__Climate-change stress…__ is getting *financial*. Risks related to climate change could affect global markets in a big way, and US officials are taking note. Last week, the Fed moved closer to launching climate-risk safety checkups. And the SEC is trying to amp up rules for corporate climate reporting. The disclosures could change company valuations, and how investors view entire industries. The details:

- __Climate checkup:__ The Fed wants to require Big Banks to tally climate risks — aka how much $$ is threatened by intensifying wildfires and floods. 
- __Climate filings:__ The SEC wants public companies to share how climate change could affect their business (think: fossil-fueled lawsuits), demand for carbon-heavy products, and what they’re spending to stay compliant.
- __Targets:__ The SEC might also make companies share five-year plans for cutting emissions, plus net-zero goals. 

__Late to the climate rally…__ The US is playing catch-up with countries like England and France, which have already set corporate climate-reporting standards. Meanwhile, companies have been making their own rules:  

- __Neutralize:__ Tech giants like __[Amazon](https://robinhood.com/stocks/AMZN)__ and __[Microsoft](https://robinhood.com/stocks/MSFT)__ made plans to go carbon-neutral. __[Google](https://robinhood.com/stocks/GOOGL)__ says it’s been carbon-neutral since 2007.
- __Transition:__ Oil companies __[Exxon](https://robinhood.com/stocks/XOM)__, __[Shell](https://robinhood.com/stocks/RDS.A)__, and __[BP](https://robinhood.com/stocks/BP)__ have made multibillion-dollar plans to shift to renewable energy.
- __Clean-vest:__ Investment firms like __[BlackRock](https://robinhood.com/stocks/BLK)__ have prioritized renewables to de-risk funds.

__Green filter...__ About 90% of S&P 500 companies share *voluntary* climate reports. But they’re usually not regulated, and sometimes “greenwashed” to inflate progress:

- __Facts:__ Most Fortune 500 companies have emissions targets, but only 20% are based on science.
- __Dally:__ Amazon committed to carbon neutrality by 2040 in 2019, but its emissions have actually *grown* 15%+ annually since. 
- __Lip service:__ Companies like __[Costco](https://robinhood.com/stocks/COST)__ have said they want to reduce their footprints, but haven’t set formal targets yet.


This storm looks expensive [Rapideye/E+ via Getty Images]

Scrub

__Goodbye, greenwashing…__ Because climate accounting is about to be clearer. Standardized climate reporting through the Fed and SEC will likely make it harder for companies to fudge their environmental impact. US officials say better reporting will drive more capital to greener industries, and help countries reach net-zero emissions. Big money is at stake too: Extreme weather has cost the US [$1.9T](https://capitalmonitor.ai/institution/government/big-names-back-climate-disclosure-in-the-us/) since 1980, and $95B last year alone.

__Correction:__ In the original version of this story published Monday, Oct. 11, we misstated that __Netflix__ had not yet set targets to reduce its carbon footprint. The company *has* set targets, which you can read about [here](https://ir.netflix.net/governance/ESG/default.aspx) and [here](https://sciencebasedtargets.org/companies-taking-action). 

The Green Sheet: The Fed and SEC plant seeds for better corporate climate reporting

__Leaky roof…__ Last week the Senate raised the $28T debt ceiling by $480B, preventing a historic and [“catastrophic”](https://www.nytimes.com/2021/09/28/business/economy/yellen-powell-senate.html) default, for now. Lawmakers will need to go back to the drawing board to make a long-term plan in December. One solution: The President could order the Treasury to mint a trillion-dollar platinum coin to help offset the nation’s debt. The idea emerged a decade ago but was nixed over inflation worries. TBD if it will happen. 

__Lifting off...__ Flights to Cabo still haven’t returned to pre-pandemic levels, but US airline travel is poised to rev up during the holidays. __[United Airlines](https://robinhood.com/stocks/UAL)__ said it planned to offer 91% as many domestic flights in December as it did the same month in 2019. __[Delta](https://robinhood.com/stocks/DAL)__ said US business traffic is starting to grow, and next year could be its best year since before the pandemic. Flight searches for holiday trips are also up 16% compared to 2019. We’ll see if Delta concerns change airlines’ outlook.

Zoom Out

Stories we’re watching...

__Banks’ big week...__ __[Citigroup](https://robinhood.com/stocks/C)__, __[JPMorgan Chase](https://robinhood.com/stocks/JPM)__, __[Morgan Stanley](https://robinhood.com/stocks/MS)__, and __[Wells Fargo](https://robinhood.com/stocks/WFC)__ all report this week. Earlier this year, banks profited from strong consumer spending (thanks, [stimmy](https://www.reuters.com/article/us-usa-banks-stimulus/cash-strapped-americans-ask-mnuchin-where-their-stimmy-checks-are-idINKBN294259) checks) and by moving billions of “rainy day [funds](https://snacks.robinhood.com/newsletters/2Dx6BpeCelL6ERgFEQBzuf/articles/7FGQ9LWK0pYQ0cJrD5MQd9/)” to reserves. __[Goldman Sachs](https://www.cnbc.com/2021/07/13/goldman-sachs-gs-earnings-q2-2021.html)__ and other top IPO underwriters have benefited from a [record](https://markets.businessinsider.com/news/stocks/ipo-volume-2021-spac-171-billion-us-capital-markets-boom-public-6) year for market debuts. Now, investors are watching loan revenue from products like mortgages. Loan growth has been stagnant, and makes up [more](https://www.reuters.com/business/finance/us-banks-see-big-jump-2q-profits-before-results-return-normal-2021-07-08/) than half of the banking industry’s revenue. 

__Dough-eyed…__ America’s biggest pizza chain saw sales skyrocket during lockdown when more people munched from their couch. Domino’s sales growth has slowed down this year, but the chain is still growing sales in places where Covid restrictions are lifting. Small price hikes for delivery fees and menu items have helped. When __[Domino’s](https://robinhood.com/stocks/DPZ)__ reports on Thursday, we’ll see whether the labor shortage impacts results (the chain hires its own delivery [drivers](https://www.wsj.com/articles/dominos-goes-it-alone-on-delivery-11566219685)), and if the pizza fever is still going strong as more cities reopen. 

