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Robert Kennedy Jr. Endorses Trump
Rate Cuts, CEO's Out, A.I. and Mergers on the Rocks.
Read time: 7-9 Minutes | Total words: 1,744
Politics
Kennedy Bows Out, Endorses Trump
Robert F. Kennedy Jr. decided to call it quits on his presidential campaign last week, announcing the news on Thursday.
Kennedy was supposed to make the announcement on Friday, but a Pennsylvania court filing on Thursday spoiled the news. Rumors of such an announcement had been swirling all week, prior to RFK Jr. making it official.
Not only did he announce his withdrawal, but also his endorsement for Republican candidate Donald Trump, joining him on stage at his rally in Arizona on Friday, prompting quite the ovation.
His running mate, Nicole Shanahan, explained on a podcast the dilemma they were facing last week. To paraphrase: continue to run and steal some votes away from Trump? Or join forces with him instead, to make sure to avoid a Harris and Walz presidency?
The Washington Post had reported that Kennedy Jr. asked Trump for a “high-level role” in his administration in order to drop out of the race and offer his endorsement. Reportedly, he made the same offer to Harris, who showed no interest (insert the Michal Jordan “and I took that personally” meme).
The rest of Kennedy’s family didn’t seem too pleased with this decision though.
RFK Jr’s high water mark in the polls was 16% in the spring. But that number, most recently, had dipped below 5%. His campaign did bring some surreal headlines though. Such as the story of Kennedy Jr. dumping a dead bear in Central Park, a parasitic worm eating part of his brain, a story about whether he ate a dog or not, and more. What a world.
From the Hill:
Economy
Rate Cuts Coming Next Month
Strongest signs yet of coming rate cuts.
We might finally get the news so many have been waiting for! Federal Reserve Chair Jerome Powell gave his strongest affirmation yet on Friday that a rate cut WILL be coming next month. How big of a cut? That still remains to be seen.
This would be the first cut to interest rates since the pandemic initially began in 2020. Job data recently released revealed that job growth over the last 12 months was much weaker than previously. And unemployment is also the highest it has been since October of 2021. These are some of the things leading to the assumed cut, along with the fact that they just can’t wait much longer.
Cutting interest rates, which currently sit at a 23-year high, was discussed at their last meeting a month ago, with a “vast majority” of the group believing it would be more appropriate to wait until September to do so.
“The time has come for policy to adjust,” Powell said in his keynote speech at the Fed’s annual economic conference in Jackson Hole, Wyoming. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
“Ultimately, the August jobs report released in early September will determine if the Fed cuts [by a half point] in September,” analysts at Citi said in a note to their clients on Thursday. That job report will be released on September 6th. And if it shows a second straight month of weak hiring, the Fed may even cut its key rate by more.
“The only question remaining for the Sept. 18 meeting is: By how much will the Fed be cutting?” said Joseph LaVorgna, chief economist at SMBC Nikko Securities.
In the meantime, Somebody cue up Bonnie Tyler’s “Holding Out for a Hero” while we wait.
Around the Water Cooler:
Tech
Europe Doesn’t Know What To Do With A.I.
Zuck and Elon offer their opinion
In this new world of AI, some might be in jeopardy of falling behind. That, apparently, is the case for Europe, according to a couple of high ranking executives.
Meta CEO Mark Zuckerberg and Spotify CEO Daniel Elk have criticized European regulations surrounding AI, as they believe the continent WILL fall behind because of their overly complex rules.
The CEO’s released a joint statement on Friday (like when two heavyweights would team up for a rare tag team match, a la Randy Savage and Hulk Hogan), claiming that Europe is actually in a good position to make the most of this AI wave, as they have “more open-source developers than America.” However, they explained that “[Europe’s] fragmented regulatory structure, riddled with inconsistent implementation, is hampering innovation and holding back developers.”
The two also believe that the tech industry in Europe is facing “overlapping regulations and inconsistent guidance on how to comply with them,” instead of clear rules.
The Irish privacy regulator has already asked Meta to not launch its AI models in Europe any time soon. Therefore, Meta won’t be allowed to release its upcoming models, leading to the CEO’s explaining that Europeans will be “left with AI built for someone else.”
Spotify has pointed to their use of AI to create personalized experiences (and playlists) for its users as a big reason for its success.
