Good Morning! Wall Street is gearing up for a dealmaking frenzy in the media & entertainment sector in 2025. Trump says fate of TikTok should be in his hands as president. South Korea is reviewing its airline operation system after a crash killed 179 people.

Private credit is helping Wall Street basically print money, hedge funds are betting on a bank bull run for 2025, and the dollar is having its best year in a decade.

Wall Street’s gearing up for a record wave of 65-year-olds and the shifting of retirement assets. Plus, why emotional intelligence is key in the workplace, and how to tell your boss isn't happy with your work.

Take control of your financial future—schedule a consultation with Optifino today.

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Banks at the Mercy of PE Firms

After a multi-year slowdown in M&A activity, Wall Street’s once-thriving deal environment has largely stalled since 2021. With a scarcity of transactions, investment banks find themselves increasingly at the mercy of private equity firms (sponsors) who are leveraging their position to dictate terms and reshape the dynamics of leveraged buyouts (LBOs).

Historically reliant on banks to underwrite debt-heavy acquisitions, PE firms have turned the tables. Sponsors are now exercising considerable influence, pressuring lenders into accepting unfavorable terms and capitalizing on banks’ eagerness to secure deals in a low-volume environment.

The result? Banks are assuming heightened risk profiles, stretching their balance sheets for transactions that would have been deemed too speculative in more robust deal-making periods.

Take the €8.65 billion debt package backing Clayton, Dubilier & Rice’s (CD&R) acquisition of a stake in Sanofi SA’s consumer health division earlier this year. To secure their roles, banks not only agreed to underwrite the debt but also committed over €1 billion to help fund CD&R’s equity check—an unprecedented demand in previous cycles. Despite the high risk, 22 banks joined the syndicate, a clear indicator of the lengths lenders are willing to go to stay relevant.

Even deal negotiations have evolved into grueling exercises, as illustrated by Brookfield Asset Management’s attempted acquisition of Grifols SA. Over six months, banks were presented with more than 100 detailed terms, a strategy designed to overwhelm lenders and extract maximum concessions. Ultimately, Brookfield walked away due to valuation disagreements, but the imbalance in negotiating power was evident throughout.

Takeaway: The power shift is clear: by investing heavily in in-house capital markets teams, sponsors like KKR and Carlyle have reduced their reliance on banks for structuring and advisory support. These sophisticated internal teams allow PE firms to dictate terms with confidence, leaving banks increasingly sidelined in the LBO process. For lenders, the hope rests on a 2025 recovery in M&A activity to restore balance. Until then, private equity firms remain firmly in the driver’s seat.

_{PRESENTED BY OPTIFINO}

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_HEADLINES

Top Reads

• It's about to be 'a perfect storm' for media dealmaking (YF)

• Trump says fate of TikTok should be in his hands as president (Fox)

• Trump urges Supreme Court to pause TikTok ban (CNBC)

• Former President Carter dies at 100 (AP)

• South Korea to review country’s airline operation system after crash (CNBC)

• Wall Street is minting easy money from private credit (NYT)

• Bank bull run seen thundering onward in 2025 with hedge funds loading up (BB)

• America's favorite business winners and losers of 2024 (Fox)

• Dollar eyes best year in almost a decade (YF)

• S&P 500's 2024 rally shocked forecasters expecting it to fizzle (YF)

• What the record wave of new 65-year-olds means for Wall Street (WSJ)

• Google CEO tells staff to gear up for big 2025 (CNBC)

• AI model Gemini will be Google’s ‘biggest focus’ in 2025 (YF)

• OpenAI says it needs ‘more capital than we’d imagined’ (CNBC)

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Markets Rundown

Stocks Finish Lower

U.S. equity markets declined on Friday, weighed down by weakness in mega-cap technology stocks. The S&P 500 fell 1.1%, while the NASDAQ dropped 1.5%, and the Russell 2000 small-cap index declined by over 1.5%.

With no major corporate or economic news, the pullback appears to be profit-taking after a strong year for the markets.

Asian markets were mixed, with Japan's Nikkei gaining 1.8% while China's markets remained flat.

Bond Yields Holding Near Highs for the Year

The 10-year Treasury yield continued to climb, finishing above the 4.6% mark on Friday. Since the Fed's 0.5% rate cut in September, the yield has risen nearly 1%, driven by healthy economic data and inflation uncertainty.

The Bloomberg U.S. Aggregate Bond Index, which had been up 4.7% through September, is now up just 1.2% year-to-date due to the rise in yields.

