💼 The Golden Road: Unearthing Opportunity in a Shaky Market

Good morning,

If this week’s market movement were a treasure hunt, it would feel like the search for El Dorado—full of twists, turns, and a few missteps. Wall Street took a hard hit as recession fears and tariff concerns rattled investors, with the tech sector particularly suffering a $750 billion loss. But in the midst of the chaos, private equity could be positioning itself to unearth its own golden opportunity. M&A activity remains strong, signaling that while some treasure hunters falter, others are moving quickly to claim their prize.

"Over the Mountains of the Moon, Down the Valley of the Shadow, Ride, boldly ride, The shade replied, If you seek for Eldorado!"
—Edgar Allan Poe (American writer and poet)

Recession Fears Shake Wall Street – Private Equity to the Rescue?

Yesterday, stocks had their worst day of 2025, with the Nasdaq suffering a $750 billion loss. The Dow fell 900 points, as recession fears ballooned and tariffs loomed large. Among the carnage, however, private equity firms might be on the cusp of a surprising rebound.

What this means While many companies struggle with the prospect of a slowdown, private equity firms may have a unique opportunity. Having overpaid for assets in 2020 and 2021, the current economic conditions could prompt these firms to finally liquidate old holdings. While they’ve been holding onto assets in the hope of higher valuations, a tough economy might provide the excuse they need to cut ties and reposition for the future.

Point of interest If private equity firms start selling their less-than-ideal investments, expect a surge in M&A activity. Private equity could be the unsung hero of the current market downturn.

Stock Picks

• Low Risk: Blackstone $BX ( ▼ 6.06% ) – A stable leader in private equity with a diverse portfolio.

• Medium Risk: Carlyle Group $CG ( ▼ 7.29% ) – A strong player in growth-focused investments, with room for flexibility.

• High Risk: Apollo Global Management $APO ( ▼ 11.96% ) – A more aggressive private equity firm, poised for high returns but comes with increased volatility.

• Wildcard: KKR $KKR ( ▼ 9.52% ) – Known for opportunistic investments, KKR could be well-positioned in a market downturn.

The Magnificent Seven Take a $750 Billion Hit

The tech titans have been knocked off their pedestal. The Magnificent Seven—Apple, Microsoft, Amazon, Nvidia, Alphabet, Tesla, and Meta—shed $750 billion during the Nasdaq's worst session since 2022. Nvidia alone is down 30% from its peak.

What this means As the AI boom slows down, some of these megacaps are finding their valuations harder to justify. The promise of the next tech revolution isn't looking so shiny after all. Expect increased scrutiny on these stocks as investors question whether the growth has been priced in.

Point of interest The fallout from the selloff is a reminder that even the tech elite can’t escape market turbulence. When growth stocks face a correction, no one is safe.

Stock Picks

• Low Risk: Apple $AAPL ( ▼ 7.29% ) – Despite recent selloffs, it remains one of the most stable tech stocks.

• Medium Risk: Microsoft $MSFT ( ▼ 3.56% ) – A strong cash flow generator, but its valuation is feeling pressure.

• High Risk: Nvidia $NVDA ( ▼ 7.36% ) – Still a key player in AI, but its current dip makes it a more speculative choice.

• Wildcard: Meta $META ( ▼ 5.06% ) – A highly volatile stock, still recovering from its metaverse bet, but could see a rebound if its AI investments and ad growth pick up steam.

Goldman's Tariff Warning & M&A Resilience

Goldman Sachs cut its economic forecasts, citing concerns over tariffs as a looming threat to global growth. Meanwhile, despite the bleak outlook, mergers and acquisitions are holding strong. Rocket Companies acquired Redfin for $1.75 billion, and ServiceNow snapped up AI startup Moveworks for $2.85 billion.

What this means While the broader economy struggles, dealmakers continue to show faith in strategic acquisitions. M&A remains a bright spot, suggesting that companies are consolidating and positioning for future growth despite the economic uncertainty.

Point of interest In times of turbulence, some sectors, like real estate and AI, still offer attractive opportunities.

Stock Picks

• Low Risk: Berkshire Hathaway $BRK.B ( ▼ 6.91% ) – A diversified powerhouse with a history of weathering market storms.

• Medium Risk: ServiceNow $NOW ( ▼ 6.77% ) – Focused on AI-driven growth, positioning itself for future opportunities.

• High Risk: Redfin $RDFN ( ▼ 0.78% ) – A higher-risk bet as real estate deals continue to evolve, with Rocket Companies behind it.

• Wildcard: Rocket Companies $RKT ( ▲ 11.19% ) – Benefiting from a strong M&A pipeline, it might be one to watch in the shifting housing market.

