| Plus, Zuck does the splits. |
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Good afternoon. GLP-1 users are tightening their belts, literally—and that’s spelling out solid returns for some tuck-and-tighten industries. Tailors and cobblers have entered the Ozempic economy, with a rising number of slimmed-down customers coming in to cinch their waistlines and notch their belts. With about 80% of GLP-1 users living in clothes that no longer fit, by one survey’s count, that’s created revenue for more than your local seamstress: Resale platforms and discount chains are also seeing sales tick up as customers search for clothes while their size is in flux. Consider it an unraveling of economic principles: A shrinking market boosts the bottom line. —Helena Cheng, Sissy Yan, and Gabriela Riccardi In today’s newsletter: - Airlines want to upgrade you
- Zuck does the splits
- A defense of solid stock returns
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| - Stocks: Indexes dropped, with yesterday’s Meta and Tesla earnings amplifying investor concerns about spending in the AI sector. That ricocheted into industry-wide losses for tech stocks and the Nasdaq’s worst day since June.
- Bonds: Treasury yields logged their biggest drop in a year, with 10-year yields breaking below 5%, as investors cycled out of tech to seek safe investments.
- Commodities: Crude oil temporarily spiked to its highest price in months amid geopolitical tensions in the Middle East, adding to global market jitters.
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Transportation Airlines’ upsell era is getting stranger  Morning Brew Inc, Photos: Adobe Stock | Airlines have already charged you for the bag, the legroom, and the privilege of choosing where you sit. With jet fuel prices still soaring, here’s what’s next: couches and child-free flights. US carriers are stuck with an unpleasant combination of expensive fuel and passengers who (fortunately) still want to travel. American Airlines reported record quarterly revenue today, but a fuel bill that jumped more than 68% from a year ago still pushed it to a loss. Southwest spent $821 million more on fuel last quarter than a year earlier, while United’s bill shot up $1.8 billion. Rather than wait for oil prices to cooperate, airlines are getting creative—and rolling out premium and oddball new products for the business lines they can control. Let me upgrade youSouthwest may be the clearest example. The airline built its brand around being the simple, low-cost alternative. Now it’s rolling out assigned seating, extra-legroom options, new loyalty perks, and even its first airport lounges as it tries to attract travelers willing to spend more. Those upgrades are already helping: Southwest said its new product offerings are attracting business and price-flexible travelers, while third-quarter revenue hit a record. The airline isn’t alone. American’s premium cabin revenue jumped about 22.9% last quarter, outpacing economic growth, while United’s rose 17%. And airlines are getting increasingly creative about what qualifies as premium. United’s new “Relax Row” lets long-haul passengers buy three economy seats that convert into a couch-like bed with a mattress pad and bedding. While it’s not quite business class, it’s better than sleeping on your own shoulder. JetBlue, meanwhile, has found something even harder to manufacture: silence. The airline announced this week that it’s partnering with Virgin Voyages on an adults-only travel package, which includes a flight with no children onboard. ‘No screaming toddlers’ has officially become an amenity. Wallets buckle upAirlines can get these ideas off the ground for one big reason: Passengers haven’t stopped flying. That gives carriers room to chase more revenue from each traveler, rather than fighting for them with cheaper tickets. That dynamic could matter even more next year. United executives warned this week that elevated fuel costs could stretch well into 2027, while airlines are already cautious about adding capacity. That isn’t especially encouraging for bargain-hunters. If fuel stays expensive and demand holds up, airlines have less incentive to flood the market with cheap seats—and more incentive to dedicate them to travelers who pay for extra room, perks, and status. For investors, the question heading into 2027 may be less about whether people keep flying, and more about which airlines can get enough revenue from each passenger to outrun the fuel bill. Getting on the plane may soon be the cheapest part of the trip.—HC |
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Stocks  | 🟢 What’s up- Aevex jumped 13.22% after disputing a report that the US Navy had halted purchases of its drone-launching boats over performance concerns.
- Southwest Airlines climbed 5.36% despite cutting its full-year profit forecast, as strong booking demand showed that travelers were still willing to pay higher fares.
- SAP rallied 3.45% after quarterly revenue topped 10 billion euros for the first time.
- Blackstone popped 8.38% on strong quarterly earnings, with assets under management reaching $1.37 trillion.
- Comcast gained 3.44% after beating quarterly earnings expectations, aided by its Peacock streaming service turning a profit for the second consecutive quarter.
- Biohaven jumped 25.02% after the FDA accepted its resubmitted application for Vyglxia, an experimental treatment for a nerve-damaging disorder.
🔴 What’s down- Tesla fell 3.08% despite narrowly beating quarterly earnings estimates, as flat revenue and higher spending on new technologies weighed on operating profit.
- SpaceX slipped 9.14% after Elon Musk declined to discuss a potential merger with Tesla during the automaker’s earnings call.
- Lam Research dropped 11.76% despite beating quarterly expectations, as warnings of “supply chain constraints” disappointed investors expecting high AI demand.
