Good Morning! Jersey Mike's confidentially filed for an IPO a little over a year after Blackstone bought a majority stake in the sandwich chain for $8 billion. Tim Cook is stepping up to Executive Chairman with John Ternus set to become Apple's next CEO.

Direct lending funds raised just $10.7 billion in Q1, the lowest quarterly total in three years. Spirit Airlines is floating offering the government a potential equity stake to avoid liquidation. And the Ferrari of espresso machines is quietly fueling a hot resale market.

Plus: How private credit's cracks are threatening to deepen private equity's woes, and 26 ways to work smarter and avoid burnout.

How reliable are LLMs for financial modeling? Read more to find out.

SQUEEZ OF THE DAY

Wall Street Feeds Itself

Big banks just posted a monster quarter, and most of the money is being reinvested right back into Wall Street. The biggest banks doubled down on the parts of their business that were already booming: trading desks, hedge fund financing, and other institutional lending.

Across the six biggest U.S. banks, trading revenue jumped 17% in Q1, and trading-related assets climbed about 20% year over year. Loans through trading desks to hedge funds, private credit funds, and other institutional clients rose around 25% or more at several major banks.

JPMorgan called markets lending "the primary driver of wholesale loan growth recently." Morgan Stanley said it "strategically deployed leverage-based capital" to support its markets franchise, a polished way of saying it leaned harder into financing clients that trade.

Powering the shift is excess capital banks built up during the Biden administration, when they were preparing for tougher requirements. Under the Trump administration, requirements are expected to stay flat or fall, freeing up capital to redeploy.

That stands out because the rest of the lending picture looked ordinary. Consumer loans grew at low single-digit rates, and commercial banking for midsize businesses wasn't much better. So while headline results looked broad-based, much of the real growth came from putting more money to work inside the financial system itself.

That's a great business when markets are active, volatility is high, and clients need financing. But it also means more exposure to the fastest-moving part of finance. Hedge fund prime-brokerage borrowing roughly doubled from early 2023 to the end of last year, and S&P Global warned this week that rapidly expanding balance sheets at hedge funds and prop trading firms are creating risks for major global banks.

Takeaway: Big banks had a great quarter, and they used the momentum to do more of what was already working. It's profitable, it's scalable, and it's exactly what the new regulatory environment allows. But the strongest part of bank growth is now coming from Wall Street feeding Wall Street, which means when markets turn, the exposure comes with it.

PRESENTED BY MOSAIC

How Reliable Are LLMs for Financial Modeling?

AI has transformed how Wall Street handles language-based work. Summarizing earnings calls, processing CIMs, drafting memos… for tasks like these, LLMs are definitely a game changer.

But financial modeling is a different problem entirely.

LLMs are probabilistic by nature. Run the same model twice and you get two different answers. For a summary of an expert call, that's fine. For an LBO supporting a multi-billion dollar investment decision, that's a structural problem.

A financial model needs to be 100% correct. A 99% accurate LBO is still a wrong LBO. And LLMs are nowhere near 99%...

AI adds more randomness to a system that needs less.

What firms actually need is purpose-built software where the math is locked in and never in doubt. Not AI making it up as it goes.

That's the approach Mosaic takes, fully automating the LBO process so the output is the same every single time. The questions on a deal should be about the business, not whether the math is working correctly.

Read the full article here.

HEADLINES

Top Reads

• Blackstone-backed Jersey Mike's submits confidential IPO filing (BB)

• John Ternus to become Apple CEO, Tim Cook will become Chairman (CNBC)

• McKesson to sell stake of medical-surgical unit to Apollo (WSJ)

• Direct lending fundraising falls to $10.7 billion, lowest in three years (BB)

• Spirit Airlines floats government stake to avoid possible liquidation (CBS) 

• The Ferrari of espresso machines is fueling a hot resale market (NYT)

• How private credit's cracks are threatening to deepen private equity's woes (CNBC)

• Kash Patel sues The Atlantic for $250 million over alcohol abuse claims (CNBC)

• Eli Lilly to acquire cancer drug maker Kelonia for up to $7 billion (CNBC)

• This data center is getting a $77 million tax break to create one job (NYS Focus)

• Google eyes new chips to speed up AI results, challenging Nvidia (BB)

• Goldman, BlackRock calm private credit panic — Blue Owl less so (BB)

• Hedge funds turn bullish on cotton for first time in two years (BB)

• Jack Daniel's owner is said to favor Pernod Ricard over Sazerac (BB)

• Drone maker Aevex shares double in just two days after debut (BB)

• America is in the middle of a stealth manufacturing boom (WSJ)

• Why gas prices go up fast and take so long to fall (NYT)

CAPITAL PULSE

Markets Rundown

Market Update

• Stocks edged lower as geopolitical tensions resurfaced over the weekend

• The pullback was modest, signaling markets remain relatively calm despite headlines

• Small caps outperformed, hinting at underlying risk appetite

• Bond yields were steady, reflecting a balanced macro backdrop

• Oil prices moved higher, but stayed below recent peaks

Geopolitics Back in Play

• Renewed tensions around the Strait of Hormuz brought energy markets back into focus

