🍋 Wall Street’s DEI Distancing

Why Wall Street is pausing all DEI initiatives, plus Macy's activist investors upped takeover bid to $6.6 billion.

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"The most powerful productivity tool ever invented is simply the word no." — Shane Parrish

Good Morning! You need a net worth of $5.8 million to be in the top 1% in the U.S. (up from $5.1 million last year). Ousted Twitter execs sued Elon for $128 million in severance. We might be gearing up for another bank run this March - with Moody’s downgrading NYCB again. JetBlue and Spirit officially ended their $3.8 billion merger, and an investor group bumped their Macy’s takeover bid to $6.6 billion. Plus the difference between power skills and soft skills, and how neuroscience can help you make better decisions. 

To get in on the private credit boom, sign up for Percent (weighted average APY of 18.83% in 2023) and get a $500 sign up bonus.

SQUEEZ OF THE DAY

Wall Street’s DEI Distancing

It probably seems like, ever since the pandemic, Wall Street has been all-in on diversity, equity, and inclusion (DEI) programs. And, at face value, it makes sense. After all - the only real diversity you saw in investment banking in the 1990s was which boarding school you went to, or which country club your dad belongs to. 

But, in 2020, it seemed like every big company felt like they had to do something in light of the civil unrest. So, you saw a ton of investment banks and F500 companies alike implement diversity and inclusion programs. 

Take Goldman Sachs, for example. They launched a Possibilities Summit for black college students. Other firms like Bank of America implemented programs geared at women and minorities, while other banks like Bank of New York Mellon implemented metrics, and quotas, and tied executive compensation to the percentage of minorities they should hire.

But it turns out that, after a 2023 Supreme Court case ending affirmative action in higher education, there’s been a massive anti-DEI blowback. Elon Musk and Bill Ackman have even gotten in on the action, too. And now these investment banks are worried they could get sued for DEI programs.

This year, Goldman Sachs just opened up its Possibilities Summit (black college recruitment) to white college students. J.P. Morgan’s summer fellowship for Black students is open to all students “regardless of background.” And Bank of America is broadening programs geared at women and minorities to everyone. 

The banks say they’re still as committed as they were in 2020 to ending racism. They just say they have no choice but to pause new diversity initiatives to get ahead of any potential litigation.

Takeaway: Diversity is as sensitive a topic as it gets - it seems like no matter what banks or other companies do, they’re bound to upset someone. And it’s not just Wall Street - Zoom just laid off its entire DEI team, and Tesla removed language about minority workers from a regulatory filing. But right now, banks are blaming the DEI walk back on their lawyers, saying they really have no choice but to pause right now.

PRESENTED BY PERCENT

Don’t Miss the “Golden Era” for Private Credit

Private credit is now a $1.9 trillion asset class and still growing

AllianceBernstein and Goldman Sachs are calling it a “key component of a diversified investment portfolio” and “the biggest opportunity set across the alternative space”. 

That’s because private credit can offer higher yields, less correlated returns, and liquidity compared to public markets–while also hedging against inflation and rising interest rates.

You can take advantage with Percent. They’ve already funded over $1 billion in private credit deals, giving investors access to: 

  • Attractive yields: Percent’s weighted average APY was 18.83% in 2023

  • Recurring interest income: Investors earned $17M in interest in 2023 

HEADLINES

Top Reads

  • Elon Musk sued by ousted Twitter execs for $128M in severance (Fox)

  • Some NYCB deposits may be at risk after Moody’s downgrades bank again (CNBC)

  • The U.S. national debt is rising by $1 trillion about every 100 days (CNBC)

  • Millennials stand to become the richest generation in history (CNN)

  • Wells Fargo slowly starts to shed the problems of its past (YF)

  • Why AI could boost the economy faster than past technologies (Axios)

  • Bank of America latest firm to see bullish outcome for stocks in 2024 (YF)

  • JetBlue, Spirit end $3.8 billion merger agreement (CNBC)

  • Investor group bumps Macy's takeover bid to $6.6B (Axios)

  • American says 80% of 2024 revenue will come from loyalty program (CNBC)

CAPITAL PULSE

Markets Rundown

Stocks fell from their records to begin the week.

