Marriott | August 7th, 2024

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GOOD MORNING

Here's everything you need to know today: Elon Musk apparently hates irony as much as he hates “Wokeness.”

Musk’s social media circus, X, just filed a federal antitrust lawsuit against an ad industry coalition, accusing big shots like CVS Health, Mars, and Unilever of illegally boycotting the platform. This comes just months after Musk told advertisers to "go fuck themselves" in November 2023. 

Filed in Texas, the suit claims these companies conspired to withhold billions in ad dollars to force X into maintaining certain safety standards. The suit says 18 brands ditched X ads between November and December 2022, with many more cutting back in 2023. The accused companies are part of the World Federation of Advertisers and its offshoot, the Global Alliance for Responsible Media (GARM), which pushes for ad safety standards. Musk, never one to shy away from drama, has compared GARM to "HARM" and ranted about this boycott to lawmakers like Rep. Jim Jordan, alleging anti-conservative bias (which Jordan already sees everywhere).

Musk is on a lawsuit spree as of late, taking on Media Matters, Disney, and even reviving a suit against Sam Altman and OpenAI. In his latest X posts, Musk urged other boycotted companies to sue too, declaring, "We tried peace for 2 years, now it is war." We hope he was wearing the leather bomber jacket when he typed that.

Let’s dive into more detail below.

BREAKING NEWS
Vice President Kamala Harris has made her choice for her own Vice President, and things are about to get “Minnesota Nice” on the campaign trail.

Meet Tim Walz, the sitting Governor of The North Star State and the man Democrats are ready to unleash on the Trump campaign, with a particular focus on that ticket’s number two, J.D. Vance, whom you might have heard is “weird.”

Know who called him that first? Tim Walz.

WHAT HAPPENED
The 60-year-old Walz is the rarest of creatures in today’s bitterly partisan America; an honest-to-god political enigma. He looks and sounds like a guy who has a “Let’s Go Brandon” lawn sign in front of his farmhouse, but when you listen to him speak, he comes off more like your uncle who spends Thanksgiving dinner cogently explaining why AOC is “actually pretty cool” to the other olds at the table.

His backstory is what progressive political consultants would grow in a lab if given the opportunity. Before he decided to dabble in politics, Walz was shaping young minds as a high school teacher and coach. Yes, the guy lecturing legislators was once lecturing teenagers about geography. But Walz wasn’t content just managing rowdy classrooms; he also joined the Army National Guard and rose to the rank of Command Sergeant Major, which, let's be honest, adds a nice touch of military gravitas to the Harris ticket (and gives political balance to Vance’s service as a Marine).

Walz swapped chalkboards for campaign boards in 2006, running for Congress in Minnesota's 1st District. The teacher-turned-soldier-turned-Democrat politician pulled a shocker, beating a Republican incumbent in a rural district by deploying his folksy charm and a knack for connecting with voters who actually enjoy hearing about fiscal policy. In Congress, Walz focused on veterans' affairs, agriculture, and other heartland staples, making him a hit with the local farmers and retired military folks.

In 2018, Walz decided to upgrade his office to the governor’s mansion. Since taking the helm, he’s been navigating Minnesota through political minefields like healthcare reform, COVID-19, and police reform (George Floyd was killed by Minneapolis cops, a thing that will surely come up on the campaign trail) with a mix of pragmatism and a touch of that teacher’s patience.

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BREAKING NEWS
The stock market over the weekend and Monday’s opening saw one of the most historic flushes of capital and leverage since 2022.

Japan’s stock market posted its worst drop since Wall Street’s Black Monday in 1987, creating a negative ripple effect worldwide.

Then, there was Warren Buffet and Berkshire Hathaway, who disclosed over the weekend a divestiture of about half of their holding in Apple stock and a substantial holding of safe-haven Treasury bills. With $234.6 billion, Warren Buffett now holds more US Treasury Bills than the Federal Reserve.

Despite the fears, a quote from the Oracle of Omaha felt fitting: “If you are worried about corrections, you shouldn’t own stocks.” Buffett’s words exude a kind of grit and cool most investors would kill for, inspiring a look back at all the times the world thought the market was dead, only to see it roaring back.

WHAT HAPPENED
As Buffett reiterated, market corrections are not something to fear in economic cycles but should ultimately be embraced. We won’t beat you over the head with quotes about “buying the blood” or “dark clouds raining gold,” but as many who work in the market know, a confluence of factors tends to shake anybody’s confidence.

Economic indicators, like the poor unemployment print signaling a possible road to recession, are typically the most straightforward. Slowing GDP and rising inflation, or “the data,” as FED Chairman Jerome Powell puts it, often trigger widespread risk aversion if they come in weak. Central bank policies, like interest rate adjustments, can swiftly alter market dynamics by impacting borrowing costs and corporate profitability. We saw this around November 2021 when the Fed began tapering its pace of asset purchases by $10 billion in Treasuries and $5 billion in MBS each month, resulting in the beginning of the two-year bear market for Bitcoin and an almost 30% drop in the S&P 500.

