🐂 Look out, Apple

Markets

Stocks experienced a rise yesterday; however, it's worth noting that all three major indexes concluded the week with declines. This decline was largely attributed to investor apprehension surrounding Jerome Powell.

Kroger saw a modest increase in its stock price following an announcement that the grocery chain had reached a $1.2 billion settlement regarding opioid sales claims. Concurrently, Kroger also entered into an agreement to sell 400 stores for $1.9 billion, a move aimed at obtaining approval for its merger with Albertsons.

An Important Shift in Fed Officials’ Rate Stance Is Under Way

For over a year, Federal Reserve policymakers were unanimous in their stance that they would prefer to raise interest rates too aggressively rather than too conservatively, underscoring their deep concerns about the persistent threat of high inflation.

However, this stance is undergoing a transformation.

While some officials still advocate for a cautious approach, leaning towards raising rates more than needed with the idea that they can always be reduced later, there is now a shift among other officials who view the risks as more evenly balanced. They are growing concerned about the possibility of raising rates and inadvertently triggering an unnecessary economic downturn or sparking a fresh bout of financial instability.

This shift towards a more balanced approach to interest rates is being driven by data indicating a moderation in inflation and a labor market that is no longer as overheated. Furthermore, the rapid pace of interest rate hikes implemented over the past year and a half is expected to continue dampening demand in the coming months.

Federal Reserve officials have raised interest rates at 11 out of their past 12 meetings, with the most recent increase occurring in July, bringing rates to a range between 5.25% and 5.5%, a level not seen in 22 years. It appears that they are largely in agreement to maintain interest rates at this level during their meeting on September 19-20, allowing them more time to assess the economic response to these rate hikes.

The key debate revolves around what would prompt them to raise rates again, possibly in November or December. In June, the majority of officials projected that an additional quarter-point rate hike would be necessary this year. The projections to be released at the end of the September meeting are likely to indicate that such an increase is still under consideration. However, whether they actually proceed with it remains an open question.

World

Putin wants his Hitman back

In 2019, a shocking incident unfolded in Tiergarten park, where Russian assassin Vadim Krasikov, riding a bicycle, closely trailed his target to a bustling children's playground during lunchtime. This park, a popular summer destination in the heart of the city, was teeming with families and workers at the time.

As Krasikov's quarry entered Tiergarten park, he maintained a close pursuit. Not far from the swings, he retrieved a pistol from his rucksack and coldly fired a shot into the man's back, leaving his victim—a former Chechen insurgent leader—slumped on the ground. Unfazed, Krasikov dismounted his bike and proceeded to discharge two more rounds into the man's head. Shockingly, this gruesome act played out before the eyes of children and parents, as recounted by witnesses during the subsequent court trial that resulted in his conviction.

This murder, the 2019 killing of Zemlikhan Khangoshvili, a figure Moscow accused of leading a 2004 attack in Russia, was determined by a German court to be a deliberate and brutal message from Russia to its adversaries abroad: No matter where you seek refuge in the West, we will pursue you.

Shortly prior to the 2021 verdict, Russian President Vladimir Putin instructed his top security adviser, Nikolai Patrushev, to explore the possibility of a prisoner exchange to secure Krasikov's release. This move underscored the significant value placed on Krasikov by Putin, a former KGB operative who later headed its successor agency, the Federal Security Service (FSB).

Subsequently, Moscow has brought up Krasikov's case during discussions on prisoner swaps, as confirmed by Western officials. It is believed that Krasikov's release is central to U.S. efforts aimed at securing the freedom of individuals held by Russia, which may include U.S. Marine veteran Paul Whelan and Wall Street Journal reporter Evan Gershkovich. Gershkovich, a 31-year-old U.S. citizen, was detained by the FSB on March 29 while on a reporting assignment and faces charges of espionage, which he, the Journal, and U.S. officials vehemently deny.

According to a high-ranking Western official involved in diplomatic negotiations concerning hostages with Russia, Putin has expressed interest in exchanging only for Krasikov. In the past, Putin has sought the return of agents arrested during clandestine operations conducted abroad. For instance, in 2004, he expressed gratitude to the Emir of Qatar for returning two individuals convicted there for planting a car bomb that killed a Chechen rebel leader on the run, although Russia denied responsibility for the assassination.

Officials from various countries have suggested that a multilateral agreement to swap Russian detainees held in Western countries for Western citizens incarcerated in Russia, as well as imprisoned dissidents like Alexei Navalny, is feasible.

Tech

Apple Becomes the Biggest U.S.-China Pawn Yet

Apple, often regarded as the king of tech with its stock symbol AAPL showing a 0.35% increase, is finding itself caught up in the escalating economic tension between the world's two largest economies. While it remains the largest publicly traded company globally based on market value, Apple is experiencing a significant dip in its valuation due to mounting concerns about its business operations in China.

