__A tiny taste of normal…__ Starting today, __[McDonald’s](https://robinhood.com/stocks/MCD/)__ will begin [reopening](https://www.nytimes.com/2022/09/19/business/mcdonalds-reopen-ukraine.html) some of its restaurants in Ukraine. McD’s closed all of its 109 locations there after Russia invaded over six months ago. (Refresher: McD’s sold its Russian stores in May and they [reopened](https://snacks.robinhood.com/newsletters/74Rmw5VlxBTIazWlkKzrHf/articles/6JLig31chFCLXR55AUMuC6/) in June under new ownership.) Today, war’s still raging in Ukraine, but McDonald’s says it hopes to restore “a small but important sense of normalcy.” 

- __Taking it slow:__ McD’s plans to open restaurants gradually over the next two months in Kyiv, where __[Nike](https://robinhood.com/stocks/NKE/)__ and KFC stores are open. For now, Big Macs are delivery only, with in-store dining and drive-thru set to resume next month.
- __Safety first:__ McD’s will close during air-raid alerts to allow customers and workers to move to shelters.

__The violence is ongoing…__ but Ukraine's already planning for recovery. Russia’s war on Ukraine has left tens of thousands of people dead, in addition to at least 7M refugees and $100B+ in damage — and it’s not over. But last week, Ukrainian President Zelensky [met](https://www.nytimes.com/2022/09/19/business/zelensky-blackrock-reconstruction-fund.html) with __[BlackRock](https://robinhood.com/stocks/BLK/)__ CEO Larry Fink to discuss a reconstruction fund to attract public and private investment.

- __Donations won’t do it:__ So far, countries have pledged $83B+ in aid to Ukraine, but some analysts say rebuilding could cost as much as $750B. To encourage private investment, Ukraine’s offering entrepreneurs grants and no-interest loans.

Golden arches. Blue-and-yellow flags. (Yurii Stefanyak/Getty Images)

McRecovery

__Recovering from war takes a global effort…__ and McD’s and BlackRock aim to play a part. Ukraine’s economy is set to fall about 30% this year, but it didn’t collapse as Russia wanted: industry’s [rebounding](https://www.wsj.com/articles/ukraine-economy-stabilizes-military-gains-11663078436) and unemployment’s falling. Plus, the same countries and companies pushing Russia out of the global economy are pulling Ukraine in: creditors including the US government and BlackRock have agreed to freeze billions in debt to kick-start recovery.

McDonald’s reopens some restaurants in Ukraine, helping to kick off recovery talks as war rages on

__Grand Theft IP...__ Video-game titan __[Take-Two Interactive](https://robinhood.com/stocks/TTWO/)__ is feeling the heat as it suffers from one of the biggest [leaks](https://www.bloomberg.com/news/articles/2022-09-19/grand-theft-auto-vi-gta6-leak-is-a-shock-to-rockstar-games#xj4y7vzkg) in gaming history. Over the weekend a hacker posted 90 previously unreleased clips from Take-Two's highly anticipated "Grand Theft Auto VI," including new locations and characters. Yesterday Take-Two's stock dropped 3% before rebounding higher — but is still down almost 30% this year.

- __Pause:__ GTA's publisher, Rockstar Games, confirmed the leaked videos are real and is trying to stop their spread on sites like YouTube.
- __Play:__ "GTA V" is still one of the best-selling video games ever, despite being released nearly a decade ago. 

__Ready player none…__ Take-Two's GTA hack kicks the video-game biz (which is on pace for its first sales decline in seven years) while it's down. Cyberattacks on gaming companies and users have increased 167% over the past year, as hackers look for more ways to exploit the multibillion-dollar industry. Leaks could be just the start: in July hackers posted stolen documents from __[Roblox](https://robinhood.com/stocks/RBLX/)__ in an attempt to extort the biz.

__It’s hard to put the IP genie back in the bottle…__ Gaming companies are famous for keeping releases secret. While leaks can sometimes boost hype, they can also force developers (like Take-Two and Rockstar) to make changes to games and delay releases. And delays = lost $$. "GTA VI" is expected to earn $3.5B in bookings on its 2025 debut, and $2B a year after that.

Take-Two suffers one of the biggest leaks in video-game history, as hackers up the pressure

McDonald’s reopens restaurants in Ukraine, kicking off recovery talks as war rages on

Dow Jones

S&P 500

Nasdaq

Bitcoin

Scientists estimate there are 20 quadrillion (that's 20,000 trillion) ants on Earth

🍟 Ukraine’s McRecovery

__“Buy now” is the easy part…__ It’s the “pay later” that gets tricky. Buy now, pay later companies help you sport that $400 __Aritzia__ coat now and pay for it *later* in monthly installments. BNPLs gained popularity by [positioning](https://snacks.robinhood.com/newsletters/68Ji759EUo3BnTZxw9mAj1/articles/4ged1i28lf9nr12iGW3oBC/) themselves as trendier credit-card alternatives for Gen Z — with fewer strings attached (think: no interest, just late fees). Now they’re facing serious heat, and they can’t deal with it later:

- __Regulated:__ Last week the Consumer Financial Protection Bureau [outlined](https://www.cnbc.com/2022/09/15/harvard-fellow-cfpb-crackdown-on-buy-now-pay-later-is-good-news.html) plans to regulate BNPL businesses like __Klarna__, __[Affirm](https://robinhood.com/stocks/AFRM/)__, __[PayPal](https://robinhood.com/stocks/PYPL/)__, and __[Block](https://robinhood.com/stocks/SQ/)__-owned Afterpay.
- __Risky business:__ Regulators said BNPLs pose risks to consumers because they lack protections, harvest data, and encourage over-borrowing. 
- __Credit rules:__ Officials plan to regulate BNPLs like credit-card companies, which means BNPLs may have to add pricey safeguards and do more credit checks.

__Boom earlier, crash later…__ BNPL giants thrived during the pandemic when interest rates were low and stimmy cash was flowing. BNPL loans jumped from $2B in 2019 to *$24B* last year (a 12X increase). But as the economy soured and IOUs increased, so did BNPL’s blues:

- __Gucci to grapes:__ Mid-pandemic, stimmy-flushed shoppers used BNPL for luxuries like __Balenciaga__ bags. Now 15% of BNPL users are “buying now, paying later” for gas and groceries. 
- __Missed payments:__ ’Flation-stressed folks are increasingly struggling to pay for necessities up front, and more BNPL users are racking up late fees — and failing to repay their loans.

