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💳 Visa Gets Slapped with Antitrust Lawsuit

+ Bank Of China’s Stimulus: Band-Aid on a Broken Leg

Good afternoon! Caroline Ellison, the former CEO of Alameda Research, was sentenced to two years in prison for her role in the FTX collapse. Despite helping prosecutors convict Sam Bankman-Fried, the judge made it clear that cooperation doesn’t mean a free pass. Along with the prison term, she’s been ordered to forfeit a cool $11 billion.

Ellison’s sentencing is another chapter in the FTX drama that rocked the crypto world. While her testimony helped bring down the house of cards, the scale of the fraud meant leniency was off the table. Now, all eyes are on what happens to the other key players.

MARKETS

*Stock data as of market close*

  • US stocks wrapped up the day in the green, shaking off a downbeat consumer confidence report. The S&P 500 snagged another record close, rising 0.3%, while the Dow and Nasdaq followed suit. A major stimulus package from China gave the market a little extra juice, especially for companies with global ties.

  • China’s economic boost sent ripples across global markets, propping up various sectors. Even with the soft consumer confidence data, investors kept their cool, banking on recovery hopes to keep the momentum going.

STOCKS
Winners & Losers

What’s up 📈

  • Liberty Broadband ($LBRDK) surged 25.92% after submitting a counterproposal to Charter Communications for combining the two businesses.

  • Tencent Music Entertainment ($TME) jumped 16.40% after the Chinese government and central bank unveiled the country's biggest stimulus measures since the pandemic.

  • Alibaba ($BABA) increased 7.88% as shares of Chinese companies soared after China’s central bank introduced a host of stimulus measures.

  • Smartsheet ($SMAR) climbed 6.47% after beating second-quarter earnings estimates, reporting adjusted earnings of 44 cents per share on revenue of $276.4 million. Additionally, Reuters reported that Vista and Blackstone are in talks to acquire Smartsheet.

  • Estee Lauder ($EL) rose 6.09% in response to China’s central bank lowering interest rates, a significant market for the struggling cosmetics giant.

  • Nvidia ($NVDA) ticked up 3.97%, following the CEO Jensen Huang's announcement that he had completed his stock selling under a prearranged plan, netting over $700 million.

  • Caterpillar ($CAT) increased 3.98%.

  • Uber ($UBER) climbed 3.65%.

What’s down 📉

  • Visa ($V) fell 5.49% after a Bloomberg report stated that the Justice Department is preparing to file an antitrust lawsuit against the credit card network and payments processor.

  • Regeneron Pharmaceuticals ($REGN) declined 4.21% following a federal judge's decision preventing it from blocking Amgen’s launch of a product mimicking its eye-care drug, Eylea.

  • Celsius Holdings ($CELH) slipped 3.57% after Morgan Stanley analyst Eric Serotta lowered the firm’s Q3 sales estimate by 8%, reflecting accounting related to PepsiCo’s inventory reduction.

  • Sirius XM ($SIRI) dropped 5.84%.

  • Synchrony Financial ($SYF) decreased 3.00%.

LEGAL
Visa Gets Slapped with Antitrust Lawsuit

What’s the Charge? The U.S. Department of Justice (DOJ) has Visa in its crosshairs, accusing the payment giant of illegally monopolizing the debit card market. According to the DOJ, Visa’s control over 60% of the $4 trillion debit transaction market has allowed them to bully merchants and tech rivals into submission. Think steep fees, restrictive contracts, and massive payouts to ensure no one else gets a slice of the pie.

The Long Play: This isn’t Visa’s first antitrust tango. The lawsuit follows a yearslong investigation that began after Visa tried to acquire fintech firm Plaid in 2021—a move the DOJ swiftly blocked. Visa’s alleged game plan? Pay off competitors like Apple, PayPal, and Block (formerly Square) to keep them from developing rival tech.

Attorney General Merrick Garland didn’t mince words: “Visa’s unlawful conduct affects not just the price of one thing—but the price of nearly everything.”

How’s Visa Feeling? Visa’s General Counsel Julie Rottenberg fired back, calling the lawsuit “meritless” and reminding us all that Visa is just one player in a growing, competitive debit market. With a touch of PR spin, she added that Visa’s innovations help consumers—though, maybe not their wallets.

Bigger Picture This case is part of the Biden administration’s broader crackdown on industry giants that dominate markets. Visa’s been here before, but this time, the DOJ is coming for their debit throne. With over $7 billion in annual swipe fees on the line, Visa's legal defense is shaping up to be just as costly.

Meanwhile, Visa shares? Down 5%.

If Visa loses, it could mean lower transaction fees for merchants and more competition in the payment space. But the fight won’t end anytime soon—expect this case to stretch over the next few years. And who knows, a new administration may have different ideas. Either way, Visa’s dominance might finally meet its match.

