Internal | September 10th, 2024

GOOD MORNING

Here's everything you need to know today: Wall Street just shook off its worst week of the year with a monster Monday rally. The Dow surged over 484 points, closing at 40,829, while the S&P 500 and Nasdaq clawed back more than 1% each, ending at 5,471 and 16,884, respectively. Nvidia, last week's AI darling-turned-selloff-victim, saw a 3.5% rebound. Retailers, banks, and industrials weren’t far behind, with names like JPMorgan, Costco, and Amazon joining the comeback parade. Even Apple got a nice little bounce after unveiling its new AI-powered $800 iPhone.

As we opined in literally yesterday’s newsletter (and now feel pretty smart), it seems clear that the market is banking hard on a rate cut later this month to save the economy from circling the drain. The consumer and producer price index reports hit this week, and they’ll be a major factor in the Fed’s decision. Traders are all but certain we’ll see at least a quarter-point cut. Oh, and did we mention the Trump vs. Harris debate tomorrow night?

Tomorrow night’s debate is set to be an economic slugfest… if Trump can stop himself from verbally swinging at Harris long enough to focus on actual policy while she attempts charisma to defend herself. Expect The Donald to brag about the "best economy ever" under his reign while Harris likely counters with rising costs, stagnant wages, the everyday struggle of Americans, and the fact that she’s not Joe Biden. Inflation, recession fears, jobs, taxes—it’s all up for grabs. Whoever wins the narrative and the debate could sway the market’s next big move.

Let’s Dive Into More Details Below…

BREAKING NEWS
It’s that time of year when the air gets crisp and kids trade in bathing suits for backpacks. That’s right, it’s time for Apple’s annual fall event, where Tim Cook takes the stage to sell us on a new iPhone we didn’t ask for but somehow still kind of want. This year, it’s not about the camera, the bezel (we’re still not sure what it is), or whether it comes in some shade of purple. Nope, this time Apple is trying to convince us that the magic word we’ve all been waiting for is AI. Because who doesn’t want their iPhone to generate their passive-aggressive email responses?

On Monday, Apple is expected to unveil the iPhone 16, the first device purpose-built for generative AI. Think Siri, but less of a vacant stare. The company has been teasing us with the oh-so-mysterious slogan “It’s glow time,” which sounds less like a tech revolution and more like marketing for the world’s most punctual rave. But, hey, it’s Apple, the company that pretty much invented the idea of ambiguous hype.

WHAT HAPPENED
When it comes to improving the iPhone, Apple has been phoning it in for years now. Since the iPhone 12 brought 5G in 2020, the upgrades have been about as exciting as a new U2 album that no one asked for. Sure, the cameras got better, and the screen is technically nicer, but good luck finding anyone who can actually see the difference. In Apple’s defense, it knows what’s up. iPhone sales have been limping along for some time now because, honestly, the folks still clinging to their iPhone X just don’t see the point in shelling out another $1,000 for the latest version of “good enough.”

But now, Apple thinks it has the answer: generative AI. The rumor mill has it that the newest features will help you compose emails, find that one photo of your dog in a sea of screenshots, and have more “natural” conversations with Siri (whatever that means for the people who have wanted to deepen their bond with the faceless entity who lives in their phone). If Apple wants to make a splash, however, this cannot fall flat, because its competitors have already beaten it to the AI punch.

You’ve got Google’s Pixel rolling out AI-powered cameras, Samsung packing AI into everything from phones to fridges, and even Microsoft’s ChatGPT plastered across the web. Meanwhile, Apple has been the stoic grandpa at the AI family reunion, not saying much but quietly nodding along.

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BREAKING NEWS
If you ever needed proof that Wall Street has a short attention span, look no further than Etsy. Yes, Etsy, the former bohemian paradise of handmade macramé, artisan soaps, and cat sweaters. This once-plucky Brooklyn startup transformed into a bona fide e-commerce powerhouse and, for a fleeting moment, became a Wall Street darling.

Now, like a teenager who went from awkward band geek to cool kid and back again, Etsy’s being tossed out of the S&P 500. So, how did we get here?

WHAT HAPPENED
Let’s flash back to 2019 when Etsy completed one of the most shocking transformations in recent corporate history. Once known for plowing cash into altruistic causes like some kind of profit-allergic idealist, Etsy turned its business around and embraced its inner capitalist. With CEO Josh Silverman at the helm, Etsy delivered impressive numbers: $3.9 billion in gross merchandise sales, a nearly 37% revenue increase, and a much-improved bottom line. Silverman’s team had gone from patchouli-scented losses to fleece-vest profitability. And for a while, it worked. Etsy joined the S&P 500, the gold standard for American business credibility. It was like Etsy had joined the corporate suits while still wearing a tie-dyed tie.