A case of the BNPL blues (Daniel Harvey Gonzalez/Getty Images)

BNPL

__Pain now can mean gains later…__ BNPL’s looser-than-credit rules helped attract users. But now its lax policies are hurting the bottom line: despite soaring revenues, Affirm’s still unprofitable and Klarna’s losses tripled in the first half as bad debts mounted. Affirm shares are down 75% this year, while Klarna’s valuation dropped 85% in July. Now that BNPL staples face stricter rules (read: higher costs), it may be even more difficult for them to reach profitability short term. But regulation could help them reduce bad debt long term.

Regulators announce plans to crack down on BNPL giants, threatening their path to profits

__No Powell pause…__ aka: Pow-se. On Wednesday the Fed is expected to hike interest rates by a “jumbo” 75 basis points (or even 100) after August inflation came in [hotter](https://snacks.robinhood.com/newsletters/ZgP04cuwhMSae0wDNeDsj/) than expected. Though it slowed from July, inflation was still up 8.3% from last year. The spooky numbers sent stocks tumbling to their worst day in two years. Analysts expected better results since gas prices fell, but food and rent kept rising. Now investors predict even more pain from the Fed chair, who’s committed to fighting #flation with aggressive hikes.

__Up in smoke…__ Cannabis sales are sparking upward worldwide, but not all sellers are feeling the high. Last quarter, Canadian pot giant __[Aurora Cannabis](https://robinhood.com/stocks/ACB/)__ saw its revenue drop 8% while losses 5X’d as it struggled to cut costs. In the US, canna-fans are starting to trade down for cheaper greens as inflation kills the buzz. Shares of Canadian cana-rivals __[Tilray](https://robinhood.com/stocks/TLRY/)__ and __[Canopy](https://robinhood.com/stocks/CGC/)__ are down 50%+ this year as US legalization slows, while Aurora’s down 80%. We’ll see whether Aurora’s sales slumped (as analysts forecast) when it hashes out results tomorrow.

Events

Coming up this week...

__The Merge went smoothly…__ but there could be bumps ahead. __[Ethereum](https://robinhood.com/crypto/ETH/)__ successfully shifted from proof of work (energy-guzzling) to proof of stake (efficient) last week, eliciting relieved cheers from crypto fans. Now investors can stake their ETH to earn yield (think: interest), creating added incentives for crypto titans and hedge funds to [hold](https://www.bloomberg.com/news/articles/2022-09-13/what-s-ethereum-eth-merge-proof-of-stake-differs-from-bitcoin-btc) ether. But there could be trouble ahead: ethereum devs are warning of post-Merge bugs, and the SEC said Thursday that a crypto that allows people to stake coins and earn yield might be a [security](https://www.wsj.com/articles/ethers-new-staking-model-could-draw-sec-attention-11663266224).

__Construction disruption…__ The pandemic housing boom has gone bust, and it could hit homebuilders hard. In July, new-home construction [fell](https://www.businessinsider.com/housing-market-outlook-downturn-bubble-home-values-dropping-2022-8#:~:text=In%20July%2C%20residential%20housing%20construction,affordable%20housing%20options%20for%20Americans.) 10% as soaring mortgage rates and high prices make homes less affordable. US home sales have [fallen](https://www.wsj.com/articles/existing-home-sales-prices-housing-market-july-2022-11660774574) for six months straight, and homebuilder confidence has [dropped](https://www.bloomberg.com/news/articles/2022-08-15/us-homebuilder-confidence-hits-worst-slump-since-2007-collapse) for eight months (the worst slump since 2007’s collapse). But homebuilding giants __[Lennar](https://robinhood.com/stocks/LEN/)__ and __[KB Home](https://robinhood.com/stocks/KBH/)__, both of whom report Wednesday, posted rising sales last quarter and upheld their growth forecasts. That could be because inventory’s still tight. 

Zoom Out

Stories we’re watching...

- __[Photoshop](https://snacks.robinhood.com/newsletters/4DxKjaxcBBGxy0yyBuYx9F/articles/3pzeouzW81imZVi8xBUZR0/):__ __[Adobe](https://robinhood.com/stocks/ADBE/)__ agreed to buy design-software startup __Figma__ for $20B — its largest acquisition *by far*. Cue: Adobe stock had its worst day since 2010, as investors worry that it’s overpaying to quash competition.
- __[Searched](https://snacks.robinhood.com/newsletters/7KTQ2MUJHzWX25g9adlgVP/articles/1a0ZyqNit2YojO6QpTKXHl/):__ The EU ordered __[Google](https://robinhood.com/stocks/GOOGL/)__ to pay a record $4B after it lost its appeal to an Android-related antitrust ruling. Crackdowns abroad could increase pressure in the US, where tech regulation has stalled. 
- __[iCharge](https://snacks.robinhood.com/newsletters/3zk1PzoMK4g9MSqLIZcEPW/):__ __[Goldman Sachs’](https://robinhood.com/stocks/GS/)__ loss rate on __[Apple](https://robinhood.com/stocks/AAPL/)__ Card loans is the worst among major US credit-card issuers (read: problems with bad FICO scores). Banks with more subprime exposure would feel the hit of a recession first.

ICYMI

Last week's highlights...

Buy now, pay never? Regulators aim to crack down on BNPL giants like Klarna and PayPal

The autumnal equinox — when day and night are the same length — will happen on September 22, marking the beginning of fall

🛍️ Buy now, pay never? Regulators aim to crack down on BNPL giants like Klarna and PayPal

__5 fits and a pair of combat boots…__ Chinese shopping app __Shein__ is [expanding](https://www.wsj.com/articles/fast-fashion-giant-shein-plans-more-u-s-distribution-centers-as-sales-climb-11663236002?mod=markets_featst_pos2) its US footprint as sales boom in its #1 market. The online-only retailer has thousands of trendy fits at ultralow prices (think: $10 wool pants). Shein was last valued at $100B, and in Q2 it surpassed __[Amazon](https://robinhood.com/stocks/amzn/)__ as America’s most downloaded shopping app. 

- __#Unboxed:__ Shein plans to open three new US distribution centers and hire 3K workers to get $5 tops to America’s teens.
- __#OOTD:__ Shein’s only US distributor opened in Indiana in April and is already forecast to generate $175M/year.

