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Inside the $22 trillion world of private capital, an asset class so big it would be the world’s second-largest economy

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Top analysts at Bank of America Research are pulling back the curtain on the colossal $22 trillion universe of private capital, an asset class so massive it would be “the world’s second-largest economy” if it were treated as a country. As the global financial landscape faces tectonic shifts, Bank of America Research’s latest thematic investing report reveals that private capital is reshaping how companies, investors, and economies think about growth, risk, and control, challenging the primacy of public markets and opening new frontiers for both innovation and caution.​

Private capital, defined by the bank as assets not available on public markets, includes private equity, private credit and real assets. It has multiplied at a staggering pace, more than doubling since 2012 to $22 trillion by 2024. This explosion has been driven by a retreat from public markets. Since 2000, the number of U.S.-listed companies has halved to just over 4,000, even as the number of private venture-backed firms soared 25-fold. Startups now remain private for an average of 16 years, a third longer than a decade ago, reflecting a broad shift toward private capital and away from public scrutiny and regulation.​

The world’s most transformative firms aren’t found on the stock market ticker, BofA argues. Just as public stock markets have a “Magnificent 7,” so there is a “Private Magnificent 7” of “hectocorns,” each valued at $100 billion or more and growing. BofA’s Thematic Research team estimates that their combined valuations have skyrocketed nearly fivefold since 2023 to $1.4 trillion. They evaluated the top 16 companies in the space, representing $1.5 trillion in value, an astonishing 1% of global GDP. There are many other “decacorns” (valued at $10 billion+) and unicorns below them in the list.

For investors, BofA finds that private equity has notably outperformed the S&P 500 over this period, by six percentage points per year on average. And there are other benefits to privacy, BofA analysts add: “In the time spent on financial regulation paperwork every year, 12 Great Pyramids of Giza could be built.”

But as this asset class balloons, financial experts warn that opacity breeds risk, especially with regard to the $1 trillion-$3 trillion chunk of the asset class known as private credit. Public markets offer transparency, governance, and liquidity; private firms, by contrast, often avoid periodic reporting and undergo less rigorous oversight. This lack of visibility can mask financial and governance hazards, with analysts urging investors not to overlook the pitfalls in their quest for returns.​

Wall Street’s “fear index”—the VIX—spiked by more than 35% in the past month amid bankruptcies at subprime lender Tricolor Holdings and auto supplier First Brands, both marred by alleged fraud and loss events, slicing $100 billion off U.S. bank stock market capitalization. JPMorgan CEO Jamie Dimon warned, “When you see one cockroach, there are probably more,” pointing to the dangers of hidden risks in private lending markets. In fact, Dimon has been sounding a similar tune since at least May, when he warned that non-bank lending “hasn’t been tested in a downturn,” implying that a deluge of defaults could follow if a recession hits.

Capital allocation goes private

Historically, public companies were seen as the best vehicles for capital efficiency. They offered liquid investments, transparent financials, and were accessible to all. Yet, private capital is rewriting the rules. With fewer companies pursuing IPOs, public markets are losing their once-central role in economic growth. At the same time, innovation and digitization—sparked by disruptors like OpenAI’s ChatGPT—are increasingly nourished by deep-pocketed private investors. Since ChatGPT’s launch, BofA finds, Nvidia, Google, Microsoft, and Amazon have invested in roughly half of the world’s 100 artificial intelligence (AI) unicorns.​

The data-center deals that are driving a significant chunk of GDP growth are increasingly based on private credit, to boot. Meta, for example, has secured a nearly $30 billion financing package or a data center in Louisiana, Bloomberg reported, adding that it is the largest private capital deal on record. The scale of spending in this space is unprecedented, with OpenAI alone estimating it will require trillions in infrastructure spend to keep up with rapid technological demands. In late October, Apollo Global Management Chief Economist Torsten Slok argued that private construction spending on data centers was so massive that there was “basically no growth in corporate capex outside of AI at this moment.”

​Even some of the beneficiaries of this are concerned. OpenAI’s CEO Sam Altman has drawn parallels to the dot-com bubble, cautioning that “someone’s gonna get burned there”—especially since 95% of generative AI projects reportedly don’t deliver any profit, according to a widely read piece of MIT research. Analysts warn that investors could face pain if speculative infrastructure bets outpace real-world utility or revenues, recalling lessons from early-2000s telecom overreach.

