Analyzing private equity, private credit & institutional capital. Join the weekly email list!
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The median age of first time home buyers is 38. It was 33 in 2021.
The housing market is broken. A correction would be beneficial.
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The median age of first time homebuyers is 38. It was 33 in 2021.
Housing market is broken.
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There's nothing like flying w/ someone who has an Amex Platinum.
Instead of sitting at the gate's crowded waiting area, you sit at the "elite" crowded waiting area, which is as far away from the gate as possible.
All so your buddy can think he's rich.
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This is a great example of why countries like US and EU dislike trading with China.
China pumps subsidies into select industries like EVs and solar, massively over-produces, and then dumps the excess product into global markets at the expense of every else’s domestic industries
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Seems like the big industries going forward will be sales / relationships and real world stuff (engineering, infrastructure, trades, etc.)
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It takes so much to make it up to MD, that the primary motivation can't be money.
MD's love the grind. Their life is literally deal-making (at the expense of everything else including family and friends). Most don't want to retire.
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I don't have sympathy for anyone who thinks it's a good idea to go 10x leverage on fartcoin
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One of the most mentally draining parts of the job is never knowing what time you’ll get to go home or if you’ll have the weekend free
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Seems like an acceleration of existing trends.
Investment banking (and finance in general) is already commoditized in the execution aspect, the difference is mostly the ability to build relationships and source
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Because endless deficit spending ultimately leads to money printing to repay the mountain of debt we can’t afford.
That’s why investors are also rotating to gold and bitcoin
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This is the same story as the railroad and fiber optic capex mega-cycles
Build to overcapacity, then most market participants get wiped out and a few survive
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The whole economy is transitioning to serve data centers and big tech.
In 2Q, data center capex had the same GDP contribution as consumption (although mostly due to struggling consumers)
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There is a reason you get paid 2x the average in finance and big law.
It's not because you're smarter. It's because you are expected to be on call 24/7, including weekends, holidays and vacations.
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Very few acknowledge how progressive US tax policy is. The bottom half of earners essentially don’t pay taxes. The top 10% pay 70% of income taxes.
Breakout by earners:
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"My hobbies are golf and travel. I'm running the NY marathon this year. My greatest weakness is I sometimes push myself too hard because I am just such a hard worker."
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Every financier and lawyer tells their children to do something more meaningful.
Every child ignores it. And the cycle repeats.
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Credit secondaries are popping up now that private credit can’t get refi’d due to the PE exit slowdown… the madness is spreading
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The top 50% of all tax payers pay 98% of all income tax (and top 1% pay 46%) - they will logically benefit more than groups buckets who don’t pay income taxes
Doesn’t mean it is unfair or bad
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Does it really count as investment banking if you’re not up all night working on a model that nobody cares about?
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Wait until people realize the huge gap in cash revenues needed to fund all the data centers being built
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You get to stop at the overcrowded centurion lounges, and feel forced to use your $50 credit at Sachs you don’t really want
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That’s the trade-off for the risk free path to wealth. You’re essentially monetizing your time and freedom, in exchange for double the income of other stable jobs.
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You can’t cut rates when the market is at all time highs and core inflation is over 3.0%
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If inflation starts to uptick to any material degree, the Fed may actually have to hike.
That would absolutely shatter the market.
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Everyone can feel that consumers are barely hanging on.
Once the AI euphoria starts to stall, it's going to be a rough time for the economy and market.
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Textbook execution.
Got the whole US hooked with good pricing / aggressive growth (negative FCF), then pivoted to sustainable pricing and market behavior (positive FCF)
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How will college students flex on their peers if they can’t post their “Incoming Investment Banking Summer Analyst” stint?
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Then your wife stops working and you’re eying that beach house… and suddenly it’s 25 years later
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Airport lounges are like TSA Precheck.
Not the same once gen pop starts getting in on it.
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The US tax system is much more progressive than Europe. US low earners pay essentially no taxes, whereas they'd have to pay much more in the EU
US taxes by income level:
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Proceeds to message all his facebook friends to schedule a call about their financial wellbeing
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When I started in banking, I assumed you are paid so much because it is prestigious and hard to break in
I quickly found out you are paid so much to be on call 24/7, including weekends, vacations and holidays
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It’s getting investigated for fraud allegations, and the Medicare market is going through some serious headwinds.
Tough duo.
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That's the general investment banking / PE mindset.
The preferred method is typically the most time consuming, overengineered solution. You can tell everyone how many hours you worked on it, so it must be right.