Events

Coming up this week...

1. __[Global](https://snacks.robinhood.com/newsletters/79a47f1ZHASWmFqj21BRZ8/articles/4vjRWY6cPN5u2Khu4WU4ft/):__ Netflix’s South Korean hit “Squid Game” didn’t become the top TV show in 90 countries by accident — it’s part of the ’Flix’s strategy to go global.
2. __[Levi’s](https://snacks.robinhood.com/newsletters/BsDe10e9xAgHvtNWL9X9r/):__ The denim icon's sales blew past pre-pandemic levels last quarter thanks to “casualization” (think: baggy), plus a sturdy supply chain behind the seams. 
3. __[Robotaxi](https://snacks.robinhood.com/newsletters/13cF1yKnOi3d4KGQe6K8q2/articles/4EByRZTA6SoI4Jqbuu9VmJ/):__ __[GM](https://robinhood.com/stocks/GM)__ isn’t only doubling down on EVs to catch up to __[Tesla](https://robinhood.com/stocks/TSLA)__ —– it’s launching a robotaxi fleet in a push to zoom past it.

ICYMI

Last week's highlights...

The Gov v. corporate greenwashing, and more of today’s top Snacks stories

Dow Jones

S&P 500

Nasdaq

Bitcoin

🌳 The Gov v. greenwashing

__Cotton comeback…__ High-waisted jeans are in at __[Levi’s](https://robinhood.com/stocks/LEVI)__. Levi’s [lifted](https://www.cnbc.com/2021/10/06/levi-strauss-co-levi-q3-2021-earnings.html) its annual forecasts after last quarter’s sales blew past pre-pandemic levels for the first time. Rising cotton costs have caused shares of retailers like __H&M__ and __[Gap](https://robinhood.com/stocks/GPS)__ to fall over the past six months. But Levi’s stock surged 9% yesterday thanks to the denim powerhouse’s strong sales and proactive supply chain. 

__Casual clothes, serious supply chain…__ Levi’s is cashing in on denim demand. The overall apparel market has outgrown its pre-pandemic size, and denim sales have grown even *faster*. Levi’s leaned into the jean-aissance by investing in Levi’s-branded stores and embracing the post-pandemic “casualization” trend (think: baggier fits and yoga-wear). But there’s another secret to Levi’s success: smart supply-chain management. Here’s the skinny:

- __Splitting at the seams:__ The spread of Delta has caused widespread factory shutdowns in Vietnam, where __[Nike](https://robinhood.com/stocks/NKE)__ makes half its shoes, __Everlane__ produces 40% of its clothes, and Adidas gets 28% of its kicks. Retailers’ plans unraveled. 
- __Spread the threads:__ Levi’s makes only 4% of its products in Vietnam. The rest are made in 24 *other* countries.
- __Never miss a stitch:__ The supply shortage cost Levi’s *just* $10M last quarter — out of its $1.5B in sales. Adidas, on the other hand, could lose $600M from supply shortages in the second half of this year alone.

That new-jeans feeling [Flashpop via Getty Images]

__Reliable supply chains never go out of style…__ but fashion trends come and go. Levi’s sales are booming today because it diversified its supply chain years ago. Levi’s de-risked system ensures no more than 20% of products come from any one country, preventing pipeline wrinkles. In the wake of pandemic factory closures, more companies making everything from shoes to furniture are trying on Levi’s strategy and [diversifying](https://www.wsj.com/articles/firms-want-to-adjust-supply-chains-post-pandemic-but-changes-take-time-11609081200) their supply chains too.  

Levi’s stock surged thanks to “casualization” and an always-fashionable supply chain

__King of the sneaks...__ Nike is officially the No. 1 footwear and apparel brand among [teens](https://www.pipersandler.com/1col.aspx?id=6216), according to Piper Sandler’s Gen Z survey. It’s held the top spot in both categories for the past *decade*. The competition:

- __Runner-up:__ __[American Eagle](https://robinhood.com/stocks/AEO)__ took second — the same spot as the past two years. Converse, owned by Nike, came in fourth.
- __Big spender:__ Gen Z makes up [nearly half](https://www.businessinsider.com/retail-courts-gen-z-spending-power-over-140-billion-2020-1) of shoppers in the US and has a whopping $140B in spending power. Nike’s taken note.

__Slam-dunk strategy…__ Thanks to social media (Nike is IG’s most followed brand with 177M fans) and the rise of “[sneakerheads](https://www.bloomberg.com/features/2021-sneaker-investment/),” Nike has shown it's not just the sponsor of your favorite NFL team. For years, it’s been tailoring its products and reach to Gen Z: 

- __Virtual fits:__ Since 2019, Fortnite fans have been able to [purchase](https://esportsinsider.com/2019/05/epic-games-launches-fortnite-and-nike-air-jordans-crossover/) Nike skins and branded clothes for their avatars. 
- __Resale:__ 60% of Gen Z males use StockX, a sneaker-bidding marketplace where a rare pair of Jordans can cost $500 or more.  
- __AR Yoga:__ Nike’s augmented-reality [feature allowed Snapchat and TikTok users to experience](https://www.fool.com/earnings/call-transcripts/2021/06/24/nike-inc-nke-q4-2021-earnings-call-transcript/) everything from yoga to dancing. (__[Snapchat](https://robinhood.com/stocks/SNAP)__ was teens’ No. 1 social-media app.)
- __Gen J’s:__ This year, NBA player Zion Williamson became the first [Gen Z](https://www.fool.com/earnings/call-transcripts/2021/06/24/nike-inc-nke-q4-2021-earnings-call-transcript/) player to design a shoe for Nike’s popular Air Jordan line.

Swoosh

__Nike is like the Beyoncé of retail brands…__ and Gen Z is the music industry. Similar to how Queen B has resonated for decades and across generations, Nike has stayed relevant by reaching young customers where they are and leaning into styles that click. While Fortnite and Snapchat are in today, Nike will need to keep refocusing its strategy as social hubs shift. 