Movers & Shakers

  • (+) Super Micro Computer ($SMCI) +19% after the IT company was included in the S&P 500 index.

  • (+) Macy’s ($M) +14% after Macy’s activist investor raised their buyout bid to $6.6 billion.

  • (–) Li Auto ($LI) -14% because the Chinese automaker posted disappointing February deliveries.

Private Dealmaking

  • Platinum Equity sold Yak, a ground matting provider, for $1.1 billion

  • Mews, a hospitality cloud-based tools provider, raised $110 million

  • Geopura, a hydrogen generator developer, raised $71 million

  • Phagenesis, a dysfunction treatment developer, raised $42 million

  • PermitFlow, a construction permitting startup, raised $31 million

  • Moego, a payments company for pet groomers, raised $24 million

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

BOOK OF THE DAY

Supercommunicators

Come inside a jury room as one juror leads a starkly divided room to consensus. Join a young CIA officer as he recruits a reluctant foreign agent. And sit with an accomplished surgeon as he tries, and fails, to convince yet another cancer patient to opt for the less risky course of treatment.

In Supercommunicators, Charles Duhigg blends deep research and his trademark storytelling skills to show how we can all learn to identify and leverage the hidden layers that lurk beneath every conversation.

Communication is a superpower and the best communicators understand that whenever we speak, we’re actually participating in one of three conversations: practical (What’s this really about?), emotional (How do we feel?), and social (Who are we?). If you don’t know what kind of conversation you’re having, you’re unlikely to connect.

Supercommunicators know the importance of recognizing—and then matching—each kind of conversation, and how to hear the complex emotions, subtle negotiations, and deeply held beliefs that color so much of what we say and how we listen.

Our experiences, our values, our emotional lives—and how we see ourselves, and others—shape every discussion, from who will pick up the kids to how we want to be treated at work. In this book, you will learn why some people are able to make themselves heard, and to hear others, so clearly.

With his storytelling that takes us from the writers’ room of The Big Bang Theory to the couches of leading marriage counselors, Duhigg shows readers how to recognize these three conversations—and teaches us the tips and skills we need to navigate them more successfully.

In the end, he delivers a simple but powerful lesson: With the right tools, we can connect with anyone.

“A winning combination of stories, studies, and guidance that might well transform the worst communicators you know into some of the best.”

DAILY VISUAL

Significant Decline in the Number of Publicly Traded Companies

Source: Apollo

BOOK DROP

The Trading Game: A Confession

Gary Stevenson’s much anticipated new book The Trading Game dropped today and you can order here. If you liked “The Wolf of Wall Street” or “Liar’s Poker”, you’ll enjoy this book.

From the gritty streets of East London to the glossy high-rises of the city's financial district, "The Trading Game" tells the remarkable story of Gary Stevenson, a math prodigy from a challenging background who rises to become one of Citibank's most profitable traders.

But Gary's story is more than just a rags-to-riches tale. It's a journey into the heart of the trading floor, a place of unimaginable wealth, intense pressure, and moral dilemmas. With the eye of a seasoned trader and the heart of a storyteller, Gary reveals the inner workings of the global economy and the individuals who run it.

“Darker than [Liar’s Poker], but if anything even more of a rollicking read.” —Felix Salmon, Axios

"A thrilling story of high finance—and its low points..." Matt Levine, Bloomberg Money Stuff columnist

"The best finance memoir I've ever read..." Zeke Faux, author of Number Go Up

DAILY ACUMEN

Tony Hawk

“When I first started getting successful at skating, my style was ridiculed — so I had already been through all this flak.

I was scrawny, I was skinny, I didn’t look cool. I didn’t flow the way the old-school guys did. I wasn’t a Dogtown guy.

So, they were like, “Who’s this little robot kid doing circus tricks with a skateboard?”

I’d finally found in skateboarding the one thing that speaks to me — which already set me apart from my peers, because it’s an outcast activity — and then I was an outcast in that.

It was so crushing. But skateboarding gave me much more happiness, so I was prepared to deal with that disappointment. 

So, yeah, the years of becoming the king sellout, according to the hard-core skaters — I didn’t care. I learned to be resilient early in life.”

ENLIGHTENMENT

Short Squeez Picks

MEME-A-PALOOZA

Memes of the Day

 

 

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