Good Morning! Trump announced that Elon and Vivek will lead a new Department of Government Efficiency (DOGE). Citi’s CEO is declaring “game on” for M&A in the U.S. post-election, and Blackstone’s CEO is cashing in on his Trump wager. Speaking of bets, hedge funds that shorted Tesla have lost $5 billion following the election. And Bitcoin enthusiasts are betting its price will hit $100,000 by year-end. Chipotle got hit with a lawsuit after its stock got hammered over skimping on portion controls.

Plus, a Citi outsider wants to return the bank to its glory days, why $3,500/month can still be considered affordable housing in NYC, and red flags to keep in mind when looking for new jobs.

Invest in the music you love—start building your royalty portfolio today.

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_{SQUEEZ OF THE DAY}

It’s Extra Guac Szn

It’s been a rough few years for bankers, with year-end bonuses shrinking for two consecutive years. But Wall Street might finally be gearing up for a big payday in 2025. Fresh bonus projections released yesterday by Johnson Associates suggest payouts could rise by as much as 35%.

Why the change? The S&P 500 hitting record highs, a booming private credit and equity market, and a surge in debt issuance—corporations issued over $1.4 trillion in investment-grade U.S. bonds during the first nine months of 2024. And Goldman Sachs says this could be the second-busiest year on record for bond issuance.

Investment bankers in debt underwriting stand to benefit the most, with bonuses expected to jump 25-35%, while equity underwriters might see 15-25% increases. (see table below). Global investment banking fees rose nearly 20% year-over-year, reaching almost $40 billion in the first 10 months of 2024.

But it’s not good news for everyone, though. Retail and commercial bankers can expect smaller bonus checks, thanks to weaker loan demand and tighter lending standards. 

Takeaway: NYC economy could be set for a boom too. When Wall Street bonuses are up, the rest of New York’s economy generally does well - bankers pump cash into everything from nicer apartments to high-end dining. But while most are bullish on a Trump presidency, tax cuts, tariff hikes, and potentially more relaxed regulations still come with some uncertainty. One thing's for sure: it's officially extra guac season.

_{PRESENTED BY JKBX}

Why Smart Investors Are Turning to Music Royalties

Forget beachfront real estate or private equity—the next diversifier in investing is the songs you stream every day:

• Unlocked access: Until now, music royalties were largely reserved for institutions

• Ongoing revenue: Top songs generate steady royalties from streaming

• Uncorrelated returns: While markets fluctuate people keep pressing play

JKBX (pronounced “Jukebox”) lets you own shares in chart-topping songs from Taylor Swift, Adele, and others.

If building a portfolio with music sounds like your kind of investment, hit the button below.*

_HEADLINES

Top Reads

• Trump taps Musk to lead a 'Department of Government Efficiency' with Ramaswamy (NPR)

• Citigroup CEO says it’s `game on' for M&A in the U.S. post election (SA)

• Hedge funds shorting Tesla lost more than $5B after Trump win (NYP)

• Blackstone CEO's Trump bet pays off (YF) 

• Bitcoin to top $100,000 before year-end, according to bettors on Kalshi (CNBC)

• The outsider trying to restore Citi to investment banking glory (WSJ)

• Why ‘affordable housing’ in New York City can still cost $3,500 a month (NYP)

• Chipotle shareholders sue after stock hammered from skimping on portion sizes (NYP)

• Apple may not need 'next big thing' (NYP)

• Apollo invests in fintech to boost service for private markets (YF)

• Activist investor Elliott Management has $5 billion Honeywell stake (CNBC)

• Carlyle, Warburg among investment firms hunting deals in Japan (Reuters)

• Activist investor ValueAct has $1 billion stake in Meta (CNBC) 

• Hedge funds hit by ‘arbageddon’ sense brighter future after Trump win (WSJ)

• Salesforce hiring 1,000 AI sellers (YF)

• JPMorgan braces for ‘impactful’ first two years of Trump (YF)

_{CAPITAL PULSE}

Markets Rundown

Stocks Finish Lower: U.S. equity markets dipped on Tuesday, ending a five-day streak of gains for the S&P 500. Technology and communication services sectors outperformed, while most other sectors declined, and small-cap stocks lagged with the Russell 2000 down over 1.5%, indicating a cautious market tone.

