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  • 🩸 The DOJ Goes for Google’s Jugular

🩸 The DOJ Goes for Google’s Jugular

+ WeightWatchers Jumps Into the Weight-Loss Drug Game

October 09, 2024

Good afternoon! A new HBO doc, Money Electric: The Bitcoin Mystery, has reignited the debate over who exactly Satoshi Nakamoto is, with the film pointing the finger at Canadian developer Peter Todd. But Todd isn’t having it. He called the claim “ludicrous” and dismissed it with a laugh, saying, “I’m not Satoshi,” when pressed in the film. The documentary relies on circumstantial evidence, including early Bitcoin forum posts, to suggest Todd’s involvement, but so far, nothing definitive.

The mystery surrounding Bitcoin’s elusive creator has been a hot topic for years, with everyone from physicist Dorian Nakamoto to computer scientist Nick Szabo being named as potential candidates. Whoever Satoshi is, their stash of 1 million Bitcoin (worth over $62 billion) hasn’t moved in over a decade—any movement could send shockwaves through the market.

MARKETS

*Stock data as of market close*

  • Stocks popped for a second day on Wednesday, with the S&P 500 and Dow both setting fresh records. The S&P 500 gained 0.71% to close at 5,792, while the Dow surged 431 points (1.03%) to hit 42,512. Tech stocks were the real MVPs, leading the charge, while investors brushed off geopolitical concerns and looked ahead to earnings season, which kicks off with the big banks on Friday.

  • The S&P 500 hit its 44th record high of 2024, as traders geared up for key inflation data. Tech and consumer discretionary stocks stole the show, while utilities dragged their feet. Meanwhile, Fed minutes showed some officials wanted bigger rate cuts, but markets barely flinched.

STOCKS
Winners & Losers

What’s up 📈

  • Arcadium Lithium ($ALTM) skyrocketed again today, climbing 30.90%, after Rio Tinto ($RIO) revealed plans to acquire the company for $5.85 per share. The news sent Arcadium's stock soaring as the mining giant moves deeper into the lithium space.

  • Astera Labs ($ALAB) surged 15.6% after launching new fabric switches for AI, driving interest in its data center connectivity chips.

  • Cruise stocks navigated choppy waters to close higher, shrugging off concerns about an incoming Gulf of Mexico hurricane. Norwegian Cruise Line ($NCLH) surged 10.91%, Carnival ($CCL) gained 7.05%, and Royal Caribbean ($RCL) rose 5.26%, all buoyed by Citi analysts’ upgrades.

  • GitLab ($GTLB) climbed 7.74% following Morgan Stanley's initiation of coverage with an overweight rating, citing its potential to become a key consolidator in the software delivery market.

  • C3 .ai ($AI) increased 6.75% after announcing that retired General John E. Hyten has joined its board of directors, effective immediately.

  • Snowflake ($SNOW) ticked up 5.42%.

  • General Motors ($GM) rose 4.17%.

What’s down 📉

  • Bayer ($BAYR) dropped 7.07% after the Washington Supreme Court agreed to review a case alleging that people were harmed by products made by Bayer's Monsanto unit at a Washington state education center.

  • Wayfair ($W) declined 4.32% after successfully closing an $800 million private offering of senior secured notes with a 7.250% interest rate, maturing in 2029.

  • Boeing ($BA) fell 3.41% as the machinists’ union strike continues, with Boeing withdrawing its contract offer after negotiations failed. Additionally, S&P Global Ratings issued a negative outlook on the company's credit rating.

  • Alphabet ($GOOGL) dropped 1.53% after news that the Justice Department is considering a potential breakup of Google, following an August ruling that Google holds a monopoly in search and text advertising.

  • Constellation Energy ($CEG) slipped 6.12%.

  • Williams-Sonoma ($WSM) decreased 3.23%.

ANTITRUST
The DOJ Wants To Break Up Google’s Monopoly

Google's monopoly reign might be facing its toughest challenge yet. The U.S. Justice Department (DOJ) is weighing a move that could break up the tech titan after a judge ruled it unlawfully dominated search and ad markets.

In a court filing, the DOJ proposed everything from breaking off pieces of Google’s business (think Chrome and Android) to forcing the company to share its search data with competitors. It’s a bold step that echoes the antitrust battles of the early 2000s…remember Microsoft?

Not surprisingly, Google isn’t too thrilled. The company called the DOJ’s plan "radical" and warned that messing with its business model could have unintended consequences, like fewer free services for users. Meanwhile, Alphabet shares slid 1.6% on the news—cue the market jitters.

Tech Titans Under the Microscope
Google’s not the only one sweating right now. Almost half of the S&P 500, including big names like Meta, Nvidia, and Amazon, are in antitrust hot water too. Regulators are accusing them of crushing competition and monopolizing key markets.