Recent reports from The Wall Street Journal and Bloomberg have highlighted that the Chinese government is implementing a ban on the use of iPhones and other foreign-branded devices by employees of central government agencies. Furthermore, there is speculation that this ban might be expanded to include state-owned enterprises and other government-affiliated entities. This move could potentially affect a substantial portion of the Chinese population, given the nation's massive population of over 1.4 billion.

According to data from China's National Bureau of Statistics, approximately 56.3 million urban workers were employed by "state-owned units" in 2021. These jobs typically offer wages approximately 8% higher than the national urban average, making them an attractive demographic for a company like Apple, which specializes in premium devices. Considering that Apple ships approximately 230 million iPhones worldwide every year, losing access to 56 million potential buyers is a significant blow, particularly in a mature global smartphone market with limited growth prospects.

Adding to Apple's challenges in the Chinese market, Chinese tech giant Huawei Technologies has introduced a new smartphone that reportedly offers speeds comparable to 5G technology, despite facing a U.S. ban on the advanced chips typically required for such devices. The new smartphone, known as the Mate 60 Pro, quickly sold out and has generated substantial backorders. Significantly, it was launched just ahead of Apple's anticipated unveiling of its latest iPhone lineup at an event scheduled for the following week.

Finance

SEC Probes Ryan Cohen’s Bed Bath & Beyond Trades

The Securities and Exchange Commission (SEC) is currently conducting an investigation into the ownership and unexpected sale of Bed Bath & Beyond shares by billionaire Ryan Cohen, a move that occurred during the surge in popularity of so-called "meme stocks" among investors.

Ryan Cohen initially invested $120 million in Bed Bath & Beyond and advocated for changes in the retailer's sales strategy. However, in August 2022, he abruptly sold his 11.8% stake in the company, shortly after tweeting positively about it. This five-month investment yielded him a profit of nearly $60 million.

Cohen's involvement with the company sparked a trading frenzy, causing its stock to soar by 34% in a single day. However, the stock quickly plummeted when he disclosed his sales, despite having recently secured the appointment of three new board members.

The SEC has initiated an investigation into Cohen's trades and his communications with Bed Bath & Beyond's officers and directors, as reported by individuals with knowledge of the matter. The regulator has also requested records from some of the company's current and former board members.

It's important to note that SEC civil investigations can be lengthy, sometimes lasting more than two years, and they may conclude without formal allegations of wrongdoing being brought by the regulator.

Ryan Cohen, known for founding the online pet retailer Chewy, has garnered a substantial following among individual investors who tend to follow his stock purchases. Notably, he assumed control of video game retailer GameStop in 2021 and currently serves as its executive chairman.

In addition to the SEC investigation, a group of Bed Bath & Beyond investors filed a lawsuit against Cohen in a Washington, D.C. federal court last year. They alleged that he engaged in fraudulent activities because he was aware of undisclosed negative news about the company when he sold his shares. These investors claim that Cohen's statements on Twitter and in SEC filings were part of a strategy to artificially boost the stock's value and then profit from the subsequent downturn, causing significant losses for smaller investors.

Sports

Tennis’s Teenage Sensation Wins Her First U.S. Open

Coco Gauff's victory at the U.S. Open on Saturday was a moment of sheer delight—a pivotal breakthrough in the career of a young tennis sensation who initially captivated the world's attention at Wimbledon when she was just 15 years old. Since then, she has embarked on a more extended and occasionally challenging journey towards securing her first major tournament victory.

At the age of 19, Gauff has become the youngest American winner at the U.S. Open since Serena Williams in 1999. She is a modern champion with an endearing charm—immediately after her win, she even tried to FaceTime her brother from the court. However, her hard-fought 2-6, 6-3, 6-2 triumph over the World No. 1, Aryna Sabalenka, can be attributed to two decidedly traditional qualities: defensive prowess and composure.

Defensive tennis seldom receives the recognition it deserves because it involves unglamorous, relentless effort. Essentially, it entails running tirelessly in various directions, mainly lateral but also forward and backward, in order to extend rallies. Often, it means making not the best shots you can, but the best shots available to keep a point alive.

The skills required to excel in defensive tennis—sprinting, sliding, maintaining pace, employing slice forehands and backhands, and, above all, endurance—are not glamorous to develop. They are honed during solitary offseason days, in grueling footwork drills that can make you question your love for the sport. However, they are undeniably crucial. A mastery of defensive tennis enables a player to remain competitive even when the opponent is performing at a high level, and one's own shots are not cooperating.

In the words of one of Gauff's coaches, Brad Gilbert, "It's about winning when you're playing at an average level." Gauff consistently demonstrated her ability to claw her way back into matches and secure victories, even when she couldn't dictate the terms of play or land her own winners.