From Snapchat to StockX: Nike still reigns supreme with Gen Z 

Supply chains = trendy and today's top Snacks stories

👖Supply chains = trendy

__Putting the EV in rEVolution…__ __[General Motors](https://robinhood.com/stocks/GM)__ kicked off a two-day investor event yesterday by outlining bold plans to *double* annual revenue to $280B by 2030. GM says *all* its cars will be electric by 2035, and its eHummer goes on sale this fall. But EVs are only the start: GM says growth will come from *services*, like its fleet of Chevy Bolt autonomous EV taxis.

__Your robotaxi has arrived…__ And it’s powered by GM. __Cruise__ — an AV startup majority-owned by GM that counts __[Honda](https://robinhood.com/stocks/HMC)__, __[Walmart](https://robinhood.com/stocks/WMT)__, __[Microsoft](https://robinhood.com/stocks/MSFT)__, and __[Softbank](https://robinhood.com/stocks/SFTBY)__ as investors — is key to GM’s software-centric strategy. Here’s why:

- __Cruising past Waymo:__ Cruise became the first robotaxi biz permitted to collect fares with no safety driver last month, beating Google-owned robotaxi rival Waymo. 
- __Robo-revenue:__ GM, which already signed a deal to sell a robotaxi fleet to Dubai, says robotaxi revenue will soon hit $50B — more than 30% of GM’s 2020 sales. Cruise was last valued at $19B in 2019, and Waymo at $30B in 2020.
- __Connected everything:__ Robotaxis are just one application of GM’s auto tech. Walmart already uses Cruise self-driving tech to deliver groceries, and GM plans to launch in-car subscriptions through its Ultifi operating system in 2023. 

Robotaxi drivers tell great jokes [Igor Alecsander/E+ via Getty Images]

Robo

__Tech-enabled mobility platforms > car companies...__ even EV car companies. Tesla is worth 10X GM — even though it delivered 10X fewer cars last year — because investors value __[Tesla](https://robinhood.com/stocks/TSLA)__ like a tech company, not like a carmaker. Now GM’s gunning for its own sky-high tech valuation by investing big bucks to take Tesla’s crown as America’s EV giant. But since that could take years, GM is also tapping revenue streams Tesla hasn’t touched, like robotaxis and driverless delivery services.

GM hopes to double revenue by catching up to Tesla in the EV race and rolling out robotaxis

__Greener nav bar…__ __[Google](https://robinhood.com/stocks/GOOGL)__ unveiled several new eco-friendly [features](https://www.theverge.com/2021/10/6/22711623/google-climate-change-greenhouse-gas-emissions-carbon-footprint-maps-search-travel) to help its 1B+ users make more sustainable lifestyle choices. They launch first in the US but will expand to Europe next year. The suite:
- __Shop:__ When searching for a new dishwasher, you might see water-saving models pop up alongside regular results in the Shopping tab.
- __Drive:__ Google Maps will offer an alternative “green leaf” route that shows how much gas you could save with minimal extra time. 
- __Fly:__ See how much [carbon](https://www.washingtonpost.com/travel/2021/10/06/google-flights-carbon-footprint-travel/) is emitted in every Google Flights route before booking your next getaway.
- __Nest:__ Google’s thermostat can automatically heat or cool your home based on when renewable energy is available.

__Big user base = big responsibility…__ Google reaches more than 10% of the Earth’s [population](https://www.livescience.com/global-population.html) through its enormous range of hardware products (Pixel phones, robotaxis) and digital tools (Chrome, Android, Google TV). But its wide reach comes at a jolting cost: 
- __12.4 terawatts:__ How much electricity Google uses to keep its network afloat. That’s nearly as much as the Dominican Republic uses, and it’s growing.
- __Other tech giants__ like __[Facebook](https://robinhood.com/stocks/FB)__ and __[Apple](https://robinhood.com/stocks/AAPL)__ have committed to zero-carbon or carbon-neutral initiatives, but have yet to roll out similar features for users.
- __Criticism__ is mounting against big corporations accused of putting climate responsibility in the hands of individuals instead of their own.

Poke

__A “nudge” in the sustainable direction…__ may be a key strategy for consumer companies facing pressure to go green. The gist of the “nudge theory” in behavioral research is that encouraging individuals to take an action is more effective than eliminating all other options. It’s why Google is *suggesting* sustainable options instead of picking them for you. Now that most people are seeking more eco-friendly lifestyle options, nudges could be the way that companies get their customers to go green.

Flying, shopping, or driving? Google just rolled out eco-friendly features to help ease your carbon conscience

🚕 Rise of the robotaxi

__Grumpy at the pump…__ Oil prices spiked to a seven-year high this week, while US prices are up 63% this year — a dollar more per gallon than last year. The spike is weighing on drivers’ wallets and boosting inflation concerns because higher prices mean pricier goods. President Biden asked OPEC to crank up production to keep economic recovery on track. But earlier this week, OPEC’s powerhouses rejected the request and said they’d make only gradual production increases to help prop up prices.

__A slippery slope…__ Demand for oil fell during the pandemic, when people stayed home and drove to the mall less. But demand rebounded faster than analysts expected. So to *keep* prices high and profits flowing, oil giants are capping supply. It’s paying off for oil companies, but costing everyone else:

- __Barrel half full:__ __[BP](https://robinhood.com/stocks/BP)__ and __[Shell](https://robinhood.com/stocks/RDS.A)__ doubled their profits last quarter from the previous year, and __[Exxon](https://robinhood.com/stocks/XOM)__ boosted profits 6X.
- __Barrel half empty:__ Gas prices have hit $4.41/gallon in California, while panicked petro-purchases have caused fuel shortages in Britain and China. Such high gas prices could also increase the cost of food, heating, plastic, and other goods.

Not pumped at the pump [Hybrid Images via Getty Images]

Gassy

__The US economy still runs on gas…__ Just like your uncle’s ’64 Impala. Many investors are shifting their dollars toward renewables, but the US economy still depends on fossil fuels. High oil prices don’t only affect consumers; they can also up supply-chain costs and shape policy priorities. Oil has cracked the $80-per-barrel mark for the first time in seven years, and could hit $100 by winter. So even though US consumer spending has been rebounding this year, businesses like restaurants and retailers could suffer if consumers blow their cash on gas — and their products and services cost more.