• Despite escalation, market reaction suggests investors still expect de-escalation overall

• International markets, especially in Asia, showed resilience despite energy sensitivity

• Headlines are likely to drive short-term volatility, but not a full risk-off shift

• The market is increasingly treating these events as temporary disruptions, not structural threats

Earnings Season Accelerates

• A larger wave of companies reporting this week will set the tone for the next leg of the market

• Early results have been strong, reinforcing confidence in corporate fundamentals

• Some sectors are seeing pressure from higher energy costs, particularly cyclicals

• However, strength in technology, energy, and materials is offsetting that drag

• Broad earnings growth remains a key pillar supporting equity valuations at current levels

Movers & Shakers

• (+) Compass Pathways ($CMPS) +42% after Trump signed an executive order to accelerate research and FDA review of psychedelic medicines.

• (+) Marvell Technology ($MRVL) +6% because the company is in talks with Google to co-develop two custom AI chips.

• (–) American Airlines ($AAL) -4% after the company dismissed talk of a United megamerger.

Prediction Markets

• US Retail Sales for March announced today at 8:30am EDT.

• Trade on real-world events with Kalshi. Use code OWS to get a $10 bonus when you trade $10.

Private Dealmaking

• QXO agreed to acquire TopBuild, an insulation company, for $17 billion

• Brady agreed to acquire Honeywell’s Productivity Solutions and Services business for $1.4 billion

• Apollo agreed to acquire a 13% interest in McKesson’s Medical-Surgical Solutions for $1.3 billion

• Recursive Superintelligence, a neolab founded by former Google engineers, raised at least $500 million

• Bally’s Intralot is nearing a deal to acquire Evoke, the owner of William Hill, for around $300 million

• Loop, a platform for logistics and supply chains, raised $95 million

For more PE, VC & M&A deals, subscribe to our Buysiders newsletter.

BOOK OF THE DAY

The Courage to Commit

Description:
A grounded and motivational guide from Shawn Johnson and Andrew East on the overlooked power of commitment in a world that constantly pushes for optionality. The book explores how staying the course, through uncertainty and doubt, is often the real differentiator between success and stagnation. It blends personal stories with practical insights on discipline, resilience, and building a life around long-term dedication.

Book Length: 240 pages
Release Date: June 9, 2026

Ideal For:
Anyone struggling with consistency, decision paralysis, or the temptation to constantly pivot instead of committing to a path.

The real power is not in starting something new it is in staying with something long enough for it to change you.

DAILY VISUAL

Trading Is Getting Younger, Ownership Is Getting Older

PRESENTED BY F2

AI That Won’t ‘Jump the Gun’

Isn’t it the most frustrating thing when you prompt GPT, Claude, Grok (insert your favorite finance AI here), and they immediately jump to working rather than listening and planning?

Thus follows the typical AI workflow in finance:

1) Run it. 2) Review it. 3) Find assumption errors. 4) Redo it.

While AI may be helpful, it has a tendency to act first and ask questions later (unless prompted).

Plan Mode from F2 lets you review the entire workflow before it runs:

• the logic

• the assumptions

• the build path

Build the plan upfront, let the agents handle the grunt work.

This equates to fewer drafts, faster outputs, and way less time retracing steps.

See how Plan Mode works.

DAILY ACUMEN

Fear

A surprising amount of what you are afraid of was never actually yours. It was absorbed, often before you were old enough to evaluate it, from a parent who grew up in a different economy, a culture shaped by a different set of risks, or a previous generation whose hard-earned caution made perfect sense in their context and almost none in yours.

The tells are specific. Fears that feel older than your own experience. Anxieties that flare up in situations that have not actually hurt you. Rules about money, ambition, visibility, or risk that you cannot quite justify but cannot bring yourself to break.

Most people spend their lives defending inherited caution as if it were wisdom. Some of it is. A lot of it is just somebody else's scar that you are still bleeding from.

ENLIGHTENMENT

Short Squeez Picks

• How Pepsi became a factory for CEOs

• 26 ways to work smarter and avoid burnout

• The leadership blind spot draining workplace performance

• The more you study consciousness, the weirder it gets

• 7 quietly powerful traits of emotionally secure

MEME-A-PALOOZA

Memes of the Day

📣 Partner With Us: Get in front of an audience of over 1 million finance professionals, business leaders, and policy influencers. Submit a partnership inquiry.

📊 Wall Street Comp & Culture Data: Get the most detailed comp, carry, and culture insights across 800+ Wall Street firms. Explore the data.

📈 Grow With Us: Work directly with the Overheard on Wall Street team to scale your finance brand. Schedule your free consult.

🧢 Wall Street Shop: Explore our collection of finance-themed apparel and merchandise. Visit the shop.

📬 Deals Newsletter – Buysiders: A curated roundup of major M&A, private equity, and VC activity. Plus access to private deal flow. Subscribe here.