__Not-so-fast fashion…__ Social media has supercharged demand for new fits to fill the feed. But for all of Shein’s popularity, its shipment times have lagged fast-fashion standards. While rivals like Zara, __H&M__, and Amazon can deliver in two biz days, Shein packages can take up to two weeks (they all come from Asia). While ETAs haven’t dulled Shein’s shine, delays could be getting in the way of its next big venture:

- __High prices = low patience:__ Last year Shein launched a higher-end clothing line called MOTF (think: $100 silk dresses), but demand is soft because shoppers are less willing to splurge *and* wait 10 days for that bachelorette fit.
- __Zara-fication:__ While Shein moves large volumes, its revenue falls short of rivals’ because its items are so low-priced. Last year Zara earned $19.5B in sales while Shein reportedly brought in $16B.

Fashein haul (Cezaro De Luca/Getty Images)

OOTD

__The price must be right, but so does the time…__ To command higher prices, Shein can’t just be a fast-fashion brand — it has to be a fast-delivering fashion brand. By setting up shop where its top customers are, it can cut down delivery times by three to four days.

Fast-fashion staple Shein plans a US expansion to deliver faster to Gen Zers (and be more like Zara)

__Just went Photo-shopping…__ picked up a multibillion-dollar startup. __[Adobe](https://robinhood.com/stocks/ADBE/)__, the __[Microsoft](https://robinhood.com/stocks/MSFT/)__ of the creative world, agreed to buy design-software company __Figma__ for a cool $20B — its largest acquisition by far. Figma’s cloud-based software helps engineers and designers collab on web interfaces in real time (think: a digital whiteboard). Investors weren’t impressed:

- __Adobe shares tanked nearly 17%__ yesterday as investors frowned at the price tag. Figma was last valued at $10B in June 2021, and Adobe is paying double to scoop it. 
- __Figma is expected to generate $400M+__ in revenue this year, meaning that Adobe is paying a huge forward multiple of 50X revenue for the company. FYI: multiples for top cloud companies have plunged to about 9X revenue. 
- __Not helping…__ Adobe also issued disappointing fourth-quarter earnings guidance, though its profit jumped last quarter by 13% to $1.1B. 

__Doing some Acrobat(ics)…__ Adobe has snatched up companies, including Workfront ($1.5B) in 2020 and Frame.io ($1.3B) in 2021. Previously, its largest splurge was Marketo in 2018 ($4.7B). Now Adobe is making a purchase *four times* that size at a time when dealmaking has slowed big time. See: inflation, econ uncertainty, volatile markets. Adobe says Figma’s customers will expose it to a new user segment and a total addressable market of $16B.

Shop

__When under threat, you might overstretch…__ Adobe’s splurge may be more of a need-driven move than a smart buying opportunity. Figma competes toe to toe with Adobe’s XD program. Instead of sparring with it, Adobe’s eating it. Investors worry it’s overpaying out of desperation to quash competition, and yesterday the stock had its worst day since 2010.

Adobe agrees to buy rival Figma in its largest splurge ever, but investors aren’t loving the move

__🤖 Techy…__ The __[ethereum](https://robinhood.com/crypto/ETH/)__ [Merge](https://www.nytimes.com/2022/09/15/technology/merge-ethereum-crypto.html) succeeded, moving the chain from proof of work (energy hog) to proof of stake (efficient). The switch *also* means ETH holders can earn coins via staking, which incentivizes investors to [scoop up](https://www.bloomberg.com/news/articles/2022-09-13/what-s-ethereum-eth-merge-proof-of-stake-differs-from-bitcoin-btc) ether.

__🤔 Sus…__ South Korea [issued](https://www.wsj.com/livecoverage/stock-market-news-today-09-14-2022/card/manhunt-begins-for-terraform-labs-do-kwon-Ipunh3LaLLR09rnZEOaY) an arrest warrant Wednesday for Do Kwon, the founder of failed stablecoin TerraUSD. The coin went to near $0 in June — wiping out $42B of investors' money — and investors accused Kwon of fraud. 

__🤹‍♀️ Quirky…__ Out with Picasso, in with the punks. NYC’s MoMA plans to [sell](https://www.wsj.com/articles/70-million-in-art-at-moma-to-be-sold-to-extend-museums-digital-reach-11663117201) $70M worth of paintings and sculptures to fund a digital-art gallery (picture: framed NFTs). Renoir and Rodin will compete with Bored Apes.

The Crypto Catch-Up…

Chinese fast-fashion staple Shein plans a US expansion to deliver faster to Gen Zers

Roger Federer, who on Tuesday announced his retirement from tennis, has won 20 major titles and $130M+ in career prizes

👗 Shein’s American dream

__Googling "how to delete apps"…__ Yesterday the European Union [ordered](https://www.cnn.com/2022/09/14/tech/google-loses-eu-fine-appeal/index.html) __[Google](https://robinhood.com/stocks/GOOGL/)__ to pay a massive $4B after the tech titan lost an appeal challenging an antitrust ruling. Back in 2018, the search giant was fined $5B over accusations it forced manufacturers to preinstall Google apps (think: Chrome, Search) on Android phones. FYI: about 70% of smartphones in Europe run on Google’s Android. 

- __Google vs. the EU:__ Over the past decade, Google's faced $8B+ in EU antitrust fines, including $2.4B last year for biased results on its Google Shopping platform.
- __Double whammy:__ Yesterday, South Korea’s privacy committee fined Google $50M and __[Meta](https://robinhood.com/stocks/META/)__ $22M for collecting user data for targeted ads.
- __FYI:__ Google has a $125B cash pile, so a $4B fine won’t make a huge dent — but the regulatory aftermath could force Google to change its profitable biz model. 

__The EU’s antitrust arsenal…__ is stacked. Earlier this year, EU policymakers approved laws aimed at regulating tech juggernauts. Under the Digital Markets Act, companies can be fined up to 10% of their global revenue for breaking the rules — and up to *20%* for repeat offenses. It could all add up for techies caught in the crosshairs: 

- __[Apple’s](https://robinhood.com/stocks/AAPL/)__ faced several EU antitrust charges, including over its refusal to let competitors like __[PayPal](https://robinhood.com/stocks/PYPL/)__ use its contactless payment tech. 
- __[Amazon’s](https://robinhood.com/stocks/AMZN/)__ been stuck in a three-year investigation over how it collects data from rival retailers and uses Prime to force sellers into its logistics biz.

