For months, investors and consumers alike have had their fingers crossed, hoping March might finally be when the Fed starts slashing rates, but that hope is starting to look less and less like a reality. "We want to see more evidence that inflation is moving sustainably down to 2%. Our confidence is rising. We just want some more confidence," Federal Reserve Chair Jerome Powell said during an interview with 60 Minutes that aired Sunday. The markets were hoping for something less mealy-mouthed — the Dow, S&P 500, and Nasdaq all fell Monday. Maybe the Fed will surprise us with something big this summer.
ARTIFICIAL INTELLIGENCE
Microsoft Will Pay Semafor to Use AI for News Reports
Microsoft is cultivating its ties to the news business the old-fashioned way.
The Financial Timesreported Monday that Semafor, the digital news startup with a distinct grownup-in-the-room brand, has struck a deal to have Microsoft (OpenAI's biggest investor) sponsor a new part of Semafor's news operation called "Signals," which will draw on Microsoft's AI chatbot to help journalists write the news.
Generative AI's Spotlight
Since generative AI busted onto the scene, tech platforms' relationship with the news media has become even more strained. Not only are legacy news operations worried that generative AI search engines could effectively break their paywalls, they're also annoyed that their articles have been used to train the large language models powering the bots. The New York Times sued OpenAI for this reason, although OpenAI CEO Sam Altman replied acidly: like we even need your content anyway.
This new deal between Microsoft and Semafor represents the AI industry's more honeyed approach, paying a news organization to use its tools is clearly a marketing decision rather than a long-term business strategy. "I would assume that this is part of a broader effort to strike deals and disincentivize publishers to go after technology giants for copyright violations," Felix Simon, a researcher at the Oxford Internet Institute specializing in AI and the media, told The Daily Upside. "Getting a well-known outlet like Semafor on board for a 'substantial' sum might create incentives for others to strike deals, too: 'Get them while they are hot,' so to speak." But what exactly is Semafor getting, besides cash? Per the FT, the idea is to use Microsoft's AI to help create a breaking news feed that will carry around 12 stories per day:
A use case given to the FT was that the AI could be used to scan news media from around the world, summarizing the response of Russian, Chinese, or Indian news media to a particular event, for example. Exactly how much cultural or common sense the AI will display when taking the pulse of various nations remains to be seen.
Simon added the deal will have other benefits for Semafor. "The economic landscape for news organizations and news startups isn't exactly rosy. This flagship deal not only seems to provide a new source of revenue for Semafor but also puts it more squarely on the map against competitors such as Axios and Politico, given the attention this will attract," he said.
Dealing With Data: Speaking of Big Tech companies re-jigging their relationships with the media, there's a quiet but monumental shift going on in the digital advertising world as Google has decided to kill off "cookies," tiny files that websites place on your computer to store information about you and what you like. Cookies have been a big, if sugarless, part of the online advertising ecosystem for some time, so their absence leaves a vacuum. In response to the great cookie crumbling, vacuum-abhorring Amazon has struck a deal with the UK's largest publisher Reach to extract first-party data from its readers.
Your mission: Start earning 10% annual cash interest while helping make the country safer.
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All you have to do is invest, collect your cash interest each year (for up to five years), and enjoy that shaken martini.
Add two all-beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame-seed bun to your list of casualties of war.
The Israel-Hamas war has hit McDonald's revenue as Middle East sales nose-dived, according to the fast food chain's fourth-quarter earnings released Monday.
This Bites
The burger giant used promotional deals and menu price-hikes to some success in the US, as the company beat Wall Street's overall profit expectations and saw Q4 same-store sales jump 4.3% in its home country. Those gains might dwindle, though, as increasing labor costs — especially in California, where the minimum wage will rise to $20 an hour in April — could mean more menu hikes that hit low-income customers, who the company said are already spending less.
