Good Morning! Dealmakers are facing a dilemma after the latest Fed day, which signaled delayed rate cuts. Deutsche Bank will cut 3,500 jobs, buy back shares and pay dividends to convince investors its turnaround remains on track. Amazon delivered better-than-expected earnings, and the stock climbed more than 8% in extended trading. Plus why letting go of 80% of your life might just be the key to happiness, and the four types of professional time. 

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_{SQUEEZ OF THE DAY}

Dividend Recaps are So Back

The holy grail of the private equity seems to be making its way back. Dividend recapitalizations are back, and managing partners across the globe are breathing a sigh of relief after a tough last couple of years.

Dividend recaps are a classic private equity way to juice returns on its investments. A PE firm will issue debt (on its portfolio company’s balance sheet) and use the proceeds to pay itself a hefty dividend.

In practice, private equity firms buy companies and often saddle them with debt. In a dividend recap, they double down, piling on more debt to finance these thicc dividends. It's sort of like maxing out a credit card.

Why are recaps back? 1) PE firms need to find ways to make returns with PE exits in a slump. 2) Debt market has been rallying, setting the stage for these riskier debt deals that fuel recaps.

Takeaway: Dividend recaps are a mixed bag. They may be a headache for the companies loaded with more debt, but they're a clear sign that investors are feeling bullish about the economy's future. Plus, it’s a clear sign that your managing partner might soon be hosting the next LP meeting on a brand-new yacht.

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_HEADLINES

Top Reads

• Amazon delivers better-than-expected results (CNBC)

• Why Wednesday was stock market’s worst day of 2024 (Axios)

• Deutsche Bank to cut 3,500 jobs and reward shareholders (Reuters)

• Dealmakers face dilemma after Fed meeting (Axios)

• 23andMe’s fall from $6 billion to nearly $0 (WSJ)

• How Vail Resorts sparked the Northeast ski revolt (BB)

• Taylor Swift’s songs removed from TikTok after UMG spat (CNBC)

• Powell would like investors to treat good news like good news (YF)

• The Musk ruling is not the end for outsized CEO pay packages (Axios)

• January hiring was lowest for the month on record as layoffs surged (CNBC)

_{CAPITAL PULSE}

Markets Rundown

Stocks closed higher as Wall Street tries to recover from Wednesday’s stock selloff.

Movers & Shakers

• (+) Nextracker ($NXT) +25% after solar technology company revised guidance.

• (+) Ferrari NV ($RACE) +13% after topping Wall Street estimates, strong 2024 profit forecast.

• (–) Peloton ($PTON) -24% after falling to a record low after an outlook cut.

Private Dealmaking

• Cardinal Health bought Specialty Networks for $1.2 billion

• DataSnipper, an automation platform, raised $100 million

• Codeium, a coding toolkit, raised $65 million

• SmithRx, a pharmacy benefits company, raised $60 million

• Metronome, a billing solutions startup for software companies, raised $43 million 

• Latitude, a small launch startup, raised $30 million

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

_{BOOK OF THE DAY}

Tracers in the Dark

Over the last decade, a single innovation has massively fueled digital black markets: cryptocurrency.

Crime lords inhabiting lawless corners of the internet have operated more freely—whether in drug dealing, money laundering, or human trafficking—than their analog counterparts could have ever dreamed of.

By transacting not in dollars or pounds but in currencies with anonymous ledgers, overseen by no government, beholden to no bankers, these black marketeers have sought to rob law enforcement of their chief method of cracking down on illicit finance: following the money.

But what if the centerpiece of this dark economy held a secret, fatal flaw? What if their currency wasn’t so cryptic after all? An investigator using the right mixture of technical wizardry, financial forensics, and old-fashioned persistence could uncover an entire world of wrongdoing. 

Tracers in the Dark is a story of crime and pursuit unlike any other. With unprecedented access to the major players in federal law enforcement and private industry, veteran cybersecurity reporter Andy Greenberg tells an astonishing saga of criminal empires built and destroyed.

He introduces an IRS agent with a defiant streak, a Bitcoin-tracing Danish entrepreneur, and a colorful ensemble of hardboiled agents and prosecutors as they delve deep into the crypto-underworld.

The result is a thrilling, globe-spanning story of dirty cops, drug bazaars, trafficking rings, and the biggest takedown of an online narcotics market in the history of the Internet.

"A master-class in the tactics and countertactics of financial cyberwarfare, laid out in a tense, exciting technothriller."

_{DAILY VISUAL}

Household Debt Is Mainly Fixed Rate

89% of consumer debt is fixed rate (mortgage, student and auto loans)

_{SHORT SQUEEZ INSIDERS}

Insiders: Investment Banker Winter Stocks

With winter in full tundra territory, for this week’s Insiders newsletter, we dive into the top winter stocks.

From ski resorts to snow plows to winter apparel, we look at some of the stocks powering Midtown during the dreariest days of the winter.

And hopefully, we’ll settle the Canada Goose (fall edition) vs. Moncler rivalry once and for all.

Read full edition here.

_{DAILY ACUMEN}

Hitchen’s Razor

Aliens live among us. There’s an invisible dragon in my garage that doesn’t make a sound. Friends is better than Seinfeld.

When we’re confronted with claims that lack explanations and supporting evidence, Hitchen’s Razor can make our lives easier.

Why waste energy on speculating and disproving assertions if those who make them have nothing to offer in their favor?

You’re under no obligation to take it seriously and can in turn dismiss it out of hand. The burden of proof lies with the person who makes a claim, not the one it’s thrown at.

_{ENLIGHTENMENT}

Short Squeez Picks

• How to get more aversive tasks done

• 5 personal habits of highly effective leaders

• 13 of the best time management podcasts

• Why you should let go of 80% of your life

• The 4 types of professional time

_{MEME-A-PALOOZA}

Memes of the Day