Good Morning! Sam Bankman-Fried's ex Caroline Ellison was sentenced to two years in prison for her role in the FTX collapse. Blackstone and Vista bought Smartsheet for $8.4 billion, in one of the largest take-privates of the year. Private credit is facing its worst reckoning since 2008. KKR's private equity co-head is pushing for workers' stake in U.S. companies. Americans are growing more worried about where economy is headed. Plus, 4 ways to take on toxic colleagues and body language tricks to be more confident in public speaking.

Want to strengthen your valuation skills (and score a promotion)? Learn advanced financial modeling techniques with CFI, the #1 rated finance training provider.

_{SQUEEZ OF THE DAY}

DOJ vs Visa

If you have a debit card, chances are it’s a Visa. But the U.S. Justice Department thinks Visa’s stranglehold on the market might be costing everyone a bit too much.

This week, the DOJ filed a lawsuit against Visa, accusing the company of monopolizing the debit card market, where it controls over 60% of transactions and rakes in more than $7 billion in fees each year. 

The DOJ claims Visa strong-armed merchants into using its network by imposing steep "disloyalty penalties" and actively worked to stifle tech competitors like Apple, PayPal, and Square. 

In fact, one Visa exec reportedly said, "We've got Square on a short leash," a comment that didn’t exactly fly under the DOJ's radar.

The DOJ’s goal? To break up Visa's dominance and open the market to more competition, which could mean lower fees for consumers. Visa, on the other hand, is calling the lawsuit "meritless" and plans to fight back. Stock was down 5.5% on the news.

Takeaway: The DOJ argues that Visa’s anti-competitive practices have cost consumers billions. This case is part of a broader crackdown by both the DOJ and FTC on big business, with other giants like Google also in the firing line. Whether this crackdown continues under the next administration remains to be seen. But one thing is clear—executives should think twice before boasting about "short leashes." Because nothing loosens a leash faster than a DOJ lawsuit.

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_HEADLINES

Top Reads

• FTX fraudster Caroline Ellison sentenced to 2 years in prison (CNBC)

• Record stock market defies election uncertainty (Axios)

• Blackstone, Vista to buy Smartsheet (Reuters)

• Private credit faces worst reckoning since 2008 (BB)

• KKR's private equity co-head pushes for workers' stake in U.S. companies (WSJ)

• Intel's years of missteps leave it fighting for survival (YF)

• Careerism is ruining college (NYT) 

• Private equity leading the way in private markets (YF)

• Americans growing more worried about where economy is headed (Axios)

• JPMorgan CEO Jamie Dimon warns ‘geopolitics is getting worse’ (CNBC)

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Markets Rundown

Economic Update

The financial landscape in the U.S. is undergoing significant changes, with average monthly mortgage payments nearly doubling over the last few years, placing a heavy burden on households. Personal interest expenses have soared to an unprecedented $543 billion, and consumer defaults are escalating at the fastest rate since 2007.

If this trajectory continues, default levels could reach those of the 2008 financial crisis by early 2025. The primary catalyst behind these developments is the Federal Reserve's aggressive interest rate hikes over the past two years, which have increased costs for mortgages, corporate debt, credit cards, and auto loans.

Economists are currently debating whether the Fed will reduce rates to counteract growing economic weaknesses, but key questions remain about the magnitude of potential cuts and their ability to prevent a recession. The Fed's dual objectives of price stability and full employment are under strain, especially as unemployment rates climb rapidly.

Market expectations for a 1% rate cut by the end of the year have surged from 10% to 40%, yet historical patterns show the Fed has struggled to avert recessions during previous rate-cutting cycles. Despite these warning signs, the stock market remains optimistic, even as consumer confidence plummets to its lowest point since the 2008 crisis.

It's important to remember that changes in monetary policy often have delayed effects, taking 15 to 20 months to impact the economy. This suggests that today's high interest rates could continue to elevate consumer defaults well into 2025, and any rate cuts implemented now might not be felt until late 2025. In these uncertain times, staying informed and proactively adjusting your financial strategies is more crucial than ever.

Movers & Shakers

• (+) Smartsheet ($SMAR) +6% after the software-as-a-service company was taken private.

• (+) Thor Industries ($THO) +6% after the recreational vehicle company beat earnings.

• (–) Visa ($V) -5% after the DOJ announced they were suing Visa.

Private Dealmaking

• Blackstone and Vista Equity bought Smartsheet, a workplace collaboration software provider, for $8.4 billion

• M2P Fintech, an API infrastructure provider, raised $100 million 

• Torq, a security automation platform, raised $70 million

• Route 92 Medical, a neurovascular medical device maker, raised $50 million

• VELA, a wind-powered cargo ship developer, raised $44 million

• Dandelion Energy, a geothermal energy startup, raised $40 million

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

_{BOOK OF THE DAY}

Big Money Thinks Small

Investors are tempted daily by misleading or incomplete information. They may make a lucky bet, realize a sizable profit, and find themselves full of confidence.

Their next high-stakes gamble might backfire, not only hitting them in the balance sheet but also taking a mental and emotional toll.

Even veteran investors can be caught off guard: a news item may suddenly cause havoc for an industry they’ve invested in; crowd mentality among fellow investors may skew the market; a CEO may turn out to be unprepared to effectively guide a company. 

How can one stay focused in such a volatile profession? If you can’t trust your past successes to plan and predict, how can you avoid risky situations in the future?

Patience and methodical planning will pay far greater dividends than flashy investments.

Tillinghast teaches readers how to learn from their mistakes―and his own, giving investors the tools to ask the right questions in any situation and to think objectively and generatively about portfolio management.

“Tillinghast’s book is a cornucopia of investing wisdom.”

_{DAILY VISUAL}

GDP per Capita in Poland

IMF is forecasting that in a few years GDP per capita in Poland will be higher than in Spain and at the same level as Italy

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_{DAILY ACUMEN}

Value of Rest

In 1943, Thomas Edison’s famous invention, the phonograph, almost never came to be.

Edison, a relentless worker, often pushed himself to the brink of exhaustion.

One day, after working tirelessly for hours, he decided to take a short nap.

Upon waking, his mind was refreshed, and a breakthrough idea hit him.

That spark of genius led to the creation of the phonograph.

Edison’s story serves as a reminder that rest is not a waste of time but a crucial component of creativity and productivity.

Sometimes, the best ideas come when we step away, allowing our minds the space to recharge.

_{ENLIGHTENMENT}

Short Squeez Picks

• 4 ways to take on toxic colleagues and win

• Wegman’s prepared foods, ranked 

• 3 signs of relationship self-sabotage

• The super productivity app review

• 9 body language tricks to be more confident in public speaking

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Memes of the Day