Business

➚ BUY: Dissent. The lone vote against Wednesday’s Fed interest-rate cut came from its newest governor and the one with the closest ties to Wall Street — former Goldman Sachs executive Beth Hammack, who voted to keep rates steady. Meanwhile, three Bank of England officials disagreed with today’s decision to hold rates after UK inflation jumped to an eight-month high.

➘ SELL: Descent. The Fed signaled a slower path to lowering rates in 2025, with most officials penciling in just half a percentage point reduction next year, down from the 1-1.25 points they expected in September. Major stock indexes took a nosedive on the news.

Trump wants to abolish debt ceiling… while Musk eggs on government shutdown… M&A indigestion sparks firesales… DOJ sues CVS over opioid crisis… Oura smart-ring maker worth $5B… North Korea cools it on crypto hacks…

Elliott-backed life insurer draws Wall Street takeover interest

THE SCOOP

Private investment firms are circling a major life insurer, intensifying a race for Americans’ nest eggs.

Prosperity Life, owned by Elliott Management, held sale talks this month with potential buyers including TPG and European investment firm JAB, people familiar with the matter said, though neither conversation is still live. Wall Street has been hoovering up insurance and retirement businesses, which generate cash that they can invest for decades.

Any deal would likely value Prosperity around $3 billion to $4 billion, the people said. The company manages $23 billion of policyholders’ money and has been built up through acquisitions including the July takeover of National Western Life for $1.9 billion.

TPG, JAB, and Elliott declined to comment.

KNOW MORE

Premiums from life insurance policies and annuities — which are contracts that promise retirees a fixed income in the future — don’t have to be paid out for decades, which makes them an attractive money source for dealmaking. Apollo, Blackstone, KKR, and Brookfield are already major players, and rivals that don’t yet have an insurance arm are scrambling to buy one.

These firms are betting that they can invest policyholders’ money more profitably than traditional insurers, which generally favored blue-chip corporate bonds. In many cases, they have replaced those vanilla assets with private loans backed by things like plane leases and consumer layaway purchases.

“I think insurance companies over the last two decades really blew it because they got out of investing,” Anant Bhalla, JAB’s chief investment officer, said at the Semafor Business Summit in June. “So who stepped in? The people are very good at it. Alternative asset managers.” (You can watch his entire interview here.)

Critics, meanwhile, warn that higher profits mean higher risks and have sounded alarms about Wall Street gambling with Americans’ retirements.

TPG, which remains on the hunt for an insurance acquisition or partner, has picked up $3.5 billion from independent insurers since acquiring a private-credit arm, Angelo Gordon, last year, CEO Jon Winkelried said at an investor conference last week.

“Not surprisingly, we’re now involved in conversations with very established large insurance companies who are coming to us saying, ‘Look, it would be interesting for us to figure out whether or not we can do business together, whether we can establish some relationship,’” he said.

It wasn’t just stock investors who reacted negatively to yesterday’s rate cut. US government bond yields had their biggest one-day jump since the “taper tantrum” of 2013, when the Fed said it would gradually reduce its economic support.

Rates were low then and are high now, but the signal was the same: Investors shouldn’t expect easy money anytime soon. Fed Chair Jay Powell was just a new member of the central bank’s board back in 2013 and a decisive voice in favor of the move. “We’ve got to jump,” he told his colleagues, according to transcripts later published by the Fed. “There is no risk-free path.” The same is true now as the economy continues to run hot, as seen in this week’s retail sales data, and Donald Trump (who picked Powell as Fed chair in 2018) is floating immigration and tariff policies that analysts say would fuel inflation.

Today, Semafor announces the launch of The CEO Signal from Semafor Business, an exclusive, invitation-only membership for chief executives of the world’s largest companies.

Helmed by veteran Financial Times editor Andrew Edgecliffe-Johnson, the initiative builds on the success of Liz Hoffman’s Semafor Business and sets a new standard for how global leaders connect, learn, and navigate future challenges. Focusing on exclusivity over scale, the platform will debut as a weekly briefing in January 2025 offering candid, practical insights and interviews tailored for global CEOs who are short on time and seeking actionable intelligence.

You can request an invitation for the debut edition here.

China’s growing dominance over the global car market helps explain merger talks between Japanese giants Honda and Nissan. Both companies have lost ground in China, whose domestic automakers are consolidating control at home and boosting sales abroad, where their 21% global market share is expected to reach 33% by 2030, consulting firm AlixPartners says.

Toyota is still the world’s biggest car maker, but even its sales are plateauing. “The overall picture is worrying for [Japanese] companies once considered pioneers in efficiency and reliability,” Bloomberg wrote in a prescient deep dive last month.

Amazon workers at seven warehouses around the country, including a major hub in New York, launched strikes this morning coinciding with the holiday rush. In addition to potentially snarling holiday deliveries, the action may revive a broader fight over who is and isn’t an employee at some of America’s biggest companies.

Amazon has argued that delivery drivers are employees of subcontractors and that it has no obligation to bargain with them. The National Labor Relations Board thinks otherwise. The Biden administration’s effort to label big companies that use franchisee or contractor labor as “joint employers” was struck down earlier this year in court.

While Trump has not taken an official stance on the legal battle as of late, his right-hand adviser and head of DOGE Elon Musk testified against the NLRB in federal court last month, arguing its structure is unconstitutional.

Nearly $1 in every $10 raised by all private funds this year will go back to private funds, as the industry revs up its self-licking ice cream cone as it struggles to sell investments and return cash. Secondaries funds, which have emerged as an alternative to a dead-quiet market for public offerings, brought in a record $100 billion, Pitchbook data shows. There are bargains to be had: private-equity firms are selling assets at an average discount of 15%.

The question remains about whether the fundraising is a leading or lagging indicator. After a sluggish year for IPOs, 2025 is expected to bring renewed activity, and the M&A market is “steadily gaining strength,” Goldman Sachs says.

Filmmaker Nenad Cicin-Sain has tried using AI to write his next screenplay, with bizarre results, Semafor’s Reed Albergotti reported.

“I expected it to instantaneously pump out a screenplay once I created all the prompts,” he said. Instead, ChatGPT kept stalling, changing deadlines and then coming up with reasons why it couldn’t meet them.