But Zuckerberg and Elk feel that Europe’s laws, which were originally designed to increase sovereignty and competitiveness, are actually leading to the opposite.
In conclusion, the two CEO’s stated that Europe needs a new approach with clearer policies and more consistent enforcement, otherwise they theorized that Europe will miss a “once-in-a-generation opportunity.”
In other news:
Business
Things Aren’t So Sweet at Nestle
Not long after Starbucks ousted their CEO, Nestle is now following suit. Nestle, “the world’s biggest foodmaker”, let go of (their now former) CEO Mark Schneider on Thursday, due to continued poor performance.
The decision came following a board meeting on Thursday, where Nestle also agreed to appoint company veteran Laurent Freixe as Schneider’s replacement.
The 58-year-old Schneider had spent eight years as the CEO of Nestle, and was the first outsider to lead the company in nearly a century.
Schneider might have been blindsided by the news, after he had, apparently, remarked recently about being with the company for the long haul. Bernstein analyst Bruno Monteyne said that the suddenness of this move is a “sign that this is not a planned transition. It is clearly not [Schneider’s] choice either, or he probably would have managed a smoother transition.”
Following a record high in early 2022, Nestle has been on a downslide since. Sales have increased by only 0.1% for the calendar year of 2024 thus far, concerning the board about weak sales growth. Shares have lost 10.8% of their value so far this year, as well, while rival Unilever’s has increased by 29%! According to sources, the board was also displeased with the company’s product development, or lack thereof, of late.
Nestle's price-to-earnings ratio, used to gauge the relative value of a company's stock, is 17.7, which is down from 25 in June of 2022. It’s also lower now than Unilever’s 18.5.
Freixe, the 62-year-old replacement, has worked for Nestle for nearly four decades. So this new role, in some ways, has been a long time coming for him. Now, we’ll see what he can do with the opportunity.
Industry analysts have said that Nestle’s become too reliant on price increases, which have hurt sales with cash-strapped customers choosing cheaper brands instead. Sounds relatable, right? Maybe Nestle, and other gluttonous companies, should take a page out of Target’s book.
What’s Happening:
Finance
Rates New Springs Stocks
In anticipation of cut to interest rates, the U.S. stock market rallied close to record highs to close out last week.
The S&P 500 rose 1.1%, pulling within 0.6% of its all-time high set last month. It has now clawed back nearly all of its losses from the summer swoon.
The Dow Jones Industrial Average rose 462 points, or 1.1%, to close above the 41,000 level for the first time since it set its own record in July, while the Nasdaq composite jumped 1.5%.
All three indexes ended higher by more than 1% on the week, as well, because of Friday’s gains. Even despite a down day on Thursday. Some notable standouts included Tesla and Nvidia each jumping up more than 4%.
However, there is still a chance that traders have set their expectations too high, expecting greater cuts than what might truly lie ahead for the rest of 2024. We’ll see, come September… we think.
From the Street:
Entertainment
Skydance x Paramount on the Rocks
There’s trouble in paradise, already, between Skydance and Paramount in their potential merger, as Paramount seems to have cold feet and wandering eyes.
Paramount extended their deadline last week to assess bids rivaling Skydance’s, following the reception of an apparent $6 billion offer from media executive Edgar Bronfman Jr. The deadline was pushed back to September 5th, which Skydance lawyers claim is a breach of the terms they had agreed upon.
Skydance claims that Bronfman Jr.’s offer is not superior to their own, and, therefore, does not require an extension of the deadline. Skydance’s offer was, reportedly, for $8 billion.
Bronfman didn’t submit his proposal until last Monday, two days prior to the deadline, after having spent weeks rounding up investors.
According to sources, this offer won’t be enough to derail the Skydance-Paramount partnership. But it should certainly be enough to strain the relationship.
The Skydance deal, approved in July, provided a 45-day “go shop” window for Paramount’s board to attempt to find “superior” offers. Though the offer from Bronfman isn’t superior, in terms of the money, maybe it can still be used by Paramount as a bargaining chip in a game of negotiating hardball.
Both bids would inject $1.5 billion into Paramount's battered balance sheet, allowing them to pay down some debt.
In addition, Bronfman said he would match Skydance's proposal to buy out National Amusements for $2.4 billion. Once the firm's debts of about $650 million are paid, the Redstone family, who owns Paramount, would come away with $1.75 billion. That’s, atleast, once this all gets worked out.
From the Lot: