__Airline elite status…__ just got harder to score. Yesterday, __[American Airlines](https://robinhood.com/stocks/AAL/)__ rolled out big [changes](https://www.cnbc.com/2022/12/15/american-airlines-frequent-flyer-status-becomes-harder-to-earn.html) coming to its loyalty program next year that include upping the cost of elite status. Notably, American says its loyalty program, AAdvantage, is the largest in the industry. In addition to the price bump, American plans to cut some lower-end rewards: 

- __Wave goodbye:__ American’s ditching its MileSAAver and AAnytime programs, which let passengers swap miles for tickets at a discounted rate. Instead, American said it would offer “web specials."
- __Say hello:__ In March, fliers will need 40K loyalty points to qualify for gold status, up from 30K. Gold fliers are the bottom rung of the AAdvantage status ladder, getting perks like seat changes and priority check-in.

__Free pinot in the lounge…__ better get in line. Loyalty programs were a buoy for airlines during the pandemic as companies lowered status requirements to lure customers. But as travel demand takes off again (and airfare hits record levels), more fliers are turning to travel cards for cushiony perks like lounge access. For some airlines, those perks have proved a little *too* popular: 

- __Last month,__ __[Delta](https://robinhood.com/stocks/DAL/)__ said its SkyMiles members must have elite status to buy airport-lounge memberships as its clubs fill up. Meanwhile, next year its highest-tier Diamond members will have to spend 33% more to keep status.
- __[Alaska Airlines](https://robinhood.com/stocks/ALK/)__ will start limiting lounge access for first-class passengers based on how far they’re traveling.

Lookin’ for the lounge (Andrew Caballero-Reynolds/Getty Images)

__Exclusive perks mean exclusive prices…__ The airline industry is finally expected to return to profitability next year after a three-year pandemic slump. With over a quarter of Americans signed up for travel-based credit cards, airlines could raise the bar for gaining status — and perks — even higher in the future.

American Airlines revamps its loyalty program as the travel boom prompts airlines to get pickier about perks

- 🧐 __Privacy…__ __[Coinbase](https://robinhood.com/stocks/COIN/)__ said law-enforcement requests for user data [spiked](https://www.theblock.co/post/194204/coinbase-law-enforcement-requests-jumped-66-over-the-past-year) nearly 70% from last year. The exchange said most of the requests, which came both from US and global officials, involved criminal investigations.
- 📜 __Policy…__ Sen. Elizabeth Warren [introduced](https://decrypt.co/117221/senator-warren-crypto-bill-kyc-self-custody-wallets) bipartisan legislation targeting non-custodial wallets. The bill drew intense pushback, with advocacy group Coin Center, which is funded by crypto companies and investors, calling it "unconstitutional."
- 🤖 __Techy…__ __[Microsoft](https://robinhood.com/stocks/MSFT/)__ said it's [banning](https://www.coindesk.com/tech/2022/12/15/microsoft-bans-crypto-mining-on-its-online-services-without-permission/) crypto mining on its cloud service (at least without explicit approval first). The tech behemoth follows __[Google](https://robinhood.com/stocks/GOOGL/)__ and __[Amazon](https://robinhood.com/stocks/AMZN/)__ in saying customers can't use their online services for mining.

Mined

The Crypto Catch-Up…

American Airlines is revamping its loyalty program as airlines get pickier about perks

Dow Jones

S&P 500

Nasdaq

Bitcoin

23% of US adults recently surveyed said buying real estate is the best way to build wealth

✈️ American’s rewards revamp

__Sounds like the plot of "Iron Man"…__ actually real life. This week the US Department of Energy announced a [milestone](https://www.bloomberg.com/news/articles/2022-12-13/nuclear-fusion-energy-will-likely-take-decades-to-reach-commercial-viability) in the development of fusion energy. For the first time, scientists successfully used a nuclear-fusion reaction to generate 50% more energy than what was required for its creation — aka "net energy gain" — paving the way for sustainable clean power. Nuclear fusion (imagine: atoms fusing together) occurs naturally in the sun and releases 4M times more energy than burning oil, coal, or gas. Experts say it could unlock "virtually limitless" carbon-free power.

