💰 5 Fact Friday: What The Cut?

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MARKETS
1. Quarterly Reports On The Chopping Block 🪓

Trump is back on his business-friendly beat, reviving an old proposal to cut quarterly earnings reports — literally.

His proposal? Move to semi-annual reporting, halving the cadence of financial updates for public companies from four times a year to two.

It’s a controversial pitch. But he’s not alone.

Warren Buffett and Jamie Dimon have long argued that quarterly earnings encourage short-termism. In a 2018 Wall Street Journal op-ed, the duo warned that frequent guidance pushes companies to game earnings.

🔎 Example: A CEO might authorize buybacks to boost earnings per share (and their own bonus). This move comes at the expense of R&D or building a new plant, investments that may take years to pay off… long after they’ve left the company.

📈 The Case For Less Reporting

• Longer time horizons: With fewer check-ins, executives may feel freer to take big swings on innovation or long-term capex.

• Lower compliance costs: Audit and regulatory costs range from $1M–$4M/year for smaller firms, and $10M+ for large ones. Slashing reports = instant savings.

• More IPOs, faster growth: Less red tape could make going public more attractive, bringing companies like SpaceX and Stripe to market — and sharing the wealth creation with the public.

SEC Commissioner Paul Atkins and Nasdaq CEO Adena Friedman support the shift, saying it would “minimize the friction, burden and costs associated with being a public company.”

📉 The Case Against

• Less transparency: With fewer check-ins, bad actors can bury problems longer — especially in firms without analyst coverage.

• Power to insiders: Hedge funds like Citadel and Millennium rely on volatility from earnings, and say cutting frequency tilts the playing field toward management.

• Investor backlash: When small-cap firms on the Tel Aviv Stock Exchange switched to semi-annual reports in 2017, their stock prices fell 2% on average. Meanwhile, firms that kept quarterly reports saw a 2.5% bump.

Supporters say it’s a step toward long-term thinking. Critics say it opens the door to bad behavior. Where do you stand?

ECONOMY
2. The Fed Is Back In Cutting Mode ✂️

After a 9-month break, the Fed just resumed its march toward normal.

On Wednesday, Jerome Powell announced a 0.25% rate cut, bringing the Fed Funds rate down to 4.0%–4.25%. For a central bank that has held rates well above the “neutral” level to tame inflation, this was a step toward balance.

Powell described the move as a “risk-management cut,” a clear sign that the job market is now the Fed’s top concern.

“Our tools can’t do two things at once,” he said.

In other words, interest rates can’t fight inflation and support hiring at the same time. With tariff-driven inflation coming in “slower and smaller” than expected, the Fed is choosing to protect jobs.

The Summary of Economic Projections (aka the Dot Plot) shows:

• Two more cuts in 2025

• One more in 2026, followed by a gradual decline to ~3.0%

• A wide range of views: 6 officials want no more cuts next year, and one even projects a hike

As Powell put it, today’s economy is “historically unusual.” Policymakers are split, and the path forward is anything but clear.

Why The Cut?

Because the labor market isn’t as strong as it looks.

• Unemployment ticked up to 4.3%

• Wage growth slowed to 3.7%, easing inflation pressure

• Excluding healthcare, private-sector job growth has turned negative

• 911,000 jobs were recently revised away, the steepest downward revision in decades

The job finding rate is “very, very low” especially among recent grads, young workers, and minorities. Any uptick in layoffs or AI-related job displacement could quickly increase the unemployment rate.

The Takeaway

This isn’t a pivot party — it’s a precaution.

The economy remains mixed: inflation isn’t dead, growth hasn’t collapsed, and employment is softening in ways that aren’t always obvious in the top-line numbers.

The Fed’s message? Cuts are coming, but they’ll be measured. In Powell’s words: “There are no risk-free paths now.”

In a moment like this, that might be the most honest thing he could say.

