Good Morning! The U.S. and Britain struck the first major trade deal of the Trump tariff era. Trump urged Americans to buy stocks, sending markets soaring, and Bitcoin crossed $100k for the first time since February.

Instacart CEO Fidji Simo is joining OpenAI as CEO of Applications. Bill Gates plans to give away most of his $200B fortune, Trump wants to raise taxes on those earning over $2.5M, and Krispy Kreme plunged 25% after ending its McDonald's partnership.

Plus: Wall Street bonuses may shrink amid tariff chaos, Trump slammed ‘fool’ Powell again, and the first American-born Pope was elected.

Navigate the market chaos with Bigdata.com’s personalized watchlists and custom daily briefs.

SQUEEZ OF THE DAY

Hedge Funds > Private Equity

For decades, private equity firms were investment banks’ favorite customers, dealmakers who handed out fat fees every time they bought a company, raised debt, or filed an IPO. But the tides are shifting.

While private equity has evolved into broader alternative asset managers dabbling in private credit, infra, and real estate, it’s the hedge funds (and their cousins like prop trading firms and family offices) that are increasingly driving revenue growth for banks.

Let’s look at the numbers: Private equity firms paid $20.4 billion in investment banking fees last year, up 62% from a dismal 2023 but still far below the 2021 peak of $33.3 billion.

In contrast, BCG estimates that prime brokerage revenues (the backbone of bank services for hedge funds) have ballooned to $36 billion, growing over 50% in the past four years.

Goldman Sachs alone made $5.5 billion in equity financing revenue last year, with record prime balances. Fixed income financing chipped in another $3.6 billion.

Morgan Stanley and Citi are also highlighting similar growth in their prime brokerage businesses. Across the top five US banks, markets revenues (trading and financing) have grown by 50% over the past decade and now dwarf traditional investment banking.

Much of this is powered by leverage. Hedge fund borrowing through prime brokerage and repo has doubled to over $2.5 trillion in five years. Multi-strats and pod shops are leading the charge, but family offices and prop trading firms (like Jane Street) are increasingly key clients too.

Traditional asset managers, meanwhile, are cutting research budgets, pushing banks to rely more on high-volume hedge fund commissions.

Takeaway: Private equity still commands over $10 trillion in private markets, but its grip on Wall Street’s P&L is loosening. With dry powder accumulating, sluggish exit markets, and valuations under pressure, PE’s dominance isn’t what it once was. Meanwhile, hedge funds, with their insatiable appetite for leverage and liquidity, are quietly overtaking their place at the top.

HEADLINES

Top Reads

• U.S., Britain strike first major trade deal of Trump tariff era (Axios)

• ‘You better go out and buy stock now,’ Trump said. Markets listened (Fortune) 

• Bitcoin jumps above $100,000 for first time since February (CNBC)

• Banker bonuses set to drop as tariffs cause economic uncertainty (BB)

• Bill Gates announces plan to give ‘virtually all’ his money away (CNN)

• Trump seeks tax hike on wealthy earning $2.5 million or more (YF)

• Instacart CEO Fidji Simo to join OpenAI as head of applications (MSN)

• Krispy Kreme pauses its doughnut rollout with McDonald’s (CNN)

• Trump aims at 'fool' Powell after Fed rate hold (YF)

• Will the Fed step in if America’s labor market cracks from Trump’s tariffs? (CNN)

• Match Group cuts 13% of staff in latest move to reverse declines (BB)

• OpenAI CEO Sam Altman touts US is ahead of China in AI arms race (Fox)

• Autographed Buffett books fetch as much as $100k at Berkshire auction (CNBC)

• The AI startup that stood out in an otherwise drab month for family office deals (CNBC)

• Moody's warns of risk posed by rising retail exposure to private credit (YF)

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The best part? We’ve also partnered with Bigdata.com to launch our own watchlists, including Short Squeez Alpha, The Street Index, and 2 & 20, now live on the platform.

CAPITAL PULSE

Markets Rundown

Market Update

• U.S. stocks rose Thursday after the U.S. and U.K. announced a new trade agreement, lowering tariffs on autos, steel, aluminum, and aerospace parts.

• It marks the first major trade deal since the U.S. unveiled sweeping tariffs on April 2, and markets responded positively on hopes it could serve as a template for further negotiations.

• Consumer discretionary and industrials led sector gains, while health care and utilities underperformed.

• Asian and European markets advanced, with the Bank of England cutting rates to 4.25%.

• Bond yields moved higher, with the 10-year Treasury yield rising to 4.39% and the 2-year hitting 3.9%, reflecting stronger risk sentiment.

