Read It And Eat 28/03

Welcome to ‘Read it and Eat’ — your go-to for bite-sized updates on corporate actions in finance, AI and anything I consider newsworthy. Join me twice a week for quick reads, where I serve up the latest insights that matter in the world of business.

Major Headlines

• A Key Bridge Collapses in Baltimore:

• The Francis Scott Key Bridge collapsed after a 985ft (378m) cargo ship moving at 8 knots (9 mph) collided with it. As of writing this, there have been 2 casualties who were construction workers filling potholes, and there were six other injured individuals. The ship had lost all power and drifted with its own inertia into the bridge, however, there was a distress call which prompted the authorities to close the bridge. The Francis Scott Key Bridge is relatively modern, so experts would expect that it was built with the assumption that its supporting piers might experience a collision. Those piers are important because any structural failure in them — especially in the centre — means that the whole bridge would collapse. But those protections only go so far. “A vessel’s mass and velocity are key factors in the level of impact force generated and there is an economic and practical limit to what level of impact force can be designed for,” said Lee Cunningham, a reader in structural engineering at the University of Manchester. “Similarly, the direction of impact is also an important factor and design assumptions for this would likely be based on the position of the dedicated navigation channel.” “It’s conceivable that the piers weren’t designed to withstand the magnitude of today’s ship impacts, as vessels like the ‘Dali’ weren’t navigating the Port of Baltimoreduring that era,” said Professor Mottram. “Despite meeting regulatory design and safety standards of the 1970s, the Baltimore Key Bridge may not have been equipped to handle the scale of ship movements seen today.” It is important to stress that when addressing the public the Mayor of Baltimore, Brandon Scott, stated the need to pray for all those who have been impacted, and thank the first responders. He then stated when asked about the cargo and the use of the seaport he stressed the need to focus on the human loss and that aspect before even considering the emotional aspect. [The Independent]
  

• Apple To Unveil Their AI Strategy In June:

• Apple has officially stated the date for their mid-summer annual developers’ conference WWDC (World Wide Developers Conference). Apple plans to kick off its annual Worldwide Developers Conference on June 10, when the company is expected to unveil its long-anticipated artificial intelligence (AI) strategy. The iPhone maker announced the timing on Tuesday, saying the event will run through June 14. Though Apple did not say what it plans to unveil — in its usual fashion — people familiar with the matter have said that the presentation will focus heavily on AI. Continuing an approach used since the beginning of the COVID-19 pandemic, the conference will be hosted for free on Apple’s website and app for developers. The opening-day announcements will take place in person at the company’s campus in Cupertino, California. Apple is expected to unveil its next major software updates for the iPhone, iPad, Mac, Vision Pro headset and smartwatch — and its new AI strategy will be front and centre for the planned iOS 18 upgrade. In announcing the event, Apple marketing executive Greg Joswiak said, “It’s going to be Absolutely Incredible” — a clear nod to AI. Apple’s artificial intelligence strategy will include a slew of new proactive features to assist users in their daily lives. The company is not planning to debut its own generative AI chatbot, though. Instead, Apple is holding talks with potential partners like Alphabet’s Google and OpenAI to supply generative AI services, Bloomberg News has reported. [Bloomberg]
  

• Private Equity Bubble About To Pop and Threatens To Trigger Financial Crisis, warns Bank of England:

• We discussed extensively the growing Private Equity bubble which at the time was estimated worth $3Tn and now the Bank of England has issued a warning, stating that the bubble is valued at closer to $8 trillion with a T. For scale A billion is a thousand million, and a trillion is a million million, in other words, if you multiply a million dollars by a thousand you get a billion dollars, and if you multiply a million dollars by one million you get a trillion. On Wednesday, the BoE’s financial policy committee, which monitors risks to financial stability and develops policies to offset them, said: “Finance for riskier corporates could be particularly vulnerable to a significant deterioration in investor risk sentiment.” It said that the likelihood of a “sharp correction” in some markets had increased since December as prices rose despite a cloudy outlook. Officials added they would examine the relationships between private equity firms, which are facing higher borrowing costs, and the UK companies they own. Major private equity-owned UK companies include supermarket chains Asda and Morrisons. [The Telegraph]
  

