Good Morning! The AI race is heating up, and so is the stock market, with the S&P 500 and Nasdaq closing at records ahead of key inflation data today. Samsung debuted new smartphones in an AI push to catch up to Apple. Apple meanwhile hit a $3.5 trillion market cap for the first time, and Amazon announced new AI products for its cloud services. Elon Musk beat his $500 million severance lawsuit brought by fired Twitter workers, and one analyst thinks Tesla is the new meme stock. Plus Spotify wants to be a social app, and the 10 time management apps that CEOs swear by.

Work smarter (not harder) with Mindgrasp AI–the assistant that takes notes and summarizes any document, meeting, or video. Try it today for free!

_{SQUEEZ OF THE DAY}

From Billionaire to Bust

You may have heard of Bill Hwang, the little-known investor who practically caused a short stock market freakout in March 2021. Hwang inflated his fortune in the GameStop and stocks only go up era to billionaire status before it all collapsed. Ultimately, Hwang met his fate yesterday, landing guilty verdicts on 10 out of 11 counts of fraud and conspiracy.

Hwang’s playbook involved leading banks into lending him billions, all to pump up the prices of a select few media and tech stocks in his portfolio. And according to the prosecutor, "lying was part of the job.” Hwang’s defense team, however, insisted he was just an honest trader who happened to love his investments a bit too much. 

Hwang ran Archegos, a low-profile family office that turned into a financial behemoth when Hwang’s investments exploded from $10 billion to $160 billion at the height of the pandemic. But it came crashing down in March 2021, wiping out over $100 billion in market value and costing Wall Street’s banks $10 billion. 

The prosecution argued they lied to banks about everything from stock holdings to the riskiness of the firm’s portfolio. 

Hwang’s goal? To borrow more and bet bigger. He says it was all part of his renewed Christian faith, and that he felt compelled by God to grow his portfolio and give back. 

The defense argued that Hwang’s aggressive trading tactics were nothing out of the ordinary. They say Hwang genuinely believed in his stocks. But bank executives claimed they were misled to think Archegos's biggest holdings were blue-chip stocks like Amazon and Google, only to find out too late that the real investments were a few small media stocks like ViacomCBS and Discovery.

The Archegos debacle shows the persistent vulnerabilities in our financial system. Even 15 years after the global financial crisis, unregulated family offices and opaque financial instruments can wreak absolute havoc.

Takeaway: Hwang’s rise and fall make the financial world seem like a playground for both geniuses and con artists. While Hwang might be heading to jail, some experts are highlighting more significant issues—the structural risks that still persist on Wall Street. While you may get away with stealing a few million from banks, costing them $10 billion is a one-way ticket to prison.

_{PRESENTED BY MINDGRASP AI}

AI Assistants Are Killing Search Engines

If you need to know the capital of Greece, you Google it. 

But if you need to analyze your own personal materials, documents, or past meetings, you ask Mindgrasp.

The world's #1 learning assistant, Mindgrasp helps save time and enhance learning for professionals of every level. 

• Answers Q’s, finds additional research, and creates notes automatically

• Scans any Document, PDF, YouTube Video, Zoom Meeting, Podcast, etc

• Used by 10,000 professionals and countless universities (MIT, Stanford, and more)

So, ready to advance your career (or simply skyrocket your productivity)? 

Try Mindgrasp AI today at no-cost!

_HEADLINES

Top Reads

• Samsung debuts new smartphones in generative AI push (YF)

• Will FTC sue big benefit managers? (CNBC)

• More than half of Manhattan homes are bought in all-cash deals (NYP)

• Spotify wants to be a social app (TC)

• Microsoft and Apple drop OpenAI board (CBS)

• Amazon's cloud launches blitz of new AI products (Axios)

• Elon Musk beats $500 million severance lawsuit by fired Twitter workers (CNN)

• Bill Gross says Tesla is the new meme stock (CNBC)

• The Wall Street law firm asking applicants to explain participation in protests (NYT)

• U.S. is the private sector AI leader (Axios)

_{CAPITAL PULSE}

Markets Rundown

Stocks closed at record highs thanks to AI hype, inflation data ahead.

