The Rundown - Amazon Unveils New AI Tool, Airline Execs Testify Over 'Junk Fees'

Episode Date: December 4, 2024

Stock market update for December 4, 2024.

Public.com presents the rundown. Your daily market update in five minutes. My name is Zaid Admani, and today is Wednesday, December 4th. In today's episode, we tell you about how the markets reacted to the political turmoil over in South Korea. We also dive into some new AI products and partnerships coming out of Amazon. Then stick around to the end of the show for an earnings recap from sales force and footlocker and find out why CEOs are getting replaced at a record pace. All right, let's go.

Yesterday was a pretty choppy day in the market. Stocks were jumping around all over the place, but they were able to squeeze out another record close. The S&P 500 was up just 0.05%, so essentially flat, and the NASDAG added 0.4%. But that was good enough for technically another record high close for both of these indices. So I'll take it. Now, we did have some chaos internationally.

South Korea sent some shockwaves through the markets yesterday when the South Korean president unexpectedly declared martial law on late Tuesday. That kind of came out of the blue. Nobody was really expecting that. Now, the president did end martial law just hours later after some major pushback from politicians. In fact, the South Korean parliament struck down that martial law just hours after it was implemented. And now South Korean lawmakers are pushing for the president's impeachment. So a bit of political turmoil happening in South Korea right now.

And that's making investors kind of nervous right now. In fact, South Korean indices and South Korean. companies listed on the U.S. stock market dropped yesterday, but have recovered since Marshall Law ended. The South Korean currency, though, is now trading at two-year lows against the U.S. dollar. So this is some pretty shocking stuff. I think investors are nervous, though, because according to the Financial Times, foreign investors in South Korea sold a net $300 million worth of stocks in Korean markets yesterday. So they might wait a little bit for some calm to come over before they invest that money back into the South Korean markets. We'll have to see how this all

plays out, this isn't seem to impact U.S. stock markets still, like I said, markets in the U.S. continue to push higher. Let's run through some headlines. Let's start with Amazon. They're throwing a conference right now in Vegas, and they announced a ton of cool stuff during the conference so far. And shocker, a lot of it has to do with AI. Amazon now has their own set of AI models that they're calling Nova. These new models will come in four separate tiers, micro, light, Pro and Premiere. And they're going to be available on AWS for developers to build off of. But I think the coolest thing that Amazon might have announced are there two new AI products called Canvas and Reels. Canvas is Amazon's generative AI image model. It's kind of similar to Dali.

You can give it a prompt and it'll generate an image for you. And Reels is their AI model that will let you generate video. Kind of like OpenAI's SORA, which still hasn't come out yet, by the way. Now right now, Reels only generates around a six second video, but Amazon is working to make them longer. Amazon, just like pretty much every other big tech company, has been racing to release their own AI products. But what makes Amazon different, though, is they have a lot of advantages here compared to their competition. Because remember, Amazon owns AWS, which is a huge part of internet infrastructure. A lot of AWS customers might be more willing to use Amazon's AI products to build their AI tools instead of the competition, like OpenAI. And Amazon's not

just working on AI models. They're also building their own AI chip. that they call Traneum 2. Amazon said these Traneum 2 chips will be abused by Anthropic, which is the maker of the Claude chat box. Claude is pretty good. I like Claude. But a surprise user of these Traneum chips is Apple. An Apple executive actually came on stage during this conference

and said that Apple is using Amazon's tranium chips for search. They're also exploring other use cases for them as well. Maybe they can use it to make Siri better. Oh, my kidding. That's never going to happen. So Amazon, man, they're making moves. And video better watch out. By the way, I think Apple and Apple and, on NVIDIA have some beef, which is why Apple probably isn't working with NVIDIA.