The first phase of AI build-out was largely peer-to-peer, but now bond investors and private credit lenders are providing two to three times the funding of public markets. Tech “hyperscalers” have tapped private credit for sustained, long-tenor loans, and commercial mortgage-backed securities tied to AI infrastructure hit $15.6 billion in August, JPMorgan estimated at the time. Major deals now feature 20-30 year funding horizons—extraordinary bets on technologies whose commercial viability five years from now remains uncertain. “We are conservative in our assessment of forward cash flows because we don’t know what they will look like, there’s no historical basis,” Ruth Yang, global head of private market analytics at S&P Global Ratings, told Bloomberg in August.

Shawn Tully, who has reported extensively on private credit for Fortune, noted a distinction between major players such as Apollo, Ares, and KKR, who are “pioneering a highly original strategy by extending credit they originate independently, often backed by high-earning assets from rail cars to data centers, that lock in borrowers for a number of years.” Borrowers are willing to pay a lot more in interest than the traditional lengthy, expensive syndication process that requires ratings from S&P and Fitch, tough covenants, and sometimes long.

Two top executives in the space, David Spreng of Runway Growth Capital and Ted Goldthorpe of BC Partners Credit, argued in a Fortune commentary this month that private credit is not, in fact, a shadowy bogeyman but “structured finance built on cash flow, enterprise value, and downside protection.” Far from venture-style risk-taking, they argue that many private debt vehicles are publicly listed or institutionally backed, while reporting audited financials and operating under legal and fiduciary obligations. To be sure, they add, there are riskier parts of the market with looser standards such as covenant-lite loans, aggressive structures, or promises of liquidity where underlying assets are illiquid.

Earlier this month, Morgan Stanley Wealth Management CIO Lisa Shalett told Fortune she was particularly concerned about how much of the spending boom has been driven by private credit. “Every morning the opening screen on my Bloomberg is what’s going on with CDS spreads on Oracle debt,” she said, referring to credit default swaps, the financial instrument infamous for the role it played in the 2008 Great Financial Crisis global market meltdown. “If people start getting worried about Oracle’s ability to pay,” Shalett said, “that’s gonna be an early indication to us that people are getting nervous.”

The long view: opportunity vs. oversight

The tectonic shift toward private investing carries enormous implications for society. BofA analysts note that as private firms scale, they shape how technology develops, how jobs are created, and how risks are managed. The top 120 private unicorns now boast a total valuation roughly equal to Germany’s entire market cap, signaling their outsized influence on the global stage.​

Jim Rossman, the global head of Barclays’ shareholder advisory group, has been tracking private assets with a particular focus on hedge funds for decades on Wall Street, and he sees a wider transformation taking place. “The growth of private capital is really a reflection of the fact that companies, particularly these now that Apollo and Blackstone and TPG, are closing in on trillion-dollar platforms,” he told Fortune in a recent interview, noting that they’ve acquired their own insurance companies in some cases and are growing beyond the traditional conception of an investment firm.

These firms are so flush with capital and assets, Rossman said, that he sees the private capital boom facilitating the growth of alternative platforms to public markets. “You could see an age when private equity, private capital allows companies to remain in a private format for longer. And if 401(k)s get opened up” for private equity investments, he added, he could envision some kind of investment platform where wealth advisors could invest money just as freely in the private capital space as they can now in equities. “And that would give you exposure to a much broader part of the economy than just what’s public.”

More generally, Rossman added, the world of finance is undergoing many changes. “I think there’s a technology change, a generational change, and then finally, the structural change [that] may be the most important is the growth of mutual fund investing.” Instead of seeing private capital as a shadowy and risky thing, Rossman argued it is opening up more kinds of companies to investment, and that will likely grow, even mutate in surprising ways to many investors.

Rossman recalled buying his first mutual fund through a leading asset manager in the late 1990s: “It cost 300 basis points, three percentage points to join, and they would select 28 interesting technology companies … and then, oh, the expense ratio would be two-and-a-half, 250 basis points a year.” Today, he said, the index-fund revolution has democratized access to the point where you can get the same fund for just 5, 15 or 25 basis points. “It’s just so incredible.”

As the line between public and private capital blurs, the $22 trillion world of private capital is not just a financial story—it’s a signpost for how our economies, companies, and innovations will be built and valued in the years to come. With private assets rivaling the size of national economies and the biggest names in tech betting big outside the public eye, top analysts believe this is a revolution that’s just getting started.



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The Coast Guard has seized a record amount of cocaine while Trump says interdiction has failed

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 In justifying American military strikes on boats suspected of smuggling drugs, President Donald Trump has asserted that the longtime U.S. strategy of interdicting such vessels at sea has been a major failure.

“We’ve been doing that for 30 years,” he said last month, “and it’s been totally ineffective.”

Trump’s comments came around the same time that the U.S. Coast Guard announced it had set a record for cocaine seizures — a haul of 225 metric tons of the drug over the previous year. That milestone, however, has not dissuaded the Republican president from upending decades of U.S. counternarcotics policy.

Under Trump, the U.S. military has blown up 20 suspected drug boats, resulting in 80 deaths, in the Pacific Ocean and Caribbean Sea. Trump and other top officials have contended that such boats are being operated by narco-terrorists and cartel members with deadly drugs bound for America.

The strikes have generated international pushback from foreign leaders, human rights groups, Democrats and some Republicans who have raised concerns that the United States is engaging in extrajudicial killings that undermine its stature in the world.

Veterans of the drug war, meanwhile, say U.S. resources would be better spent doubling down on the traditional approach of interdicting drug boats, especially in the long term. That is because crews of drug boats frequently have valuable intelligence that can help authorities better target cartels and trafficking networks. Dead men, they say, tell no tales.

The Coast Guard has fought the drug war a long time

The Coast Guard for decades has interdicted small vessels suspected of smuggling illicit narcotics. Much of that work is focused on halting shipments of cocaine, most of which is produced in the jungles of Colombia.

Working with partner nations and other federal agencies — the Drug Enforcement Administration, the departments of State and Justice as well as U.S. Southern Command’s Joint Interagency Task Force-South in Key West, Florida — the aim is to inflict heavy losses on traffickers and limit the amount of drugs entering the U.S.

That campaign, by at least one measure, has never been more successful, despite constant complaints by the Coast Guard that it lacks funding to seize even more drugs.

The Coast Guard’s recent record cocaine seizure was almost 40% higher than the past decade’s annual average. The haul included 38 tons of cocaine offloaded by the cutter Hamilton when it returned from a two-month patrol. It was the largest amount confiscated by a single Coast Guard ship during a deployment, the Coast Guard reported. The interdictions have continued as part of what’s known as Operation Pacific Viper even during the federal government shutdown, with several cutters reporting major seizures last month.

In almost every case, drug smugglers have been brought to the U.S. for prosecution, and valuable information about ever-changing smuggling routes and production methods was collected — all without any loss of life and a far lower cost to American taxpayers. Experts said each missile strike is likely to cost far more than the payload of cocaine on every ship.

“The Coast Guard has extraordinary powers and authorities to do effective drug interdiction without killing unidentified people on small boats,” said Douglas Farah, a national security expert on Latin America and president of IBI Consultants. “When resourced, they are far more effective, sustainable and likely legal than the current Pentagon-led operations.”

Trump administration officials say strategy needed to change

Secretary of State Marco Rubio this week defended the shift in strategy, saying that “interdictions alone are not effective.”

“Interdictions have limited to no deterrent effect,” he added. “These drug organizations, they’ve already baked in the fact they may lose 5% of their drug shipments. It doesn’t stop them from coming.”

Part of the problem is that demand for cocaine is high, and supplies have never been so robust, according to authorities and experts. A sign of that trend: Cocaine prices have been hovering at historical lows for more than a decade.

The Coast Guard also does not have enough vessels or crew to halt it all. At most, it seizes not even 10% of the cocaine that officials believe flows to the U.S. on small vessels through what is known as the “Transit Zone” — a vast area of open water larger than Russia.

Cocaine shipments bound for the U.S. primarily work their way up the west coast of South America to Central America and then overland into the U.S. via Mexico. Shipments heading to Europe are smuggled through the Caribbean, often hidden in container ships.

Such interdiction efforts target cocaine, not fentanyl

In social media posts, Trump has claimed that his strikes have blown up boats carrying fentanyl and that each destroyed vessel has saved 25,000 American lives. According to experts and former U.S. counternarcotics officials, Trump’s statements are either exaggerations or false.

