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  • 💎 BlackRock Spends $12 Billion

💎 BlackRock Spends $12 Billion

+ Apple Accused Of Snooping On Workers’ iPhones In New Lawsuit

December 03, 2024

Good afternoon! OpenAI is toying with the idea of bringing ads to ChatGPT, according to its CFO. The potential revenue boost is hard to ignore, especially as the company racks up massive losses. If executed carefully—think clearly labeled, non-intrusive ads—it could follow the search engine playbook. But if ads muddy the waters, trust in AI chatbots could take a serious hit.

The timing makes sense: OpenAI is under pressure to turn its pricey projects into profits, and rivals/partners like Microsoft and Meta are already weaving ads into their AI products. For now, OpenAI claims it’s just exploring options, but this move could reshape how we interact with free AI tools.

MARKETS

*Stock data as of market close*

  • Markets took a breather Tuesday after November’s hot streak, with mixed results across the major indexes. The S&P 500 inched up 0.05% to another record close, while the Nasdaq climbed 0.4% thanks to a boost from Apple’s fresh 52-week high. The Dow? Not as lucky, slipping 0.17% as blue chips lagged behind.

  • Investors are growing more confident in a December rate cut, with the odds of a 0.25% reduction climbing to 72%. If the Fed pulls the trigger, it would mark the third cut this year, slicing rates by a full percentage point—a move aimed squarely at keeping the economy humming.

STOCKS
Winners & Losers

What’s up 📈

  • PSQ Holdings surged 270.39% after announcing Donald Trump Jr. joined its board of directors. ($PSQH)

  • Credo Technology Group skyrocketed 47.89% on strong fiscal second-quarter earnings and a glowing forecast. ($CRDO)

  • BigBear. ai soared 28.64% after being touted as the next Palantir by the Economic Times. ($BBAI)

  • Palantir climbed 6.88% following U.S. government approval to handle classified data on its cloud offerings and expectations for inclusion in the Nasdaq 100 in 2025. ($PLTR)

  • Upstart Holdings rose 8.00% on a Redburn Atlantic upgrade to buy, citing optimism about its recovery and future growth. ($UPST)

  • AT&T gained 4.58% after announcing plans to return $40 billion to shareholders over three years and outlining a robust strategy during its investor day. ($T)

What’s down 📉

  • Children’s Place plunged 24.15% as the retailer announced setbacks in its turnaround efforts. ($PLCE)

  • US Steel dropped 8.01% following President-elect Trump’s declaration to block its acquisition by Nippon Steel. ($X)

  • Intel fell 6.10%, extending its decline after CEO Pat Gelsinger’s abrupt retirement announcement. ($INTC)

  • FedEx sank 4.66% after Bernstein downgraded the company, citing uncertainties surrounding its spinoff plans. ($FDX)

  • Posco Holdings dropped 4.36%, Coupang slid 3.74%, and Samsung lost 3.71% amid South Korea’s martial law declaration and subsequent reversal. ($PKX, $CPNG, $SSNLF)

  • Tesla declined 1.59% after a Delaware judge blocked Elon Musk’s $56 billion pay package. ($TSLA)

FINANCE
BlackRock Hops On The Private Credit Train

When you’re the world’s largest asset manager, what’s your next play? Apparently, buying one of the biggest private-credit firms out there. BlackRock announced it’s acquiring HPS Investment Partners in a $12 billion all-stock deal to dive headfirst into the $2 trillion private credit pool.

HPS’s leadership will head a new private financing unit at BlackRock, which now boasts $220 billion in private credit assets—vaulting it into the top five globally. For CEO Larry Fink, this isn’t just a win; it’s a power move to dominate a market that’s swelling faster than a fintech IPO in 2021.

Private Credit 101: Wall Street’s Current Obsession

Think of private credit as the financial world’s VIP lending room. Instead of going to a bank or going public, mid-sized companies borrow directly from firms like HPS. The payoff? High interest rates mean juicy returns for investors.