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FAST FACTS
3. Strip Club Execs Make It Rain… Bribes 🕺

💰 Elon doubles down on Tesla — Musk just bought $1B worth of $TSLA ( ▼ 2.12% ) stock, his first open-market buy since 2020, sending shares up 6% and reviving investor confidence. [Read]

🏠 Shkreli vs. Opendoor — Infamous “Pharma Bro” Martin Shkreli revealed a new short bet against $OPEN ( ▼ 2.64% ), which dropped 5% after his post. The stock is still up 463% YTD. [Read]

🎥 TikTok deal nears finish line — Oracle, Silver Lake, and A16Z are set to control 80% of TikTok’s U.S. biz under a new proposal backed by Trump. [Read]

🧠 ChatGPT adoption goes mainstream — A new study finds AI use is broadening, with 70% of prompts non-work related, from cooking tips to travel planning and emotional support. [Read]

📈 Global debt crosses $100T — That’s more than 6x higher than in 2000. As borrowing costs surge, 70% of the debt now belongs to developed nations. [Read]

🚀 IPO door swings wide open — StubHub joins Klarna, Gemini, and Figure after last week’s sextet of deals raised $4B in the busiest stretch since 2021. [Read]

🕺 Strip club execs indicted for tax fraud — RCI Hospitality leaders allegedly bribed NY auditors with lap dances to dodge millions in sales tax. [Read]

STOCKS
4. Nvidia Bets $5B On Intel's Comeback 🇺🇸

Nvidia just invested $5 billion in Intel, taking a 4% stake in the company. The move sent Intel’s stock up 23% for its best day since 1987.

But this isn’t about cash. It’s about cooperation.

The world’s top chip designer is partnering with the U.S.’s most important (and most troubled) chipmaker to help stabilize a fragile supply chain and reduce reliance on Taiwan.

Design vs. Production

Nvidia designs the world’s most advanced chips. Its premium GPUs are up to 100x faster than high-end CPUs.

But Nvidia depends on Taiwan’s $TSM ( ▲ 2.23% ) to manufacture those chips.

Intel, by contrast, builds chips on U.S. soil. The problem? It missed the AI boom, overbuilt its capacity, and lost $13 billion in its foundry business last year.

The Geopolitical Risk

Roughly 90% of leading-edge chips are made in Taiwan, just 110 miles off the coast of China. If tensions escalated or China moved to seize control, U.S. access could vanish overnight.

In the words of a 2021 U.S. security commission:

“If a potential adversary… cuts off U.S. access to cutting-edge chips entirely, it could gain the upper hand in every domain of warfare.”

That’s why Intel’s survival as a domestic manufacturer is vital.

What’s In The Deal?

Nvidia will use Intel CPUs in its AI data center systems. Intel, in return, will integrate Nvidia’s AI tech into its PC chips.

The agreement doesn’t cover chip manufacturing yet. But the $5 billion stake gives Nvidia a strong financial incentive to test Intel’s capabilities in the future.

Bottom line: As Daniel Newman of the Futurum Gorup put it, “Reshoring isn’t about nostalgia—it’s about survival.” Nvidia designs the future, but it may need Intel to help build it.

STOCKS
5. Guess That Stock 🕵️‍♂️

This company started out replacing taxis, then moved on to replacing the drivers behind the wheel. Now it’s teaming up with an autonomous helicopter startup to take the disruption sky-high.

Can you guess the stock?

1. At its core, the business is simple: book a ride, get a meal, or ship a package—all through one app. The company takes a cut from every trip.

2. The ride-hailing heavyweight just partnered with Joby Aviation to bring air taxis to its app as soon as next year.

3. It’s even testing drone delivery for meals through a partnership with Flytrex, reviving an aerial strategy it first explored in 2019.

4. The company now offers driverless rides with Waymo in Atlanta, Austin, and Phoenix. When Lyft announced a similar deal in Nashville, their stock jumped 13% while this one fell 5%.

5. In the short term, the CEO plans to purchase a fleet of robotaxis. Over time, he expects the platform to evolve into a marketplace that connects riders with 3rd party vehicle owners.

Got a guess? Tap here for the answer → 

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