For the past decade, U.S. officials have sounded the alarm about rising overdose deaths in the U.S., particularly from opioids and synthetic opioids. Overdose deaths from opioidspeaked in 2023 at 112,000 but dropped to 74,000 in April. Experts have attributed that decline mostly to Biden administration efforts to boost the availability of lifesaving drugs that prevent overdose deaths.

The drug flowing to the U.S. from South America is cocaine. Fentanyl, on the other hand, is typically trafficked to the U.S. overland from Mexico, where it is produced with chemicals imported from China and India. Cocaine overdose deaths are less frequent than those from fentanyl. In the last year, just under 20,000 people in America died from cocaine overdoses, federal data shows.

Trump and administration officials have also claimed that the crews of targeted vessels were narco-terrorists or members of cartels.

The Associated Press visited a region in Venezuela from which some of the suspected boats have departed and identified four men who were killed in the strikes. In dozens of interviews, residents of the region and relatives said t he dead men were mostly laborers or fisherman making $500 a trip.

Law enforcement officials and experts echoed those findings, saying the smugglers captured by the Coast Guard are hired for little money to ferry drugs from point A to point B.

“They are hardly kingpins,” said Kendra McSweeney, an Ohio State University geographer who has spent years researching U.S. drug policies.

Trump administration officials recently promoted big seizures

In April, months before Trump launched his military campaign, his attorney general, Pam Bondi, traveled to South Florida to welcome home the Coast Guard cutter James from its latest antinarcotics patrol. It had seized 20 tons of cocaine worth more than $500 million.

Flanked by FBI Director Kash Patel, she praised a “prosecutor-led, intelligence driven approach to stopping these criminal enterprises in their tracks.”

“This is not a drop in the bucket,” said Bondi, standing in front of the vessel loaded with colorful, plastic-wrapped bales of narcotics stacked several feet high. “Behind you is half a billion dollars of pure, uncut cocaine.”



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The 2026 class of American Rhodes scholars includes 5 students at U.S. military academies

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Five students at U.S. military academies and three each from Yale University, Harvard University and the Massachusetts Institute of Technology are among the 32 American winners named Sunday as 2026 Rhodes scholars.

The group includes students focused on housing, health outcomes, sustainability and prison reentry programs. They include:

Alice L. Hall of Philadelphia, a varsity basketball player at MIT who also serves as student body president. Hall, who has collaborated with a women’s collective in Ghana on sustainability tools, plans to study engineering.

Sydney E. Barta of Arlington, Virginia, a Paralympian and member of the track team at Stanford University, who studies bioengineering and sings in the Stanford acapella group “Counterpoint.” Barta plans to study musculoskeletal sciences.

Anirvin Puttur of Gilbert, Arizona, a senior at the U.S. Air Force Academy who serves as an instructor pilot and flight commander. Puttur, who is studying aeronautical engineering and applied mathematics, also has a deep interest in linguistics and is proficient in four languages.

The students will attend the University of Oxford as part of the Rhodes scholar program, which awards more than 100 scholarships worldwide each year for students to pursue two to three years of graduate studies.

Named after British imperialist and benefactor Cecil John Rhodes, the scholarship was established at Oxford in 1903. The program has more than 8,000 alumni, many of whom have pursued careers in government, education, the arts and social justice.



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Most advanced US aircraft carrier adds to the growing fleet of warships near Venezuela

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The nation’s most advanced aircraft carrier arrived in the Caribbean Sea on Sunday in a display of U.S. military power, raising questions about what the new influx of troops and weaponry could signal for the Trump administration’s intentions in South America as it conducts military strikes against vessels suspected of transporting drugs.

The arrival of the USS Gerald R. Ford and other warships, announced by the Navy in a statement, marks a major moment in what the administration insists is a counterdrug operation but has been seen as an escalating pressure tactic against Venezuelan President Nicolás Maduro.

The Ford rounds off the largest buildup of U.S. firepower in the region in generations. With its arrival, the “Operation Southern Spear” mission includes nearly a dozen Navy ships and about 12,000 sailors and Marines.

The carrier’s arrival came as the military announced its latest deadly strike on a small boat it claims was engaged in ferrying illegal drugs. The military’s Southern Command posted a video on X on Sunday showing the boat being blown up, an attack it said took place Saturday in international waters of the eastern Pacific Ocean and killed three men. A request for more information from the military was not immediately answered.

Since early September, such strikes by the U.S. in the Caribbean and eastern Pacific have now killed at least 83 people in 21 attacks.

The carrier strike group, which includes squadrons of fighter jets and guided-missile destroyers, transited the Anegada Passage near the British Virgin Islands on Sunday morning, the Navy said.

Rear Adm. Paul Lanzilotta, who commands the strike group, said it will bolster an already large force of American warships to “protect our nation’s security and prosperity against narco-terrorism in the Western Hemisphere.”

Adm. Alvin Holsey, the commander who oversees the Caribbean and Latin America, said in a statement that the American forces “stand ready to combat the transnational threats that seek to destabilize our region.”

Holsey, who will retire next month after just a year on the job, said the strike group’s deployment is “a critical step in reinforcing our resolve to protect the security of the Western Hemisphere and the safety of the American Homeland.”

In Trinidad and Tobago, which is only 7 miles from Venezuela at its closest point, government officials said troops have begun “training exercises” with the U.S. military that will run through much of the week.

Minister of Foreign Affairs Sean Sobers described the joint exercises as the second in less than a month and said they are aimed at tackling violent crime on the island nation, which has become a stopover point for drug shipments headed to Europe and North America. The prime minister has been a vocal supporter of the U.S. military strikes.

The exercises will include Marines from the 22nd Expeditionary Unit who have been stationed aboard the Navy ships that have been looming off Venezuela’s coast for months.

Venezuela’s government has described the training exercises as an act of aggression. It had no immediate comment Sunday on the arrival of the aircraft carrier.

Meanwhile, Army Secretary Dan Driscoll said Sunday that U.S. troops have been training in Panama, underscoring the administration’s increasing focus on Latin America.

“We’re reactivating our jungle school in Panama. We would be ready to act on whatever” Trump and Defense Secretary Pete Hegseth needed, he told CBS’ “Face the Nation.”

The administration has insisted that the buildup of American forces in the region is focused on stopping the flow of drugs into the U.S., but it has released no evidence to support its assertions that those killed in the boats were “narcoterrorists.” Trump has indicated military action would expand beyond strikes by sea, saying the U.S. would “stop the drugs coming in by land.”

The U.S. has long used aircraft carriers to pressure and deter aggression by other nations because their warplanes can strike targets deep inside another country. Some experts say the Ford is ill-suited to fighting cartels, but it could be an effective instrument of intimidation for Maduro in a push to get him to step down.

Secretary of State Marco Rubio says the United States does not recognize Maduro, who was widely accused of stealing last year’s election, as Venezuela’s legitimate leader. Rubio has called Venezuela’s government a “transshipment organization” that openly cooperates with those trafficking drugs.

Maduro, who faces charges of narcoterrorism in the U.S., has said the U.S. government is “fabricating” a war against him. On his Facebook page, Maduro wrote on Sunday that the “Venezuelan people are ready to defend their homeland against any criminal aggression.”

Venezuela’s government recently touted a “massive” mobilization of troops and civilians to defend against possible U.S. attacks. Maduro and other officials in Venezuela’s socialist party also have been attending rallies this weekend to back the creation of neighborhood committees that will be in charge of increasing membership in Venezuela’s socialist party, and promoting the party’s policies.

Trump has justified the attacks on drug boats by saying the U.S. is in “armed conflict” with drug cartels while claiming the boats are operated by foreign terrorist organizations.

He has faced pushback from leaders in the region, the U.N. human rights chief and U.S. lawmakers, including Republicans, who have pressed for more information on who is being targeted and the legal justification for the boat strikes.

Senate Republicans, however, recently voted to reject legislation that would have put a check on Trump’s ability to launch an attack against Venezuela without congressional authorization.

Experts disagree on whether or not American warplanes may be used to strike land targets inside Venezuela. Either way, the 100,000-ton warship is sending a message.

“This is the anchor of what it means to have U.S. military power once again in Latin America,” said Elizabeth Dickinson, the International Crisis Group’s senior analyst for the Andes region. “And it has raised a lot of anxieties in Venezuela but also throughout the region. I think everyone is watching this with sort of bated breath to see just how willing the U.S. is to really use military force.”



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