Oil stalemate: OPEC’s refusal to crank out gas means higher prices — and more profits for oil giants

__Sounds like a hunting tool…__ actually a wine. __[Duckhorn Portfolio](https://robinhood.com/stocks/NAPA)__ is Napa Valley’s first publicly traded winemaker in decades, and the stock (perfect ticker: NAPA) is up 20% since its $2B March IPO. Its 10 luxury wine brands include Decoy, Duckhorn Vineyards, and Kosta Browne, with bottles ranging from $20 to $200. Last quarter, the supplier swung a profit and beat pre-pandemic levels with 36% sales growth. Behind the boon:

- __Wide net:__ Duckhorn wines are sold in bars, restaurants, and grocery stores across the US. Last year, it sold more than 1.4M cases.
- __Member fees:__ Duckhorn’s Wine [Club](https://www.duckhornwineshop.com/Wine-Clubs/Duckhorn-Vineyards-Limited-Wine-Club) sends three to four of its top bottles to your doorstep for up to $420/month.

__One-stop wine shop…__ Empty vineyards and shuttered tasting rooms put a strain on most luxury vineyards during the pandemic. Duckhorn offset those losses by increasing its presence in grocery stores, where most consumers [shopped](https://www.foodandwine.com/news/usa-alcohol-sales-in-2020), and by launching new products and features: 

- __Wine seltzer:__ Duckhorn unveiled a line of canned Decoy wine seltzers this year, like “Chardonnay with Clementine Orange.” 
- __Tastings with Alexa:__ Its new Alexa assistant means its 55K club members don’t have to sip alone. Think: virtual tasting rooms and wine-pairing suggestions.  


Wine

__In crowded markets, differentiation is key...__ When customers walk into the wine section of a grocery or liquor store, they’re overloaded with options. While IRL wine tours paused and in-store and online shopping competition spiked, Duckhorn innovated to reach a target audience: millennials, who spend more per bottle than any other demo. Differentiation worked: Brand-new products like seltzers and its Alexa feature helped its wine portfolio sales grow faster than those of the other top 20 US suppliers.

For Luxury winemaker Duckhorn, supermarkets and tailored launches are a winning pairing

🛢Oil giants = pumped

__Not your average extension cord…__ The world’s longest undersea electricity cable [started](https://www.cnbc.com/2021/10/04/worlds-longest-under-sea-electricity-cable-begins-operations.html) sending electricity between the UK and Norway earlier this week. Shares of __[National Grid](https://robinhood.com/stocks/NGG)__, the UK energy giant behind the 450-mile cable, which trades on the NYSE, rose nearly 2% yesterday. NG has big plans for its network:

- __Wind, water, wire:__ The new $1.9B North Sea Link cable will send British wind power to Norway and Norwegian hydropower back to the UK.
- __Underwater energy superhighway:__ NG already built “interconnectors” in the Netherlands, France, and Belgium — and it has plans to connect even more countries. 
- __Low carbon:__ NG aims for 90% of its imported electricity to come from zero-carbon sources by 2030.

__Energy sharing = energy caring…__ One issue with renewables is intermittency, which happens when solar panels stop generating electricity on cloudy days and wind turbines slow down in less gusty weather. But power grids need to keep the lights on in *all* kinds of weather. One solution: electricity sharing. National Grid’s new cable enables both the UK and Norway to borrow spare juice from each other when their own wind and water systems slow down.

With great cables come great responsibility [Westend61 via Getty Images]

Plug

__Better grids are key to a renewable future…__ Shared energy grids are crucial now that 160+ countries have adopted renewable-energy targets and need backup when their sources wane. Businesses and orgs like the Renewable Energy Institute are working to connect cables across borders to make “supergrids.” Others, such as battery giants __LG__ and __[Panasonic](https://robinhood.com/stocks/PCRFY)__, are building mega-batteries that can store renewable energy, while carmakers __[Tesla](https://robinhood.com/stocks/TSLA)__, __[VW](https://robinhood.com/stocks/VWAGY)__, and __[Nissan](https://robinhood.com/stocks/NSANY)__ are working to transform their EVs into mini power plants. But countries still have a ways to go to reach targets: The US needs to triple its renewable investments by 2030 to hit its global climate goals.

The UK just plugged in the world’s longest undersea cable — but the transformation of the power grid is just beginning

__"Hunger Games" meets "Black Mirror"…__ __[Netflix’s](https://robinhood.com/stocks/NFLX)__ new South Korean fictional thriller “Squid Game” debuted 10 days ago and is already on track to becoming its [biggest](https://www.nbcnews.com/pop-culture/pop-culture-news/netflix-s-squid-game-sensation-here-s-why-it-s-n1280646) show ever (sorry, “[Bridgerton](https://www.businessinsider.com/bridgerton-compared-to-other-netflix-top-original-shows-viewership-2021-1)”). The drama follows hundreds of cash-strapped contestants competing in children’s games for a big $$ prize (think red light, green light), but losing could mean death. The results are viral:

- __From the couch to the monitor:__ Fans are using apps like __TikTok__ to recreate the series’ tasks (see the Dalogna candy [challenge](https://www.techtimes.com/articles/266041/20210930/netflix-squid-game-dalgona-candy-recipe-revealed-tiktok-viral.htm)). Game makers on Roblox are also creating playable spinoffs. 
- __82M million subscribers__ are [expected](https://fortune.com/2021/10/02/squid-game-series-netflix-everything-to-know/) to tune in by the end of the month. It’s now the top show in [90](https://www.forbes.com/sites/paultassi/2021/10/03/squid-game-is-now-the-1-show-in-90-different-countries/) countries.

__Netflix’s streaming passport…__ is full of stamps. Since its international debut in Canada a decade ago, ’Flix has added 180+ countries to its roster. America still accounts for about a quarter of Netflix’s 209M global paying memberships, but US growth is tapping out. To unlock new audiences, Netflix is looking overseas:  

- __International reels:__ This year, Netflix plans to spend half its $17B original content spend on [productions](https://www.wsj.com/articles/netflix-disney-and-amazons-streaming-wars-heat-up-overseas-11619083801) outside the US. 
- __Hits:__ Popular shows like Germany’s “Barbarians,” the French series “Lupin,” and South Korea’s “Sweet Home” have boosted Netflix’s international subscribers 18%+ since [2018](https://www.comparitech.com/tv-streaming/netflix-subscribers/). 


