Good Morning! Dealmaking is so back on Wall Street after the six largest U.S. banks all reported strong Q3 results, with Morgan Stanley the latest to announce a surge in banking and trading revenue. Private equity firms are pulling back from investing in consumer companies that could negatively be impacted by the Ozempic boom. The chip industry is facing headwinds, but ASML’s earnings miss isn’t a disaster for the industry. Nvidia is set to dominate another Big Tech earnings season, Amazon is going nuclear, and Meta laid off staff for abusing $37 meal credits.

Plus, MLB playoff viewership is surging, FTC is finalizing a rule that makes canceling subscriptions easier, and do you have a busy mind or a busy day?

Think you know who will win the 2024 presidential election? Make your prediction with Kalshi.

_{SQUEEZ OF THE DAY}

Blue Collar Millionaires

If you want to become a millionaire in 2024, you're likely sticking to the tried-and-tested playbook. Graduate from a good university, get a job in finance or consulting, and maybe even get an MBA. You probably wouldn’t consider blue-collar work like plumbing, HVAC engineering, or electrical contracting as the path to wealth.

But it turns out that America's latest class of millionaires are blue-collar operators. Private equity investors have been scooping up HVAC, plumbing, and electrical companies - and they're offering owners seven and eight-figure paydays.

Since 2022, private equity investors have bought almost 800 HVAC, plumbing, and electrical companies according to Pitchbook. The strategy, known as a roll-up, is designed to scale up small, fragmented businesses into larger, more profitable operations. Investors argue that they’re boosting efficiency, creating jobs, and helping business owners retire wealthy.

Private equity roll-ups aren’t without controversy. Critics say they raise prices for consumers. However, investors counter that improved efficiencies actually result in higher wages for workers and that efficiencies often reduce prices.

Takeaway: One of the operators interviewed said that, if you want to build a $10 to $30 million business, you should look to the plumbing, electrical contracting, or HVAC industry. It might be a little different than the traditional Silicon Valley entrepreneur path… but when you’re cashing out for millions, do you really care if your riches come from fixing someone’s clogged toilet at 2am?

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_HEADLINES

Top Reads

• Private equity's Ozempic diet (Axios)

• Investment banking surge at Morgan Stanley solidifies Wall Street revival (YF)

• MLB playoff viewership surges as big market stars vie for World Series (CNBC)

• FTC finalizes rule that makes canceling subscriptions easier (Axios)

• ASML earnings miss isn't a disaster for AI chip sector (YF)

• Lucid shares tumble following a public offering of nearly 262.5 million shares (CNBC)

• Private equity skirts losses to the economy’s cost (FT)

• Billionaire Tom Gores to buy 27% of the LA Chargers for $750 million (CNBC)

• Nvidia is set to dominate another Big Tech earnings season (YF)

• Low home turnover rate, charted (Axios)

• $25 oil? Here's when the bold call could become reality (YF)

• Amazon to invest more than $500 million developing nuclear reactors (CNBC)

• Global debt could soon equal the world economy, IMF report finds (Axios)

• KKR to launch sale of Goodpack, valued at around $1.8 billion (Reuters)

• U.S. antitrust regulators make major changes to notification rules (Axios)

• Meta sacks staff for abusing $37 meal credits (AFR)

_{CAPITAL PULSE}

Markets Rundown

Market Commentary

Markets close higher: In a quiet session on Wednesday, U.S. equity markets ended the day with a late rally, pushing major indexes to a positive close. Stocks have been volatile this week, hitting their 46th record high on Monday but closing lower on Tuesday.

Investors are still digesting recent inflation and jobs data, with corporate earnings reports from big banks driving sentiment this week. The upcoming September retail-sales report, due Thursday, will provide further insight into the health of consumer spending, a key indicator as we approach the holiday season.

With the labor market softening but holding steady, there is optimism that consumer spending will remain resilient. If inflation continues to ease, particularly in shelter costs, the Federal Reserve may continue with rate cuts, potentially boosting equity markets further.

Markets reflect a mix of themes: Bond markets saw modest gains, with the 10-year Treasury yield settling just above 4%.