Let's shift gears and talk about airlines. Airline executives are testifying in front of the Senate today to defend their seat fees. Oh, this should be good. A Senate committee is claiming the airline industry is charging consumer junk fees for add-ons for things like window seats and check bags and more. You know what I'm talking about? Every time you try to buy an airline ticket, you're getting hit with a bunch of fees. Airline leaders from Delta, United Airlines, and others claim that these fees are for offerings

that are based on a choice, and they're not forcing them on consumers. I mean, I can kind of see both sides on this issue. On one hand, yes, all these fees by these airlines is very annoying and sometimes excessive. But then again, if they weren't allowed to charge these fees, they might just end up raising the price of the airfare. So, again, I can see both sides. I mean, the airline industry is going through a shift right now. Airlines are prioritizing first-class seating and kind of making the economy class bare bones.

We mentioned yesterday, but Frontier Airlines recently announced they're going to be offering first-class seats starting next year. So, yeah, we'll see what happens. I'll let you guys know if anything spicy comes out of the Senate hearing. Let's talk about some stocks making moves today. Shares of the tech giant Salesforce are booming this morning after the company reported solid Q3 earnings. The revenues grew by 8% beating estimates

and their net income was up 25% to $1.5 billion. Now, their earnings per share did miss estimates by a bit, but investors were willing to overlook that because of the company's better than expected fourth quarter guidance. Salesforce continues to push into AI and offering AI products, specifically AI agents, which are like AI power chat boxes. Salesforce thinks that more and more companies are going to start deploying these AI agents, and Salesforce wants to be the one that provides these tools to do that. Investors were eating that up, and that's why Salesforce stock is up more than 10% this morning in reaction to these earnings. Again, I'm still not exactly sure what Salesforce does and all this talk about AI agents isn't really helping me understand that.

By the way, I think you're going to start hearing more and more companies talk about AI agents. I'm already starting to hear more chatter about them. I think it's going to be the buzzword of 2025. So don't be surprised if you hear every major tech company and even not tech companies mention them in earnings calls over the next few quarters. Now, on the flip side, Foot Locker not having a great morning. Shares are tanking after the shoe retailer reported disappointing Q3 results. And when I say disappointing, I mean, it was bad across the board for Foot Locker.

Revenues came in below expectations. Profit failed to meet estimates, and the company also lowered their Q4 guidance because of weak consumer demand during the holiday shopping season so far. I guess not that many people are looking to buy shoes right now. Foot Locker is actually kind of blaming Nike for their slower demand. I mean, Nike is Foot Locker's largest brand partner. They account for 60% of Foot Locker sales. And as we've talked about it in the past, Nike's kind of dealing with their own issues right now. They recently hired a new CEO to help turn things around.

So we'll see how that goes. But yeah, investors aren't feeling so great about Foot Locker. The stock is down more than 15% this morning in a reaction to these earnings. So in about a couple weeks, we'll know how Nike is doing as well. Let's wrap the show with a fun fact. A record number of CEOs have been fired this year. Looking at the largest 3,000 companies in the U.S., 119 CEOs have been fired in 2024 so far. That beats last year's record when 118 CEOs were ousted.

And we still got one more month to go this. year. And according to the data, companies are a lot quicker to fire CEOs these days than before. Like back in 2017, only 43 CEOs were fired that year. Companies are just becoming more impatient with CEOs. I kind of think of it like quarterbacks for NFL teams. It's hard to find a really good CEO and a bad CEO can set a company back for years, sometimes decades. Some notable companies to fire their CEOs this year include Intel, Starbucks, and Nike, just to name a few. All those companies were kind of struggling this year, so their CEOs got fired. It's the same thing with quarterbacks. NFL teams are becoming more and more impatient with bad quarterbacks to try to find the

next good one, because it's almost impossible to win the Super Bowl with a bad quarterback. I'm kind of liking the CEO quarterback analogy. I think this might be my best one yet. For my NFL fans out there, let me know what you guys think about that analogy. Leave a comment on YouTube or Spotify and let me know what you think. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. If you did and you have like eight extra seconds, consider giving us a five-star rating on Apple and Spotify. Vote in today's Spotify poll.

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