Squid

__Going global means it might be time to “copy and paste”…__  Netflix’s US subscriber base is no longer growing — it actually dropped by 400K people this year — which means the streaming giant has two options to grow: Raise prices or win new customers somewhere else. With hits like “Squid Game,” Netflix is doubling down on high-quality international content to win over new subscribers overseas. The push seems to be working, but it does bring some new costs: Think pricey licensing fees and conflicts with broadband providers facing traffic spikes.

Netflix’s K-thriller ‘Squid Game’ series goes viral, underscoring Netflix’s big opportunity overseas

🔌 Clean cable energy 

__Same name as the Jetsons’ dog...__ Except it has a tablet for a head. __[Amazon](https://robinhood.com/stocks/AMZN)__ [rolled out](https://www.wsj.com/articles/amazon-event-today-expect-echo-updates-and-a-little-weirdness-11632837993?mod=business_lead_pos4) new home gadgets at its hardware event last week, including a smart thermostat and a wall-mounted echo. The most interesting drop: a $1K Alexa-powered robot named Astro. Picture a 10-inch tablet on wheels. Control it like a metal dog, with voice commands or through an app.

- __Multitask queen:__ Astro follows you around while you video-chat on its tablet, and plays music and shows as you do laundry.
- __Host with the most:__ Astro transports stuff around the house in its storage compartment. Just don't ask it to take the La Croix upstairs (it can't climb).
- __Better than a bulldog:__ Astro patrols your home while you're on vacay, and can scope out areas where movement is detected.

__Connection, still loading...__ Amazon will offer a limited number of Astros starting later this year. So far the reviews have been underwhelming: Amazon developers [reportedly](https://www.theverge.com/2021/9/28/22699284/amazon-astro-real-world-stairs-fragile-developer-claims-documents-tracking) claim it's "terrible" and will "throw itself down" stairs. Still, Amazon has been building its suite of connected-home products, from Echo speakers and tablets to Amazon-branded TVs, and now robots. The goal: plant its flag in the connected home.

- __Today__ we have smart speakers like Amazon's Alexa and Google's Home Mini, along with thermostats, security cameras, and light dimmers. And let's not forget __[iRobot's](https://robinhood.com/stocks/IRBT)__ Roomba.
- __Tomorrow__ we could have [showers](https://time.com/5634791/smart-homes-future/) that turn on at your preferred temp when your alarm rings, health sensors that order Advil when they detect a fever, and AI bots that whip up spaghetti while you drive home.
- The smart-home market is projected to [grow](https://www.marketsandmarkets.com/Market-Reports/smart-homes-and-assisted-living-advanced-technologie-and-global-market-121.html?gclid=CjwKCAjw49qKBhAoEiwAHQVTowIwoFavyZ4cb5paTresHBzClz8-1Ux70sN090Cu1ATN606ers2f1BoCJIEQAvD_BwE) from $84.5B this year to $139B by 2026. And [63M](https://time.com/5634791/smart-homes-future/) American homes will qualify as smart by 2022.

2040: Your avo toast is ready [onurdongel/E+ via GettyImages]

__The smart future could unlock smart profits…__ The smarter homes become, the more connected hardware they’ll need to power them. That’s an opportunity for companies like Amazon to not only sell new hardware like Astro but also boost subscriptions and e-comm sales. Think: A smart fridge that automatically restocks groceries via Prime. But IoT is still early. Plus, all that connectedness requires tons of data on your home life. That could turn off some consumers.

Smart Home: Amazon unveils a home robot in a bid for the connected future

__Shots fired...__ __[United Airlines](https://robinhood.com/stocks/UAL)__ [said](https://www.nbcnews.com/news/us-news/nearly-600-united-airlines-employees-face-termination-defying-vaccine-mandate-n1280304) it would fire nearly 600 US-based employees who failed to comply with its vaccine mandate. Meanwhile, chicken giant __[Tyson](https://robinhood.com/stocks/TSN)__ is requiring all 120K of its US workers to be [vaxxed](https://www.nytimes.com/2021/09/30/business/tyson-foods-vaccination-mandate-rate.html) by November 1. It offered a $200 vax bonus and says 91% of its workforce has already gotten the shot. Last month, President Biden signed an exec order requiring companies with 100+ workers to ensure  employees are vaxxed or submit them to weekly Covid tests. Expect corporate pressure to keep intensifying.

__Flated shopping spree...__ Consumer spending, aka the biggest driver of US economic growth, [jumped](https://www.wsj.com/articles/consumer-spending-personal-income-inflation-august-2021-11633027180) 0.8% in August after falling in July. Personal incomes ticked up thanks to wage gains and $300/month child tax credits. Splurging suggests economic recovery is ramping up heading into the holidays. Also ramping up: inflation. Prices popped 3.6% in August from last year, eating into households' buying power. Adjusting for inflation, August spending rose only 0.4%.

Stories we’re watching…

__Kim Crawford wine, chilled...__ Booze giant __[Constellation Brands](https://robinhood.com/stocks/STZ)__ owns grocery go-tos like Robert Mondavi wine, Svedka vodka, and Corona Hard Seltzer. Constellation benefited during the pandemic, when bar and restaurant closures had us couch-sipping hard seltzers and quarantinis. From March to December 2020, US liquor store sales hit $42B — up 20% from the same period in 2019. But sales have slowed this year as home-sipping declines. We’ll see if that has continued when Constellation reports earnings Wednesday.

__The blowout is back…__ __[Helen of Troy](https://robinhood.com/stocks/HELE)__, whose brand portfolio includes Hydro Flask, Vick’s, and Dry Bar hair products, reports earnings Thursday. Helen owns or licenses trademarks for a variety of household, beauty, and health products. Sales jumped 29% last quarter, driven by growth in beauty as salons reopened and “going out” life picked up. But Helen still has regulatory issues to iron out, and it lowered its sales forecast for the rest of the year. 