__The nuclear evolution…__ has been a long time coming. For decades, scientists have researched ways to harness nuclear power (like the more familiar nuclear *fission*) in hopes of producing alternatives to fossil fuels. Now, investors are on course to have put $1B+ into fusion tech this year, driven partly by growing climate-change initiatives and Russia’s war on Ukraine, which disrupted global energy supplies. That's just a fraction of the $1.4T invested this year in clean energy, but the future’s bright:

- __Atomic returns:__ The overall fusion market could be worth $40T down the road.
- __Electric possibilities:__ __[Constellation Energy](https://robinhood.com/stocks/CEG/)__, which says it's the US's largest producer of clean, carbon-free energy, said net energy gain is a “game changer” and the biggest breakthrough in 30 years.

It's powerful stuff (Olivier Douliery/Getty Images)

__It’s a small short-term step for clean energy…__ but a giant long-term leap. Even with the net energy gain breakthrough, commercial nuclear-fusion tech (picture: electricity, heating homes) could be decades away. Legislation like President Biden’s [Inflation](https://snacks.robinhood.com/newsletters/42zI4SXli5Y5q5GTnO57Hh/articles/6P1VJKtvjfjnjFHojBaGj0/) Reduction Act could help expedite the tech's development by offering tax credits for green-energy startups.

Scientists made a major breakthrough in nuclear fusion, but it'll take years to hit the grid

Scientists hit a nuclear-fusion milestone, but it'll take years to transform clean energy

Netflix said its "Harry & Meghan" docuseries set a record for hours watched in its debut week

⚛️ Fusion-energy breakthrough

__One-two punch…__ It’s a big week for markets, with back-to-back economic headliner events. Today the Fed meets on rate hikes, and its decision will likely be informed by yesterday’s inflation report. US consumer prices were up 7.1% in November from last year (vs. 7.3% expected). The pace of inflation slowed again from 7.7% in October, showing “disinflation.” 

- __Disinflation:__ Like a balloon that’s getting more inflated, but at a less noticeable pace. Prices are rising — just not as fast as they were in previous months. 
- __Deflation:__ Like a balloon that’s losing air — aka: *not* what’s happening now. Deflation is a broad drop in prices and can signal an economic downturn. 
- __Expectation:__ Investors celebrated the report because it raises the likelihood that the Fed will hike rates by 50 basis points today (vs. another 75 bps hike, as we had the past four times). 

__Potato-potahto…__ While food prices continued ticking up, price *growth* has slowed since July (potatoes led the charge, with prices falling a spudtacular 8.4% in November). Meanwhile, the energy index fell 1.6% for the month as gas and electricity prices dropped, contributing to disinflation (oil prices are actually *down* for the year). But housing and rent prices canceled out the energy cooldown, accounting for nearly half the total increase in core inflation. We’re not out of the inflated woods just yet.

#disinflation (Brandon Bell/Getty Images)

Disinflate

__Pausing ≠ reducing…__ While disinflation is happening, inflation’s still abnormally high (energy prices alone are still up 13% from last November). That’s why the Fed’s expected to keep hiking into the new year, though less aggressively. Even if Fed Chair Powell pauses hikes early next year, high interest levels could stick around until the Fed sees a meaningful cooldown in growth. And it could be a while before the Fed actually starts *cutting*.

November’s consumer prices show “disinflation,” but reaching acceptable levels could mean more pain

__Less white-sand beaches…__ more courtroom speeches. Disgraced crypto "wunderkind" Sam Bankman-Fried was [arrested](https://www.bloomberg.com/news/articles/2022-12-13/sam-bankman-fried-charged-with-fraud-by-ny-prosecutors) Monday in the Bahamas at the request of the US gov’t (see: $1B+ of customer funds missing). Instead of attending his scheduled remote testimony before Congress yesterday (with planned [remarks](https://www.forbes.com/sites/stevenehrlich/2022/12/13/exclusive-transcript-the-full-testimony-sbf-planned-to-give-to-congress/?sh=9e0014b3c474) feat. an F-bomb), the former __FTX__ CEO appeared in Bahamian court. Earlier, US federal prosecutors had charged him with numerous counts of fraud and violations of campaign-finance regulations.