Preinstalled problems (Pier Marco Tacca/Getty Images)

Crackdown

__“Hot Antitrust Summer” may be over…__ but a chilly antitrust fall may be dawning. Antitrust crackdowns abroad could push policymakers to increase pressure in the US, where tech regulation has largely stalled. It’s already starting: yesterday California regulators [sued](https://www.wsj.com/articles/california-sues-amazon-for-alleged-antitrust-violations-that-inflated-prices-stifled-competition-11663178985) Amazon, alleging it prevents merchants from offering lower prices through competitors’ sites.

Google gets slapped with a record $4B EU antitrust fine — and other big techies could be next

__It’s BB szn…__ Big businesses are buying back shares by the boatload. This past week, __[Comcast](https://robinhood.com/stocks/CMCSA/)__, __[Johnson & Johnson](https://robinhood.com/stocks/JNJ/)__, __[T-Mobile](https://robinhood.com/stocks/TMUS/)__, __[UBS](https://robinhood.com/stocks/UBS/)__, and __[Starbucks](https://robinhood.com/stocks/SBUX/)__ all [announced](https://ca.finance.yahoo.com/news/comcast-doubles-share-buyback-program-121615546.html) plans to buy back billions worth of their own shares. Refresher: Some companies regularly buy back shares to boost prices and reward investors (think: fewer available shares + similar earnings = higher earnings per share). Two reasons for the buyback bonanza:

- __Bargain prices:__ Because stocks have plunged this year, it’s (relatively) cheaper for companies to splurge on their stock.
- __Extra fees incoming:__ President Biden’s Inflation Reduction Act will impose a 1% tax on buybacks from large corporations beginning next year. 

__Buyback brouhaha…__ Buybacks have [boomed](https://www.cnbc.com/2022/08/19/what-stock-buybacks-are-and-how-a-new-tax-affects-your-portfolio.html) in recent years. In the first quarter of this year, S&P 500 buybacks hit a record $281B (though the index itself had its worst performance in years). Biden’s 1% tax is projected to raise $74B in the next decade, but critics say the tax will reduce investment and innovation and hurt investors. Over the past 20 years, big buybackers have outperformed others by 60%.

ByeBack

__The big buyback era probably isn’t ending…__ because the benefits still outweigh the costs. Experts say buybacks are unlikely to disappear, since a tax would have to be 10% to persuade companies to ditch buybacks altogether. Apple, Alphabet, Meta, __[Microsoft](https://robinhood.com/stocks/MSFT/)__, and __[Bank of America](https://robinhood.com/stocks/BAC/)__ — the “buyback monsters” — accounted for 25% of all buybacks in the past year, and they’re likely to keep splurging on themselves.

Businesses are buying back their shares by the billions before a new tax hits buyback boosts

The EU dealt Google a record $4B antitrust fine, and other big techies could be next

Starbucks’ cold coffee drinks now account for 60% of all orders year-round

☎️ Google’s $4B anti-fine

__Seeing red…__ Stocks had a no good, very bad day after August inflation numbers came in hotter than expected. Lower gas prices helped slow the pace of inflation for a second straight month, but the TL;DR is that it’s still ridiculously high, with consumer prices up 8.3% from last year. 

- __Why does $5/gallon sound cheap?__ Energy prices fell 5%, with gas down 10.6%. But while pump and airfare prices were lower, utility and electric bills ticked up. 
- __Why is this croissant $9?__ Food prices were up nearly 0.8% month over month, with cereal and bakery products up 1.2%. 
- __Why is rent my entire paycheck?__ “Shelter” prices rose 0.7% over the month as housing gets even pricier. FYI: The median monthly rent in America’s 50 largest cities hit a record [$1.9K](https://www.forbes.com/sites/jonathanponciano/2022/09/13/inflation-climbed-83-in-august-slowing-for-second-month-straight-as-gas-prices-plunged/?sh=691a378d66c5) in July as prices increased for 16 months straight. 

__No rest for JPow…__ Before this bummer report dropped, investors were gaining confidence that inflation could be slowing for real (which could compel the Fed to cool its ’flation-fighting crusade). Now there’s a lower chance of a Powell pause (aka: a Pow-se). 

- __It’s likely the Fed’ll raise rates__ by 75 basis points at its meeting next week, instead of the 50 basis points some were hoping for. 
- __To tamp inflation__ to a benchmark target of 2%, the Fed’s already had four hikes this year — including two jumbo hikes of 75 basis points in June and July.
- __Tech stocks have been hit hard,__ as high rates lower the potential future earnings of companies whose valuations are largely tied to growth… potential.

We already “be inflation” (Patrick T. Fallon/Getty Images)

Grinch

__Inflation’s a Grinch…__ The holidays are months away, but more than half of Americans are already [stressed](https://www.cnbc.com/2022/09/08/inflation-fears-spur-shoppers-to-get-early-jump-on-year-end-holidays.html#:~:text=More%20than%20half%20%E2%80%94%20or%2059,prices%2C%20another%20recent%20survey%20said.&text=Many%20consumers%20are%20also%20getting%20a%20head%20start%20as%20a%20result.) about buying gifts this season. While ’flation erodes spending power, rate hikes make borrowing pricier (think: credit-card debt). That could put a dent in major retailers’ biggest splurge season of the year. 

After August inflation came in too hot, investors aren’t expecting a Powell pause anytime soon

__Zoom sweats > Gucci-blazer rental…__ __[Rent the Runway](https://robinhood.com/stocks/RENT/)__ is falling out of fashion as more users ditch designer rentals. RTR offers clothes from 800+ designers for one-time rental, monthly membership, and discounted purchase. Last quarter the “shared closet” biz notched record revenue of $76M and shrank its quarterly loss from last year. But that didn’t keep the [stock](https://robinhood.com/stocks/RENT/) from tanking nearly 40% yesterday. 

- __Torn seams:__ Last quarter, Rent the Runway's active subscribers dropped 8% to 124K as penny-pinching fashionistas paused (or ended) their memberships. 
- __Cloudy forecast:__ RTR lowered its sales expectations for the year and said it planned to lay off a quarter of its 1K+ employees to cut costs.