But, despite these lawsuits, Big Tech’s still living its best life, with stock prices climbing thanks to AI innovation.

The DOJ’s real focus? The future of search, especially with AI on the rise. They want to prevent Google from flexing its dominance as AI-powered search tools become the norm. Regulators are thinking long-term here, trying to stop Google from maintaining its stranglehold in the tech space.

The Long Legal Road Ahead
Judge Amit Mehta, who ruled Google was guilty of monopolistic behavior, now has to decide what to do about it. The DOJ’s suggested remedies range from “just change your behavior” to “time to break up the band.”

While some experts think a breakup is unlikely (at least anytime soon), this legal battle is far from over. Google’s going to fight, and they’re likely to appeal any decisions not in their favor.

The Big Picture: Despite the legal storm, analysts aren’t losing sleep over it. Tech stocks have been riding high, with investors more interested in earnings and product launches than courtroom drama. For now, it’s business as usual, but if the DOJ really manages to pull off a Google breakup? Well, that could be a game-changer.

NEWS
Market Movements

  • 🤖 Amazon’s Robot-Powered Warehouse Expansion: Amazon ($AMZN) revealed plans for a new “next-generation fulfillment center” in Louisiana, powered by 10x more robots than its typical warehouse. The facility spans 3 million square feet and houses advanced robotic systems like Sequoia, which can store over 30 million items. Despite the robotic increase, Amazon still plans to employ 2,500 people at the new location.

  • 🎟️ Disneyland Hikes Ticket Prices: Disneyland ($DIS) is raising prices for its highest-demand tickets by $7-$12, while annual passes will see a 6-20% increase. The top-tier pass will now cost $1,749, though the base ticket price remains at $104.

  • ✈️ Boeing Pulls Pay Raise Offer Amid Strikes: Boeing ($BA) has retracted its 30% pay raise offer to 30,000 striking workers and suspended negotiations. Despite delivering 33 jets in September, Boeing’s deliveries for 2024 are down. Meanwhile, the FAA issued a safety alert for 737 planes due to rudder issues.

  • 🍔 McDonald’s Sues Meat Suppliers Over Price Fixing: McDonald’s ($MCD) is suing major U.S. meatpackers, including Tyson ($TSN), JBS, Cargill, and National Beef, alleging a conspiracy to fix beef prices by limiting supply since 2015.

  • 🚕 Supreme Court Rejects Uber and Lyft Appeal: The Supreme Court declined to hear Uber ($UBER) and Lyft’s ($LYFT) appeal, leaving them liable for back wages owed to California drivers misclassified as independent contractors.

  • 💸 Fed Officials Split on Rate Cut Size: Federal Reserve officials were divided at their September meeting over whether to cut interest rates by half a point. Most favored the larger cut to balance inflation concerns with the strong labor market, though a few members argued for a smaller, 25 basis point cut. Since then, the labor market has outperformed expectations, solidifying predictions for a slower pace of future rate cuts.

  • 🚗 Tesla and BYD See Chinese Sales Boost: Tesla’s ($TSLA) Chinese-made EV sales rose 19.2% YoY in September, while its rival BYD saw an even larger surge, with sales increasing 45.56% YoY.

  • 🍟 Lamb Weston Shutters Plant Amid Falling Demand: French fry giant Lamb Weston ($LW) is closing its Washington state plant and cutting production due to declining demand from fast-food chains like McDonald’s ($MCD). The stock has fallen 35% YTD.

  • 🏦 BlackRock Eyes HPS Investment Partners: BlackRock ($BLK) is exploring a potential acquisition of HPS Investment Partners, a move that would push the asset manager deeper into the booming private-credit market. HPS is valued at over $10 billion, though no deal has been finalized. BlackRock is competing with other suitors, including private equity firm CVC Capital Partners.

  • 🇧🇷 X Resumes Operations in Brazil: Brazil’s Supreme Court allowed X to resume operations after the company complied with court orders on hate speech moderation, appointed a local representative, and paid $5.1M in fines. X had been suspended since August.

BUSINESS
WeightWatchers To Offer Compounded GLP-1 Weight-Loss Drugs

WeightWatchers just jumped into the weight-loss drug game with a twist. The company announced it’ll start offering a compounded version of Wegovy (aka a cheaper knockoff) after facing shortages of the real deal.

At $129 for the first month and $189 thereafter, it’s a far cry from the $1,300 price tag of branded options like Ozempic. Naturally, the stock shot up by nearly 47% on the news.

But the real question is—how long can this ride last?

