Put Tom Cruise in the Jamie Dimon biopic because the JPMorgan Chase CEO is opening his firm up to more risky business.

America’s largest bank by assets said Monday that it is putting aside $50 billion to make loans to risky firms backed by private equity shops, in an effort to expand its foothold in the roaring private equity market that was once reserved for non-bank lenders.

Private Eye

Private credit, in the most basic sense, refers to when companies borrow money directly from lenders who are not banks. Instead, they take out loans from private investors, hence private credit. The dominant players in the space are money managers like Apollo Global, Blackstone, Ares, and KKR.

The sector exploded starting in 2022, when loan volume on debt markets seized up amid inflation, fears of an economic downturn, and pandemic supply chain issues, all of which prompted a tightening cycle at the Federal Reserve. Direct lenders in the private credit market became a key alternative for private equity shops to finance leveraged buyouts and for middle-market companies to obtain loans that banking lenders might shy away from.

As the sector exploded, traditional institutional investors — insurance companies, pension funds, sovereign wealth funds — poured in hundreds of billions of dollars, transforming private credit into a greater rival to traditional lenders. Moody’s analysts predict, as of last week, that the private credit market will double to $3 trillion by 2028. Which is why banks have responded by finding ways to join the fray — by putting up money from their balance sheets, using existing or establishing asset management or private credit arms, or by forming strategic alliances with private credit lenders:

• JPMorgan has already committed over $10 billion to more than 100 private credit deals in the last four years, partnering with more than half a dozen asset managers in the process.
• It is now massively adding to those stakes: In addition to the $50 billion in capital from its own reserves, the bank said other investors have committed $15 billion to make direct loans to companies.

JPMorgan’s rivals have rolled out their own efforts: Citigroup struck a $25 billion private credit partnership with Apollo last year, Wells Fargo and asset manager Centerbridge partnered on a $5 billion direct lending fund in 2023, and Goldman Sachs and Morgan Stanley have used their in-house asset management divisions to launch multibillion-dollar direct lending funds.

Need a Reason: The attraction of private credit for lenders is obvious: It often generates higher returns than fixed-income investments, and it’s also less competitive than traditional capital markets. For borrowers, the convenience is the ability to negotiate customized loan structures and repayment terms and, of course, access to financing deemed too risky for bank loans — the fact that private credit is less regulated than banking means lenders can move faster for clients in a pinch for cash.

You know what they say: A server a day keeps the tariffs away. Actually, no one says that, but on Monday, Apple announced it’s planning to open an AI server factory in Texas.

As well as getting Apple on the AI compute train, the move seemed designed to please the Trump administration, which has been eager to trumpet AI infrastructure as one of its key economic pillars. Good timing too, since Apple is currently under pressure from a politically conservative activist investor.

I’ll Be Your Server

Today, Apple investors will vote on a motion put forward by the National Center for Public Policy Research (NCPPR). As you can probably tell from the conspicuously bland name, the NCPPR is a political think tank, and its motion challenges Apple’s continuing commitment to diversity, equity, and inclusion (DEI) policies, specifically saying that a 2023 Supreme Court ruling that universities cannot use race-based affirmative action in their admissions process leaves the company legally vulnerable.

Apple is one of the few Big Tech companies to have kept its DEI policies after Trump’s second inauguration. Meta, Amazon, and Google have all scaled back their DEI programs. Amazon scrubbed mention of DEI from its annual report. But with this new server farm announcement, which comes after CEO Tim Cook reportedly paid President Trump a visit (here’s hoping that Trump called him by his real name this time, rather than “Tim Apple”), Apple is looking to raise some political capital:

• Apple has promised that the new server farm will create 20,000 jobs. Overall, Apple said it plans to spend $500 billion in the US over the next four years, spread across different parts of its business (i.e., not just AI). 
• $500 billion is a popular number these days: OpenAI and SoftBank’s announcement of the planned “Stargate” AI infrastructure project had a $500 billion tag on it, although it’s not clear exactly how they plan to raise that cash.

An Embarrassment of Servers: While Apple is pitching its tent in the AI server space, one market leader seems to be pulling back. Microsoft has canceled some leases for US data centers, analysts from investment bank TD Cowen said in a note published Monday. In a post-DeepSeek world, the move raises uncomfortable questions about overcapacity, although the analysts noted it may just be Microsoft rejigging to Oracle servers.

Talk about awkward timing. Hims & Hers spent millions hyping its cheap Ozempic alternative during the Super Bowl earlier this month, only to learn that the FDA would likely be winding down the company’s weight-loss game. Now it’s got a bad case of regulatory indigestion.

Hims & Hers launched its injectable GLP-1s last spring, and the jabs have since punched up its earnings. The millennial-coded healthcare company yesterday reported sales growth of nearly 95% year-over-year to $481 million in the most recent quarter on the back of strong sales of its weight-loss meds, along with a 45% jump in subscribers. But investors are looking forward, not back. Shares of Hims & Hers lost nearly a third of their value after the FDA announced on Friday that semaglutide — a.k.a. the key ingredient in Ozempic and Wegovy — was no longer in an officially designated shortage. The shares managed to claw back some of their value yesterday, rising over 4%.

Ozempiconomy Inflection Point

Novo Nordisk is the only FDA-approved producer of semaglutide drugs, but semaglutide’s status on the national drug shortage list is what allowed Hims & Hers to create alternatives to the original recipe used by Novo Nordisk for its blockbuster drugs, Ozempic and Wegovy.

As demand for the injectable med far outstripped Novo’s ability to fill prescriptions, the key ingredient in Ozempic and Wegovy, semaglutide, has been in a shortage since 2022:

• That shortage status opened the floodgates for rivals who were allowed to sidestep the FDA and make and sell “compounded” semaglutide spinoffs that don’t require the FDA’s approval to mass-produce. 
• This fast-tracked process is intended to meet patients’ needs when the official version is unavailable.

Now that semaglutide’s no longer in shortage territory, the FDA said drug-makers have 90 days to wrap up production of their Novo knockoffs. Hims & Hers CEO Andrew Drudum said Friday that his company will keep selling its drugs as long as they’re legal and will be on the lookout for future shortages.

Unsaturated isn’t Forever: Post-pandemic, drugmakers were looking for their next big seller as fewer people popped into CVS for covid vaccines. They found it in injectable weight-loss drugs, with prescriptions popping 500% between 2019 and 2023, according to KFF. But after years of pharma companies ramping up factory output and churning out new drugs to meet demand, the Ozempiconomy could be nearing its saturation point. Novo Nordisk forecasts sales growth will slow this year.