Bond yields rose notably, with the 10-year U.S. Treasury yield up to 4.43% and the 2-year yield at 4.34%. In economic news, the NFIB Small Business Index rose to 93.7 in October, still below its 30-year average of over 97. Commodity markets saw minimal change, with oil around $68 per barrel and gold slipping 0.4%.

Inflation Data in Focus: Inflation will be a primary focus this week, with the October CPI data due today and PPI on Thursday. Expectations are for headline CPI to show a 2.6% annual increase, and PPI to rise by 2.3%. Markets currently see a 65% chance of a 0.25% Fed rate cut in December, but a higher-than-expected CPI reading could lead the Fed to pause.

Rising Bond Yields: Bond yields resumed their climb, with the 10-year Treasury yield up over 0.4% from last week. Since the Fed’s September rate cut, the 10-year yield has risen by about 0.7%, causing U.S. investment-grade bonds to drop nearly 3%.

Factors behind the yield rise include robust U.S. economic growth and heightened inflation expectations, pushing market predictions for the Fed’s 2025 target rate up to around 3.9%. With limited upward pressure expected on yields, investors should consider shifting from cash and short-term bonds to intermediate and long-term bonds.

Movers & Shakers

• (+) Shopify ($SHOP) +21% after a revenue beat; positive holiday outlook.

• (+) Tyson Foods ($TSN) +7% because its chicken business is becoming more profitable.

• (–) Novavax ($NVAX) -6% after the vaccine maker cut its outlook.

Private Dealmaking

• Cardinal Health bought a majority stake in GI Alliance from Apollo for $2.8 billion

• Aristocrat Leisure sold its mobile gaming unit to Plarium Globalto Modern Times for $820 million

• Ari Emanuel bought OpenBet and IMG Arena from Endeavor for $450 million

• Ualá, an Argentinian challenger bank, raised $300 million

• Neo Financial, a Canadian challenger bank, raised $258 million

• Upwind, a cloud security threats startup, raised $100 million

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

_{BOOK OF THE DAY}

That’s on Me

One indication of a good leader is the willingness not only to admit mistakes but also to share those errors with others so that the cycle is not repeated.

To do this takes humility and courage.

In Mike McHargue’s That’s on Me, nearly forty seasoned C-suite veterans, who have made all kinds of mistakes in their roles as leaders, share with you their insights on keeping teams focused, connecting with staff, running effective meetings, managing performance, and developing people.

Their collective wisdom on the universal challenges of leadership can be applied to any leadership role and at any level.

“As an entrepreneur, I believe each failure brings us closer to our biggest goals.”

_{DAILY VISUAL}

50 All-Time Highs for the S&P 500 So Far This Year

On average, the stock market closes at an all-time high 18 times each year.

In 2024, the S&P 500 has closed at an all-time high 50 times:

_{PRESENTED BY CORPORATE FINANCE INSTITUTE}

“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}

Asymmetric Bets

Asymmetric bets are those rare opportunities where the potential upside far outweighs the possible downside—a concept that can redefine how we think about risk. Imagine risking $1 for the possibility of earning $100. If you lose, the cost is minimal, but if you win, the payoff is substantial. This is the essence of an asymmetric bet, where the rewards are heavily skewed in your favor.

A famous example comes from venture capital. Investors place many small bets on startups, knowing that most will fail. But it only takes one unicorn—a company like Uber or Airbnb—to create massive returns that more than compensate for the losses. The beauty of these bets lies in their asymmetry: even if 9 out of 10 investments fail, the 10th success can yield exponential profits.

Asymmetric bets aren't just for investors, though. Consider Elon Musk launching Tesla or SpaceX. The downside was steep: he could lose his entire fortune. But the upside? Revolutionizing industries, advancing space exploration, and creating monumental value. The payoff was worth the risk, especially when you believe in your mission deeply enough.

In everyday life, asymmetric bets might look like learning a new skill or starting a side project. The investment in time is relatively small, but the potential rewards—new career opportunities, a successful business, or personal growth—are immense. It’s about placing bets where failure costs little, but success could change everything. The power of asymmetric thinking is not in avoiding risk, but in embracing the kind where, if you win, you win big.

_{ENLIGHTENMENT}

Short Squeez Picks

• Why the best negotiators are willing to compromise

• 6 things you think you need but minimalists don’t have

• How to reduce clutter in your home

• Red flags to watch out for when looking for a new job

• 3 books for business leaders and aspiring entrepreneurs 

_{MEME-A-PALOOZA}

Memes of the Day