- __New tech, old playbook…__ John Jay Ray III, who's overseeing FTX's bankruptcy, yesterday described the case to Congress as "old-fashioned embezzlement."
- __'Twasn't the season…__ Prosecutors accused SBF of criminal activity dating back to 2019 — long before crypto winter. 

__Everyone wants in…__ on FTX's punishment. While federal prosecutors brought *criminal* charges against SBF, the Securities and Exchange Commission filed a civil complaint charging FTX with scheming to defraud investors. Yesterday, SEC Chair Gary Gensler said SBF built a “house of cards on a foundation of deception.” Also yesterday, the Commodity Futures Trading Commission charged SBF, FTX, and __Alameda Research__ (SBF's crypto hedge fund) with fraud.

- __If convicted on all criminal charges,__ SBF could face life in prison. But he suggested in Bahamian court yesterday (notably wearing a suit instead of his trademark shorts) that he might fight extradition to the US. 
- __If he stays in the Bahamas,__ he could be sent to a prison known to be dangerously overcrowded. SBF's bail request was denied.

SBF’d

__Centralized crypto could face consequences…__ FTX was a centralized exchange (it directly held customers' funds/crypto) controlled by only a few people (vs. a decentralized exchange). The consequences it faces could set precedents for other centralized crypto players. Lawmakers and regulators like the SEC and CFTC are debating who, exactly, has crypto-oversight power. But as they consider new regulations following FTX's meltdown, they mostly now agree on at least one point: whoever has oversight, controls need to be tighter.

Sam Bankman-Fried's arrest could bring about major changes for crypto

November prices show “disinflation,” but reaching acceptable levels could mean more pain

Elon Musk is no longer the world's richest person, after Tesla shares dropped 60% this year

⛽ Disinflation nation

__Double dose of profits…__ Healthcare giants are shelling out big bucks to bolster their drug portfolios. Yesterday, biotech behemoth __[Amgen](https://robinhood.com/stocks/AMGN/)__ signed a deal to buy __[Horizon Therapeutics](https://robinhood.com/stocks/HZNP/)__ for $27.8B — in this year’s biggest healthcare merger. Horizon specializes in rare-disease treatments, and its new thyroid eye disease drug, Tepezza, helped double revenue last year. Over the past month, Tepezza’s success had fueled takeover bids from pharma titans like __[Sanofi](https://robinhood.com/stocks/SNY/)__ and __[Johnson & Johnson](https://robinhood.com/stocks/JNJ/)__. 

- __High risk:__ Amgen plans to pay $116.50/share as part of the deal — a nearly 20% premium from the stock’s pre-merger-announcement price. 
- __High reward:__ Horizon thinks Tepezza could haul in $4B+ in sales if it’s approved outside the US. It could also help Amgen offset lost revenue from its biggest drugs, whose patents are about to expire.

__Billion-dollar buying spree…__ Pharma companies frequently look for new sources of revenue to make up for lost patent protection on blockbuster drugs (patents typically last 20 years). While deal making has slowed this year, some healthcare heavyweights have used the broader sell-off to snatch up smaller drugmakers at a “discount.” Just this year: J&J struck a $16.6B deal to buy heart-device maker __[Abiomed](https://robinhood.com/stocks/ABMD/)__; __[Pfizer](https://robinhood.com/stocks/PFE/)__ agreed to buy __[Global Blood Therapeutics](https://robinhood.com/stocks/GBT/)__ for $5.4B; and __[Merck](https://robinhood.com/stocks/MRK/)__ acquired blood-cancer biotech __[Imago BioSciences](https://robinhood.com/stocks/IMGO/)__ for over $1.3B.

The year’s biggest healthcare deal (Al Seib/Getty Images)

Treat

__Rare treatments command high prices…__ Of the 7K known rare diseases, 95% have no approved treatment. Rare treatments may have a smaller addressable market, but they can lead to a treatment monopoly that can lure higher payouts from insurance companies — and patients.

Amgen strikes the year’s biggest healthcare deal as drugmakers splurge on rare treatments to boost sales

__“I could have my Gucci on”…__ That Meghan Trainor song you keep hearing in *every single* __TikTok__ video is the current soundtrack for Americans in Europe. They’re [flocking](https://www.wsj.com/articles/americans-flock-to-europe-for-holiday-shopping-binge-11670797821) to designer stores across the old continent to take advantage of holiday deals, courtesy of the strong dollar. Since the Fed began hiking rates, the USD has strengthened against other currencies. 