• Robinhood Launches Credit Card:

• US neo-broker Robinhood saw its shares trade up by 6–7% in premarket trading Wednesday but settled down to just below $20 (up about 3%) in mid-morning trading. The $20 level marks the highest that Robinhood stock has been since late 2021 after the company unveiled its first credit card for clients — the Robinhood Gold Card. Robinhood called its Gold Card “the only credit card you’ll need”, although at least initially it is being offered exclusively for Robinhood Gold members. The Robinhood Gold Card has no annual fee, no foreign transaction fees, and offers 3% cash back on all categories, or 5% cash back on travel when booked through the all-new Robinhood travel portal. The Robinhood Gold Card is offered by Robinhood Credit, Inc., and is issued by Coastal Community Bank (Member of FDIC), pursuant to a license from Visa USA Inc. The reason for the share price jump seems to be not just due to the credit card itself, but the direction that Robinhood is taking — becoming more of a one-stop-shop retail financial supermarket, as opposed to just an online broker for meme stocks and crypto. [Reuters]
  

MINOR NEWS

• The Chairman and CEO of J.P. Morgan Chase, Jamie Dimon, had lunch with the Vice President of the United States, Kamala Harris. [Financial Times]

• Sam Bankman-Fried is to be sentenced today. [NBC]

• Visa and Mastercard agree to pay a $30Bn settlement over US transacting fees. [Financial Times]

• Moody’s considering downgrading Boeing’s stock rating. [Reuters]

• Saudi Arabian Fund will build the first “Dragon Ball-Z” theme park. [Wall Street Journal]

• Retirement Crisis, superannuation scheme, and an increase in the retirement age. BlackRock’s Larry Fink says in his annual letter to shareholders. [The Times]

• Get promoted within 2.5 years or resign, Mckinsey management tells U.S. consultants. [Bloomberg]

• Dell has cut a further 6,000 jobs, bringing total layoffs to 13,000 within 1 year. [CRN]

NEWS OF THE DAY

Is DEI The New “N” Word?:

There is growing resistance against equality within the corporate workplace that morphs from the disdain against Critical Race Theory (CRT) to the disdain and stigmatisation of the word Woke, to now the attempt to commandeer and rebrand DEI (Diversity Equity and Inclusion) to mean (Didn’t Earn It). This is peddled mostly by unqualified, unintelligent, illiterate and/or uneducated, and easily manipulated Caucasians and people like Elon Musk who strongly believe that any and all accomplishments by minorities equate to a reduction in standards of excellence. They are the same people who Donald Trump convinced successfully that immigrants are “coming to steal their jobs”.

DEI, Diversity Equity and Inclusion are the organisational programs and initiatives set up to provide and promote “the fair treatment and full participation of all people” particularly minority groups who have been underrepresented, marginalised and discriminated against within the workplace and in education. Diversity — through the lenses of race, ethnicity, ability, gender, sexual orientation, neurodiversity, and beyond — can help to strengthen organizations, as studies have shown time and again. Quite simply, diversity, equity, and inclusion (DEI) is used to describe three values that many organizations today strive to embody to help meet the needs of people from all walks of life. The latest research finds that companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians. Companies in the bottom quartile in these dimensions are statistically less likely to achieve above-average returns. And diversity is probably a competitive differentiator that shifts market share toward more diverse companies over time. While correlation does not equal causation (greater gender and ethnic diversity in corporate leadership doesn’t automatically translate into more profit), the correlation does indicate that when companies commit themselves to diverse leadership, they are more successful. More diverse companies, we believe, are better able to win top talent and improve their customer orientation, employee satisfaction, and decision-making, and all that leads to a virtuous cycle of increasing returns. Furthermore, diversity of though helps to dispel all type of falsely preconceived notions from harmless ones such as “Black people enjoy chicken and watermelon” and “Women are too emotional” to harmful ones such as some medical students believed that Black patients had thicker skin or a higher threshold for pain than White people which has been shown to contribute to the fact that Black women are three times more likely to die during childbirth.