Lastly, geopolitical events and internal/external shocks—from international conflicts to global health crises—frequently disrupt economic stability, causing abrupt market volatility. These include events like COVID-19, Russia's invasion of Ukraine, and the current situation in Israel and the Middle East. These events had significant, temporary effects on the market, but if you were patient and didn’t panic, you saw some of the best returns.

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BREAKING NEWS
We know things have been little busy over the last few days but we’d hate for you to miss out on one of the most expensive, and cattiest, corporate feuds we’ve seen in some time.

Microsoft and Delta Air Lines are in a playing a spectacular version of The Blame Game after a massive IT outage in July left them scrambling and $500 million poorer. Delta CEO Ed Bastian pointed fingers at a botched CrowdStrike software update that wreaked havoc on Microsoft Windows systems, grounding over 5,000 flights and creating a PR nightmare for an airline that prides itself on reliability.

With the U.S.’s second-largest airline now unsubtly threatening legal action, Microsoft is firing back that Delta has the technical skills of an octogenarian wearing a VR headset.

WHAT HAPPENED
Delta CEO Ed Bastian, doing his best impression of a beleaguered school principal, claims the meltdown cost the airline around $500 million. Naturally, Delta wants compensation and has brought in heavyweight lawyer David Boies to make their case, claiming that Microsoft's outdated infrastructure didn't help matters and that the tech giant failed to comply with contractual obligations.

Microsoft, however, is not taking this lying down. In a delightfully snarky letter, Microsoft’s lawyer Mark Cheffo hinted that Delta’s IT systems are about as modern as a flip phone.

"Our preliminary review suggests that Delta, unlike its competitors, hasn't modernized its IT infrastructure," he wrote, pointing out that American and United bounced back from the outage much faster.

Microsoft is even calling out Delta for ghosting its CEO, Satya Nadella, and CrowdStrike’s CEO, George Kurtz, during the fiasco, claiming both men emailed Bastian and he left them on read. Adding to the hot drama, Microsoft hinted that Delta’s real issues might lie with other tech partners like IBM and Amazon Web Services, who manage their crew-tracking systems. As the blame game heats up, Microsoft demands Delta keep records showing who really dropped the ball during the meltdown.

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1. Google and Apple Stocks Unfazed by Antitrust Verdict

The ruling that Google violated Section 2 of the Sherman Act has had minimal impact on Google and Apple stocks. Investors remain optimistic despite the antitrust verdict, suggesting that the market does not foresee significant operational disruptions for these tech giants.

2. Palantir Q2 Shows Strong Execution in US Commercial Business

Palantir's Q2 results highlighted robust growth in its commercial sector, driven by advancements in AI and large language models. The company's focus on US commercial contracts has proven fruitful, making PLTR stock a strong buy recommendation.

3. Aramco Maintains $31 Billion Dividend Despite Lower Profits

Saudi Aramco reported a slight dip in profits for the second quarter but maintained its $31 billion quarterly dividend. This payout remains crucial for Saudi Arabia's economic plans despite lower production volumes and reduced refining margins.

4. OpenAI Co-founder John Schulman Joins Rival Anthropic

OpenAI is experiencing significant leadership changes as co-founder John Schulman departs to join competitor Anthropic. This move comes amidst other key executive shifts within the company.

5. Google Monopolized Search, Judge Rules

A US federal judge ruled that Google maintained a monopoly in the search market through $26 billion in payments to secure default search engine status on smartphones and web browsers. This ruling represents a significant win for government regulators.

6. Japanese Stocks Rebound After Historic Selloff

The Nikkei 225 index rebounded sharply, rising over 10% after a record drop the previous day. This recovery signals potential stabilization in Japan's volatile market, encouraging global investor sentiment.

7. US Stock Futures Bounce Back After Global Selloff

US stock futures rose as investors bought the dip following a three-day global market selloff. Concerns about economic slowdown and high tech valuations had driven the previous downturn.

8. Rivian Tops Q2 Expectations Amid Cost Cuts

Rivian reported better-than-expected second-quarter results, driven by significant cost reductions. The electric vehicle maker continues to refine its production processes, aiming for a modest gross profit by year-end.

9. X Files Antitrust Lawsuit Against Advertisers

Elon Musk's X filed a lawsuit against a coalition of advertisers, alleging an illegal boycott that cost the social media platform billions in revenue. The suit targets several major corporations and a global trade group.

10. Yum Brands Misses Revenue Estimates Amid Weak US Demand

Yum Brands, the parent company of Taco Bell, KFC, and Pizza Hut, reported lower-than-expected sales in the second quarter. Despite this, Taco Bell continues to perform well, supporting the company's overall portfolio.

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Today's insights are courtesy of Marriott Bonvoy™, Over 30 Hotel Brands, 10,000 Global Destinations.

Learn More Now ➔