Latest Issue | Morning Brew

Check in on your finance friends who probably worked overtime yesterday dealing with the sea of red that filled stock screens around the world.

The trading floor nightmare began with a jolt from Japan while Jim Cramer was likely still fast asleep:

• Japan’s Nikkei 225 index nose-dived 12%—its biggest drop since 1987—as investors there reacted to the US’ rising unemployment and slower job creation reported on Friday and figured that an economic slowdown across the Pacific heralds hard times for Japanese companies. The pessimistic outlook was further compounded by a more expensive yen.
• The stateside sell-off commenced as soon as Wall Street rubbed its eyes in the morning, with the S&P 500 plummeting 4% before gaining back some ground (but still having its worst day since 2022).
• The tech-heavy Nasdaq Composite took an even bigger pummeling and was at one point down 6% as investors processed recent reports of sluggish returns from astronomic AI bets and weekend news that Warren Buffett’s Berkshire Hathaway sold almost half its Apple stock in Q2.

Jittery vibes: The VIX, a measure of expected volatility referred to as Wall Street’s fear gauge, briefly rose to its highest level since the early days of the pandemic.

Some commentators called for the Fed to cut the federal funds rates ASAP to avoid further trouble. But market wonks say a different central bank is at least partially to blame for the sell-off.

Land of the rising yen

Last week, the Bank of Japan hiked interest rates, prompting the country’s currency’s value to spike like the social standing of someone who just got asked out by the most popular kid in class.

The move derailed the long-running “carry trade” investment strategy, in which international investors borrowed cash in yen at historically low interest rates to buy higher-return assets abroad, like US stocks. As the yen became more expensive in relation to the dollar, many investors were forced to sell assets to cover the loans.

Looking ahead…many analysts advise touching some grass before you dump your entire stock portfolio—if only to see some much-needed green. They point to a still-strong US economy with relatively low unemployment and higher-than-expected GDP growth last quarter as signs that the market chaos might be temporary. One promising sign: Japan’s stocks have already begun to rebound.—SK

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Google lost the antitrust case over search. Big Tech may have to get a little smaller after a federal judge ruled yesterday that Google acted illegally to sustain its grip over internet search, writing, “Google is a monopolist, and it has acted as one to maintain its monopoly.” The ruling marks a major win for the government as the first big antitrust victory against a tech giant in the internet era. The DOJ and several states argued in the case that Google ran afoul of antitrust law by paying smartphone companies like Apple and Samsung billions of dollars to be their default search option. The decision found Google liable but didn’t dictate a remedy, which the judge must now decide.

Bangladesh’s prime minister resigned amid deadly anti-government protests. Prime Minister Sheikh Hasina has stepped down and left Bangladesh, causing celebration among protesters, some of whom stormed her former official residence. Bangladesh’s military said it is working toward forming an interim government. The change in leadership comes after weeks of deadly clashes between police and protesters who demanded an end to quotas for filling government jobs that benefit the descendants of those who fought for Bangladesh’s independence from Pakistan.

Elon Musk-backed PAC investigated for possible state election law breaches. Michigan is looking into possible violations committed by America PAC, a political action committee backed by the billionaire Trump supporter. The investigation stems from the PAC collecting detailed information on voters in swing states via a section of its website labeled “register to vote,” which does not actually help those voters register. North Carolina is also considering an inquiry, according to CNBC. Separately, five secretaries of state drafted a letter urging Musk to update X’s chatbot, Grok, to stop spreading election misinformation after the bot said Kamala Harris was ineligible for many states’ ballots.

CrowdStrike has had enough of being Delta’s punching bag. The IT company went on the offensive this weekend, telling its side of the story after Delta blamed it for mishandling the fallout from a flawed software update in late July that caused widespread computer outages.

Read it and weep. On Sunday, CrowdStrike lawyers sent a pointed letter to Delta’s legal counsel—the prominent lawyer David Boies—saying it was “highly disappointed by Delta’s suggestion that CrowdStrike acted inappropriately” and “strongly rejects any allegation that it was grossly negligent.”

• The letter said CrowdStrike CEO George Kurtz personally offered onsite assistance to Delta CEO Ed Bastian, contradicting a claim Bastian made last week on CNBC that CrowdStrike was nowhere to be found during the breakdown.
• If Delta does pursue legal action, it should be ready to explain why it took longer to recover than other airlines, according to the CrowdStrike letter. Delta canceled more than 5,000 flights during the outage, and the Department of Transportation is investigating its handling of the crisis.

What gives, Delta? The airline said it would seek $500 million in damages for the outage. CrowdStrike clapped back that its contractual liability is only in the single millions.—CC

Expense scaling. Employing tried-and-true best practices when scaling expense management is pivotal. So, um…what are these best practices? Tune in for our virtual chat with BILL, where we’ll tackle these topics and more. Got questions about automation? Corporate card rewards? Scaling and tech? All you’ve gotta do is save your seat to learn more.

When people say “bring back gatekeeping,” this isn’t what they mean: Sam Altman & co. have held off on releasing technology that detects writing generated by OpenAI’s ChatGPT with near-perfect accuracy, even though the tool has been launch-ready for about a year, the Wall Street Journal reported on Sunday.

Why? OpenAI is torn between the company’s transparency pledge and the risk that it could lose AI plagiarists users. According to internal documents reviewed by the WSJ and to unnamed sources who spoke to the publication:

• OpenAI found the tech to be 99.9% effective at detecting copy generated by ChatGPT.
• Almost one-third of loyal ChatGPTers said the anti-cheating tool would dissuade them from using ChatGPT.
• Altman encouraged OpenAI’s anti-cheating project but hasn’t pressed for the tool’s release.

Teachers have begged for this. AI-assisted schoolwork is running rampant, many educators believe, partly because students have realized that third-party detectors don’t always catch them.

ChatGPdefense: After the article dropped, OpenAI took to the company blog to describe the detection tech as “highly accurate” but susceptible to workarounds and possibly stigmatizing for non-native English speakers. Elsewhere on an OpenAI FAQ page that hasn’t been updated in over a week, the question “Do AI detectors work?” is answered with “In short, no, not in our experience.”—ML

If you’re one of the many people who helped make Deadpool & Wolverine the highest-grossing R-rated movie ever, you probably noticed two things: 1) They finally put Hugh Jackman in the yellow suit and 2) the characters say the f-word. A lot. Characters in the Marvel film drop f-bombs more than 100 times, per Reuters, which also notes they’re dropping the once incredibly taboo term into an increasingly cuss-friendly pop culture landscape.

Taylor Swift uses the word 18 times in the song “Down Bad” on her latest album, and the serious academics who study these issues say that usage has evolved. A 2021 study in the UK found it was the most popular swear word, and research from 2023 found British teens using it more in friendly conversation instead of as an insult or a euphemism for sex, Reuters reports.