Good morning! CVS is considering splitting up just seven years after its acquisition of Aetna. Nike is pulling its guidance and delaying its investor day as it prepares for its CEO transition. Tom Brady is selling off his luxury watch collection, including his $250k Audemars Piguet "Roast" watch. Americans are quitting their jobs at the lowest rate in four years and oil prices surged amid Middle East tensions. Plus Mark Cuban says his dog is a better problem-solver than AI and why private equity is in such a funk.

Ready to earn higher returns in a low-rate world? Start investing with Percent today.

_{SQUEEZ OF THE DAY}

The New Kings of Wall Street

For decades, the pinnacle of Wall Street success was synonymous with working at an investment bank like Goldman Sachs or Morgan Stanley. These institutions ruled the financial landscape, and had a massive influence over trading.

But in recent years, a new breed of trading firms—Jane Street, Citadel Securities, and Susquehanna International Group—has quietly dethroned the old guard. These tech-savvy trading firms have used high-frequency trading and algorithms to outpace traditional banks, revolutionizing the financial landscape.

Today, Citadel Securities alone handles $455 billion in daily trades, nearly a quarter of all U.S. stock trading. Meanwhile, Jane Street's 2024 trading revenues hit $8.4 billion, up 80% from the previous year. In contrast, Goldman just saw an 11% increase.

The pay at these firms is equally impressive—Jane Street employees averaged $900,000 in 2023, triple Goldman’s payout.

This seismic shift began over a decade ago, but the 2010 Dodd-Frank legislation truly accelerated it. The law restricted banks from making risky trades, leaving room for non-bank traders to dominate the market with faster, tech-driven trades.

Yet, their rise isn't without concern. Critics warn that these firms, with their massive market influence, pose new risks to financial stability, calling for greater regulation.

Nevertheless, these new kings of Wall Street aren’t slowing down. They’ve already expanded into more opaque markets like bonds, loans, and even foreign exchange, areas traditionally dominated by the big banks. And with their continued focus on tech and innovation, they seem poised to dominate the financial landscape for years to come.

Takeaway: The rise of firms like Citadel and Jane Street underscores the shift in power on Wall Street from old-school investment banks to lightning-fast, tech-driven trading firms. Speed, algorithms, and tech prowess now dominate the trading game, making these firms both indispensable and potentially risky players in the financial system. And with salaries like that, it’s clear the real money on Wall Street is being made in milliseconds, not boardrooms.

_{PRESENTED BY PERCENT}

Lower Rates, Higher Opportunity in Private Credit

With the Federal Reserve's recent decision to lower interest rates, finding high-yield investments could become more challenging. In this low-rate environment, HYSAs and fixed-income options like government bonds may no longer offer the returns you need. That’s where Percent comes in, providing accredited investors with access to high-return private credit opportunities.

On Percent’s platform, private credit deals typically offer significantly higher return potential due to their unique, privately negotiated terms.

Here’s why private credit on Percent could work for you:

• Attractive Yields: Average historical returns on Percent’s platform have exceeded 14%.

• Consistent Cash Flow: Many private credit deals provide monthly interest payments, delivering steady income.

• Short-Term Flexibility: Terms as short as 9 months allow for flexibility while earning attractive returns.

• Low Minimums: You can invest in your first deal for as little as $500, making it easy to get started.

In a world of declining rates, private credit on Percent shines as an opportunity for high yield and steady income. Plus, earn an additional bonus of up $500 when you make your first investment.

_HEADLINES

Top Reads

• Tom Brady putting his watch collection for auction (CNBC)

• Americans quit their jobs at the lowest rate since 2020 in August (YF)

• Nike withdraws guidance, postpones investor day as it gears up for CEO change (CNBC)

• Microsoft’s AI bet will lead to over $100B in data center leases (CNBC)

• Bitcoin tumbles back to the $60,000 level as tensions in the Middle East heighten (CNBC)

• JPMorgan's 'Jamie premium' to be tested as CEO succession looms (Reuters)

• Mark Cuban says his dog is a better problem-solver than AI (CNBC)

• The stock market isn’t all about AI anymore (YF)

• CVS reportedly considers a breakup (Axios)

• Charles Schwab CEO Walt Bettinger to retire at end of 2024 (CNBC)

• Why private equity is in such a funk (BB)

• Silicon Valley has a plan to save humanity - just flip on the nuclear reactors (CNN)

_{CAPITAL PULSE}

Markets Rundown

Market Commentary

Stocks kicked off October on a cautious note as major indexes slipped following a strong September. Investors are closely monitoring geopolitical tensions in the Middle East, particularly after Iran's missile attack on Israel, which caused a 3% spike in oil prices. Despite this, oil remains near two-year lows.