But fast forward to 2024, and it’s a different story. Etsy’s stock has cratered, falling more than 80% from its pandemic-fueled highs, and now it’s being booted from the S&P 500. That’s right, Etsy’s out, and in its place come the likes of Palantir and Dell (everyone’s third-favorite computer maker is back, baby!). So how did Etsy go from the coolest kid in e-commerce to the one getting shoved out the stock market Moon Door?

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BREAKING NEWS
Everyone knows the Holy Grail story—King Arthur, the Round Table, eternal life, healing powers, etc. Fun stuff if you’re into legends, but today’s top investors aren’t chasing mythical chalices. They’re after companies with the potential to transform the world.

Enter Altos Labs, launched in January 2022, and still the biotech industry’s poster child for cellular rejuvenation research. While commercial products aren’t here yet, Altos raised a staggering $3 billion in funding, and investors like Jeff Bezos are “letting them cook.” Altos is working to rejuvenate cells and possibly extend human life, all under the leadership of former GlaxoSmithKline CEO Hal Barron.

WHAT HAPPENED
In 2022, Altos Labs, based in the San Francisco Bay Area, San Diego, and Cambridge (UK), with collaborations in Japan, announced, “Altos is designed to integrate the best features of academia and industry—from academia, the freedom to pursue the most challenging problems in biology, and from industry, the focus on a shared mission, fostering deep collaborations, and the passion to transform science into medicines.”

Their Board of Directors reflects this ambition, including Nobel Laureates like Frances Arnold, David Baltimore, and Shinya Yamanaka. With multiple Institutes of Science across locations, each focused on “rejuvenation programming,” Altos is literally working on the Holy Grail of biotechnology, from cellular protein control to organ regeneration.

“Building a company with extraordinary ambition requires extraordinary people,” said Hans Bishop, President and Founder. “It also requires an innovation culture that brings out the best in people from diverse backgrounds.”

This caught Jeff Bezos’ attention, though his exact investment remains undisclosed. Bezos, who also backed Unity Technologies in 2018, was introduced to Altos by Yuri Milner, a Soviet-born Israeli entrepreneur and scientist. Milner, worth $6 billion, has been involved since 2020, when he co-hosted a meeting that led to Altos’ concept. Like many tech billionaires, Milner invests early in ventures like META, X, Airbnb, and Spotify.

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1. Norfolk Southern CEO under investigation for misconduct

Norfolk Southern has confirmed that its CEO Alan Shaw is under investigation for potential ethical lapses, following allegations of inappropriate behavior. The board has hired external counsel to conduct the probe, with reports suggesting Shaw might step down soon.

2. Google faces DOJ in major ad tech antitrust trial

Google's legal battles continue as it enters a federal antitrust trial focused on its dominance in digital advertising. The Justice Department alleges the company has monopolized the ad tech market, posing a significant threat to Google's business model.

3. Big Lots files for Chapter 11 bankruptcy amid closures

Big Lots has filed for Chapter 11 bankruptcy and plans to close hundreds of stores as part of its restructuring. The discount retailer, which has struggled with its business model, has entered a sale agreement with Nexus Capital Management.

4. Apple unveils AI-packed iPhone 16 and other products

Apple introduced the iPhone 16 and other new products at its highly anticipated event. The latest iPhone features advanced AI capabilities, reinforcing the company’s push into artificial intelligence across its devices.

5. Oracle beats revenue estimates, driven by AI and cloud services

Oracle exceeded analysts' expectations for its first-quarter revenue, reporting $13.31 billion, driven by strong demand for its cloud services and AI offerings. The company continues to build partnerships with major firms like Amazon and Google.

6. Wendy's Chairman Nelson Peltz steps down

Nelson Peltz has stepped down as chairman of Wendy’s board. Arthur Winkleblack will succeed him, while Peltz remains as chairman emeritus. Peltz’s firm Trian Fund Management holds a significant stake in the fast-food chain.

7. Goldman Sachs faces $400 million hit amid consumer business exit

Goldman Sachs is expected to post a $400 million loss in the third quarter as it unwinds its consumer business. CEO David Solomon noted this as part of the bank’s pivot away from consumer-focused operations.

8. Boeing offers historic pay raise to avoid worker strike

Boeing has reached a tentative agreement with its largest union, offering a 25% pay raise to avoid a costly strike. The deal, which still requires a vote, marks Boeing's largest wage increase in history.

9. Murdoch family faces hedge fund pressure over News Corp succession

Activist hedge fund Starboard Value is pushing for changes at News Corp, challenging the Murdoch family’s control. The fund cited concerns over family dynamics and succession plans that could affect the media giant’s future.

10. Stock market rallies after last week's sell-off

U.S. stocks rebounded on Monday, with the Dow climbing over 450 points. Investors appeared optimistic following last week's sharp losses, with inflation and upcoming Federal Reserve rate decisions in focus.

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