Business

➚ BUY: Gifts. Tech companies are racing to create AI shopping bots. Perplexity’s new personalized agent is luring merchants with promises of better placement in the app.

➘ SELL: Grifts. The pranksters responsible for the viral Birds Aren’t Real conspiracy gag are behind a reboot of Enron, which went bankrupt 23 years ago this week following an accounting scandal. A new website says the company is relaunching with a plan to solve the energy crisis. (The second N stands for “nice.”)

S&P 500, Nasdaq hit new highs… Apple accused of spying on workers… Another Microsoft antitrust case… German Volkswagen workers on strike… Cargill cuts jobs as commodity prices sink… Black Friday, Cyber Monday set shopping records…

Wall Street’s blurred lines

THE NEWS

BlackRock’s $12 billion acquisition of HPS Investment Partners shows that what was once set up as an existential war between public and private lending is anything but.

BlackRock, best known for its ultra-cheap index funds, has been looking for a way into the fast-growing world of private credit, which are bespoke loans negotiated directly with corporate borrowers. HPS, which was founded in 2007 by three breakaway Goldman Sachs bankers, has $150 billion in such loans and will sit alongside BlackRock’s bond funds to “provide both public and private income solutions.”

LIZ’S VIEW

For most of its decade-long rise, private credit has been cast in opposition, and competition, to loans and bonds underwritten by banks.

That’s a satisfying but outdated lens. Borrowers want the cheapest money. Investors want the best returns. Banks want to stay just close enough to companies to solicit M&A deals while offloading risk.

As more money flows into private credit — there’s about $2 trillion now, which BlackRock sees going to $4.5 trillion by 2030 — the lines will start to blur. The same thing has happened in stocks over the past decade, with mutual funds dabbling in private rounds and buyout shops taking stakes in public companies. My guess is that in a few years, we won’t be talking about private or public credit anymore.

The winners will be firms like BlackRock and Apollo, who can come with a full menu of borrowing options. Corporate executives, too, will have more choices and competition for their business. The losers will likely be firms that believe in the bright line between public and private and are happy to stay on their side of it.

That’s why HPS, which had a hard time convincing investors on its go-it-alone IPO plans, is selling itself. It’s why even Pimco, the pure-play bond giant, has quietly added $160 billion of private credit to its $2 trillion in public debt holdings.

“There had been close to zero innovation in fixed income in 20 years,” John Zito, who oversees lending at Apollo, told me a few weeks ago. “The industry had been designed in a very narrow way: ‘Here’s a public allocation to corporate credit.’”

Apollo runs its $600 billion credit business “with no walls,” Zito said. “We come to clients with 16 or 17 different products in our bag.”

Apollo, JPMorgan, and others are building out trading desks to buy and sell private loans the way brokers buy and sell bonds. The assumption is that private loans will get easier to trade, especially as they get bigger and more standardized. Meanwhile, it’s getting harder to trade large slugs of corporate bonds without affecting their prices.

“You’re going to see a lot more acceptance and there’s not going to be ‘that was private’ or ‘this is public.’ It’s just going to be ‘that was Intel,’” Zito said, referring to Apollo’s $11 billion loan to the chip company. “The world isn’t there yet, but there’s this convergence.”

I’ve been covering this long enough to remember the first nonbank loan to crack $1 billion. It was, I swear, a big deal at the time, which was 2016.

Read on for the view from a skeptical private lender →

It’s been a bad year to be a CEO with an underperforming stock. Intel and Stellantis, the heir to legacy Chrysler, both replaced their chief executives this week, following swift ousters at Starbucks, Nike, and other blue-chip companies in recent months.

In 2024, nearly half of public companies that changed CEOs had one-year stock price performance in the bottom quartile, up from about 30% in 2017, according to a recent report from The Conference Board.

Boards’ short fuses show the “difficulty of shifting course when CEOs become attached to past decisions,” Tammy Madsen, a professor at Santa Clara University’s Leavey School of Business, told Semafor. “CEO departures often create temporary uncertainty, but in these cases, the market reactions are particularly sharp because they reflect deeper strategic doubts.”

Intel stock quickly gave up the 5% jump that followed Pat Gelsinger’s ouster, now trading lower than before his exit as investors worry whether Intel can reclaim its edge in tech. Stellantis shares are down 4% over concerns of “fractious relations with dealers, suppliers and politicians,” The Wall Street Journal reported.

Elon Musk’s post-Nov. 5 winning streak was derailed Monday when a Delaware judge for the second time rejected his $56 billion pay package from Tesla. This time around, she delivered another blow to the EV maker — a $345 million bill to pay the plaintiffs’ lawyers, who had argued that the 2018 bonus tied to Tesla’s share price was egregious. (In the name of overcompensation, the court cut the attorneys’ requested fee of $5.6 billion.)

The judge says Musk exerts too much influence over the board members who set his compensation. But investors have decided twice now that Musk is worth the money. Tesla shares have skyrocketed in recent years, including a 40% surge since the election.

“Shareholders should control company votes, not judges,” Musk said in a post on X after the ruling. Tesla, which had already moved its corporate home from Delaware to Texas in protest of the court’s first ruling, plans to appeal.

Carlyle Co-Chairman David Rubenstein, Citadel Founder and CEO Ken Griffin, former US Commerce Secretary Penny Pritzker, and KKR Co-Chairman Henry Kravis will serve as co-chairs of Semafor’s World Economy Summit on April 23-25, 2025, in Washington, D.C.

The third annual event will bring together US cabinet officials, global finance ministers, central bankers, and Fortune 500 CEOs for conversations that cut through the political noise to dive into the most pressing issues facing the world economy.

Join the waitlist for more information and access to priority registration. →

The political standoff over France’s 2025 budget briefly sent the country’s bond yields higher than that of Greece, Europe’s debt basketcase, for the first time in recent memory as its government teeters on the edge of collapse.

France’s borrowing costs rose as investors feared the government would fail to pass a budget in time. The far-right National Rally is threatening a no-confidence vote to Prime Minister Michel Barnier’s budget, which calls for tax increases and spending cuts. France’s 10-year bond yield rose to 2.9% on Monday morning, briefly surpassing Greece by 0.01 percentage points. It stabilized Tuesday after S&P held off on a further credit-rating downgrade and Barnier agreed to certain “red lines” demanded by far-right leader Marine Le Pen.

Riyadh, a city known for its worsening gridlock, has finally launched its 85-station metro system, Semafor’s Sarah Dadouch reported.

A construction boom over the last six years has transformed traffic jams into “endless nightmares,” she wrote, but Riyadh’s drivers are less than hopeful that the opening of the metro will solve the problem in the long term.

For more on Saudi Arabia’s rapidly changing landscape, subscribe to Semafor Gulf.  →