Economic Data Highlights

• U.S.–U.K. trade agreement: First deal since April 2 tariffs; cuts duties on key sectors but maintains 10% baseline tariff

• Initial jobless claims (May 4): 228,000 – in line with estimates; down from 241,000

• 10-year Treasury yield: 4.39% – up on trade optimism

• 2-year Treasury yield: 3.9% – reflects stronger growth expectations

• Bank of England rate cut: Down 25bps to 4.25% – cites softening domestic demand

Reported Earnings

• Shopify (SHOP) – Reported May 8: Beat expectations; growth in GMV and new tools for tariff navigation highlighted progress on merchant enablement.

• Coinbase (COIN) – Reported May 8: Revenue rose, but earnings fell short; company announced Deribit acquisition to expand in crypto derivatives.

• Pinterest (PINS) – Reported May 8: Revenue and users grew faster than expected; strong Q2 guidance sent shares sharply higher after hours.

Earnings Today

• TeraWulf (WULF) – Reporting May 9: Company is expected to highlight progress on zero-carbon mining and reaffirm its focus on sustainable growth strategy.

• Enbridge (ENB) – Reporting May 9: Investors watching for updates on infrastructure projects and confirmation of 2025 guidance.

Movers & Shakers

• (+) AppLovin ($APP) +12% because the company will sell its mobile games business.

• (+) Carvana ($CVNA) +10% after the used car retailer announced strong Q1 results.

• (–) Arm ($ARM) -6% after the semiconductor company released disappointing guidance.

Private Dealmaking

• Parloa, a customer service startup, raised $120 million

• Statsig, a product development platform, raised $100 million

• Orca AI, a maritime intelligence provider, raised $72.5 million

• Tobin Scientific, a biopharma logistics provider, raised $65 million

• Wonderskin, a beauty brand, raised $50 million

• PAQ Therapeutics, a protein degradation biotech, raised $39 million

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

BOOK OF THE DAY

The Capital Order

For more than a century, governments facing financial crisis have resorted to the economic policies of austerity—cuts to wages, fiscal spending, and public benefits—as a path to solvency.

While these policies have been successful in appeasing creditors, they’ve had devastating effects on social and economic welfare in countries all over the world.

Today, as austerity remains a favored policy among troubled states, an important question remains: What if solvency was never really the goal?

In The Capital Order, political economist Clara E. Mattei explores the intellectual origins of austerity to uncover its originating motives: the protection of capital—and indeed capitalism—in times of social upheaval from below.

Mattei traces modern austerity to its origins in interwar Britain and Italy, revealing how the threat of working-class power in the years after World War I animated a set of top-down economic policies that elevated owners, smothered workers, and imposed a rigid economic hierarchy across their societies.

Where these policies “succeeded,” relatively speaking, was in their enrichment of certain parties, including employers and foreign trade interests, who accumulated power and capital at the expense of labor.

Here, Mattei argues, is where the true value of austerity can be observed: its insulation of entrenched privilege and its elimination of all alternatives to capitalism.

Drawing on newly uncovered archival material from Britain and Italy, much of it translated for the first time, The Capital Order offers a damning and essential new account of the rise of austerity—and of modern economics—at the levers of contemporary political power.

“A groundbreaking examination of austerity’s dark intellectual origins.”

DAILY VISUAL

Wall Street Bonuses Projected to Drop

Projected change in bonus compensation for select financial sectors, 2024 to 2025; Includes cash bonuses and equity awards

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DAILY ACUMEN

Legends Series: Edward Thorp

Most people walk into a casino expecting to lose. Edward Thorp walked in with a plan to win.

A mathematics professor with a gift for probability, Thorp didn’t just dabble in gambling—he dissected it.

In the early 1960s, he cracked the code of blackjack, publishing Beat the Dealer, the first mathematically sound card-counting system.

Vegas tried to ban him. Players tried to mimic him. But Thorp wasn’t interested in roulette wheels forever.

He saw a much bigger game: Wall Street.

In 1969, Thorp launched Princeton Newport Partners, one of the earliest quantitative hedge funds, applying the same statistical rigor to stock pricing as he had to blackjack.

While other investors followed instincts, narratives, or the morning paper, Thorp followed math. He built models that detected minuscule mispricings—arbitrage opportunities hiding in plain sight. 

The result? 20% annualized returns over two decades. Barely a losing quarter. No flashy trades. Just math, discipline, and edge.

Thorp’s timeless lesson? Ignore the noise and trust the numbers. While the world reacts to headlines, the edge lies in the data: pricing inefficiencies, historical correlations, volume shifts—signals often drowned out by sentiment. 

As modern investors chase AI narratives and meme stock revivals, Thorp would remind us: fortune favors the mathematically prepared.

ENLIGHTENMENT

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