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Major red flag if the dominant industry player is unable to fund its data center builds. Imagine the state of everyone else
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Stunning how Hebbia is paying every FinTwit influencer for ads like this...
Most likely that IB workers will be expected to grind on more workflows simultaneously (with less overall headcount), rather than reducing workloads for same pay.
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Due to inflation, it costs $30-50 per person at these places.
That's a big problem when the business model based on affordability.
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Pretty crazy how down distributions are.
The math for PE doesn't work with higher rates + inflation squeezing margins.
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I wouldn’t say inventory has exploded, it’s still below pre-COVID levels. More like normalizing
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The economy is increasingly divided between tech / AI and everything else.
Consumer spend is falling, but AI capex over the next several years will power a lot of growth.
The stock market is basically just MAG7 at this point.
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Now we just need to start seeing actual price corrections so new families can actually afford homes
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All the sleepless nights and tears of Moelis analysts seeps through the pages as you digest the CIM in all its glory
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Have read that many investors expect Milei-influenced policy to spread to other South American countries like Brazil
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MD: Of course you can go to your [birthday/wedding/funeral/weekend trip], we care about culture here, just have your laptop on you in case something comes up
> Proceed to work the entire trip from the hotel
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The current AI build out will end up just like railroads and fiber optic
Everyone builds until overcapacity hits, most firms get wiped out, and the few survivors take over the industry
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The problem is the out-of-control deficit spending since the early 2000s, which has only gotten worse
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Unless you are the .0001% who get very lucky, you need to create substantial value to become wealthy
There are plenty of ways to do it (climb corporate ranks, start a business, create stuff), but they all take lots of time and effort
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Good for him. Almost all the MDs I've worked with are too deep in the lifestyle to leave.
You can tell that dealmaking is their entire identity, ahead of family, friends, etc., so they'd lack purpose and direction if not grinding all the time.
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Investment banking analysts are about to become the headcount synergies they've always modeled, thanks to AI
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Gold is flying up because of the US continues to debase its currency with no end in sight
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The government is prioritizing protecting the market over everything else. More money printing is on the horizon.
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We’re quite clearly in a recession in most of the economy.
The only thing propping up the economy and stocks is AI / Big Tech euphoria, which could evaporate any day.
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Real residential electricity prices are still going up, but not as dramatically as above.
They are back to 2015 levels.
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It's much more fun to tell people you work in investment banking, than actually working in investment banking.
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Investors are starting to realize the endless of cycle of deficits and borrowing doesn’t work.
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The Fed has essentially abandoned the 2.0% inflation target.
We are moving into a inflation-is-fine environment, as long as the market stays propped up.
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Private equity's magic formula is cracking under a volatile economy and higher rates. Distributions are lagging and fundraising has never been harder
🔗Full writeup below
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The biggest risk to AI is generating the revenue needed to fund all these data centers
It’s easy to borrow and build. But it has to be repaid eventually
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The US consumer market is double the size of the next largest (China).
Better to accept a small tariff than lose your largest importer.
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We have to reform Social Security + Medicaid in the next decade.
It's the only way to stop the insane deficit spending and borrowing that have gotten out of hand.
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If you don’t like banking, you’re probably going to hate PE
Similar amount of hours / work, but you have to know and defend every underlying assumption. Plus you have tons of PortCo grunt work
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At this point, the economy is just AI capex, which hides the consumer recession we’ve been in for months.
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Need the same approach with TSA pre-check. Barely any different than the normal line these days
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It used to be an investment, which is why boomers are rich.
But now it’s too expensive and nobody young can afford a house.
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"I love the important work and fast-paced environment"
*Cancels dinner with parents to work on pitchbook until 3AM
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The median age of first time homebuyers is pushing 40. It was 33 a few years ago.
The housing market is broken.
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Lots of retail investors haven't lived through a real market correction like '08
They've only seen that dips instantly reverse
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The economy hasn't crashed because the top 10% account for 50% of all spending.
The stock market hasn't crashed because the top 10% own 90% of all stocks.
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AI is also causing a lot of disillusionment for young adults
Gen Z and Millenials were raised that college education is the path to a stable future, but AI is a once in a lifetime transformation of the employment landscape going forward
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AI industry needs $2 trillion in revenue to pay for all the data centers being built. That’s about 5x the size of the global SaaS market today
Good luck with that
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Crazy memory needs + energy consumption are the two massive bottlenecks everyone is overlooking / ignoring
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