Hello! Fed up with Airbnb and back to booking hotels? The short-term rental giant is considering offering luxurious services to guests as a way to win back passengers, according to one executive.
But first, what happened?
If this has been forwarded to you, register here.
The big story
Bleeding the market
iStock; Rebecca Zisser/BI
wake me up when September August ends.
We’re only six days into the month, but investors are surely already sick of August after another brutal day of trading.
Confused by what’s going on? Let’s break it down.
What is happening in the markets? For the third day in a row, US stocks were hit. The S&P 500 fell 3% on Monday and is down more than 8% from its all-time high in mid-July. The tech-heavy Nasdaq ended Monday down 3.43% and is down more than 13% from its record high.
It smells. What caused the decline? Several factors are at play here:
- Big Tech, the backbone of the market, had weaker-than-expected earnings last week.
- The Federal Reserve held interest rates steady on Wednesday, diverging from other central banks. (More on that in a bit.)
- Data released on Thursday and Friday showed weak output numbers, light hiring and a surprise rise in the unemployment rate.
I heard something about Japan too? Yes, unlike the rest of the world, Japan has kept its rates extremely low while fighting deflation. This makes it a prime target for a type of arbitrage trade, where firms borrow money in yen and then invest in currencies that yield higher interest rates. But last week Japan’s central bank raised rates, which sent its currency higher and affected its mainly export-facing stock market in process.
And did I hear Warren Buffett’s name? Berkshire Hathaway, his conglomerate, has sold approx half of its stake in Apple during the last quarter. His company now has $277 billion in cash, which has some people nervous that the Oracle of Omaha has no stock. (But this is a wrong theory.)
So how is the market reacting? There are many investors repositioning their portfolios for a recession. Defensive stock sectors like consumer staples and utilities, which perform well when times get tough, are on the rise. Investors are also flocking to dividend-paying stocks and government bonds.
Hedge funds are a mixed bagwith some winners (investors who thrive in volatile markets) and losers (Asia-focused firms and currency traders).
Meanwhile, some mom-and-pop investors were thrown out of the action when top brokers faced blackouts on Monday morning. (Maybe it was a blessing; the worst thing you can do is panic sell.)
In such cases I am glad I invested in bitcoin. Ummmm.
Ok, I’m officially crazy. Who can I blame? Before you could even grab your fork, a sale was somehow expected. The market has felt overvalued for a while, so it’s only natural that investors might be looking to take some money off the table. But I guess you don’t want to hear that.
Stares menacingly If you are desperate to place the blame somewhere, you can start with Fed. Many economists think the central bank dropped the ball by not cutting rates last week.
Can they fix this? The next rate cut meeting won’t be held until September. STILLthere was talk about an emergency fee reduction as soon as next week. But this usually happens alone during extreme emergencies.
That was kind of bad. Any good news? As bad as things have been, the US is not in a recession. Former Fed official Claudia Sahm, who created a widely followed recession indicator, is optimistic about the future of the economy.
3 things in the market
Michael M. Santiago/Getty; Jenny Chang-Rodriguez/BI
- Jensen Huang sold millions in Nvidia stock right before the market crashed. CEO of Nvidia disposed of $323 million of his stock at the chip company ahead of a brutal global selloff. His decisions, though premeditated, were timely: Nvidia shares have fallen about 20% over the past month, as investors begin to question the company’s lavish spending on AI.
- Citadel’s Ken Griffin wants you to stay away from weed. The billionaire pledged $12 million to try to stop a change he was about to make legalize recreational weed in florida. Passing Florida’s bill would lead to “crime skyrocketing, child suffering” and “a decline in the quality of life in Florida’s vibrant neighborhoods,” Griffin wrote in an op-ed.
- Fewer people are moving, and it’s not just because of mortgage rates. There was a 4% drop in moves for the second quarter of 2024 compared to last year, according to Bank of America. Big deterrents for potential movers, in addition to high rates, were insurance and property taxes.
3 things in technology
Getty Images; Jenny Chang-Rodriguez/BI
- The era of Big Tech’s “cool dad” is over. The industry is in the midst of a mid-life crisis. Tech giants are turning into flashy trinkets instead of products people want (and need). From Google to Amazon, the world’s largest Tech companies are trying hard to be cool and entering the era of their divorced father.
- Thinking about a career in AI? Think again. Following the works of AI may not be the best idea, according to the chief AI architect at NYU’s business school. That’s because the tech sector periodically explodes, gobbling up job opportunities — and Big Tech’s recent earnings signal that the AI buzz may be about to explode.
- Nvidia is ditching one of its big promises. In May, CEO Jensen Huang said that Nvidia would release a new product every year. But the news that the company’s next chip release has been delayed has some question marks if Nvidia can deliver on that promise.
3 things in business
Getty Images; iStock; Natalie Ammari/BI
- The death of the millennial lifestyle subsidy. Once upon a time, new apps like Uber and Airbnb offered luxury amenities at low prices to build customer loyalty. But now that these apps have made it big, those low prices have gone up. This has left a generation accustomed to low-cost luxury turning to old-fashioned alternatives To save money.
- Google takes a big hit to destroy trust. A federal judge in DC ruled that Google has violated antitrust laws paying billions to keep its search engine the default on US web browsers – an effective search monopoly. The decision can seriously hurts Google’s revenue and could signal more antitrust enforcement other Big Tech companies.
- Amazon is raising the hiring bar for some tech jobs. The e-commerce giant is restoring part of the interview process for entry-level software engineers who will need to answer questions about Amazon’s leadership principles. It aims to boost the quality of new hires, but also reflects a shift in strategy to be more cost-conscious as its growth slows.
In other news
what is happening today
- The Fortune 500 ranking of the world’s largest corporations was published.
- The first batch of Chinese G60 Starlink satellites is said to be launched today. The effort is in direct competition with Elon Musk-backed US Starlink.
The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, London. Annie Smith, Associate Producer, London. Amanda Yen, friend, in New York.