Good Morning and Happy Friday! According to the Fed's annual stress test, all 31 major banks could survive a severe recession - but JPMorgan Chase is disputing the results. Private debt is trouncing private equity so far this year, and investment banking dealmaking is starting to pick up. Meanwhile, hedge funds are starting to sell tech stocks aggressively, and the Nvidia spell might be broken. Plus where rents are rising and falling the fastest, and the best work sneakers under $150.

_{SQUEEZ OF THE DAY}

KKR Wants To Be Your Landlord

KKR has made some brand name investments over the years - buying GoDaddy, Dollar General, and investing in ByteDance. Their latest investment? Possibly becoming your landlord. 

KKR just made a big bet on the rental market with its largest apartment purchase ever, snapping up over 5,200 multi-family units across the country for $2.1 billion from Quarterra (development arm of home builder Lennar). This deal covers 18 new mid- and high-rise buildings, and they’re betting that rents are about to soar.

Right now the apartment market is struggling. Rent growth for new leases has flatlined for over a year during the multi-family sector’s biggest building boom in 40 years. 

Higher interest rates haven’t helped either, dragging down property values. Last year, apartment-building prices took a nosedive, dropping over 20% since their July 2022 peak. Sales of these buildings were also down 44% compared to last year. 

But private equity sees an opportunity here with rents already starting to tick up in the Midwest and Northeast, KKR is betting on a turnaround. 

And it’s not just KKR - in April Blackstone spent $10 billion on Apartment Income REIT, and Brookfield bought 7,000 apartments for $1.55 billion last month. Investors are banking on fewer new constructions, which could mean higher rents by 2026.

Takeaway: With fewer buildings selling, portfolio deals are looking sweeter, and KKR is capitalizing on the macroeconomic environment. Despite the struggles in the multi-family sector, private equity is optimistic about a rebound. With rate cuts around the corner, it’s easy to see why firms like KKR are bullish on the potential rise in rents and apartment values in the not too distant future.

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_HEADLINES

Top Reads

• Big banks survive Fed stress test (CNBC)

• JPMorgan Chase says its stress test losses should be higher than what the Fed disclosed (CNBC)

• Private debt is trouncing private equity so far this year (WSJ)

• Wall Street just got another sign that investment banking is picking up (YF)

• Hedge funds are selling tech stocks aggressively (YF)

• The Nvidia spell has been broken (CNN)

• Here's where U.S. rents are rising — and falling — the fastest (CNBC)

• Blackstone said to explore options for $5B consultancy Legence (SA)

• Micron’s selloff highlights risk of sky-high AI expectations (YF)

• Is this the Tesla robotaxi killer? Meet the 'Verne’ (YF)

• SpaceX insider share sale puts record $210B value on company (YF)

• Democrats sound the alarm after Biden’s debate performance (CNBC)

_{CAPITAL PULSE}

Markets Rundown

Stocks closed sightly higher as investors brace for Fed’s preferred inflation gauge.

Movers & Shakers

• (+) RH ($RH) +9% after the company’s CEO bought more shares.

• (–) Levi Strauss ($LEVI) -16% after the jeans maker’s sales disappoint despite denim craze.

• (–) Walgreens ($WBA) -22% after cutting EPS guidance, planning to close more stores.

Private Dealmaking

• Sila, a battery minerals company, raised $375 million

• ABM Industries acquired Quality Uptime Services, a power supply services provider, for $119 million

• Fetcherr, a pricing and publishing platform, raised $90 million

• Klarity, a document review startup, raised $70 million

• Prewave, a supply chain sustainability platform, raised $67 million

• SkyCell, a vaccine transportation containers developer, raised $59 million

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

_{BOOK OF THE DAY}

Superconvergence

In Superconvergence, leading futurist and OneShared.World founder Jamie Metzl explores how artificial intelligence, genome sequencing, gene editing, and other revolutionary technologies are transforming our lives, world, and future. These accelerating and increasingly interconnected technologies have the potential to improve our health, feed billions of people, supercharge our economies, store essential information for millions of years, and save our planet, but they can also―if we are not careful―do immeasurable harm.

The challenge we face is that while our ability to engineer the world around us is advancing exponentially, our processes for understanding the scope, scale, and implications of these changes, and for managing our godlike powers wisely, are only inching forward glacially.

Luckily, in Jamie Metzl, we have a leading expert who integrates science, technology, history, politics, and international affairs to envision a future that most specialists, almost by definition, cannot see. In this bold and inspiring exploration of transformative human knowledge, Metzl gives us the definitive account of the technological precipice on which we stand and the map to where we go from here.

“Erudite, optimistic, and timely.”

_{DAILY VISUAL}

Labor Shortages Are the New Normal

Available US workers relative to demand

_{PRESENTED BY KALSHI}

Richest Person in the World by Year End?

Elon Musk currently leads with a net worth of $213 billion, boosted by his xAI startup's recent $24 billion valuation. He has a 48% chance of retaining his position, primarily driven by Tesla and SpaceX's performance. 

Jeff Bezos follows with a 29% chance, supported by Amazon's e-commerce and cloud computing dominance. Bernard Arnault & family hold a 13% chance, backed by LVMH's strong market presence.

Earlier this year, Bernard Arnault briefly surpassed Musk and Bezos due to a surge in LVMH's stock prices.

Looking ahead, Musk's fortunes are tied to tech stock volatility and his ventures' performance. Bezos's wealth will be influenced by Amazon's strategies, while Arnault's position depends on the luxury market and LVMH's growth.

What's your take? Trade your thoughts on Kalshi now.

_{DAILY ACUMEN}

Authenticity 

In a world of filters and facades, your greatest superpower is being unapologetically you. Lady Gaga didn't become a global icon by fitting in, but by embracing her uniqueness.

Apple's "Think Different" campaign celebrated the misfits and rebels who push humanity forward.

Your quirks, your scars, your unique perspective - that's your edge. So stop trying to be a second-rate version of someone else, and be a first-rate version of yourself.

What makes you different makes you powerful. Today, let your true colors shine. Remember, there's no competition for being yourself. The world is waiting for the gift that only you can give.

_{ENLIGHTENMENT}

Short Squeez Picks

• How to cultivate a lucky mindset

• 5 of NYC’s best-kept travel secrets

• How to survive a toxic boss

• The best work sneakers under $150

• 10 of the best NYC restaurants of the year

_{MEME-A-PALOOZA}

Memes of the Day