Musk’s Diplomatic Crisis & Tesla’s Stock Slump

Elon Musk’s controversial comments about Ukraine have caused headaches across his empire, including a stalled $1.5 billion satellite deal in Italy and a tanking Tesla stock. Shares in the EV giant have dropped almost 54% since December, and Musk’s involvement in DOGE (Department of Government Efficiency) has also raised eyebrows.

What this means Tesla investors are grappling with more than just slumping demand and market conditions. Musk's increasingly erratic behavior is contributing to Tesla's decline, and it’s clear that even tech titans are not immune to political fallout.

Point of interest Musk’s social media habits are affecting shareholder value. It’s a reminder that personal and political brand can dramatically impact stock performance.

Stock Picks

• Low Risk: General Motors $GM ( ▼ 3.75% ) – A stable, less volatile alternative to Tesla in the EV sector.

• Medium Risk: Ford $F ( ▲ 0.42% ) – Taking a more cautious approach to EVs, but with growing market share.

• High Risk: Tesla $TSLA ( ▼ 10.42% ) – A volatile stock with potential upside as it recovers from recent losses, but significant risk remains.

• Wildcard: SpaceX (Privately held, but keep an eye on related ventures) – A non-public option with significant exposure to Musk’s portfolio.

Delta's Earnings Forecast Gets Cut in Half

Delta Airlines revised its first-quarter earnings forecast, citing a slump in both consumer and corporate travel. The airline now expects earnings of just 30 to 50 cents per share, down from the previous forecast of 70 cents to $1. Delta’s stock fell almost 13% after the announcement.

What this means The once-booming airline industry is feeling the effects of macroeconomic uncertainty. As consumer confidence wanes, travel demand is also taking a hit. This could signal trouble for other airlines that have yet to announce their earnings forecasts.

Point of interest Delta's forecast reduction comes right before the JPMorgan airline industry conference, where more bad news could be on the horizon for the sector.

Stock Picks

• Low Risk: American Airlines $AAL ( ▼ 0.47% ) – One of the larger players in the airline industry, it could weather the storm better.

• Medium Risk: Delta Airlines $DAL ( ▼ 3.77% ) – A solid airline, but it will need to recover from a sharp earnings downgrade.

• High Risk: Southwest Airlines $LUV ( ▼ 10.36% ) – Historically a strong performer, but sensitive to shifts in demand.

• Wildcard: JetBlue Airways $JBLU ( ▼ 5.52% ) – A bit of a gamble as it navigates the tough market for airlines.

Top 5 Other Headlines Rundown:

1. Trump Puts the Brakes on Bitcoin Reserve Plans: President Trump announces a U.S. Bitcoin Strategic Reserve, but markets aren’t impressed. Bitcoin briefly dips below $80,000 as skepticism grows.

2. Walgreens Goes Private for $23.7 Billion: Private equity firm Sycamore Partners swoops in to acquire Walgreens Boots Alliance. Expect more retail giants to follow suit if foot traffic continues to slide.

3. China’s Inflation Turns Negative: With deflationary pressures mounting, China’s consumer price index dips below zero, signaling trouble for global growth.

4. X Suffers Major Cyberattack: Elon Musk's social platform X faces outages after a "massive" cyberattack. Hackers claim responsibility, while Musk scrambles to restore order.

5. Porsche Scrambles as Tariffs Loom: With the U.S. trade war intensifying, Porsche is caught between a rock and a hard place. Higher tariffs could mean higher prices for customers or costly production shifts.

Other Snapshot Insights:

• Private Equity’s Moment: Recession fears could finally get private equity firms to cut deadweight investments and kick-start M&A activity.

• Porsche’s Tariff Trouble: Porsche faces tough choices—higher production costs or passing tariffs onto U.S. buyers.

• Delta’s Earnings Miss: Delta’s forecast cut signals weakening travel demand and possible industry-wide woes.

• Goldman Cuts Growth: Goldman Sachs downgrades forecasts as tariff uncertainty clouds the global economy.

• Musk’s Italian Mess: Musk’s Ukraine comments stall a $1.5 billion Starlink deal in Italy.

• Tesla’s 54% Plunge: Tesla’s stock sinks as investor confidence crumbles amid Musk’s distractions.

• X Faces Cyberattack: X suffers major outages after a massive cyberattack leaves users in the dark.

• Redfin Gets Bought: Rocket Companies gobbles up Redfin for $1.75 billion, shaking up the real estate sector.

• China’s Deflation Woes: China’s inflation turns negative, heightening fears of economic stagnation.

• Walgreens Goes Private: Walgreens sold for $23.7 billion to Sycamore Partners amid retail headwinds.

Wrapping up

While the search for El Dorado may have taken a few detours this week, the treasure still exists for those with the right strategy. Whether it’s the tech giants reeling from a selloff or private equity firms eyeing acquisitions, there’s gold to be found in unexpected places. Keep your eyes on the prize and your portfolio ready for the next opportunity.

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Until next time,
The Briefcase Team 💼