Good Morning! The economy delivered a surprising pace of 3.1% growth last quarter, M&A finally clawed its way past $3 trillion in 2024, and bankers are crossing their fingers for an even bigger haul next year.

Diageo is parting ways with its Ciroc vodka brand after a turbulent partnership with Diddy, the FAA grounded drones over New Jersey, and Intel is reportedly shopping its Altera chip arm to private equity firms.

Plus, how to calm your mind at work, Blackstone dropped its 2024 holiday video, and Luigi Mangione was hit with a new federal murder charge, potentially facing the death penalty.

Investors are no longer conducting due diligence manually—they are automating DD with Hebbia. Test it out today.

_{SQUEEZ OF THE DAY}

IPOs Eye Big 2025

Wall Street is gearing up for what could be its strongest IPO market since 2021. Bankers are finally preparing for billion-dollar deals, and the long tech IPO drought appears to be coming to an end.

High-profile companies like CoreWeave, Medline Industries, and Genesys Cloud Services are at the forefront, potentially raising more than $43 billion collectively—well above this year’s totals.

Private equity firms are also sitting on a record $3 trillion in dry powder, positioning them as key players in driving IPO activity.

But one wildcard looms: Donald Trump’s economic policies. While Wall Street is optimistic about Trump’s deregulatory stance and potential rate cuts, proposed tariffs are sparking concerns.

JPMorgan notes that tariffs are inherently inflationary, and a resurgence in inflation could force the Federal Reserve to rethink its rate-cutting plans. Such a shift could inject volatility into markets and dampen IPO enthusiasm.

Down rounds—IPOs priced below their last funding rounds—are also becoming increasingly common. They are not impacting how IPOs are trading, so sponsors and management teams are realizing it’s more important to get the process started.

Tech IPOs, which have been notably absent since 2021, are also expected to make a comeback. Companies like Klarna and Chime Financial are reportedly gearing up for public debuts, alongside fintech and crypto-related firms like Circle Internet Financial and eToro, driven by renewed regulatory optimism.

Takeaway: Bankers are cautiously optimistic heading into 2025, citing rate cuts, deregulation, and a stable macroeconomic environment as catalysts for a robust IPO market. However, inflation, market volatility, and lingering economic uncertainties could still derail Wall Street’s hopes for a blockbuster year. In any case, here’s to hoping 2025 delivers more wins than nicely formatted pitchbooks.

_{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.

_HEADLINES

Top Reads

• M&A ekes past $3T as AI and antitrust regime fuel 2025 hopes (Axios)

• FedEx jumps on plan to spin off its freight trucking business (YF)

• Elon Musk points finger after Trump-backed funding bill fails in House, partial shutdown nears (Fox)

• U.S. economy grows at 3.1% pace in third quarter (YF)

• What the top 75 college sports programs are worth (CNBC)

• Diageo is said to weigh Ciroc vodka sale after Diddy tie-up ends (BB)

• Apple reportedly won’t launch an iPhone subscription service (Verge)

• Intel shortlists buyout firm suits for programmable chip arm Altera (BB)

• FAA bans drone flights over NJ (NPR)

• Amazon workers across the country walk off the job days before Xmas (Fox)

• Federal murder charge against Mangione could mean death penalty in CEO killing (NPR)

• JPMorgan sees a chance for Treasury market calm in 2025 (YF)

• Jerome Powell just showed Donald Trump who’s boss (CNN)

• Burger chain named as America’s most expensive fast-food restaurant (Fox)

• How Vuori reached a $5.5 billion valuation by taking share from Lululemon (CNBC)

_{CAPITAL PULSE}

Markets Rundown

Stocks Close Little Changed Following Fed Sell-Off

After an initial rally, U.S. equities finished flat on Thursday as markets digested yesterday's Fed-induced sell-off. Utilities and financials led gains in the S&P 500, while real estate stocks lagged due to rising bond yields.

Third-quarter GDP growth was revised up to 3.1% annualized, reflecting the ongoing strength of the U.S. economy. Meanwhile, initial jobless claims dropped to 220,000, well below expectations, indicating continued labor market resilience. Global markets also softened, with both Asia and Europe ending lower.

Fed Signals Higher Rates for Longer

The Fed's quarter-point rate cut brought the target range to 4.25%–4.5%, but updated projections implied a slower pace of easing in the future. The median projection for the fed funds rate at the end of 2025 rose to 3.9%, suggesting just two additional rate cuts next year.

Looking further ahead, rates are projected to reach 3.1% by 2027, up from previous estimates, reflecting the Fed’s view that restrictive policy may persist. These updates triggered a sharp sell-off Wednesday, with the S&P 500 and Russell 2000 small-cap index falling 3% and 4%, respectively.

Economic Growth Remains Robust

The U.S. economy continues to grow at a healthy pace, as GDP growth hit 3.1% annualized in the third quarter. Consumer spending, which drives 70% of GDP, rose by a strong 3.7%, while business investment climbed 4%, signaling resilience despite higher borrowing costs.

The Fed upgraded its 2024 GDP forecast to 2.5% from 2%, reflecting optimism about ongoing expansion. Additionally, small business sentiment improved, with the NFIB Optimism Index reaching its highest level since 2021.

Labor Market Supports Growth

The labor market remains a cornerstone of U.S. economic strength, with unemployment at 4.2%, well below historical norms. Nonfarm payrolls in November pushed the 2024 monthly average to 190,000, above the 10-year average of 160,000, though slightly below 2023 levels. This consistent job creation has supported robust consumer spending, bolstering the broader economy.