__Hangin’ by a thread…__ As consumer prices skyrocket, even trendsetters are cutting back on discretionary buys (think: new $2K Moncler puffer). Thanks to the rise of hybrid work, the number of Americans wearing business-formal fits has dropped by half since prepandemic. For companies like RTR that means shifting inventory to include more casual and social fits.

- __Only 20% of RTR subscribers__ looked for work-related rentals during the first half of the year, down from nearly 35% in 2019.

Thread

__Past performance ≠ future results…__ Despite RTR’s record quarter, investors tanked the stock because they’re always looking to the future, and the future may not look as bright for retailers. Instead of splurging on new styles every season, consumers are saving by buying fewer outfits that are good for lots of occasions. That shift in shopping patterns is starting to squeeze results for retailers like __[Target](https://robinhood.com/stocks/TGT/)__ and __[Amazon](https://robinhood.com/stocks/AMZN/)__.

Rent the Runway cuts a quarter of its staff as the “hybrid wardrobe” dashes demand for seasonal fits

Streaming of Netflix’s “The Crown” has surged 9X since Queen Elizabeth II died

🤢 The inflation Grinch

__Charging the iPhone to my [Apple](https://robinhood.com/stocks/AAPL/) Card...__ seamless. Paying it off on time: not so much. __[Goldman Sachs’](https://robinhood.com/stocks/GS/)__ Apple Card biz has a bad-credit problem, [according](https://www.cnbc.com/2022/09/12/goldmans-gs-apple-card-business-has-a-surprising-subprime-problem.html) to competitor __[JPMorgan](https://robinhood.com/stocks/JPM/)__. In 2019 the investment-banking giant triumphed over established card companies to become Apple's card issuer. The sleek no-fee card generated hype, with early users posting pics of their names etched in Apple titanium. Some expressed shock they'd been approved. Now we know why:

- __Credit karma:__ Over a quarter of Goldman’s card loans have gone to customers with credit scores under 660 (aka: fair to poor).
- __The WOAT:__ Goldman’s loss rate on credit-card loans is the worst among major US card issuers and “well above subprime lenders," JPM said. 
- __The GOAT:__ Thanks to pandemic stimulus and rising wages, rivals like __[Bank of America](https://robinhood.com/stocks/BAC/)__ have seen repayments rise near record levels.

__DJ D-Sol in the hot seat...__ Goldman CEO David Solomon, who moonlights as an [EDM DJ](https://nypost.com/2022/03/22/goldman-sachs-ceo-david-dj-d-sol-solomon-playing-at-lollapalooza/), is under pressure to produce profits at Goldman's consumer-facing biz (which makes up 18% of its total revenue). The Wall Street-centric bank expanded to consumers in 2016 with its high-yield Marcus savings account. Then Apple Card supercharged its retail reach. Now:

- __Growing revenue:__ Goldman's consumer-banking biz grew revenue 25% last quarter, with 14M customers and $16B in loan balances.
- __Growing losses:__ The consumer division is on track to lose $1.2B this year, and Goldman has been forced to set aside more reserves in case of future loan losses.

The IOUs are racking up (Michael Short/Getty Images)

__Cracks emerge in a downturn…__ and they could cause a quake. With inflation at a 40-year high and unemployment ticking up, the weakest American borrowers are starting to miss loan payments. 
Goldman execs have acknowledged that its consumer biz could lose even more than $1.2B if a deep recession forces them to set aside more $$ for defaulted loans. Banks with more subprime exposure will feel the hit first.

Goldman’s Apple Card biz has a shockingly high loss rate on credit card loans — and it could get worse

__Enter the Mocha-verse…__ Cold brew’s coming to the blockchain. Yesterday __[Starbucks](https://robinhood.com/stocks/SBUX/)__ [introduced](https://techcrunch.com/2022/09/12/starbucks-unveils-its-blockchain-based-loyalty-platform-and-nft-community-starbucks-odyssey/) a loyalty program powered by non-fungible tokens called “Starbucks Odyssey.” Odyssey will be powered by __[Polygon](https://robinhood.com/crypto/MATIC/)__, a proof-of-stake "sidechain" that aims to make __[ethereum](https://robinhood.com/crypto/ETH/)__ transactions cheaper and faster. Polygon’s native token, matic, jumped 5% on the Starbs news.

- __A journey:__ Odyssey will extend Starbs’ popular rewards program, enabling latte lovers to earn NFTs (called “stamps”) by completing “journeys.” Think: java-inspired games.
- __Peppier perks:__ Users can redeem stamps for exclusive experiences like virtual espresso-martini-making classes and trips to Costa Rican coffee farms. 
- __Brewing up community:__ Odyssey users can also buy and sell limited-edition stamps.

__Spill the NFTea…__ Last year NFT sales boomed with high crypto prices. But since then the NFT industry has struggled: 

- __Trading volume__ on top NFT marketplace __OpenSea__ has plunged 99% from its May peak. An NFT of __[Twitter](https://robinhood.com/stocks/TWTR/)__ founder Jack Dorsey’s first-ever tweet recently got a top bid of $280 (not a typo) — after selling for *$2.9M* last year.
- __Getting practical:__ As sales have slumped, some companies have rolled out “practical” NFT applications: __Ticketmaster__ uses them to verify tickets and prevent resale scams, and __[eBay’s](https://robinhood.com/stocks/EBAY/)__ embraced them to authenticate its goods.

NFTea

__Loyal customers make it easier to innovate…__ After Starbucks combined its existing payment system with new mobile-ordering tech in 2015, loyal latte-sippers happily adopted the tech to earn rewards — and made Starbucks the top mobile payment platform (it’s now second to __[Apple](https://robinhood.com/stocks/AAPL/)__ Pay, with 31M users). Starbs could become a top player in web3's tokenized future, if customers embrace its new NFT features.