NEWS
Market Movements

FOREIGN
Bank Of China’s Stimulus: Band-Aid on a Broken Leg

China just launched its biggest economic stimulus since the pandemic, and while it sent Chinese stocks soaring, it’s more of a temporary fix than a real solution. The People’s Bank of China (PBOC) cut interest rates, loosened bank reserve requirements, and rolled out new housing incentives to give the economy a boost.

But here’s the problem: cheap credit alone won’t fix China’s deep-rooted economic issues.

Stock Market Sugar Rush: Let’s start with the bright spot—Chinese stocks had a stellar day. JD. com, Alibaba, and PDD Holdings (yep, Temu’s parent company) saw double-digit gains, lifting the CSI 300 index by 4.33%, its biggest surge in four years. Sounds promising, right? Well, hold up—despite that pop, the CSI 300 is still down around 1% for the year, while the S&P 500 is up 21%. So while China’s market caught a break, Wall Street’s still winning the race.

Property Market in Freefall: The real issue here is China’s property market, which has gone from being a powerhouse to a sinkhole. Once accounting for a third of the economy, it’s now in a freefall, with prices continuing to drop and developers collapsing into bankruptcy. Beijing’s previous efforts to revive the market haven’t worked, and this latest push—lowering down payments on second homes to 15% and expanding loan guarantees—probably won’t either.

Here’s the kicker: only 11% of urban Chinese think home prices will rise next quarter. For context, that’s about as optimistic as expecting Blockbuster to make a comeback.

Cheap Credit Won’t Cut It: Sure, Beijing’s stimulus will provide a short-term jolt to stocks and housing, but it’s not a long-term fix. Throwing more credit at the economy won’t solve the underlying problem: a lack of private-sector innovation. Instead, the government is using financial tricks like subsidizing stock buybacks and offering cheap liquidity to institutional investors.

What China really needs is to loosen its grip on private businesses. But Xi Jinping’s ongoing crackdown on tech companies and private enterprises has left lasting scars. Until Beijing gives entrepreneurs the freedom to innovate, all this stimulus is like putting a Band-Aid on a broken leg.

Calendar
On The Horizon

Tomorrow

Get ready for another housing update tomorrow, this time with a focus on shiny new single-family homes. This report is key because it gives us a peek into how many homes were sold and at what price.

In July, new home sales hit 739,000, up 5.6% from the previous year, but economists expect August sales to cool off to around 700,000. One thing that probably won’t cool? Home prices. The median price for a new home spiked to $429,800 in July, a four-month high, and unless supply picks up, that number isn’t budging anytime soon.

After Market Close:

  • Micron Technology ($MU) might have cooled off since its peak in mid-June, but it's far from out of the game. The demand for its chips is still going strong, even if the buzz has quieted down, and the current dip in its stock price could be a prime value play. The consensus for the upcoming report? $1.13 in earnings per share and $7.63 billion in revenue.

NEWS
The Daily Rundown

  • 🚗 US Moves to Ban Cars with Chinese Tech: The US announced plans to ban cars with Chinese software on national security grounds. The Commerce Department's proposed rule aims to prevent the Chinese government from using smart cars to track Americans or cause disruptions through cyber sabotage. The ban is expected to apply to 2027 model cars and beyond, while hardware from China and Russia will be banned starting with 2030 models.

  • 💣 Israeli Strikes on Hezbollah Kill Hundreds in Lebanon: Israeli airstrikes targeting Hezbollah in Lebanon have killed at least 490 people, including 35 children, and injured 1,600. Israel's military has intensified attacks on Hezbollah, hitting over 1,300 targets as the group continues to shell northern Israel. Tensions are rising, raising concerns about a broader regional conflict.

  • 📝 Would-be Trump Assassin Detailed Plans in a Letter: Prosecutors revealed that Ryan Wesley Routh, who is accused of attempting to assassinate former President Donald Trump, wrote a letter detailing his intentions and offering $150,000 to “whomever can complete the job” if he failed. Routh was discovered near Trump’s Mar-a-Lago club and is being held without bail.

  • 🏢 Now Leasing: Apartments in Goldman’s Old HQ: Goldman Sachs’s former headquarters at 55 Broad Street in NYC has been converted into a luxury apartment building. Leasing has begun for 571 units, with studios starting at $4,000 per month. The conversion is part of a growing trend to transform vacant office buildings into residential spaces.

  • 🏬 Kmart to Close Its Last Full-Size US Store: Kmart will shutter its final full-size US location in Bridgehampton, NY, on October 20. The once-mighty retail chain now has only a few stores left in the US, Guam, and the Virgin Islands, far from the 1,400 stores it had when it merged with Sears in 2005.

RESOURCES
The Federal Reserve Resource

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