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Finance

Let’s talk about the market crash

If any of your friends are day traders you might want to check in on them. Amid fears of a slowing US economy after a lackluster jobs report, global stock markets plummeted on Monday erasing over $6.4 trillion, but have since rebounded as pessimism subsides.

A bad start to the week

Early Monday, an ocean of red filled screens on trading floors across the world after a weaker-than-expected US jobs report showed unemployment rose to the highest in three years and hiring almost stagnated.

The "Sahm Rule," a historically reliable recession indicator, is triggered when the three-month average unemployment rate increases by 0.5 points over its 12-month low. This was the case with the information at hand.

As a result, fears that the US was at risk of a recession led to chaos across global markets:

• Over $6.4 trillion was erased from international stock markets.

• The S&P 500 had its worst day since 2022, falling 4%.

• The tech-rich Nasdaq took an even larger beating, at one point falling 6%.

  • The “Magnificent Seven” stocks, which include Apple, Nvidia, and Tesla, posted a record drop.

• The Nikkei 225 index in Japan fell 12%, marking the largest decline in 37 years. The bleak outcome was made even more dismal by an increasingly expensive yen.

• Crypto was affected as well, with Bitcoin falling over 10%.

To prevent more issues, some investors urged the Fed to lower the federal funds rate immediately. However, experts in the market argue that the sell-off is at least partly the result of another central bank.

Scary signs: As fear compounded, the VIX (commonly referred to as Wall Street’s fear gauge) shortly climbed to its highest point since the start of the pandemic.

Two sides of a coin

The most recent events, according to Mark Hackett of Nationwide, have been a "masterclass" in how emotions can control market action, especially when sentiment and positioning are almost unanimously bullish.

After stocks were almost universally crushed on Monday, gains were seen on Tuesday:

• Japan’s Nikkei 225 index rose 10% after plummeting 12% on Monday.

• After the “Magnificent Seven” lost over $650 billion in market cap, Nvidia rose 3.5%, Meta rose 4%, while Tesla and Microsoft rose 1%.

• The Dow Jones is up 1.34%, the S&P has gained nearly 2%, and the Nasdaq climbed over 2.17%.

Analysts expect the market to continue to swing in the next couple days and could remain volatile until September, when the Fed is expected to make interest rate cuts. Fears of a recession have receded, as the VIX is down 55% since Monday morning’s chaotic start.

Science

Archaeologists discovered real life Hobbits

The last thing I expected was for scientists to dig up something from Lord of the Rings. Researchers discovered a 700,000-year-old bone that gives us new information on the Homo floresiensis, the smallest ancient human species ever recorded.

Island dwarfs

The mini arm bone is an incomplete fossil of the upper humerus, and measures only 3.5 inches long. Found on the Indonesian island of Flores, the bone may allow us understand how the extinct species evolved across time.

The Homo floresiensis were given the Hobbit nickname due to their unusually small stature, standing at around three-and-a-half feet tall. The species had tiny brains, large teeth, no chins, which likely resulted from Island dwarfism.

• They also hunted small elephants, giant rats, and alligator sized komodo dragons (don’t ask me how).

The findings from an analysis on the arm bone support a hypothesis that a group of ancient humans, possibly the larger Homo erectus (there’s a joke there but I’ll hold my tongue), somehow became stranded on Flores around a million years ago.

However, professor Adam Brum from Griffith University suggests that “the evolutionary history of the Flores hominins is still largely unknown,” and this 700,000-year-old bone could be key to unlocking the history of the human hobbit.

Technology

Google might not be your default search engine anymore

Bing has been quietly waiting in the shadows for this moment. Google was found to have violated antitrust laws by unlawfully maintaining a monopoly on the online search engine industry, according to a federal judge ruling on Monday.

The momentus ruling will likely change how you search for the “best half apps deal near me” as it marks the largest tech antitrust trial in more than 20 years, and might alter how tech companies like Google do business.

What did Google do exactly?

In 2020, Google was sued by the US Justice Department and more than 30 state attorneys general for allegedly sending over $10 billion in annual payments to web browser and phone manufacturers in order to be designated as their default search engine.

• This translated into roughly $238 billion made by Google's advertising division in 2023, which is three times more than it did in 2016.

• According to Monday's verdict, Google paid more than $26 billion in 2021 alone to obtain these contracts.