Starbucks launches NFT-powered rewards, leveraging loyal sippers to enter web3

Goldman’s Apple Card biz has a shockingly high loss rate on loans — and it could get worse

The Strategic Petroleum Reserve is at its lowest level since 1984 after President Biden tapped it to boost gas supplies

🍎 Goldman’s Apple Card problem

__[Zillow](https://robinhood.com/stocks/Z/)-scrolling has us pillow-sobbing…__ The US has come down with a case of housing blues: Americans are either sad because they *can’t* buy a house or sad because they *did* buy a house. Nearly three in four homebuyers have at least one [regret](https://fortune.com/2022/09/07/homebuyers-remorse-most-people-who-bought-a-house-recently-regret-the-process/) related to their recent home purchase. Meanwhile, wannabe buyers are getting priced out. Let’s unpack that: 

- __Homeowners__ are watching their net worth [fall](https://www.cnbc.com/2022/09/07/homeowners-lose-wealth-as-rising-interest-rates-weigh-on-home-values.html) as soaring mortgage rates soften demand. Home prices dropped in July for the first time in 32 months as rates doubled from January. 
- __#1 regret:__ overpaying. Buyers paid a median of $65K over asking price for their new cribs. 
- __*Meanwhile*:__ Wannabe buyers are far from their white-picket-fence dreams because prices are still significantly elevated (blame: pandemic [housing boom](https://snacks.robinhood.com/newsletters/3W8LX1jIAswA4HFNTbvVHO/articles/4Fw8bHVeO2Nn0unnSjroHO/)). 

__“Squid Game” vibes…__ No one wins in this market. Prospective buyers lose: home prices in June were 18% higher than a year earlier, a historically steep jump (plus: mortgage rates are wild). Owners lose too: home prices dipped 0.77% in July — sounds negligible, actually the largest monthly decline since 2011.

- __The housing-price drop could get worse__ since the Fed is determined to unleash ’flation-fighting “pain” (read: higher interest rates). 
- __275K mortgage holders__ would fall underwater if their homes lost 5% of their current value. Over 80% of those borrowers bought homes in the first half of this year (aka: housing peak). 

A white-picket paradox (Jon Lovette/Getty Images)

Paradox

__It’s a chill, but likely not a crash…__ Homeowners are way more cash flush now than they were when the housing market crashed in ’07 (flashback: prices plunged and millions owed more than their homes were worth). Mortgage leverage is at a record low, and losing some paper value on a home won’t harm most Americans. While housing inventory is rising at a record pace, home supply is still relatively tight, so prices likely won’t crash.

The housing paradox: as rates rain on property’s parade, Americans are losing all around

__Looks like a microwave on wheels…__ actually a robo burrito delivery (#roburrito). Last week __[Uber Eats](https://robinhood.com/stocks/UBER/)__ struck a 10-year deal with self-driving startup __Nuro__ to deliver food starting this year. Nuro was the first to score street-legal status for driverless deliveries, and it has deals with __[Kroger](https://robinhood.com/stocks/KR/)__, __[Walmart](https://robinhood.com/stocks/WMT/)__, and __[Domino’s](https://robinhood.com/stocks/DPZ/)__. In June, Grubhub launched autonomous delivery at some colleges. Driverless drop-offs can ease labor shortages and curb emissions. With US online food deliveries set to grow 10% by 2026, self-driving could go mainstream through the kitchen. 

__This cap's not for wearing…__ but winter is coming. After Russia’s __Gazprom__ indefinitely [shut down](https://snacks.robinhood.com/newsletters/7oETBY36SrLGaQPslRoeYL/articles/79MQ7GeoUXRx4wTJr1vGMn/) natural-gas flows to Europe to compel the West to lift sanctions, Europeans are fearing a worst-case scenario winter energy crisis. Think: scarce supply, sky-high heating costs. Now: the EU proposed a cap on Russian gas prices, the new British PM Liz Truss announced a cap on home and business energy bills, and Germany announced a roughly $65B plan to offset soaring energy costs. The measures are meant to protect taxpayers from massive heating bills.

__[Ethereum](https://robinhood.com/crypto/ETH/) holds its breath…__ The second-largest cryptocurrency is expected to undergo a major overhaul — dubbed [the Merge](https://snacks.robinhood.com/newsletters/1wtJg97QxjQGWOy95mSzca/articles/4PkMBBDA5ADxTIJm447Hdh/) — this Wednesday, and it's the talk of crypto town. If all goes to plan (fingers = crossed), ethereum's backbone will switch from "proof of work" (old, energy-hungry) to "proof of stake" (new, energy-efficient). But ahead of ETH's big day: experts are warning of [scams](https://decrypt.co/108791/ethereum-merge-almost-here-what-could-go-wrong) and miners are talking [hard forks](https://fortune.com/2022/08/06/vitalik-buterin-ethereum-creator-on-merge-ethpow/). Ethereum's future depends on the Merge going smoothly — only then will everyone involved breathe easy.

__$700 Balenciaga blazer…__ just for the night. Last quarter, __[Rent the Runway](https://robinhood.com/stocks/RENT/)__ doubled its sales as the return of IRL events boosted its biz. RTR offers clothes from 750+ designers for rent or purchase. But as #flation weighs on wallets, RTR is doubling down on secondhand fashion — which is forecast to double to $77B in sales by 2027. In July, Saks Off 5th and RTR [partnered](https://www.forbes.com/sites/joanverdon/2022/07/28/saks-off-fifth-broadens-its-resale-offerings-with-rent-the-runway-partnership/?sh=19d78787345c) to offer pre-owned designer pieces at stores and online. We’ll see how resale retail is paying off when RTR reports today. FYI: the [stock’s](https://robinhood.com/stocks/RENT/) down 46% this year.

- __[Spin](https://snacks.robinhood.com/newsletters/2G8tXvkEcBas5VqekX1vse/articles/n1dClWqs3MzZfLu8pFSsf/):__ Buzzy unicorn IPOs may be fading, but “spin offerings” are gaining traction. __[Volkswagen](https://robinhood.com/stocks/VWAGY/)__ plans to take __[Porsche](https://robinhood.com/stocks/POAHY/)__ public in what could be Europe’s biggest IPO since 1999. VW could raise $10B in the listing. 
- __[BTClean](https://snacks.robinhood.com/newsletters/59MuwymwaS2JMT7bKo8iPl/articles/2SCCm0FG9J7kFmECxsGTE8/):__ The White House dropped a report on crypto mining's environmental impact. Carrot: President Biden wants to work *with* the industry to go greener. Stick: If that fails, executive action (think: regulation) is on the table. 
- __[Putinflation](https://snacks.robinhood.com/newsletters/7oETBY36SrLGaQPslRoeYL/articles/79MQ7GeoUXRx4wTJr1vGMn/):__ Europe is racing to fill gas-storage facilities to keep homes warm this winter after Russia-controlled Gazprom indefinitely shut the key Nord Stream pipeline, blaming Western sanctions.