Encouraging inflation readings from the U.K. and Canada earlier this week helped stabilize rates after October’s rise. In the commodities market, gold traded higher, nearing all-time highs, while oil prices dipped slightly, easing concerns over Middle East tensions.

The drop in oil prices has seen a more than 15% decline since early July. Among equity sectors, financial services, utilities, and real estate led gains, reflecting a mix of cyclical and defensive positions.

A check on the rally: U.S. large-cap stocks, as measured by the S&P 500, have gained 5% over the past five weeks and are up more than 12% since August.

Recent market trends show a broadening of leadership beyond growth stocks, with value and mid- and small-cap stocks outperforming large caps in the last three months. This diversification has benefited investors with more balanced portfolios.

This current market positioning reflects optimism, though markets are taking a cautious breather after strong recent gains. The continued focus will be on corporate earnings and upcoming economic reports.

Movers & Shakers

• (+) United Airlines ($UAL) +12% because the airline beat earnings; announced a share buyback program.

• (+) Morgan Stanley ($MS) +6% after beating Q3 earnings thanks to a wealth management surge.

• (–) Novavax ($NVAX) -19% after the FDA put a hold on the company’s combined Covid-Flu vaccine.

Private Dealmaking

• Lightmatter, a photonic supercomputing startup, raised $400 million

• Decagon, an AI customer support agent, raised $65 million

• Neuron7.ai, a service resolution intelligence startup, raised $44 million

• Azra Games, a mobile role-playing games developer, raised $42.7 million

• Ghost, a B2B retail marketplace, raised $40 million 

• Port, an internal developer portal, raised $35 million

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

_{BOOK OF THE DAY}

Genesis

As it absorbs data, gains agency, and intermediates between humans and reality, AI will help us to address enormous crises, from climate change to geopolitical conflicts to income inequality.

It might well solve some of the greatest mysteries of our universe and elevate the human spirit to unimaginable heights.

But it will also pose challenges on a scale and of an intensity that we have never seen—usurping our power of independent judgment and action, testing our relationship with the divine, and perhaps even spurring a new phase in human evolution.

The last book of elder statesman Henry Kissinger, written with technologists Craig Mundie and Eric Schmidt, Genesis charts a course between blind faith and unjustified fear as it outlines an effective strategy for navigating the age of AI.

“In his final book, the late Henry Kissinger joins forces with two leading technologists to mount “a profound exploration” of the epochal challenges and opportunities presented by the revolution in Artificial Intelligence.”

_{DAILY VISUAL}

Luxury Slowdown

_{PRESENTED BY HEBBIA}

Analysts: If You’re Still Diligencing By Hand, Read This

Andreessen Horowitz, Index Ventures, Google Ventures, and Peter Thiel just plugged $130 million into Hebbia (you know, the AI taking Wall Street by storm). 

Why? 

• Used by a third of the top 50 asset managers globally

• Saves hours of work per day on diligencing, screening, memo writing

• Understands, PDFs, emails, docs, and more of ~unlimited~ length

• Drafts one-pagers based on your team’s investment philosophy

Book a quick demo to see Hebbia in action.

_{DAILY ACUMEN}

Chaos

The human mind loves certainty, but thriving often comes from embracing the unknown.

Our brains are wired to predict and control, yet too much stability can trap us in rigid, unfulfilling patterns.

To grow, we need to step into the unpredictable—those moments of chaos where we can't rely solely on our usual habits and assumptions.

Whether it’s art, creativity, or even the thrill of a roller coaster, embracing the "edge of informational chaos" helps us break free from unproductive loops.

It’s in these moments, when our predictive models break down, that we learn the most and grow the most.

Today, don’t shy away from uncertainty; seek it out. Let chaos disrupt your comfort and watch as it sparks new insights and growth.

_{ENLIGHTENMENT}

Short Squeez Picks

• The difference between a busy mind and a busy day

• Athlete vs. grandmaster and the psychology of decision making

• How to transform overwhelmed into creative energy

• Singles are turning to the burned haystack method to find love

• Harvard researchers might have found a way to prevent the common cold

_{MEME-A-PALOOZA}

Memes of the Day