Wall Street tribes hunt for election victory

Election aftermath to start: The outcome of the 2024 US elections will have sweeping consequences for the business world. Here’s an overview of which sectors and companies have the most to win or lose depending on who emerges victorious.

In today’s newsletter:

Presidential election reaches ‘peak uncertainty’

Presidential elections can be volatile moments for financial markets and the legions of traders, advisers, investors and executives that help shape them. The race between Kamala Harris and Donald Trump, considered a coin flip, will have enormous ramifications across business and finance.

As both headed to Pennsylvania on Monday to make their final speeches in one of the most competitive states, DD hit the phones.

We called top Wall Street executives to get a sense of how they were thinking about the contest and preparing on the eve of the election. Plus, we wanted to know how they were advising clients.

“Whether it’s law or business or finance, uncertainties are always tough to deal with,” said one corporate lawyer on Monday. For the private equity groups he deals with, either outcome will be better than the current state of not knowing.

Since Harris launched her campaign in July, financiers have lined up behind both candidates. Some have done so quietly, by privately donating millions of dollars to political action committees. Others have been far more vocal.

At the opulent Future Investment Initiative conference in Riyadh last week, Blackstone’s Stephen Schwarzman, who supports the former president, spoke about what a Trump White House reincarnation might look like.

“I think when [Trump] started in 2016, this was completely new territory,” he said. “I think he has a much better base of knowledge of how that job works and how to be efficient and effective at doing it” than his last time in office.

Other Trump backers include hedge fund manager Bill Ackman, banker Howard Lutnick, tech mogul Elon Musk and investor John Paulson.

Harris has cultivated her own cohort of influential financiers. Leading Democratic donors and allies include Blackstone president Jon Gray, Centerview’s Blair Effron, Lazard’s Ray McGuire and José E Feliciano of Clearlake Capital.

While it obviously matters who wins the presidency, it’s also important how much they win by, and whether their party also secures the House of Representatives and/or the Senate.

A top Wall Street adviser said regardless of the outcome, there’s a strong belief that executives across all industries are ready to return to the dealmaking table.

“The mood is risk-on,” the senior adviser said. “Everybody wants this election to be over and get back to executing their business plans.”

This sentiment was shared by a number of other rainmakers who spoke to DD. The general view is Trump and Harris will be more pragmatic than ideological once in power — and both will be more business friendly.

While there’s a lot of “ambient anxiety” in New York, “business it seems, just ploughs on regardless through the middle of it,” said one finance executive.

One thing they all do seem to agree on: the days may be numbered for Federal Trade Commission chair Lina Khan and Jonathan Kanter, head of the Department of Justice’s antitrust division.

Over the past few years, the pair has sued to block megadeals over anti-competitive concerns. That has rankled dealmakers.

But one of the candidates, at least, is a known quantity in downtown Manhattan. “A number of people have dealt with Trump over the years on Wall Street,” said the hedge fund manager. He was blunt: “He’s not an easy guy to deal with.”

Consensus is that the election will take days or even weeks to produce a result, but DD will be watching the 10-year Treasury and will give a quick initial read on how the vote is breaking.

When GPUs are the collateral

Wall Street has structured a new way to get in on Silicon Valley’s record artificial intelligence spending spree.

Blackstone, Pimco, Carlyle and BlackRock are among those that have created a lucrative new debt market over the past year by lending more than $11bn to a niche group of companies based on their possession of the world’s hottest commodity: Nvidia’s AI chips.

CoreWeave, Crusoe and Lambda Labs have acquired tens of thousands of Nvidia’s high-performance computer chips, known as GPUs, that are crucial for developing generative AI models.

Those Nvidia chips are now also being used as collateral for huge loans.

Take New Jersey-based CoreWeave. It had revenues of $25mn last year and negative ebitda of $8mn, said people close to the company. But in the past year, it has secured more than $10bn of loans from institutional lenders, secured against chips it started buying in 2017 to mine cryptocurrency.

CoreWeave’s success is among the frenzied dealmaking that has shone a light on a rampant GPU economy in Silicon Valley that is increasingly being supported by deep-pocketed financiers in New York.

However, its rapid growth has raised concerns about the potential for more risky lending, circular financing and Nvidia’s chokehold on the AI market, reports DD’s Tabby Kinder.

“The lenders all coming in push the story that you can borrow against these chips and add to the frenzy that you need to get in now,” said Nate Koppikar, a short seller at hedge fund Orso Partners. “But chips are a depreciating, not appreciating, asset.”

Job moves

• Schneider Electric chief executive Peter Herweck is stepping down after less than two years in the role following disagreements about how to implement company strategy. Longtime company executive Olivier Blum will replace him.

• KKR has hired Georgia Rankin as an executive adviser, where she’ll work closely with the group’s European private equity team. She previously worked at Russell Reynolds.

• Skadden has hired Deborah Kirk as a partner and head of the firm’s intellectual property and technology transactions practice in London. She joins from Latham & Watkins.

• Latham & Watkins has hired Danielle Brown as a partner for the banking practice team in London. She previously worked for Cahill Gordon & Reindel.

• Freshfields has hired Paul Stewart, Mark Davis and Nick Fortune as partners for the firm’s global transactions group in London. All three previously worked at Weil Gotshal & Manges.

Smart reads

Money machine Ken Griffin’s market maker Citadel Securities has pushed frontiers in markets once dominated by banks, the FT writes. But it’s not yet regulated like one.

Royal property The property empire that funds King Charles and Prince William has remained a closely guarded secret for centuries. The Sunday Times tracked down their details in a new sweeping investigation.

Pro-democracy Many tech billionaires have strayed into politics, the FT writes. Former Microsoft chief executive Steve Ballmer has too, by throwing his weight behind a not-for-profit civic initiative to help improve democracy.

News round-up

Franklin Templeton hit by further outflows in wake of Western probe (FT)

Anglo American to offload Australian coal mining stake for $1.1bn (FT)

EssilorLuxottica bets on glasses replacing smartphones as value hits €100bn (FT)

US clean energy industry’s future hangs in balance on election day (FT)

Sabadell trades blows with Cerberus in €365mn lawsuit (FT)

Wall Street frets over Big Tech’s $200bn Ai spending spree (FT)

Meta’s plan for nuclear-powered AI data centre thwarted by rare bees (FT)

AI’s power needs give oil majors incentive to invest in renewables, says Adnoc boss (FT)

B. Riley chair is ‘personally sick’ as FRG goes bankrupt (Bloomberg)