At nearly $2 trillion and projected to hit $2.7 trillion by 2027, the private credit market is booming. But here’s the kicker: it’s mostly for institutions and high-net-worth players. Asset managers like BlackRock are now angling to let more investors join the party.

BlackRock’s Grand Plan

This isn’t BlackRock’s first rodeo in alternative assets. With the HPS deal, its third major acquisition this year, the firm’s private-market AUM jumps 40%. Add this to a $12.5 billion deal for Global Infrastructure Partners and a $3.2 billion scoop of Preqin, and Larry Fink’s building a serious alt-assets empire.

Why it matters: Private credit is high-margin, high-growth, and a hedge against the volatility of public markets. By snapping up HPS, BlackRock isn’t just joining the private credit gold rush—it’s angling to lead it.

NEWS
Market Movements

  • 🍎 Apple Leverages Amazon Chips: Apple revealed at the AWS Reinvent conference that it uses Amazon's custom AI chips, including Inferentia and Graviton, to power services like search. Early evaluations of Amazon's Trainium2 chip show up to 50% efficiency gains for AI pretraining. ($AAPL) ($AMZN)

    ⚛️ Meta Eyes Nuclear Energy: Meta announced plans to develop 1–4 gigawatts of new U.S. nuclear capacity by the early 2030s, aiming to meet the surging energy demands of its AI-driven data centers. The company is considering both small modular and large reactors in its strategy. ($META)

  • 🚗 Volkswagen Workers Strike: Nearly 100,000 workers at Volkswagen staged strikes on Monday to protest planned factory closures, a 10% pay cut, and layoffs as the automaker faces EV market challenges. ($VWAGY)

  • 📉 Dollar Stores Slash Forecasts: Dollar General and Dollar Tree lowered their sales forecasts, citing inflation and low-income consumer struggles. Both stocks are down over 40% this year amid leadership turnover and heightened competition. ($DG) ($DLTR)

  • 🌐 Microsoft Faces U.K. Lawsuit: A £1 billion class action lawsuit in the U.K. targets Microsoft’s cloud licensing practices, filed on behalf of businesses alleging unfair terms. ($MSFT)

  • 📊 Battery Plant Funding Announced: Stellantis and Samsung secured $6.85 billion in federal funding for two Indiana EV battery plants, which are expected to produce batteries for 670,000 vehicles annually. ($STLA) ($SSNLF)

  • 📈 AT&T’s Optimistic Outlook: AT&T raised its 2024 EPS forecast to $2.20–$2.25, driven by 5G and fiber expansion. The company projects over $18 billion in free cash flow by 2027. ($T)

  • 🌾 Cargill Announces Layoffs: Cargill will cut 8,000 jobs, or 5% of its workforce, as FY2024 revenue declined to $160 billion, citing lower crop prices and shrinking margins.

BIG TECH
Apple Accused Of Snooping On Workers’ iPhones In New Lawsuit

Apple’s reputation for safeguarding privacy is facing a legal challenge—this time from one of its own.

A lawsuit filed by advertising tech worker Amar Bhakta accuses the company of overstepping its bounds by surveilling employees’ personal devices and data. According to Bhakta, Apple encourages workers to use personal iPhones for work, which subjects private data like emails, photos, and even real-time locations to company oversight.

The suit, lodged under California’s Private Attorneys General Act, claims Apple’s policies force employees to choose between privacy and job functionality. While Apple allows workers to use company devices, Bhakta alleges that using personal devices is practically the norm and that linking personal iCloud accounts to work devices grants Apple far-reaching access.

The Surveillance Allegation

Bhakta’s lawsuit paints a stark picture: Apple employees, it argues, live under constant surveillance akin to a “prison yard.” The suit claims that Apple reserves the right to monitor not only company-issued devices but also personal ones used for work purposes.

It also alleges the company suppresses employee speech, citing examples where Bhakta was prohibited from speaking publicly about his digital advertising role or including details on his LinkedIn profile.

Apple denies these claims, with a spokesperson stating, “Every employee has the right to discuss their wages, hours, and working conditions,” and maintaining that the policies align with its business conduct standards.