- __[Roof](https://snacks.robinhood.com/newsletters/6agvqKBLkHAmQdjfWIviz8/articles/dDAJRs3v8aC0I1za037Xz/):__ The debt ceiling, explained: Why Congress’ fight over borrowing could tank the US economy — and its reputation. 
- __[Ad-icted](https://snacks.robinhood.com/newsletters/33JsqHWKUqNBFoxkqiZToY/articles/psOEOADIm8V369AIxofkr/):__ __TikTok__ became one of few social networks to hit 1B+ users. It may have been cloned by Insta, __Snap__, and YouTube — but it’s not owned.  
- __[Vision](https://snacks.robinhood.com/newsletters/6agvqKBLkHAmQdjfWIviz8/articles/3cXEqrGe81eKKG3rIA2kCP/):__ Direct-to-consumer glasses pioneer __[Warby Parker](https://robinhood.com/stocks/WRBY)__ is worth $5B after directly listing its shares on the market. But customer love doesn’t always mean profit.

🤖 Amazon’s home robot

__Three Dollar Store…__ just doesn’t have the same ring to it. Discount legend __[Dollar Tree](https://robinhood.com/stocks/DLTR)__ announced [plans](https://www.wsj.com/articles/dollar-tree-to-sell-more-items-above-1-as-costs-rise-11632918816?mod=hp_lead_pos4) to start selling more items for $1.25, and even $3.50 (gasp). Driving the price jumps: a triple whammy of inflation, a global supply crunch, and the ongoing labor shortage. Despite the sudden shift from its signature price point, Dollar Tree shares jumped 16% yesterday after its announcement. 

__The namesake barrier...__ has been broken before. Since 2019, Dollar Tree has experimented with $3 and even $5 items in a section labeled “Dollar Tree Plus” (not a streaming service). Last year rival __[Dollar General](https://robinhood.com/stocks/DG)__ launched Popshelf, a store aimed at higher-end shoppers like [suburban moms](https://snacks.robinhood.com/newsletters/6CYbtZgaeQFf8W6pRxaYg0/articles/5NXP9uxfxP7R39K7MFPpnG/) who still love a good deal (prices up to $5). For Dollar Tree, price bumps have been hugely successful so far. And investors smell profit...

- __Profits are 6% higher__ at “premium” Dollar Tree Plus stores than at regular Dollar Trees. DT expects to have 500 Plus stores by fiscal year’s end — and 5K by 2024.
- __$5 products__ such as “Grandma’s Heirloom Pillow” and “decorative topiary” appeal to higher-income customers, who are more willing to splurge. 
- __Ditching the dollar standard__ allows Dollar Tree to expand into pricier — and potentially more profitable — new categories. Think frozen meats and seasonal decorative goods (#HallowLantern).


Washington

__The price is right — if the *time* is right…__ Some companies can justify price hikes thanks to coveted brands or cutting-edge tech. Since DT doesn’t have either of those, timing is key. Right now, consumers appear to be less sensitive to price hikes: Consumer prices jumped 5.3% year over year in August and have risen at record rates for five straight months. And despite a 5X increase in freight costs, Dollar Tree’s profits have grown since 2019. Once costs and inflation levels stabilize, Dollar Tree may be in a position to get even more bang for its buck.

Dollar Tree ditches the dollar standard — and paves the way for higher profits

__The Tourist Strikes Back…__ So does Mickey. After a desolate pandemic stretch, __[Disney](https://robinhood.com/stocks/DIS)__ is [opening](https://www.cnbc.com/2021/09/30/disneys-galactic-starcruiser-launches-march-2022-bookings-start-this-october.html) an immersive “Star Wars”-themed hotel to win back customers’ hearts. It'll open in March at the Disney World Resort in Orlando. Fans of the intergalactic franchise can opt into a two-night choose-your-own-adventure stay aboard the Halcyon Starcruiser (featuring lightsaber training and model ship building). The package includes tickets to the Hollywood Studios park and three meals a day (#lightsavor). 

__Experiences are back-ish...__ Disney’s  "Parks, Experiences, and Products" division, which includes resorts and cruises, lost a record $2B during the pandemic. Meanwhile, Disney+ saw impressive growth. Last quarter, Disney’s Experiences biz turned a profit for the first time in over a year. But not all experiences are created equal...

- __Sad carnival:__ Disney’s cruise fleet has been stalled as Covid resurges, and __[Carnival's](https://robinhood.com/stocks/CCL)__ Princess Cruise line canceled a number of its voyages. The cruise industry is now worth just $24B, down from $154B prepandemic.
- __Parks intensify:__ Disney’s park-pass reservation system has allowed it to maximize attendance under Covid restrictions. Last quarter, Disney's Parks and Experiences division pulled in $4.3B in sales, up 4X from the previous quarter.


_Room service has arrived [EyeEm via GettyImages]_

Yoda

__Safe thrills > cheap thrills…__ To attract customers after the height of the pandemic, companies need to offer supercharged experiences — with safety precautions. __[Airbnb](https://robinhood.com/stocks/ABNB)__ has expanded to unique stays like yurts, houseboats, and caves to lure adventure-hungry remote workers. Disney’s new Wish cruise line will feature Broadway-style musicals and an infinity pool, and __Celebrity Cruises__ debuted a 3D laser show for dinner guests. But all have implemented Covid safety measures, like contactless check-in, proof of vaccination, or facial-recognition tech to make their thrills safe.

Disney is opening a ‘Star Wars’ hotel as IRL experiences make a profit comeback

⚔️ Disney’s Star Wars

__Percey or Watts frame?__ __[Warby Parker](https://robinhood.com/stocks/WRBY)__ shares jumped 35% yesterday after [directly listing](https://www.wsj.com/articles/warby-parker-to-start-trading-on-nyse-11632913202) on public markets, giving the direct-to-consumer glasses giant a $6B valuation. Warby’s direct listing means it didn’t pay i-banks’ big fees to IPO, but released existing shares straight to investors. Last year, Warby’s sales grew faster than Ray Ban maker __Luxottica’s__, but the 11-year-old biz still isn’t profitable. It saw $394M in sales last year, but lost $56M.