On top of that, Google holds a 95% market share on mobile devices and around 90% of the global market for general search services, according to the verdict.

Search engine earnings: Click here for a full breakdown on how Google makes its money from maintaining such a high share of the market.

What happens now?

Since Google has been found guilty, the federal judge that made the decision, Judge Amit Mehta, will now have to figure out what to do with the company.

There is no clear indication of what penalties or limitations may be imposed on the tech giant by Mehta, but there are a few theories on what could happen:

• Google may have to break up its search engine business from the rest of the company.

• Google could be forced to release the plethora of data it has on users to other companies.

• Devices may be required to ask users what search engine they would like to use when they first use it.

• Or most likely of all, the company would be prohibited from paying billions to become a default search engine option on devices (like it did with Apple).

Again, Google’s future remains uncertain in face of the ruling, especially since the company plans to appeal the decision.

This isn’t the only problem they face… The company will battle another antitrust lawsuit against the DOJ in September that deals with claims that Google has illegally monopolized digital advertising technology.

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Grab Bag

OpenAI won’t release tool that can detect if you use AI to cheat

College students everywhere simultaneously jumped in the air and then shotgunned a beer after the news broke. OpenAI has had a tool in its back pocket that can detect writing generated by ChatGPT with almost perfect accuracy, yet is debating on whether to release it or not, per the WSJ.

The company has held off on releasing the technology despite it being ready to launch for over a year and widespread concerns that students use AI to generate essays and research papers to cheat.

Why not release it?

Put simply, OpenAI doesn’t want to risk losing the people that use ChatGPT. And a good portion of those people use it to cheat.

According to the WSJ, the tech company has had ongoing internal debates and is divided between its devotion to transparency and its thirst to retain users.

• In a study of devoted ChatGPT users, the company discovered that almost 33% said the anti-cheating technology would make them not want to use the chatbot.

The tool was found by OpenAI to be 99.9% effective in catching writing that was generated by ChatGPT. Many in the education field say AI-detectors aren’t working well enough. Students have noticed and are increasingly using the tech to cheat as a result.

OpenAI’s defense: Following the publication of the WSJ report, OpenAI posted on its official blog that while the detection technology is very accurate, it is also vulnerable to countermeasures.

The 2024 Olympics has ramped up the ads

Is it really surprising there are more ads than usual? Let’s be real. The Olympics has always partially relied on sponsors to fund the games. But, this year, with the Games relying more on private donations than taxpayer money, Paris has drastically boosted its use of product placement.

Who are the worst offenders?

Seeing as the luxury goods company, LVMH, spent over $163 million to be a premium sponsor of the 2024 Olympics, I would say they are a fair choice.

With almost 29 million spectators, the opening ceremony served as both a spectacle and an advertisement for the luxury conglomerate:

• Performers wore custom Dior, bespoke Louis Vuitton trunks were seen all over the place (one of which carried the torch in the opening ceremony).

• The company debuted the medals and torches alongside their branding.

• When being presented their medals, athletes will grab them from custom Louis Vuitton trays.

With sponsored “victory selfies”, Samsung is joining the medal ceremony as well. While on the podium, athletes are provided with a Galaxy Z Flip6 Olympic Edition smartphone so they can take an official selfie.

• All athletes are given a special Olympic edition of the phone, which does look pretty cool.

Wholesome moment: The selfie has led to some cool moments… and probably done more for international relations between the two countries than any politician has. After the mixed double table tennis finals, North and South Korean athletes took a #sponsoredselfie together as a sign of goodwill between the two countries.

Fast Facts

Live Longer: A way to extend life by blocking an inflammatory protein is now being tested on humans. The same protein that salamanders use for limb regrowth were found to lower age-related cancers in adult lab mice and make them live about 25% longer on average.

Beer Blasphemy: Americans going to the Paris Olympics have been “dumbfounded” by the lack of alcohol served at venues.

Night Owl: In a study of 26,000 people in the UK, those who stayed up late showed “superior cognitive function” across tests of intelligence, reasoning, reaction time, and memory than people who wake up early, according to new research from Imperial College London.

Freaky Friday: According to a new study, our faces morph as we get older to better fit what our names represent. So basically, if you look like a Steve, its because you grew into it. 

Terror Threat: Austrian authorities arrested two extremists, including a 19-year-old Islamic State sympathizer believed to be planning an attack on a Taylor Swift Eras Tour concert. 170,000 people were expected to attend.