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Good morning and welcome back. In today’s newsletter:
Private equity executive warns of US pension scheme push risks
OpenAI partners in debt spree to fund ChatGPT maker’s ambitions
How the housing crisis is pushing Gen Z into taking risky bets
And the worst office blunders remembered
We start with a warning from Robert Morris, founder of US private equity group Olympus Partners, who has told investors that “the 401k scheme bodes to be the successor to the 2008 mortgage crisis” in a letter seen by the Financial Times, raising questions about the industry’s rush towards retail investors.
More on the warning: Morris also said that “the multiple layers of fees” in private equity funds designed for retirees’ 401k savings accounts meant their “projected rate of return is unlikely to exceed that of an equity index fund” and noted that the funds exposed savers to “ample dollops of additional risk”, in the letter that was sent to large endowments and sovereign wealth funds investing with Olympus earlier this month.
Why it matters: Some of private equity’s biggest names, including Apollo, Blackstone and KKR, have seen the 90mn US savers with 401k retirement plans as a growth opportunity. President Donald Trump signed an executive order this summer intended to accelerate the push of such funds into 401k savings accounts. “The marketing machines of the large asset managers have responded rapidly to the chum in the water,” Morris wrote. Read more of the letter.
Here’s what else we’re keeping tabs on today and over the weekend:
Economic data: Statistics Canada is set to release third-quarter GDP data. The government in Ottawa will also release budget balance figures for September.
Companies: Brazil’s state-run Petrobras oil company is set to hold a press conference to present its new investment plan for 2026-2030.
Black Friday: Bargain hunters are expected to flock to stores in record numbers today and over the weekend but spend less money as the crucial winter holiday shopping season begins.
Opec+: Representatives from member countries meet on Sunday to decide on further oil production adjustments.
Pope Leo is making the first foreign trip of his papacy to which region? Take this week’s news quiz.
Five more top stories
1. Trading in futures and options on the CME, the world’s largest derivatives exchange, was halted for several hours this morning following a fault at a data centre. CME Group said it was working to fix the issue “in the near term”, without giving further details. Here’s what we currently know about the disruption.
2. Donald Trump has threatened a sweeping immigration crackdown, saying he would “permanently pause migration” from a swath of countries and “terminate” millions of admissions to the US. He made the comments as it was confirmed that National Guard member, 20-year-old Sarah Beckstrom, died from injuries sustained in an attack by a suspected Afghan national.
3. OpenAI’s data centre partners are on course to amass almost $100bn in borrowing tied to the lossmaking start-up, as the ChatGPT maker benefits from a debt-fuelled spending spree without taking on financial risks itself. Asset manager Janus Henderson estimates that the bonds, bank loans and private credit deals tied to OpenAI are equivalent to the net debt directly held by the six largest corporate borrowers in the world.
4. Canada’s Prime Minister Mark Carney has struck a deal for a new pipeline carrying 1mn barrels of oil a day to Canada’s west coast in an attempt to pivot away from an over-reliance on the US economy. The memorandum of understanding lays the groundwork for a 1,100km pipeline project connecting its northern oil sands region to the coast. Here’s more on the project.
5. Venezuela has revoked operating rights for six major airlines, accusing them of “acts of state terrorism promoted by the US” following a military build-up in the region by American forces. On Wednesday, during a visit by US defence secretary Pete Hegseth, the Dominican Republic authorised Washington to operate in restricted areas within its San Isidro Air Base and Las Américas airport outside Santo Domingo, the capital.
The Big Read
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After turning into the world’s factory, China’s relentless efforts in research and development gave way to it becoming the world’s laboratory. This prowess has allowed it to compete with, and potentially beat, the west. Find out how Beijing is working to win the innovation race.
We’re also reading . . .
Winning the ‘Taco’ trade: Gillian Tett identifies three broader lessons from Brazil’s handling of the White House and its tariffs policy.
South Africa: Accused of trafficking recruits to fight for Russia, Duduzile Zuma-Sambudla, Jacob Zuma’s daughter, is emerging as the heir apparent of one of the country’s most powerful political dynasties.
The Wolf-Krugman Exchange 🎧: Martin Wolf and Paul Krugman return for a second season of their popular podcast series. In part one they dive into Donald Trump’s ‘vibecession’.
Investing: Stuart Kirk explains why he sold his entire equity portfolio and turned it into cash — flying in the face of years of advice he has given to clients and students.
Chart of the day
New evidence suggests that the unattainability of home ownership among Gen Z is prompting young people to resort to financial nihilism, writes John Burn-Murdoch.
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Few work mistakes compare with leaking a Budget, but many employees can relate to this week’s slip-up at the UK’s Office for Budget Responsibility. Emma Jacobs recalls some other memorable workplace blunders and below the story readers weigh in with their own mea culpas.
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