Good Morning! Wall Street analysts are scaling back earnings forecasts for 2025, as some investors bet on a market melt-up. Powell assured investors he’s in no hurry to cut rates. Palantir hit a record after announcing a move to Nasdaq. Blackstone and Warburg are considering selling IntraFi for $12 billion. McDonalds will invest $100 million to lure customers back after its E. coli outbreak, and Elon Musk's companies are soaring in value.

Plus, Netflix's Paul-Tyson fight got 60 million views despite glitches, the top 10 family offices for startup investments, and how to tell when it’s time to quit your relationship, job, or diet.

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Carry’s Coming Back

Ask any private equity investor why they really got into the field… and they might even admit it’s all about carry. And after a few rough years, it’s finally coming back.

Carry, short for “carried interest,” is where most of the real wealth on Wall Street comes from. It’s a performance-based bonus - a share of the profits made from investments and is usually around 20% of a fund’s gains. 

Carry is paid out as investments are exited (sold or IPO’d). The dry spell in deal-making over recent years meant these coveted payouts were few and far between.

But 2024 has marked a turnaround. Performance-related compensation across major private equity firms has surged 33% year-over-year. KKR, for example, distributed $843 million in carry in the first nine months of 2024, nearly doubling its 2023 figure. Apollo reached its highest performance fees since 2021, while Carlyle saw an 89% increase, paying $542 million.

The resurgence comes as central banks signal rate cuts, reviving the M&A market and boosting exits and IPOs. KKR’s CFO noted that while the IPO market has been sluggish, it’s set to improve, with KKR completing four major IPOs this year.

Changes in pay structures have also shifted more carry to dealmakers. Carlyle CEO Harvey Schwartz’s strategic revamp tied more of their pay directly to performance, a move mirrored by KKR in late 2023. While these shifts trimmed earnings for shareholders in the short term, firms are betting on greater long-term gains as they push dealmakers to deliver stronger results.

Takeaway: While carry is on the rebound in 2024, private equity professionals shouldn’t get too carried away just yet. Performance pay still falls short of the 2021 peaks fueled by record-low interest rates and a flurry of deal activity. Yet with an optimistic outlook for 2025, more carry could be on the horizon. And who knows, if the stars align, dealmakers might finally be able to afford that third vacation home… or at least a yacht upgrade.

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Top Reads

• Wall Street scaling back earnings growth forecasts for 2025 (YF)

• Investors are betting on a market melt-up (YF)

• Powell: Rate cuts are still underway, but there’s no hurry (CNN)

• Bitcoin whale ETF soars to record as crypto races (Fox)

• Palantir jumps to a record after announcing move to Nasdaq (CNBC)

• Blackstone, Warburg weighing $12 billion sale of IntraFi (YF)

• McDonald's investing $100 million after E. coli outbreak (CBS)

• The top 10 family offices for startup investments (CNBC)

• Netflix fight gets 60 million viewers amid glitches (ESPN)

• RFP pick creates uncertainty for biotech startups (Axios)

• Trump’s scoreboard is S&P 500, and it’s Wall Street’s best hope (Fortune)

• Super Micro faces deadline to keep Nasdaq listing after recent plunge (CNBC)

• Why EVs could get a Trump bump — for now (Axios)

• Bob Iger is the most confident man in Corporate America (CNN)

• Wall Street ponders a potential debt reckoning from Trump spending plans (YF)

• Retail sales jump as consumers keep spending (YF)

• Elon Musk's companies are soaring in value (Axios)

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Markets Rundown

Stocks Slipped for the Week, Giving Back Half of Post-Election Gains: Major indexes closed lower, reversing a portion of last week’s rally as cautious Fed commentary weighed on sentiment. The Nasdaq led declined, while the Dow Jones and utilities sector managed to outperform.

In global markets, China's retail sales showed their fastest growth in eight months, signaling some easing pressures in its economy, though broader Asian markets were mixed. Crude oil prices dropped nearly 5% for the week, pressured by forecasts of a 2025 surplus due to robust U.S. production.

