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Stocks experienced a minor decline yesterday, despite a recent slowdown in the inflation indicator favored by the Fed. However, taking a broader view reveals a more positive trend: Tech-heavy Nasdaq stocks saw significant gains in the first half of the year, buoyed by enthusiastic investor support for AI technologies.

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Government

Supreme Court Took The Regulators’ Power

Yesterday, the Supreme Court delivered a significant blow to federal agencies' authority in a landmark decision reminiscent of Kathy Bates's iconic role in the film Misery.

In a 6–3 ruling divided along conservative and liberal lines, the SCOTUS overturned the long-standing Chevron doctrine, a pivotal legal precedent established 40 years ago. This doctrine had granted broad discretion to federal agencies such as the CDC and FCC in interpreting ambiguous laws related to sectors like healthcare and net neutrality since 1984.

With the Chevron doctrine now revoked:

• Courts are no longer obligated to defer to agencies' interpretations of unclear laws. This change is expected to complicate the ability of agencies—led by subject matter experts appointed by the president and confirmed by the Senate—to effectively regulate their respective industries.

• Responsibility for interpreting how statutes should be applied will revert to judges, who may lack the specialized knowledge that agencies like the EPA possess on complex issues such as factory emissions.

Chief Justice Roberts, in the majority opinion, clarified that the thousands of lower court decisions and Supreme Court rulings relying on the Chevron doctrine will remain valid. However, future federal regulations that are not explicitly supported by clear legislative directives are likely to face increased legal challenges.

Potential targets for legal challenges include recent EPA regulations on car and power plant emissions, the FDA's fast-track approval process for breakthrough drugs and medical devices, and the FTC's recent ban on noncompete agreements, as reported by Bloomberg. Justice Elena Kagan, in her dissent, cautioned that the decision could also jeopardize longstanding agency regulations that have not been previously contested.

This decision marks a significant victory for legal conservatives who have sought to limit the authority granted to unelected bureaucrats, whose actions often align with the political ideologies of the sitting president. Moreover, the ruling could pave the way for substantial policy reversals should there be a change in administration, potentially undoing Biden administration initiatives if former President Trump returns to office.

Retail

Nike Stock Fumbles

Nike experienced its most significant stumble since your middle-school math teacher sported Air Force 1s to homeroom. The sportswear giant's shares plummeted by 20% following its announcement that sales are projected to decline by 10% in the current fiscal quarter.

Analysts point to several strategic errors by Nike, such as a lack of innovation compared to fast-moving competitors like On Running and Hoka. Despite attempts to shift focus away from retailers like Foot Locker towards direct sales via its own stores and website, Nike admitted in April that this approach had backfired.

Once a standout in the sneaker industry, Nike has seen its stock drop by more than 17% over the past year. In its latest fiscal year, the company reported flat sales and its slowest annual growth in 14 years, excluding pandemic disruptions. Nike's lifestyle division, particularly the Converse brand, is now trailing competitors.

Nike's new strategy aims to revitalize its market position by prioritizing the launch of new product lines, an area where it has recently fallen short. Additionally, the company hopes to regain ground among 1) Chinese consumers with new high-end Jordans and 2) customers lost to rivals such as Adidas, Hoka, and On.

Artificial Intelligence

Companies Mad At Perplexity AI

A controversial AI company, Perplexity AI, has stirred up a storm in the publishing world and drawn the ire of tech giant Amazon. The company, known for its chatbot-powered "answer engine," is under investigation for allegedly plagiarizing content from major publishers.

Here's the sequence of events:

• Forbes recently accused Perplexity of appropriating one of its articles, complete with a custom illustration, and attributing it with only the word "sources" and a small Forbes logo.

• WIRED further claimed that Perplexity intentionally evades websites' Robot Exclusion Protocol, a safeguard meant to prevent bots from scraping content, which has been crucial for maintaining the integrity of the internet.

• Amazon Web Services has initiated an inquiry into whether Perplexity utilized a tool hosted on AWS servers to carry out these actions, potentially violating AWS's terms of service, as reported by WIRED.

Perplexity has refuted allegations that its servers bypass the Robots Exclusion Protocol ("robots.txt"), stating instead that it employed a third-party web scraper that may have done so.

In broader terms, while Perplexity is not the first AI company to develop chatbots capable of answering user queries like "are Sagittarius and Leo compatible?", its alleged disregard for robots.txt is significant. While not necessarily illegal, such actions are heavily frowned upon, akin to unsportsmanlike conduct in professional tennis.

E-Commerce

Amazon is Launching a Shein Competitor for Discounts

Amazon is preparing to launch a new section on its website dedicated to ultra-affordable goods directly sourced from China, as reported by The Information. This move is seen as Amazon's robust response to the rising popularity of bargain-focused platforms like Temu and Shein.

In a strategy that mirrors its competitors, Amazon's forthcoming section will offer a variety of products, predominantly priced under $20, ranging from clothing to fitness equipment to gua sha facial tools. Notably, items sold will exclude perishable or liquid goods.

Orders will be fulfilled directly from Chinese warehouses, with delivery times estimated between nine to 11 days to US customers. While this is slower than Amazon Prime's expedited shipping, the success of platforms like Temu and Shein suggests that many consumers are willing to wait longer for significant savings.

An advantageous aspect for Amazon's new venture is its utilization of the de minimis exemption, a controversial provision that exempts individual foreign shipments valued at less than $800 from import tariffs. Both Temu and Shein capitalize on this loophole, and Amazon's direct-from-China model will similarly benefit.

Meanwhile, TikTok has also entered the retail sphere with its TikTok Shop sale scheduled to commence on July 9, just two days after Amazon announced Prime Day for July 16 and 17.

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