Looking ahead, we expect the 10-year yield to remain in a 4% - 4.5% range in 2025, as Fed rate cuts should prevent yields from rising much higher while robust economic growth and inflation uncertainty keep yields from falling significantly.

Performance Check-In; Growth Sectors in the Lead

It’s been another strong year for U.S. equities, with the S&P 500 up over 28% including dividends.

Communication services and information technology have led gains, both up over 40% in 2024, while consumer discretionary stocks followed with a 36% rise. Growth enthusiasm, especially around AI-driven potential and strong corporate profits, has fueled the mega-cap tech rally over the past two years.

However, 2025 could bring broader market leadership. Value stocks, which are less exposed to trade-policy uncertainty and expected to see accelerated profit growth, could join the rally. This sets a favorable stage for well-balanced portfolios to benefit from broader equity market participation.

Movers & Shakers

• (+) Rigetti Computing ($RGTI) +11% after the quantum computing company signed a contract with NASA.

• (–) Super Micro Computer ($SMCI) -5% after ending a $50M loan agreement with HSBC Taiwan

• (–) Red Cat Holdings ($RCAT) -9% after the drone stock pulled back from its rally.

Private Dealmaking

• NeueHealth will go private in a $1.3 billion deal

• Infiniant, a cloud-based bank platform, raised $15 million

• Una Sofware, a performance planning platform, raised $5.6 million

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

_{BOOK OF THE DAY}

All That Glitters

Orlando Whitfield and Inigo Philbrick met in 2006 at London’s Goldsmiths University where they became best friends. By 2007 they had started I&O Fine Art.

Orlando would eventually set up his own gallery and watch as Inigo quickly immersed himself in a world of private jets and multimillion-dollar deals for major clients.

Inigo seemed brilliant, but underneath the extravagant façade, his complicated financial schemes were unraveling.

With debt, lawsuits, and court summonses piling up, Inigo went into a tailspin of lies and subterfuge. At around the same time, Orlando would himself experience a nervous breakdown and leave the art world for good.

By 2019 things had spiraled enough out of control for Inigo to flee to the remote island nation of Vanuatu, 300 miles west of Fiji.

Within a year, he was arrested by the FBI and extradited to America, where he was sentenced to seven years in prison for having committed more than $86 million in fraud.

All That Glitters is at once a shocking and compulsive story of ambition and downfall, a cautionary tale, and an intimate portrait of friendship and its loss.

“A dazzling insider’s account of the contemporary art world and the stunning rise and fall of the charismatic American art dealer Inigo Philbrick.”

_{DAILY VISUAL}

Homelessness Hits Record

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The Best PE, VC & M&A Newsletter

Buysiders is our deals newsletter to bring y’all the best insights on deals around Wall Street.

Every month, you get insider details on the month’s top 3 deals. For this month’s edition, we cover the following deals:

1. BlackRock’s $12 billion acquisition of HPS Partners

2. Northern Star’s $3.3 billion of De Grey

3. Mondelez’s potential ~$40 billion take over of Hershey’s

Read the full edition here and subscribe to the newsletter below.

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Expensive Wine

Expensive wine does not necessarily taste better, as several studies reveal that price heavily influences perception, not actual taste. In blind tastings, where participants are unaware of wine prices, cheap wines often receive higher ratings than expensive ones.

Notably, even trained sommeliers and judges frequently fail to differentiate between wines or give consistent ratings. Research shows that external cues like price, brand, and bottle design significantly shape perceptions of quality.

Price, in particular, acts as a powerful signal that can create the illusion of better taste, aligning with pre-set expectations and overriding sensory input.

Studies using brain imaging confirm that areas of the brain, such as the striatum and prefrontal cortex, interpret higher prices as signals of higher quality, influencing the perceived pleasantness of wine.

Surprisingly, even when people are aware of these psychological effects, the placebo effect of price often persists. The findings underscore that our experiences with wine are shaped as much by context and expectations as by the wine itself.

For true enjoyment, it’s best to focus on the experience surrounding the wine—who you’re with, the setting, and the ambiance—rather than the price tag. Ultimately, optimizing for experience rather than price can lead to greater satisfaction, regardless of the bottle's cost.

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Short Squeez Picks

• Why emotional intelligence is key to build a great company culture

• A millennial millionaire’s biggest investing mistake

• 10 books Warren Buffett studied to become a billionaire

• 8 things about work ethic that Gen-Z doesn’t get

• Subtle signs your boss isn’t happy with your work

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Memes of the Day