Fed Signals Patience, Pushing Yields Higher: Treasury yields climbed again this week following Fed Chair Jerome Powell’s cautious remarks about the pace of rate cuts. Powell indicated the Fed might skip a meeting before making further adjustments, dampening expectations for a December cut.

The odds of a rate cut next month fell to below 60%, down from 80% just a day prior. Despite stronger economic and inflation data, we believe there’s room for rates to decline gradually next year, but likely closer to 3.5%-4.0% rather than earlier estimates of 3.0%-3.5%. The upcoming inflation and employment reports will likely shape the Fed’s decision at its December meeting.

Retail Sales Growth Cools: October retail sales rose 0.4% month-over-month, with strong vehicle sales driving growth. However, control-group sales—which exclude autos, gasoline, and building materials—declined 0.1%, missing expectations of a 0.3% gain.

Upward revisions to September's data, however, highlight continued resilience in consumer spending. Falling gas prices, solid income gains, and appreciating asset values remain tailwinds for consumption, supporting the case for sustained economic expansion and a bull market into 2025.

Movers & Shakers

• (+) Palantir ($PLTR) +11% after the software company will join Nasdaq.

• (–) Ulta Beauty ($ULTA) -5% after Warren Buffett trimmed his stake in the company.

• (–) Moderna ($MRNA) -7% after concerns about RFK Jr. leading health department.

Private Dealmaking

• General Mills bought Whitebridge Pet Brands' North American business for $1.45 billion

• Tessl, a software dev platform, raised $100 million

• Lean Technologies, a fintech infrastructure platform, raised $67.5 million 

• Satispay, an Italian payments startup, raised $66 million

• AgiCap, a treasury management SaaS, raised $48 million

• LocalStack, a local-cloud developer, raised $25 million

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

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Tribal

Tribalism is our most misunderstood buzzword. We’ve all heard pundits bemoan its rise, and it’s been blamed for everything from political polarization to workplace discrimination. But as acclaimed cultural psychologist and Columbia professor Michael Morris argues, our tribal instincts are humanity’s secret weapon.

Ours is the only species that lives in tribes: groups glued together by their distinctive cultures that can grow to a scale far beyond clans and bands. Morris argues that our psychology is wired by evolution in three distinctive ways. First, the peer instinct to conform to what most people do.

Second, the hero instinct to give to the group and emulate the most respected. And third, the ancestor instinct to follow the ways of prior generations. These tribal instincts enable us to share knowledge and goals and work as a team to transmit the accumulated pool of cultural knowledge onward to the next generation.

Countries, churches, political parties, and companies are tribes, and tribal instincts explain our loyalties to them and the hidden ways that they affect our thoughts, actions, and identities. Rather than deriding tribal impulses for their irrationality, we can recognize them as powerful levers that elevate performance, heal rifts, and set off shockwaves of cultural change.

Weaving together deep research, current and historical events, and stories from business and politics, Morris cuts across conventional wisdom to completely reframe how we think about our tribes. Bracing and hopeful, Tribal unlocks the deepest secrets of our psychology and gives us the tools to manage our misunderstood superpower.

“A vision for collective change that can bring about a better future for all of us.”

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Government Debt Servicing Costs Making Up 13% of Govt Spending

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Mindfulness

Mindfulness is often misunderstood, but it holds real potential for improving well-being. It isn't about "emptying your mind" but about fully immersing yourself in the present moment.

You can practice mindfulness anywhere—eating, walking, or even brushing your teeth—not just during formal meditation. This consistent awareness can gradually reshape your brain’s function, improving focus and emotional regulation.

The practice is not easy, despite being simple in theory. It's about rewiring deeply ingrained mental habits, and that takes time. With dedication, mindfulness can lower stress levels, help regulate emotions, and even enhance athletic performance.

It’s particularly useful for helping us let go of automatic behaviors and reduce anxiety by allowing us to observe our thoughts without becoming overwhelmed.

Although mindfulness doesn’t guarantee perpetual happiness, it encourages self-compassion and acceptance, making it a valuable tool for dealing with life’s challenges.

Through simple practices like conscious breathing or tuning into bodily sensations, mindfulness can help reduce overthinking, lower blood pressure, and even improve sleep quality, ultimately guiding us toward a more balanced mental state.

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Memes of the Day