Movers & Shakers

• (+) Manchester United ($MANU) +6% after the pro “football” club announced earnings.

• (+) Carvana ($CVNA) +4% after Needham upgraded the used car seller.

• (–) LegalZoom ($LZ) -25% after the departure of the legal tech company’s CEO.

Private Dealmaking

• AMD bought Silo AI for $665 million

• Hayden AI, an autonomous traffic management startup, raised $90 million

• Captions, a generative video creation platform, raised $60 million

• Volley, a voice-powered AI games developer, raised $55 million

• Athletic Brewing Co, a non-alcoholic brewery, raised $50 million

• Tierra Encantada, a Spanish education provider, raised $38 million

For more PE, VC & M&A deals, subscribe to our Buysiders newsletter.

_{BOOK OF THE DAY}

How Big-Tech Barons Smash Innovation

Silicon Valley’s genius combined with limited corporate regulation promised a new age of technological innovation in which entrepreneurs would create companies that would in turn fuel unprecedented job growth.

Yet disruptive innovation has stagnated even as the five leading tech giants, which account for approximately 25 percent of the S&P 500’s market capitalization, are expanding to unimaginable scale and power. In How Big-Tech Barons Smash Innovation—and How to Strike Back, Ariel Ezrachi and Maurice E. Stucke explain why this is happening and what we can do to reverse it.

While many distrust the Big-Tech Barons, the prevailing belief is that innovation is thriving online. It isn’t. Rather than disruptive innovations that create significant value, we are getting technologies that primarily extract value and reduce well-being.

Using vivid examples and relying on their work in the field, the authors explain how the leading tech companies design their sprawling ecosystems to extract more profits (while crushing any entrepreneur that poses a threat).

As a result, we get less innovation that benefits us and more innovations that surpass the dreams of yesteryears’ autocracies. The Tech Barons’ technologies, which seek to decode our emotions and thoughts to better manipulate our behavior, are undermining political stability and democracy while fueling tribalism and hate.

But it’s not hopeless. The authors reveal that sustained innovation scales with cities not companies, and that we, as a society, should profoundly alter our investment strategy and priorities to certain entrepreneurs (“Tech Pirates”) and cities’ infrastructure.

“Two market experts deconstruct the drivers and inhibitors to innovation in the digital economy, explain how large tech companies can stifle disruption.”

_{DAILY VISUAL}

Used Car Prices Decline

Average US wholesale prices of used cars

_{PRESENTED BY PUCK}

The Newsletter Wall Street Can’t Stop Forwarding

Breaking news. What do CEOs and West Wing staffers have in common? They all read Puck, the platform for smart and engaging journalism.

Puck’s Bill Cohan is a former investment banker turned all-star journalist. Read his work—including a juicy chronicle of an only-in-Nantucket billionaire battle over a humble clam shack—and everything else Puck covers, from Wall Street to Washington + Hollywood, for free. Check ’em out.

_{DAILY ACUMEN}

Community

No one climbs Everest alone.

Even the most rugged individualists rely on a support system. The African philosophy of Ubuntu teaches "I am because we are."

Your greatness isn't achieved in isolation, but in collaboration.

Who's on your dream team? Whose dreams can you support?

Think of the Beatles, four talented individuals who became legendary together.

Or consider the success of Silicon Valley, built on a culture of collaboration and idea-sharing.

Your community is your strength, your sounding board, your safety net. Cultivate it with care.

Remember, if you want to go fast, go alone. If you want to go far, go together.

_{ENLIGHTENMENT}

Short Squeez Picks

• 5 traps to avoid as you gain power as a leader

• 10 time management apps that CEOs swear by

• 20 guiding principles more business leaders should live by

• Refocusing on bodily sensations may calm overthinkers

• How actors remember their lines

_{MEME-A-PALOOZA}

Memes of the Day