The Rundown - Google Files Antitrust Complaint Against Microsoft, Caroline Ellison Gets 2 Years in Prison

Episode Date: September 25, 2024

Stock market update for September 25, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Wednesday, September 25th. In today's episode, we give you the details on the DOJ's lawsuit against Visa and what they did to maintain their monopoly. We also update you on the FTX saga. Caroline Ellison was just sentenced in order to pay billions of dollars. Then stick around to the end of the show to find out the surprising resurgence in comic book sales. This was a shocker for me. All right, let's go. Another day, another record high.

Stocks continued to climb on Tuesday. The S&P 500 was up 0.3% to close at a fresh record high, and the NASDAQ was up 0.6%. Gold also continues to climb hitting new record highs. It's getting pretty close to $2,700 an ounce. Now, yesterday was kind of a weird day. It didn't start off so great because there was new data that came out showing that consumer confidence is starting to slump.

The Consumer Index from the Conference Board had its biggest one-month decline in three years, with consumers fearing a worsening job market and business conditions. Now, this survey was conducted before the Fed rate cuts, so I wonder if that would change things. But despite the drop in consumer confidence, stocks still ended up rallying. I think the big reason for that was China. Yesterday, Chinese officials revealed their stimulus package to get the country's economy out of a slum. We talked more about that on yesterday's episode and what China is planning to do, so go check that out if you missed it. This is a pretty big deal, and it's not just going to affect China, because China is the world's second largest economy.

They make up about 18% of the world's GDP. And they're also a huge trading partner to a lot of countries, including the U.S. So the Chinese economy making a comeback is not just good for Chinese companies, which saw their stock jump big yesterday, but it's also great for American companies that sell a lot of stuff in China. So we'll see the stimulus package is enough to pull China out of an economic rut they've been in for the last two to three years. Some experts don't think it'll be enough. It might be good for a short-term boost, but there are still some structural issues that need to be worked out in the Chinese economy. So we'll see what happens.

Let's run through some headlines. The Department of Justice has officially sued Visa for being a monopoly. Now, we tease this lawsuit in yesterday's show, but we got some more details on the lawsuit today. The DOJ says that Visa controls 60% of debit card transactions, which is a pretty big market. In fact, Americans use debit cards twice as much as credit cards. And Visa makes a ton of money from these transactions. It's estimated they make around $7 billion in debit card fees every year. This lawsuit also calls out Visa for some shady practices for maintaining this monopoly.

Like, for one, Visa will penalize a merchant if that merchant chooses to use a network that isn't Visa. On top of that, Visa has entered into agreements with potential rivals like Apple, PayPal, and Square, for them to stay out of the payment market. Like, apparently they're paying Apple hundreds of millions of dollars. So that doesn't sound so great. We'll see what happens. I mean, Visa has a lot to lose here. But as with any of these lawsuits, it will take years for it to fully play out. Sticking with the antitrust theme, Google just filed an antitrust complaint against Microsoft in the EU. Google claims that Microsoft makes it hard for their customers to move their workload from Microsoft's cloud platform to an alternative

cloud platform. Now, just to set the stage here, Google is third when it comes to cloud market. They're behind Amazon Web Services and Microsoft's Azure. So they're playing catch-up here, and they don't like the way that Microsoft locks in their clients from switching over to Google. Apparently, EU customers have to cough up around $1.1 billion a year in fees because of their deal structure with Microsoft. So I don't know if filing a complaint will do anything. Maybe Microsoft will change their practices. But I just find it funny that Google is calling out another big tech firm for their unfair competitive advantages.

All these tech companies are just frenemies, okay? They have partnership agreements, but they also sue each other. It's just funny how that works. And lastly, let's talk about FTX. We haven't talked about FTX in a while. Well, the drama is coming to a conclusion. Caroline Ellison was just sentenced to two years in prison for her role in the fraud debacle that led to the collapse

of one of the largest cryptocurrency exchanges in the world. Now, Caroline Ellison's sentencing was much lighter than Sam Bankman Freed's 25 years due to her cooperation in the case. She was hoping to get no prison time, but the judge said that she couldn't get a get-out-of-jail-free card because of how big the crime was. Caroline was also ordered to forfeit $11 billion. She set to go to prison on November 7th.

Let's talk about some stocks making moves today. Shares of HPEE are up this morning after Barclays upgraded the stock. Now, HPE is a separate company than HP. It actually was spun off from HP. HP sells consumer products that we all know, you know, computers, laptops, printers. HPE, on the other hand, focuses on enterprise solutions. They sell stuff to businesses like servers and storage solutions. Barclays thinks that enterprise hardware will rebound and thinks that HPE is the best play.

They have a price target of $24 a share. HPE stock is up around 3% on this news and it currently trades around $19 a share. And a mini fun fact, HPEE's headquarters is in Houston, Texas. Now, on the flip side, shares of KB homes are dropping this morning after the home builder reported weaker than expected earnings. Earnings came in at $2.4 per share, which is less than the $2.6 that was estimated. So it was a slight miss. I'm actually a bit surprised by the reaction in the stock price.

In fact, KB Homes actually raised their full year housing revenue forecast. I would think with falling interest rates, it would be bullish for the home builder, but the market doesn't think so. The stock is trading down 6% this morning. Let's wrap the show with a fun fact. Today is National Comic Book Day. And I was surprised to learn that comic book sales have been thriving. Sales of comic books and graphic novels in North America hit $2 billion in 2022,

according to IVC2, which tracks all this stuff. Now, sales were down about 7% in 2023, but they're up 70% from 2019. I guess a ton of people fell in love with comic books again during the pandemic, and they seem to be sticking around. And the reason I'm surprised by this is that, you know, we have superhero fatigue at the movies. All the Marvel movies and the DC movies, they're not performing as well as they did last decade.

But that doesn't seem to be the case for comic books. They're seeing a nice resurgence this decade. Also, I thought with our attention spans being fried by, you know, TikTok and Instagram. I thought that, you know, less people would be buying books. But you know what, I'm glad. I'm glad that comic books are making a comeback. I kind of want to buy a comic book now.

A bonus fun fact, the most sold comic book in 2023 was Transformers. That was pretty shocking to me as well. Shout out Optimus Prime. Well, all right, guys, that's the rundown for today. I hope you guys enjoyed today's episode. It's been a relatively quiet week. I mean, stocks are making an all-time high, so it's hard to complain. But no big bombshell news to drop this week yet.

The Metacomference kicks off today. I mentioned that on Monday's episode. really looking forward to see what they have to say if there's any new products they're going to launch. So we'll recap anything interesting that comes out of that conference in the episodes later this week. If you guys enjoyed today's episode, don't forget to hit us with a five-star rating on Apple and Spotify. And if you have like 15 extra seconds, write a review on Apple. People really read those reviews. And if you're on Spotify, don't forget to vote in today's Spotify poll.

All that engagement really does help us out. Thank you guys so much for listening. Shout out to Mike and Connor for all the help behind the scenes. And we'll see you guys back here tomorrow. tomorrow. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in the show reflect the opinions of the guests. You should not take any mention of a publicly traded security as recommendation to buy, sell or hold that security. Rundown guests are not financial advisors and are not affiliated with public holdings or

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