__Shifting focus…__ Warby started out 100% online, cutting out price-inflating middlemen to lower the combined cost of frames and prescription lenses to just $95. In 2013, Warby expanded into physical retail with stylish stores for a hybrid D2C experience with soul:

1. __At-home perks:__ Warby offers free home try-on of five pairs, virtual AR try-ons, 30-day returns, and online visits with specialists to extend prescriptions.
2. __Experiential retail:__ Warby’s 145 stores feature friendly barista-like employees, dedicated optometrists, and the aesthetic of a Wes Anderson movie.  
3. __Values-based branding:__ Warby lasered in on social responsibility through its “Buy A Pair, Give a Pair” glasses-donation effort. 

Percey looks great on you [Maskot via Getty Images]

20/20

__Customer love doesn’t always = profit…__ But it’s the first step. Warby pioneered a D2C growth formula built around online sales, engaging stores, and brand values — and other companies quickly copied it. D2C dynamos like __Allbirds__, __[Casper](https://robinhood.com/stocks/CSPR)__, __[Blue Apron](https://robinhood.com/stocks/APRN)__, and __[Honest Company](https://robinhood.com/stocks/HNST)__ all followed Warby’s formula to hit unicorn valuations. But like Warby, they’re also still unprofitable. And investors don’t seem convinced: Casper’s stock is down 60% since its IPO, Honest’s is down 45%, and Blue Apron’s is down 95%.

D2C glasses pioneer Warby Parker just went public — but it’s struggling to turn a profit

__The roof is on fire...__ Or is it the ceiling? There’s a battle between congressional Democrats and Republicans over raising the US Treasury's debt ceiling. A refresher: The Treasury is like Uncle Sam's money manager. It's responsible for handling all federal finances, including managing bills, borrowing, and taxes.

- __The US gov't spends more than it collects__ in taxes, so it needs to constantly borrow to meet its financial obligations. Enter Treasury bonds.
- __The Treasury borrows by issuing bonds__ and bills. Many countries, institutions, and individuals invest in these government IOUs.
- __The debt ceiling is the max amount__ of $$$ that the Treasury can borrow. The US gov't has always paid back its debt to bondholders.
- __The Treasury uses money raised from bonds__ to cover financial obligations. Think Social Security, Medicare, tax refunds, and military salaries.
- __The US needs a higher ceiling__ to cover those expenses, plus trillions worth of Covid spending. The ceiling has been raised or suspended 78 times, but Congress can’t agree to move it.

__The stakes...__ Dems want to suspend or raise the debt limit through legislation. Republicans say Democrats should raise the ceiling without GOP support, in a separate package. While lifting the ceiling doesn't authorize fresh spending, the GOP doesn't want to facilitate the Dems' $3.5T spending plan. 

- __If Congress doesn't act__ by October 18 the Treasury could run out of cash, the US could default on its debts, and operations that rely on gov't funding could slow or stop. 
- __Treasury Sec. Janet Yellen__ believes the issue will be addressed, but said failing to would result in “a historic financial crisis” and "millions of jobs lost.” 

Roof

__“Full faith and credit” has a rep to protect...__ T-bonds are backed by the “full faith and credit” of the US gov't. If the Treasury can’t repay bondholders, investors might lose faith. The US can borrow trillions at very low interest rates, since T-bonds are seen as low-risk. If the US defaults for the first time, investors could become skeptical about lending it money. Higher risk would drive up interest rates on the debt. Higher interest = less money to spend on social programs or higher taxes, which could slow economic growth and increase the $29T national debt.

The fight over the debt ceiling could tank the US economy — and its reputation

👓 Warby's direct-to-consumer IPO

__Say "seamless" again....__ Yesterday, __TikTok__ [hosted](https://www.nytimes.com/2021/09/28/business/media/tiktok-advertising.html) its first-ever "TikTok World" event to inspire brands and "TikTok For Business" clients to spend more ad bucks. TikTok is still the least trusted major social platform, and draws less than $1.3B in estimated annual US ad sales, versus $48B for __[Facebook](https://robinhood.com/stocks/FB)__ and Insta. That’s why it introduced [#seamless](https://www.google.com/url?q=https://newsroom.tiktok.com/en-us/you-are-invited-to-tiktok-world&sa=D&source=editors&ust=1632880275174000&usg=AOvVaw0vKNAZNEVbs_eE_xzs2rEX) new marketing tools, including an automated system that matches advertisers with creators, better ad-targeting tools, and deeper insights on content reach. The Tok also intro'd new shopping features with partners like __[Shopify](https://robinhood.com/stocks/SHOP)__ and __[Square](https://robinhood.com/stocks/SQ)__.

- __TikTok is becoming increasingly important to marketers.__ [71%](https://newsroom.tiktok.com/en-us/new-studies-quantify-tiktoks-growing-impact-on-culture-and-music) of users believe the biggest trends start on TikTok. Think Aerie's viral [leggings](https://www.vogue.com/article/tiktok-made-me-buy-it-aerie-leggings) and KFC's [Hot Chicken](https://www.businessinsider.com/kfc-nashville-hot-chicken-sudden-tiktok-popularity-leads-to-shortages-2021-5).
- __It has hundreds of thousands of advertisers,__ up from just dozens in 2019. This year the share of users who saw ads on TikTok nearly doubled from last year, to 37%. Last year Chinese parent __ByteDance__ saw its sales more than double from 2019.

__Music with a great (algo)rhythm...__ TikTok had 55M users in January 2018. By December 2018, it had 270M+ users post-Musical.ly merger; a year later, it had 500M. This week TikTok [announced](https://www.reuters.com/technology/tiktok-hits-1-billion-monthly-active-users-globally-company-2021-09-27/) it hit 1B+ monthly users, joining FB, Instagram, and YouTube in the elite Billion Social Club. Insta reached the 1B mark in 2018, eight years after launching; it took TikTok less than three. Meanwhile, __[Twitter](https://robinhood.com/stocks/TWTR)__ and __[Snap](https://robinhood.com/stocks/SNAP)__ still have fewer than 300M.


_Ordering 246th pair of viral TikTok leggings [Kelvin Murray/Stone via Getty Images]_

Ad-icted

__Cloned, *but not owned*....__ Social giants are trying to replicate TikTok's success with copycats, from Instagram “Reels” to Snap “Spotlight” and YouTube “Shorts.” Despite that, TikTok has continued strong growth and engagement. US users spend 24.5 hours on TikTok each month, and TikTok overtook YouTube this month for average watch time in the US and UK. But it's not all smooth-Toking: US regulatory scrutiny continues, and ByteDance reportedly postponed its IPO plans indefinitely amid China's tech crackdown.