Earnings Growth and Global Central Banks in Focus

Corporate profits are rebounding, with S&P 500 earnings per share projected to grow 9% in 2024, the strongest since 2021. Analysts expect even stronger gains in 2025, forecasting nearly 15% earnings growth.

Elsewhere, central banks remain in focus as the Bank of England held its rate at 4.75%, citing lackluster growth and slow inflation moderation. Meanwhile, the Bank of Japan kept its rate at 0.25%, with plans to raise rates as Japan battles decades of deflationary pressures.

Movers & Shakers

• (+) Darden Restaurants ($DRI) +15% after the Olive Garden parent announced a sales beat.

• (+) Palantir ($PLTR) +4% after announcing a $619 million Army contract.

• (–) Micron Technology ($MU) -16% after the company offered disappointing guidance.

Private Dealmaking

• SoftwareOne bought Crayon Group for $1.4 billion 

• Aiwyn, a software for accounting firms provider, raised $113 million 

• SiteOne Therapeutics, a pain treatment developer, raised $100 million

• BVNK, a stablecoin payments startup, raised $50 million

• Nanoramic, a battery minerals startup, raised $44 million

• Flare, a threat exposure management startup, raised $30 million

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

_{NEIGHBORHOOD WATCH}

Real Estate Digest

Mortgage rates inched up slightly this week, continuing to fluctuate within the 6%-7% range. November saw one of the largest annual gains in home sales in years, as buyers begin to accept higher rates as a long-term reality. This shift has gradually encouraged more homebuyers to move forward, driving an increase in purchase activity.

Latest News

• What Is the Future of the SALT Cap Deduction for Homeowners

• November Home Sales Post the Biggest Annual Gain Since 2021

• NYC’s Top Office Spark a Wall Street Frenzy as Others Sit Empty

• The Commercial-Property Market is Coming Back to Life

• The Best US Cities for Renters

New Listings

• 130 William St Apt: PH60B New York, NY: 3 Bed / 3.5 Bath - $6,995,000

• 860 Park Avenue Apt: 3-FLR New York, NY: 5 Bed / 4.5 Bath - $3,997,500

• 444 N Lucerne Blvd. Los Angeles CA:  6 Bed / 6.5 Bath - $3,495,000

• 1100 Alta Loma Rd APT 804 West Hollywood, CA: 2 Bed / 3 Bath - $2,400,000

• 99 Hudson St, Jersey City, NJ 07302: 1 Bed / 1 Bath -$925,000 

Fill out this form if you're looking to buy, sell, rent or invest.

_{BOOK OF THE DAY}

The Art of Uncertainty

How dangerous is our diet? How much of sports falls into the realm of luck? When authorities categorize a given event as “highly likely”―how likely is that, really? Whether we’re trying to decide if the benefits of a new medication are worth the chance of side effects or if artificial intelligence truly threatens humanity, our lives are riddled with uncertainties both everyday and existential―yet it can be difficult to know how to properly weigh all those unknowns.

Luckily for us, renowned statistician David Spiegelhalter has spent his career dissecting data to resolve the apparently random and decode the many decisions we face with imperfect information. In The Art of Uncertainty, he shows how we can become better at dealing with what we don’t know to make smarter choices in a world so full of puzzling variables

In lucid, lively prose, Spiegelhalter guides us through the principles of probability, illustrating how they can help us think more analytically about everything from medical advice to sports to climate change forecasts.

He demonstrates how taking a mathematical approach to phenomena we might otherwise attribute to fate or luck can help us sort hidden patterns from mere coincidences, better evaluate cause and effect, and predict what’s likely to happen in the future.

Along the way, we learn how a misinterpretation of a probability contributed to the infamous Bay of Pigs fiasco, why a ship twice the size of the Titanic sank without a trace, and why we can be so confident that no two properly shuffled decks of cards have ever been in the same order.

“From our "greatest living statistical communicator" comes an invaluable, data-driven guide for understanding―and learning to embrace―risk and uncertainty in our daily lives.”

_{DAILY VISUAL}

Young Americans Richer Than Ever

_{PRESENTED BY GELT}

The #1 Tax Mistake High Earners Make Each Year

As a business owner or high earner, starting the new year with a one-size-fits-all CPA could cost you thousands in unnecessary taxes.

Gelt’s specialized tax experts help you lower your liability and keep more of what you earn by creating tailored strategies that work for you—not the IRS.

Schedule a free tax call today to learn how to:

• Maximize deductions and build smart retirement plans

• Plan proactively for 2025 with customized tax strategies

• Access exclusive resources like Gelt’s Tax Library and actionable guides

Start 2025 off right by securing a tax plan that pays for itself.

_{DAILY ACUMEN}

Anxiety and Intimacy

Anxiety often disrupts intimacy, creating barriers in relationships through self-surveillance, performance anxiety, and avoidance. When anxiety infiltrates our relationships, it can lead to detachment and overthinking, robbing moments of trust and vulnerability that form the foundation of intimacy.

Self-surveillance traps us in hyperawareness, causing us to focus on our behavior rather than embracing the present. Performance anxiety interrupts physical and emotional closeness, making us fixate on outcomes instead of enjoying shared moments. Avoidance, born of fear, prevents us from addressing challenges and embracing growth in relationships.

Combating these effects requires mindfulness, self-trust, and vulnerability. By practicing presence and embracing the discomfort of imperfection, we can nurture stronger, more authentic connections with our partners. True intimacy lies in the ability to let go of fear, engage fully, and allow relationships to deepen through shared openness.

_{ENLIGHTENMENT}

Short Squeez Picks

• How to calm your mind at work

• The simple formula for success

• Your guide to inner peace and success

• The best books of 2024

• Lonely individuals think and talk in an unusual way

_{MEME-A-PALOOZA}

Memes of the Day