McDonald's main quarterly drag came from the Middle East, which contributes about 10% of the company's overall revenue. McDonald's said comparable sales for its international licensed division grew in all regions except for the Middle East, The Wall Street Journal reported. The company cited social media-fueled boycotts from both sides that are tied to the ongoing fighting between Israel and Hamas. In one of the most war-torn regions on the planet, even soft drinks and burgers are geopolitical:
McDonald's HQ hasn't issued any statements that support either side of the conflict. However, in October, the company's Israeli franchises, which are operated autonomously, announced they would provide thousands of free meals to Israel Defense Forces personnel.
Locations in Muslim countries disavowed the move and donated to Palestine, and yet many were still vandalized following Israeli missile strikes on Gaza.
Other major brands have been caught in the crossfire. After Starbucks Workers United expressed support for Palestine in a series of social media posts, some Jewish leaders called for a boycott.
No Coke. Pepsi: US brands have a long history of getting tripped up by Middle Eastern politics. In the 1960s, a major Jewish boycott of Coca-Cola arose because the Atlanta-based soda maker established bottling operations in Arab nations, but not in Israel. Even Jewish-led American institutions like Nathan's Famous switched to Pepsi from Coke. When Coke finally set up shop in Israel, it elicited a boycott by the Arab League. As a result, Pepsi flourished in the region, just like it did at Saturday Night Live's Olympia Diner.
Written by Griffin Kelly
HEALTHCARE
Novo Nordisk Drops $11 Billion to Expand Weight-Loss Drug Production
It's bulking season at Novo Nordisk.
On Monday, the Danish pharma firm behind Wegovy and Ozempic announced an $11 billion deal to significantly expand production capacity for its blockbuster weight-loss drugs.
The Weighting Game
The massive success of both drugs almost instantly made Novo Nordisk the biggest company in Europe. Last week, it announced better-than-expected earnings for 2023, with operating profit up 37% in Danish kroner and its sales projections for 2024 showing another revenue increase of up to 24%. It was enough to send its market cap over $500 billion.
But Novo Nordisk also warned of supply chain constraints strangling the company's ability to keep up with soaring demand. On Monday, Novo showed it's ready to throw its prodigious new weight around:
In a semi-complex three-way transaction, Novo Holdings — Novo Nordisk's controlling shareholder — is purchasing US drugmaker Catalent for $16.5 billion. Novo Holdings is then selling three of Catalent's manufacturing sites, in Italy, Belgium, and Indiana, to Novo Nordisk for $11 billion.
Novo Nordisk had already contracted part of Wegovy's production process to Catalent, which is known for its role in "fill-finish" operations in the final stages of manufacturing for injectables such as Wegovy; the company had previously contributed to covid vaccine manufacturing for Moderna, AstraZeneca, and Johnson & Johnson.
Novo Nordisk said it expects the deal to be completed by the end of the year, and the additional manufacturing prowess to help expand its production capabilities by 2026.
Rat Race: Keeping up with demand isn't solely a Novo Nordisk problem. Also on Monday, Mounjaro, Eli Lilly's blockbuster diabetes drug which has doubled as an off-label weight loss drug, was added to the FDA's drug shortage list due to surging demand surpassing the company's supply. We'll chalk it up to New Year's weight loss resolutions.
Written by Brian Boyle
Extra Upside
Want to go to the Super Bowl? It could cost you $7,000, which is actually cheaper than it was just a week ago.
Not guilty: Samsung chief acquitted of alleged crimes related to 2015 merger with Cheil Industries.
Dealing With Data: Speaking of Big Tech companies re-jigging their relationships with the media, there's a quiet but monumental shift going on in the digital advertising world as Google has decided to kill off "cookies," tiny files that websites place on your computer to store information about you and what you like. Cookies have been a big, if sugarless, part of the online advertising ecosystem for some time, so their absence leaves a vacuum. In response to the great cookie crumbling, vacuum-abhorring Amazon has struck a deal with the UK's largest publisher Reach to extract first-party data from its readers.
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