Cloned, not owned: TikTok hosts its first big ad event and hits 1B users

__When all the pieces fit...__ __Lego__, the world’s largest toy biz by revenue, [revealed](https://www.ft.com/content/d2e845f1-1484-4745-8e3e-4995ee85f772) it hit record sales and profits in the first half of this year. The family-owned Danish toy giant nearly went bankrupt in 2003 after lots of kids abandoned IRL toys for video games. But the pandemic boosted sales across the toy biz.

- __Lego raked in a whopping $990M profit__ for the first half of 2021 — 1,000% more than __[Hasbro](https://robinhood.com/stocks/HAS)__, the world’s No. 2 toymaker. Part of the reason:
- __While Hasbro hiked prices__ because of the global supply crunch, Lego avoided Brickflation by building factories (#RealBricks) in its biggest markets. 

__Build a brick…__ Unlike Hasbro and __[Mattel](https://robinhood.com/stocks/MAT)__, which sell huge catalogs of toys ranging from Nerf Guns and Play-Doh to Barbie and Hot Wheels, Lego built its entire business around humble plastic bricks. And recently it’s found new ways to expand the Lego life:

- __Bricks for all:__ Lego adapted its bricks to audiences with nearly every interest imaginable, from Roman history to video games. It partnered with cultural giants like Marvel to boost popular appeal. Think Minecraft, Harry Potter, and Frozen Lego sets. 
- __The Lego-verse:__ By keeping its core brand simple, Lego laid the foundation for IRL extensions like Legoland theme park and Lego Stores staffed by “Brick Specialists.” It expects to open 174 new stores this year.


Play

__The fun is in the franchise…__ So is the money. Following in __[Disney](https://robinhood.com/stocks/DIS)__'s footsteps, Lego and other toy giants are focused on expanding toy lines into movies: Lego has released several successful Lego flicks, Mattel is developing 13 live-action movies based on popular toy brands like Barbie and Polly Pocket, and Hasbro has already built Transformers into a $5B movie mega-franchise.


Lego’s profits are built on top of its bricks — by making something for everyone

🕺  TikTok’s wild ad-venture 

__Almost autonomous…__ But already famous. __[Tesla](https://robinhood.com/stocks/TSLA)__ finally launched its “full self-driving” (FSD) update, allowing some owners to activate a beta version of its controversial autonomous tech. Tesla fans applauded the unfinished feature, and shares of the EV icon jumped nearly 3% yesterday. The deets:

- __Not-quite-self-driving:__ The update enables “autosteering” around urban obstacles like bikers or pedestrians. Teslas are “Level 2 autonomous,” like models from GM, Volvo, and Toyota, which means drivers must still constantly supervise. Honda sells the most autonomous car yet, a Level 3 that asks drivers to engage only if something goes wrong.
- __No hard braking:__ FSD Beta will be available to Tesla owners who request access and earn high “safety scores” after a week of car-veillance, which measures factors such as aggressive turning.
- __Partial functionality, full price tag:__ FSD costs $10K up front, or $199/month — and an estimated 360K people have already bought it.

__Pump the brakes…__ Yesterday, the head of the National Transportation Safety Board slammed the update, saying Tesla shouldn’t roll out features without addressing existing safety issues. Last month, regulators launched an investigation into Tesla’s self-driving tech, considering 11 separate accidents and one fatality. Tesla’s getting heat over accusations it’s misleading buyers about its self-driving abilities. 


__Tesla is used to moving fast...__ As an EV pioneer, Tesla has often built technology before regulators can even regulate it — think EV charging networks. Tesla claims to make the  “safest cars in the world,” and all its models have received perfect crash-test ratings. CEO Elon Musk has acknowledged that FSD is still dangerously far from full autonomy, but he seems to have no plans to slow the release to wait for regulators. 

As Tesla puts its self-driving tech in the fast lane, regulators push back on safety 

__Broke the #ForYouPage…__ Earlier this month, a real-estate agent [posted](https://www.bloomberg.com/news/articles/2021-09-24/why-is-zillow-buying-up-houses-viral-tiktok-criticizes-firm-for-price-jump?sref=q3KSFp38) a TikTok accusing an unnamed company of manipulating housing prices. Tokers thought he was shading __[Zillow](https://robinhood.com/stocks/Z)__, and the video went viral — nearly 3M views and 450K likes. His allegation: The company uses users’ search data to mass-buy 30 homes at one price, then purchases a 31st home at a higher price to drive up the value of the others.

- __Real estate experts say the Tok claims are unlikely,__ and Zillow denied them. A more probable explanation: Zillow sometimes overpays for homes in the hot market. 
- __Home prices are soaring__, while supply is extra-thin. It's getting harder for regular Americans to buy or rent, so the idea of being intentionally priced-out hit a viral nerve. 

__Late night Zillow scroll…__ A pandemic pastime. Like competitors __Redfin__ and __Opendoor__, Zillow isn't just a listing site  à la Airbnb: it's also a buyer — an *iBuyer*. While advertising *others'* listings is Zillow's main moneymaker, its iBuying segment is growing. It's on pace to buy 5K homes/month by 2024. 

- __iBuying:__ Zillow uses its huge trove of price data to make nearly instant cash offers on homes based on "Zestimates." That cuts out the agent middleman. 
-  __iEarning:__  Zillow charges sellers commission-like fees, and can profit on flipping homes it owns, though margins are generally thin. 


_The TikTok algo comes for real estate [JDC/ Stone via GettyImages]_

__The power of the Tok hits different...__  iBuyers accounted for just 0.2% of all US home purchases in the third quarter of last year. But thanks to one TikTok, iBuying is getting unprecedented attention, and Zillow woke up with a PR mess. TikTok's secret algorithm makes it easier for people without large followings to go viral overnight — harder to do on Insta, __[Snap](https://robinhood.com/stocks/SNAP)__, and __[Twitter](https://robinhood.com/stocks/TWTR)__. We could see more controversies like this, with companies being pushed to react in the speed of a Tok.