Why It Matters

This case sheds light on a tension unique to Big Tech employees—where personal privacy clashes with workplace security. While Apple has long marketed itself as a privacy-first company, the lawsuit forces the question: Does the company's internal culture live up to its customer-facing promises?

The lawsuit also comes at a delicate moment. As Apple shifts focus to its AI strategy, “Apple Intelligence,” it continues to brand itself as the privacy-conscious alternative. However, such litigation risks exposing cracks in its own ecosystem, particularly as rivals like Google and Amazon face similar accusations of employee surveillance.

The outcome of this case could ripple beyond Apple, influencing tech workplace norms and policies around personal data and surveillance. For now, it’s another chapter in the ongoing story of privacy in an ever-connected world.

Calendar
On The Horizon

Tomorrow

Coming up in the labor market lineup: the ADP Employment report, offering a snapshot of private sector job trends across the country. Last month, private employers added 233,000 jobs—the biggest bump since July 2023—defying expectations of a hurricane-related slowdown. This month, economists are crossing their fingers for another solid showing.

Before Market Open:

  • Foot Locker is stepping up to the plate tomorrow, hoping to recover from a tough 2024. The retailer’s partnerships with Adidas and Nike on exclusive footwear lines are in the spotlight, and its success—or failure—will take center stage. Adding a digital twist, Foot Locker plans to roll out a mobile app next month to better connect with its online-first customers. Expectations are set at $0.42 EPS and $2.02 billion in revenue. ($FL)

After Market Close:

  • American Eagle Outfitters is in better shape but still has hurdles to clear. Sales have been climbing, and margins improved last quarter, but growth in its Aerie brand is slowing, casting doubt on its momentum. Analysts remain split: one says “buy,” another says “sell,” and two say “hold.” Wall Street is forecasting $0.46 EPS on $1.3 billion in revenue. ($AEO)

NEWS
The Daily Rundown

  • 🛍️ TikTok's E-commerce Surge: TikTok Shop is making waves in the retail world, reporting over $100 million in Black Friday sales. Since its launch 15 months ago, the platform has attracted brands like Puma and Nike and is projected to more than double sales to $50 billion this year. Its secret weapon? A live shopping format inspired by its Chinese counterpart Douyin, which generated $200 billion last year. While Amazon remains a giant, TikTok Shop is positioning itself as a fierce competitor with low fees, discounts, and a growing seller base.

  • 🇫🇷 French Government Faces Collapse: French Prime Minister Michel Barnier invoked a controversial legal provision to pass a social security budget without a vote, sparking a political crisis. Facing opposition from both the left and right, his government may face a no-confidence vote, which could either send Barnier packing or advance his contentious budget.

  • 🚗 Jaguar Unveils Type 00 Electric Concept: Jaguar introduced its Type 00 all-electric concept car during Miami Art Week, showcasing a futuristic design that aligns with its pivot toward sustainability and luxury in electric vehicles.

  • ⚖️ Climate Change at the ICJ: The International Court of Justice has begun hearings to define countries' legal responsibilities for combating climate change. With over 100 nations presenting their cases, the proceedings follow a $300 billion climate finance pledge at COP29, deemed inadequate by many vulnerable nations.

  • 📚 Bible Sales See a Boom: Bible sales in the U.S. have surged 22% this year, compared to a 1% overall book market increase. Analysts attribute the rise to the election cycle and interest in AI's moral implications, with publishers catering to diverse demands for scripture study. The trend signals a renewed focus on spiritual reflection in turbulent times.

  • 📖 Holiday Catalogs Shrink: Retailers are trimming their holiday catalogs this year to reduce postage and material costs. Companies like Lands' End and Duluth Trading are moving toward smaller formats or postcards. Despite the shift to digital marketing, physical catalogs remain essential for branding and customer retention.

  • 🍸 Stoli Vodka Files for Bankruptcy: Stoli Group USA has filed for Chapter 11 bankruptcy, citing financial strains including debt of up to $100 million, inflation, and declining post-pandemic demand. The company plans to restructure while maintaining operations.

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