Right-wing operatives have co-opted DEI, framing it as divisive and contrary to American values, with phrases as the aforementioned “Didn’t Earn It”. This tactic is not merely an opposition to policy but a sophisticated evolution of the dog-whistle strategy, seeking to dismantle or discredit efforts towards racial equality by repackaging them as threats to societal norms. This approach echoes the sentiment attributed to Lyndon B. Johnson (LBJ), who noted the ease with which racial divisions could be exploited for political gain. By convincing marginalized groups that their cultural or societal inclusion comes at the expense of their status, political figures can maintain power by perpetuating division and animosity. This manipulation of societal divisions for political advantage, a tactic as old as politics itself, leads us directly to a stark observation LBJ made when he poignantly captured the essence of this strategy when he said,

“If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.”

― Lyndon B. Johnson

In January, the infamous hedge fund manager and billionaire took to Twitter to pretty much rant about how the initiative could lead to “racism against white people.” This notion, although founded in rhetoric and debunked narratives was reiterated by the owner of Tesla Elon Musk. He stated that “DEI is just another word for racism, Shame on anyone who uses it.” Elon further falsely represented that all the problems that Boeing has been experiencing can be directly linked to the fact that they embraced DEI initiatives. To be clear, the problems with Boeing started when they merged with McDonald Douglas and became a profit-driven corporation that happens to make planes. When asked about this in the Don Lemon interviewhe retained the position that standards should not be lowered to allow entry for other people and that people should be judged based on their own merits. When pressed on the fact that he is insinuating that standards are being lowered to include minorities and marginalised individuals and the fact that research shows that he is wrong he stated “Check the comments on X you’d see people posting that research that agrees with me” When you have never experienced oppression, it is easy for you, Elon, to dismiss the very real and very evident struggles that minorities and marginalised people face, and make statements like “Everyone was once a slave.”

“You have to be twice as good to get half as far” This is a statement that rings true amongst the black community which is why the sentiment that black successes aren’t earned and that DEI is racism against white people is not only factually inaccurate but a slap in the face of all the achievements and handwork that the community has. Furthermore, the stats as of 2023 state that in America 47% of employees are women, (10.6% of Fortune 500 CEO’s are women), 77% of the US workforce is white, 18% are Hispanic or Latino, 13% are Black and there are only 6 Fortune 500 CEO’s who are black. Furthermore, research shows that candidates with “Distinctively Black/Foreign Names” are less likely to move forward in the interview process compared to those with distinctively White names.

As the news of a bridge collapse in Baltimore, Maryland the mayor addressed the press. In 2020, the predominately Black city elected Brandon Scott as their new mayor. One Twitter user who has grown a following by sharing inflammatory posts sometimes referred to as “Rage Bait” (content designed to elicit a reaction from viewers) called Scott a “DEI Mayor.” Many were quick to address the blatant racism the user expressed, with one writing, “DEI is basically just a stand-in for the n-word now.” Of course, a DEI mayor cannot exist because voters must elect candidates for the position. A Harvard Professor, Prof Cornel William Brooks tweeted “Just say it #DEI is the new N-WORD.” When asked about the critics who called him the ‘DEI Mayor’ he said “ We know what they want to say, but they don’t have the courage to say the N-Word” and that black men “have been the bogeyman for those who are racist and think that only straight, wealthy White men should have a say in anything.”

Unfortunately, this sentiment is being shared by people who have the power to and are exercising said power to roll back on DEI initiatives. Bill Ackman and Elon Musk are such people and that mentality is representative of the culture within their companies. Nelson Peltz, the billionaire activist investor who is in a proxy war for the control of Disney also criticised the company for deploying “woke” strategy, when making comments about “The Marvels” and “Black Panther” which featured women and black lead actors stated “Why do I have to have a Marvel [movie] that’s all women?” Peltz asked rhetorically. “Not that I have anything against women, but why do I have to do that? Why can’t I have Marvels that are both? Why do I need an all-Black cast?” Even though “Black Panther” does not have an all-Black cast, nor does “The Marvels” have an all-female cast.“Black Panther,” starring Chadwick Boseman, was a bona fide blockbuster, reaping $1.35 billion at the worldwide box office. [Forbes]

Gen-Z Word Of The Day

Pull-Up

This is defined as an invitation to come over.

It is also a threat and a common phrase people say when they are about to fight someone.