9/11 was the deadliest day in history for American firefighters

🏠 Housing’s sad paradox

__Cleaning up your act…__ can get messy. Yesterday the White House released a [major report](https://www.bloomberg.com/news/articles/2022-09-08/crypto-mining-threatens-us-climate-efforts-white-house-warns) on the environmental impact of crypto mining, and the message was clear: shape up. The report, commissioned in March, calls out energy-intensive crypto (like: proof-of-work __[bitcoin](https://robinhood.com/crypto/BTC/)__) and says the industry should collab with environmental and energy regulators to develop clean standards. If that fails, the report says the admin should consider exec action. The dirty US crypto facts:

- __Ctrl+Altcoin+Del:__ Crypto's energy usage = all home computers.
- __Ethaust:__ Crypto emissions = railroad's diesel-fuel emissions. 
- __Americoin:__ The US is home to 38% of global bitcoin mining, thanks in part to giants like __[Riot Blockchain](https://robinhood.com/stocks/RIOT/)__ and __[Marathon Digital](https://robinhood.com/stocks/MARA/)__. Both stocks popped 14% yesterday. 

__When you finish chores early…__ President Biden's crypto-climate report dropped just a week before the [ethereum Merge](https://snacks.robinhood.com/newsletters/1wtJg97QxjQGWOy95mSzca/articles/4PkMBBDA5ADxTIJm447Hdh/) (a shift from power-hungry proof of work to energy-efficient proof of stake) is set to overhaul the second-largest crypto, __[ethereum](https://robinhood.com/crypto/ETH/)__. But other proof-of-work cryptos like bitcoin still have a long list of chores to tackle to appease the current admin. 

- __If the collab model fails,__ the report says Congress should “consider legislation to limit or eliminate the use of high energy intensity consensus mechanisms” for crypto mining.

A peek into crypto mining (Lars Hagberg/Getty Images)

Greenhouse

__Self-regulation could be the best regulation…__ for the crypto industry. The Biden admin's push for cleaner crypto operations suggests the status quo is a no-go. But its openness to collabing with industry titans also suggests that crypto might come out of this smiling. Meanwhile, the Merge could demonstrate that ethereum can change all on its own, without the force of regulation. Whether the rest of crypto follows suit could determine the admin’s next steps.

The big White House report on crypto's environmental impact puts executive action on the table

__Rated E…__ for EVeryone. __[GM’s](https://robinhood.com/stocks/GM/)__ going all in on affordable electric vehicles with the [launch](https://www.theverge.com/2022/9/8/23339186/gm-chevy-equinox-ev-announce-price-specs-suv) of the Chevy Equinox EV. The Tron-esque SUV will go on sale in the US next fall, with the cheapest model starting at $30K ($10K less than __[Tesla's](https://robinhood.com/stocks/TSLA/)__ cheapest whip). The specs: 

- __Road range:__ The Equinox will be powered by GM's in-house Ultium EV battery system. GM says it’ll reach up to 300 miles per charge. 
- __The lineup:__ Chevy already has one of the largest e-fleets with the Silverado EV, Bolt E, and Blazer EV.

__EV sticker shock…__ Tesla and __[Ford](https://robinhood.com/stocks/F/)__ recently hiked their electric-car prices as rising metal and battery costs weigh on profits. With the average EV price tag just shy of $70K, GM is focusing on affordability to boost adoption — and speed past the competition. 

- __GM slashed the price__ of its Chevy Bolt EV by as much as $6K in June after a massive recall and production pause led to just 26 EVs being sold in Q4 last year.
- __Ford’s EV sales tripled__ last month, and __[Volkswagen’s](https://robinhood.com/stocks/VWAGY/)__ EVs are “basically sold out” for the year in the US and Europe.

Plug

__Consumers are waiting till the price is right…__ EV demand is hot: registrations [jumped](https://www.caranddriver.com/news/a39998609/electric-car-sales-usa/) 60% in the first three months of this year, and EVs could account for a quarter of all new-car sales by 2025. But they still make up just 5% of America’s cars. Affordable models from staples like GM, coupled with Biden’s EV tax incentives, could help make “EVs for everyone” a reality.

Chevy's $30K electric SUV could be one of the cheapest yet, as GM strives to make the “EV for everyone”

The White House report on crypto's environmental impact puts executive action on the table

Queen Elizabeth II, who died yesterday, was the second-longest continuously ruling monarch in history after King Louis XIV

⛏️ A White House crypto wish

__Cayman, top down…__ __[Porsche](https://robinhood.com/stocks/POAHY/)__ is speeding toward an IPO despite a bumpy market. On Tuesday, Porsche parent __[Volkswagen](https://robinhood.com/stocks/VWAGY/)__ [said](https://www.wsj.com/articles/volkswagen-to-list-porsche-in-one-of-biggest-ipos-in-years-11662413312) it plans to take the luxe-car brand public within weeks, in what could be Europe’s biggest IPO since 1999. VW could raise $10B in the listing, and plans to use the cash to boost EV production (think: electric Jettas). 

- __Big splash:__ At the high end of forecasts, Porsche could be worth $85B (almost equal to VW’s market cap). VW plans to keep a 75% stake in the biz.
- __Fat margins:__ Pricey Porsche has long been a profit puppy for VW: last year it accounted for 3% of VW’s car sales but *half* of its pretax profits.
- __“Supremium” surge:__ Luxury whips like __[Ferrari](https://robinhood.com/stocks/RACE/)__ and Volkswagen’s Bentley are [booming](https://www.wsj.com/articles/americans-snap-up-teslas-bentleys-lamborghinis-as-the-luxury-auto-market-booms-11662497382?mod=business_lead_pos5). New cars from brands like __[BMW](https://robinhood.com/stocks/BMWYY/)__ and __[Tesla](https://robinhood.com/stocks/TSLA/)__ made up a record 17% of total US car sales in June. 