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Stock of the day Zuck’s split-second stock drop  Morning Brew Inc. | Reporting earnings yesterday, Meta logged nearly $65 billion in quarterly revenue, notching its 17th consecutive quarter of crushing Wall Street expectations. But that’s yesterday’s news feed, and today, investors are hitting dislike for seemingly one reason: expenses. After promising yesterday to “continue investing aggressively,” today Meta disclosed that it’s committed $825 billion to future contracts, many tied to AI. Already worried by AI’s spending spree, investors went skittering, with Meta stock losing 7% today. But that’s just half of the story. Add in two other words: stock splits. The other half of itMeta also announced yesterday it will release a new class of nonvoting stock to fund AI ambitions—and, in a strikingly candid disclosure, to keep its top gun appeased. In an SEC filing, Meta detailed how CEO Mark Zuckerberg threatened to leave California over a looming billionaire tax currently on the state ballot. Zuck wanted to be shielded from it—and reportedly handed his board of directors a 96-hour ultimatum before he’d list his $110 million Palo Alto compound for sale. The board relented. Hence a two-for-one stock split planned for January, where Meta will issue nonvoting shares. Existing shareholders will be granted one new nonvoting Class C share for every Class A or Class B share they hold. The split allows Meta to raise equity while protecting Zuck’s voting power, currently nearly 61%. This isn’t Zuck’s first time trying to pull a fast split. But even if the plan is realized in January, Wall Street may want Meta to issue voting shares well before then. “The sooner the better in our view,” JPMorgan Chase analyst Doug Anmuth wrote in a note. Despite the drama, Zuck still has his following. Anmuth and most analysts maintain a Buy rating on Meta.—GR |
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Investing Wall Street’s Plan B  Morning Brew Inc, Photo: Getty Images | As you just read, Meta’s latest attempt to bankroll its AI ambitions isn’t exactly getting a like from investors. And the markets have shown that the tech giant has plenty of company. Since CoreWeave’s debt troubles rattled Wall Street, investors have been questioning anew whether AI’s massive price tag will ever pay off. Semiconductor stocks plunged 11.4% last week, their worst weekly performance since April 2025. But here’s a counterweight: At the same time, consumer staples gained 5%, energy climbed nearly 5%, and healthcare rose 3.5% to reach a record high. Rather than dwelling on AI boom and doom, turn to today’s earnings to understand where Wall Street is feeling optimistic. Consumer staplesInvestors are rediscovering the appeal of everyday necessities, which people keep buying even when the economy slows. Take Procter & Gamble, the company behind brands like Tide and Pampers. Shares jumped 5.58% today—their biggest one-day gain since March 2020—after the company reported a 4% increase in quarterly sales and beat profit expectations. It also raised its full-year sales growth forecast, reflecting its acquisition of wellness brand Thorne. But predictable demand doesn’t guarantee predictable profits: Cost-conscious consumers are limiting P&G’s pricing power, while rising commodity, energy, and transportation costs are expected to shave $1.4 billion off the company’s fiscal 2027 profits. DefenseWhile AI companies are spending billions hoping to secure future demand, defense contractors already have customers lining up. Amid escalating geopolitical tensions, Lockheed Martin reported an 11% increase in quarterly revenue today and raised its annual outlook. Its backlog surged 27% from the previous quarter to a record $292 billion, sending shares up 6.87%. Still, political uncertainty and concerns about military budgets have weighed on defense stocks. Citi sees opportunity in the pullback, highlighting RTX and Huntington Ingalls as potential beneficiaries of a rebound. AI adaptersThen there are the adapters: Companies that use AI to improve existing products can benefit without shouldering the tech’s massive infrastructure costs. Spotify, for example, rallied 11.22% after forecasting a stronger-than-expected fourth-quarter operating profit of $921 million. The streaming giant is using AI to improve music discovery and personalization, potentially boosting subscriber retention. It also added 6 million paying subscribers last quarter, bringing its total to 306 million. “People love getting rid of chores. But entertainment is the opposite. Nobody asks an agent to ‘summarize a song’ for them,” co-CEO Gustav Söderström told investors. Zoom outDiapers, drones, Drake: Wall Street is finding plenty of reasons to look beyond artificial intelligence for opportunities. Here’s hoping the momentum continues—and that by some stroke of luck, we’ll make it through a future earnings season without CEOs explaining how $50 billion in debt is great news.—SY |
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Sponsored By VanEck  | Chips don’t doubt. Semiconductors tanked 18% in July (per the MarketVector™ US Listed Semiconductor 25 Index) on doubts around AI spending. SMH holds the chipmakers behind the rebound, and now the doubts are dubious. Big players were up 180%, Micron’s memory business posted nearly 4x last year’s post, and Meta’s Muse launch popped Intel and Arm. VanEck likes what’s ahead. |
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News  | - US initial jobless claims fell to 194,000 last week, keeping America’s low-hire, low-fire labor market very committed to the bit.
- Elon Musk invested $1 billion into Skydance, giving the Ellisons another billionaire friend to help foot their Hollywood bill.
- Barclays is cutting about 5,000 jobs as it leans harder into AI, with one type of employee especially exposed.
- Big US banks are finding unauthorized AI agents inside customer accounts—and some appear to be doing more than users asked.
- PepsiCo extended its Taco Bell beverage deal through 2037, keeping fan-favorite drinks on the menu for years to come.
- Anticipation for Grand Theft Auto VI helped send US PlayStation 5 sales up 22% in September.
- The world’s largest sovereign wealth fund lost nearly $30 billion last quarter, with one typically steady corner of its portfolio doing most of the damage.
- Bose is buying Skullcandy, pairing the brand your dad trusts with the earbuds you owned in middle school.
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Calendar  | Get ready for a spree of economic numbers, including flash manufacturing PMI, flash services PMI, and the final October consumer sentiment report from the University of Michigan—some important figures as the Fed reconvenes next week to decide on interest rates. American Express, Eni, SLB, Infosys, First Citizens, Rogers Communications, and Booz Allen Hamilton close out our last earnings reports for the week. |
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This time last week... | 👟 Readers’ most-clicked story explained why The Big Short’s Michael Burry dropped his biggest stock holding this month—and bought this competitor in its place. |
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