🐂 Traffic Jams

Markets

Tech stocks that were previously performing well are now experiencing a decline, akin to a bowl of leftover soup being placed in the freezer. The Nasdaq, which has concluded three consecutive weeks of losses, marked its most significant downturn since December. Companies like Meta, Microsoft, Amazon, and Alphabet all saw their stock prices decrease by the end of the day.

Where Investors Are Finding Returns in a World of Yield

After over a decade of extremely low interest rates, Americans are now presented with options as they search for higher yields.

Previously, they earned minimal interest on their funds kept in checking or savings accounts. However, they are now eagerly embracing money-market funds and similar cash-equivalents that offer substantial returns.

The Federal Reserve's assertive campaign to raise interest rates and control inflation has disrupted the long-standing belief that there are no viable alternatives to investing in stocks. Following the stock market's decline last year, many individuals are expressing that they no longer feel compelled to invest in stocks when they can secure a 5% return with minimal risk.

Keith Hagg, aged 50, disclosed that a significant portion of his investment portfolio consisted of equities before the pandemic. However, in recent times, he has been accumulating cash in money-market funds and adjusting his allocation towards bonds as yields have risen.

Tech

San Francisco want to hit the brakes on robotaxis

A series of incidents this week in San Francisco, highlighting instances where robots demonstrated less than optimal performance, has prompted local authorities to attempt to halt the recently approved expansion of self-driving taxis within the city.

Both Cruise, owned by General Motors, and Waymo, owned by Alphabet, have been offering autonomous rides in the city for some time. However, their services were restricted until the previous week when the California Public Utilities Commission (CPUC) granted their request to increase capacity and provide commercial rides 24/7.

However, following a week of mishaps involving Cruise vehicles that would be reminiscent of the Repair Ward from the WALL-E movie universe, the San Francisco City Attorney is calling on the CPUC to temporarily suspend the expansion. Since the approval of the robotaxi expansion on August 10:

• Ten driverless Cruise cars came to a halt, causing congestion at an intersection near the Outside Lands Music Festival. The company attributed the vehicle stoppage to overwhelmed cell networks due to concertgoers, leading to disruptions in the cars' communication.

• Another Cruise car ventured through a construction site and comically ended up stuck in wet concrete.

• An individual was injured when the autonomous Cruise car they were riding in failed to yield to an approaching fire truck, which was en route to an emergency.

Waymo has also encountered its share of incidents. In May, its cars obstructed a firehouse, struck and killed a dog, and halted in front of a public bus. However, since last summer, reports indicate that autonomous car accidents have become less frequent, likely due to the vehicles learning from their experiences to better react to different situations.

Regarding the future of ride-hailing: Even if the CPUC agrees to postpone the recent expansion, it is likely to be a minor setback. This week has seen a surge in app downloads for Cruise and Waymo, and both companies are preparing to introduce their fleets in cities like Los Angeles, New York, Austin, and Miami.

Environment

Hurricane Hilary appears headed for California

The storm that was churning off the coast of Mexico yesterday has led to the issuance of a tropical storm watch for Southern California, marking the first instance of such a watch in the region's history. Should the storm reach California before making landfall in Mexico, it would be the initial occurrence of such a storm hitting the area since 1939. As the storm progresses in the upcoming days, there are predictions of an amount of rainfall that surpasses a year's worth, expected to affect California, Arizona, and Nevada. This heightened precipitation poses a potential threat of flooding and other associated hazards.

World

Another day, another ominous sign for China’s economy

Evergrande, a prominent Chinese real estate giant that had reported a loss of $81 billion in the last two years as of July, has initiated the process of seeking US bankruptcy protection. The company aims to restructure its debt on a global scale. This situation is not unique, as other major Chinese real estate firms are also facing challenges due to the economic aftermath of the pandemic within the country. Additionally, concerns have arisen among analysts about whether China is undergoing its version of the "Lehman moment," signified by asset manager Zhongrong Trust failing to make payments to corporate investors. In response to these events, China has introduced new measures to stabilize its stock market. Nevertheless, despite these efforts, investors have caused Hong Kong (which operates under its own trading regulations but incorporates numerous mainland companies) to slip into bear market territory.

Economy

Drought causes major congestion in Panama Canal

The situation at the Panama Canal is reminiscent of a busy Taco Bell drive-thru on a bustling Taco Tuesday. With over 200 ships patiently waiting their turn to traverse this crucial global trade route, the Panama Canal Authority has recently prolonged traffic restrictions due to an unprecedented lack of rainfall.

In an effort to conserve water, the typical allowance of 36 ships passing through daily was reduced to 32 last month, leading to a substantial accumulation of ships waiting in line. Notably, wait times for large container ships have surged to between 16 and 17 days, which is actually longer than the time it takes them to cross the entire expanse of the Pacific Ocean, as highlighted by an analyst featured in Seatrade Maritime News.

The significance of the Panama Canal in facilitating about a third of the trade activity between the Americas and Asia is underscored by the Wall Street Journal. However, delays in passage and a regulation imposing weight limits on certain vessels have already begun to drive up shipping expenses. This trend is occurring precisely as numerous companies are intensifying their efforts to fulfill delivery requests in anticipation of the upcoming holiday season. Regrettably, these escalated costs might ultimately be transferred to consumers, resulting in higher expenses for holiday gift-giving.

Looking ahead, the increasing frequency of droughts in the region has spurred the Panama Canal Authority to explore potential engineering remedies. These solutions are aimed at safeguarding the canal's longstanding status as a pivotal shortcut for global shipping routes.

Entertainment

Spotify thunderstorm soundtracks

As we composed this newsletter, we believed we were the sole beneficiaries of the soothing sounds of thunder. However, it turns out that white noise podcasts have garnered such widespread popularity that Spotify contemplated removing them from their platform, potentially generating an additional $38 million annually, as revealed by an internal memo viewed by Bloomberg.

According to Spotify's internal document, as of January 2023, white noise and ambient podcasts (including mixes like rainforest sounds, static, or even lawn mower noises) accounted for a staggering "3 million daily consumption hours on the platform."

Despite the considerable engagement with these calming auditory offerings, Spotify found that they weren't generating substantial revenue. Even though advertisements were bringing in approximately $18,000 per month for these tranquil sound producers, Spotify's algorithms were consistently directing listeners towards talk-based content, aligning with the platform's robust investment in such programs to boost subscription numbers.

Fans of ethereal box fans can breathe a sigh of relief, at least for the time being. While Spotify did entertain the idea of removing white noise content and preventing future uploads in an attempt to curtail those exploiting the system with looping bird sounds, the company ultimately chose not to proceed with this plan. Thus, you won't be left with only Joe Rogan's voice to lull you to sleep. Nonetheless, a few creators of static noise have recently voiced concerns in Reddit discussions about their content occasionally disappearing from the platform.