__IPOs take a back seat…__ as shaky markets scare off investors. So far this year there’ve been half as many IPOs as there were by the same time last year — and they’ve raised 70% less. But some have found success by going smaller, not bigger. In the past year:

- __Splitting up:__ __[GE](https://robinhood.com/stocks/GE/)__ and __[Kellogg](https://robinhood.com/stocks/K/)__ decided to [split](https://snacks.robinhood.com/newsletters/4S6VRj1OyGvIKuWQhrgJ1T/articles/5S6jEkhUqH5cUVw3HKheG7/) into smaller public companies to [streamline](https://snacks.robinhood.com/newsletters/1Qt2T96PxTPi4D1SE8Gee4/articles/5MZFe6N5PC1XczpsPaEX9z/) operations and attract investors.
- __Spinning off:__ __[Dell](https://robinhood.com/stocks/Dell/)__ spun off __[VMware](https://robinhood.com/stocks/VMW/)__, and __[AT&T](https://robinhood.com/stocks/T/)__ [peeled](https://snacks.robinhood.com/newsletters/aHxrhlzudIs7bopZbJSGR/articles/jw8WzXcTXZhgCC7cyV676/) off __[Warner Bros. Discovery](https://robinhood.com/stocks/WBD/)__. Back in 2015, Fiat spun off Ferrari — and Ferrari shares have nearly quadrupled.

Porsche wants its own lane (Martyn Lucy/Getty Images)

Spin

__It’s the era of “spin offerings”…__ public offerings that spin off from larger companies. 
Porsche’s planned debut shows IPOs aren’t disappearing — they’re just changing. Buzzy unicorn-style IPOs (think: rapid growth, steep losses) are getting scrapped as econ jitters grow. Just the [latest](https://www.cnbc.com/2022/09/02/chobani-pulls-plan-for-ipo.html): Chobani. But corporate staples like VW and GE could continue spinning off profitable brands to boost value. 

Volkswagen hopes to take Porsche public at $85B as “spin offerings” gain traction

__An imperfect match…__ Cheers to this “ugly” couple: yesterday odd-looking-produce purveyor __Misfits Market__ [agreed](https://www.bloomberg.com/news/articles/2022-09-07/misfits-market-buying-imperfect-foods-in-ugly-produce-grocery-delivery-deal) to buy __Imperfect Foods__. Both companies deliver strange-shaped fruits and veggies at discounted prices (think: quirky carrots and dented avo that Whole Foods won’t sell). Both benefited from the online grocery boom, and now they’re joining forces:

- __A prosperous pear:__ Misfits was last valued at $2B and Imperfect at $700M. Together, the biz expects $1B in sales (and profitability) by 2024.
- __Fruitful partnership:__ Misfits expects to boost subscribers to 500K by adding Imperfect’s urban customers to its more rural base. It’ll also stop outsourcing delivery by using Imperfect’s vans. 

__Sad-lookin’ corn…__ still has the juice. After online grocery sales more than doubled in 2020, Misfits and Imperfect attracted new customers and raised millions to grow. Since then e-grocery demand has stayed strong. So-called ugly grocers now have two tailwinds:

- __’Flation-friendly:__ Groceries have gotten 13% pricier this past year, making cheaper “imperfect” foods more attractive: Misfits says its groceries cost up to 40% less than conventional alternatives. 
- __Sustainable branding:__ Misfits and Imperfect advertise their efforts to fight food waste, capitalizing on consumers’ green preferences. FYI: critics [say](https://www.vox.com/the-goods/2019/2/26/18240399/food-waste-ugly-produce-myths-farms) ugly sellers don’t reduce waste but rebrand food that would’ve ended up in restaurants or products.

Pear

__Sustainability doesn’t always win…__ but lower prices might. Sales at eco-friendly brands like __[Beyond Meat](https://robinhood.com/stocks/BYND/)__ have wilted as demand for pricey meat alternatives dwindles. But ugly grocers have an advantage over faux-meat makers: they’re often *less expensive* than rivals like __[Albertsons](https://robinhood.com/stocks/ACI/)__ and __[Kroger](https://robinhood.com/stocks/KR/)__, and that could win over cost-conscious shoppers — regardless of sustainable preferences.

Misfits Market buys “ugly produce” rival Imperfect Foods, betting demand for weird-looking blueberries will keep rising

Serena Williams’ final match averaged 4.8M viewers, making it ESPN’s most-watched tennis match ever

🚗 Initial Porsche Offering

__Winter is coming...__ Markets were shocked on Friday after Russia indefinitely shut down natural-gas flows to Europe. Kremlin-controlled __Gazprom__ (the [biggest](https://www.investopedia.com/articles/markets/082615/5-biggest-russian-natural-gas-companies.asp) natural-gas company) halted gas supplies to Germany from the Nord Stream 1 pipeline, a key gas artery for Europe. It’s a worst-case scenario for Europe as it races to fill gas-storage facilities to keep homes warm this winter.

- __Russia blamed__ the halt on economic sanctions imposed by the West, saying they led to technical problems. Russia said flows would resume if sanctions were lifted.
- __Europe says__ Russia’s weaponizing energy to force the West to remove sanctions and punish it for supporting Ukraine.
- __Coincidence?__ The move came after the G7 agreed to impose a price cap on Russian oil and the Biden admin [asked](https://www.nytimes.com/2022/09/03/world/europe/the-biden-administration-asks-congress-for-13-7-billion-in-additional-aid-for-ukraine-underscoring-its-resolve.html) Congress for $13.7B in extra aid for Ukraine.

__Putin-flation...__ Gas prices have been falling for months, but they [spiked](https://www.ft.com/content/3fc13e81-ea91-4d4e-9184-4ae9b11f37c8) after Russia turned off the taps (and the euro hit a 20-year low). Not helping: OPEC [agreed](https://www.cnn.com/2022/09/05/energy/opec-oil-gas-prices/index.html) to cut oil production next month. Nord Stream is key for Europe and its largest economy, Germany. But ever since Russia invaded Ukraine, the EU’s had to wean itself off the pipeline.

- __Before the war:__ Russia was Europe’s largest energy supplier, with Nord Stream accounting for *over half* of Germany's gas imports.
- __Since the war began:__ Russia has dramatically cut gas flows to Europe. Before Friday’s news, Gazprom had already slashed Nord Stream flows to 20% of capacity.

Gazprom causes gas problems (NIKOLAY DOYCHINOV/ Getty Images)

Putinflation

__Energy is a powerful weapon…__ and it doesn’t have to be nuclear. By zapping Europe’s gas supply, Russia is attacking its economic heart. A winter shortage could tip Europe’s ailing economy into a full recession — and cause a collapse in energy trading. Fortunately, Europe’s gas-storage levels have surged ahead of targets, which could help it avoid having to ration. But consumers and the economy could take a major hit from record prices.

Russia cut off gas flows to Europe, using energy as an economic weapon ahead of winter

Liz Truss became the third female prime minister in British history yesterday