Energy stocks led gains, while technology shares underperformed. European markets also declined as inflation in the region fell below the European Central Bank’s 2% target, increasing speculation about potential rate cuts. Meanwhile, optimism persists in China after recent stimulus measures, though the market is closed for a holiday.

A historic port strike on the East and Gulf coasts of the U.S. involving 45,000 dockworkers has sparked concerns about potential disruptions to trade, though the impact may be mitigated by strategic inventory management. The Biden administration could impose an 80-day cooling-off period if negotiations remain unresolved. 

Finally, the third quarter wrapped up with strong gains, driven by defensive and cyclical sectors like real estate, financials, and industrials. As the focus shifts to the labor market, data on job openings and private payrolls will be released this week.

Movers & Shakers

• (+) New Fortress Energy ($NFE) +6% after the renewable energy stock priced a new public offering.

• (+) Lockheed Martin ($LMT) +4% because of geopolitical tensions in the Middle East.

• (–) HP Inc. ($HPE) -3% after a downgrade by Citi.

Private Dealmaking

• TPG and GIC bought Techem, an energy metering firm, for $7.2 billion

• Berkshire Hathaway will take full ownership of Berkshire Hathaway Energy for $3.1 billion

• PepsiCo bought Siete Food, a tortilla chip maker, for $1.2 billion

• Cerebras Systems, an AI chipmaker, filed for an IPO that could raise $600 million

• Kailera Therapeutics, an obesity management startup, raised $400 million

• Eon, a cloud infrastructure backup company, raised $127 million

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

_{BOOK OF THE DAY}

The Making of a Manager

Congratulations, you're a manager! After you pop the champagne, accept the shiny new title, and step into this thrilling next chapter of your career, the truth descends like a fog: you don't really know what you're doing.

That's exactly how Julie Zhuo felt when she became a rookie manager at the age of 25. She stared at a long list of logistics--from hiring to firing, from meeting to messaging, from planning to pitching--and faced a thousand questions and uncertainties.

How was she supposed to spin teamwork into value? How could she be a good steward of her reports' careers? What was the secret to leading with confidence in new and unexpected situations?

Now, having managed dozens of teams spanning tens to hundreds of people, Julie knows the most important lesson of all: great managers are made, not born. If you care enough to be reading this, then you care enough to be a great manager.

“The first big part of your job as a manager is to ensure that your team knows what success looks like and cares about achieving it.”

_{DAILY VISUAL}

US Economy is Not Slowing Down

_{PRESENTED BY CFI}

“You’re Hired”

Imagine this: Hired, promoted, invited to the VP’s private retreat…

Earning your FMVA® means mastering advanced financial modeling techniques and using the desk-ready skills you developed to advance your career in finance.

• Build M&A financial models from scratch

• Perfect for investment banking, corporate development, and private equity

• Over 200+ interactive exercises, and Blockchain certificate to verify your skills

Get certified with CFI today and transform your future.

_{DAILY ACUMEN}

Mere Exposure Effect

The Mere Exposure Effect is a psychological phenomenon where people tend to develop a preference for things merely because they are familiar with them.

This effect works even without conscious awareness, influencing our choices in various domains, from consumer preferences to social interactions.

Understanding this bias can help us recognize when our preferences might be shaped by familiarity rather than inherent quality.

It also highlights the power of repetition in marketing and personal branding.

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Short Squeez Picks

• Should you be nice at work?

• Whole Foods shopping tricks

• Tools you can use to improve your time management

• How anxiety shapes men’s and women’s leadership differently 

• 4 books for leaders to develop a mission-driven mindset

_{MEME-A-PALOOZA}

Memes of the Day