It’s Getting Crowded in Here
WeightWatchers is showing up a bit late to the knockoff Wegovy party, where companies like Hims & Hers and Noom have been hanging out for months. But what WeightWatchers brings to the table is its bread-and-butter combo of behavioral coaching and clinical support.

So, it’s not just about the drugs—it’s about changing the whole lifestyle.

Still, the FDA is cracking down. They’ve already removed drugs like Mounjaro from the shortage list, which means compounded versions could disappear fast. For now, semaglutide (the magic behind Wegovy and Ozempic) remains in short supply, so WeightWatchers might still have time to carve out its slice of the market.

WeightWatchers' Identity Crisis
This move comes at a shaky time for WeightWatchers. They’ve had a rough year, with their stock losing more than 90% of its value. Plus, CEO Sima Sistani exited stage left just two weeks ago, and Oprah—yes, the Oprah—ditched the board earlier this year after admitting she’s been on weight-loss meds herself. Yikes.

But interim CEO Tara Comonte is trying to steer the ship by banking on this drug offering, even as the weight-loss world shifts away from the traditional "dieting" approach that WeightWatchers has been known for.

Can They Keep the Momentum?: The stock surge suggests investors like what they’re seeing for now, but the weight-loss landscape is getting tougher by the day. With FDA regulations tightening and plenty of competitors already in the game, it’ll be interesting to see how long WeightWatchers can keep riding this wave.

Calendar
On The Horizon

Tomorrow

The weekly initial jobless claims report is here again, and all eyes are on it, especially with the Fed’s focus on the labor market as it charts the course for future rate cuts.

However, tomorrow’s CPI report is set to steal the spotlight. CPI tracks the monthly price shifts in goods that Americans buy, making it a crucial measure of inflation. Economists predict a 2.3% annual increase in September’s CPI, up from August’s 2.1%, while core CPI, which excludes the more volatile food and energy prices, is expected to hold steady at 3.2%. If these numbers hold, the Fed may feel more confident about proceeding with rate cuts. But any surprises could throw a wrench in those plans, keeping investors on edge.

Before Market Open:

  • Delta Air Lines ($DAL) has been cruising with a 25% gain in 2024, but the real turbulence could hit with this week’s earnings. It’s the first report since their July tech fiasco that grounded flights and canceled over 7,000 trips worldwide. Management has prepped everyone for a hit to the bottom line, but now the question is, how hard will it land? Analysts expect $1.55 EPS on $14.74 billion in revenue.

  • Domino’s Pizza ($DPZ), the global pizza king, has been slinging pies like a pro, thanks to its massive scale. But last quarter, things got a little sticky with slowing international growth and a sudden decision to stop sharing new store counts. Investors will be hungry for some answers. Consensus: $3.62 EPS, $1.1 billion in revenue.

NEWS
The Daily Rundown

  • 🌪️ Hurricane Milton Heads for Florida: Hurricane Milton, a Category 3 storm, is set to make landfall in Florida tonight, prompting evacuations for nearly 6 million residents. Experts warn of potentially devastating effects, with storm surges expected to reach up to 15 feet.

  • 🤖 AI ‘Godfather’ Wins Nobel Prize: Geoffrey Hinton, a pioneer in AI, won the Nobel Prize in Physics for his work on neural networks. Despite the recognition, Hinton continues to voice concerns about AI, warning of its potential dangers.

  • 📱 TikTok Sued by 14 States: TikTok is facing lawsuits from 14 states alleging that its addictive design harms children’s mental health. TikTok denies the claims, calling them “inaccurate and misleading.”

  • 📉 US Federal Deficit Hits $1.8 Trillion: The US government racked up a $1.8 trillion deficit last year, driven by increased spending on entitlement programs and higher interest payments. Spending on interest alone reached $950 billion—more than the Pentagon’s budget. Both Trump and Harris’s economic plans would add trillions to the national debt.

  • 🔫 SCOTUS Backs Biden’s Ghost Gun Rules: The Supreme Court is likely to uphold Biden’s regulations on ghost guns, which require background checks and serial numbers for DIY gun kits. The ruling would be a major win for gun safety advocates.

  • 🎾 Pickleball Overtakes Tennis Courts: Pickleball now occupies 10% of tennis courts in the US, as clubs convert tennis courts to accommodate the rising popularity of the sport. Tennis players, however, aren’t too happy about losing court space.

  • 🛠️ Home Depot Requires Retail Shifts for Executives: Home Depot ($HD) is making its corporate employees, including top execs, work an 8-hour shift in stores every quarter to better understand the challenges faced by retail staff.

  • 🎟️ Mega Millions Ticket Prices Set to Increase: Mega Millions tickets will rise from $2 to $5 next year, which will result in larger jackpots for players.

RESOURCES
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