- __Europe’s on sale__ for Americans. Last year, a buck would get you 0.82 euro. Today, you can exchange $1 for about €0.95. (Read: one dollar buys more euros.) 
- __American tourists in Europe__ spent, on average, 1.2K euros per transaction during the week of Black Friday, up from 500 euros three years ago. 

__“I could wear my Louis Vuitton”...__ in Paris with John. Luxe retailers like __[Kering](https://robinhood.com/stocks/PPRUY/)__-owned Gucci and __[LVMH](https://robinhood.com/stocks/LVMUY/)__-owned Louis Vuitton are raking it in thanks to American splurging. That’s helping them make up for the lack of high-rolling Chinese tourists (see: China’s Covid restrictions). For Americans, it’s a triple savings whammy: 

- __Strong Washington:__ The dollar is hovering at its strongest exchange rate in two decades compared to the euro. 
- __Home advantage:__ Since many luxury goods are made in Europe, they tend to be cheaper there (no US import costs). American shoppers are paying an average of 38% *more* for the same designer clothes bought in the US (vs. 20% historically). 
- __Tax bonus:__ Tourists who spend a certain amount at an EU store can often claim a refund on the sales tax (think: saving hundreds in tax on a designer bag).

Look

__Strength is a two-sided coin…__ The strong dollar is helping inflation-battered European retailers, who are dealing with low consumer confidence at home. On the flip side, it discourages tourism (and spending) in the US. That could make an economic downturn worse.

Americans ball out in Europe as the strong US dollar puts foreign luxuries on sale

🕺 *Like "Dance Dance Revolution" when you can’t keep up…*

[Stablecoins](https://snacks.robinhood.com/newsletters/1alSYApz9fMDqEf8i3IPRi/articles/1vwhQv8VIIqij4eXh9Wsvw/) are a type of cryptocurrency whose value is pegged to another asset. For example, __[Tether’s USDT](https://robinhood.com/crypto/USDT/)__ (the biggest stablecoin) is pegged 1-to-1 to the US dollar. But stablecoins have "depegged" in the past, losing that 1-to-1 value. __Binance’s__ CEO reportedly accused __FTX__ founder Sam Bankman-Fried of trying to [depeg](https://www.wsj.com/articles/rivals-worried-sam-bankman-fried-tried-to-destabilize-crypto-on-eve-of-ftx-collapse-11670597311) USDT (which could’ve been a crypto disaster) as his exchange collapsed.

DEFI(NE)

Heard on the Block: "depeg"

Amgen strikes the year’s biggest healthcare deal as drugmakers splurge on rare treatments

Wendy's prices jumped a reported 35% this year — more than any other major fast-food chain

💊 Amgen’s $28B pharma bet

__Candy or coal…__ Student loan borrowers are holding their breath to see if they’ll actually get loan forgiveness in the new year. Refresher: a few weeks before midterms, President Biden announced that the Education Department would forgive $10K in federal loan debt for people making under $125K/year and $20K for Pell Grant recipients. 

- __The plan__ would cost the US $400B and cover most of the 45M borrowers who owe $1.6T in loan debt (with 15M getting fully absolved).
- __The hold-up:__ Six GOP-led states brought a case against the plan, and the US Supreme Court agreed to take it after the DOJ asked it to reverse an injunction that blocks the program from taking effect. 
- __The status:__ On pause. 26M borrowers have already applied for relief and some have been approved, but servicers have been blocked from canceling loans. Borrowers who haven’t yet applied currently [don’t](https://studentaid.gov/debt-relief/application) have the option. Meanwhile, loan payments have been paused since March 2020. 
- __Next steps:__ SCOTUS is set to hear arguments in February to help it decide whether the forgiveness policy is an overreach of executive power or if it causes harm to plaintiffs. Some experts [think](https://www.cnbc.com/2022/12/05/supreme-court-tackles-biden-student-loan-plan.html) the conservative-majority court will rule it as unconstitutional.

__Ball’s in your Court…__ As the final arbiter, SCOTUS’s charge is to uphold and interpret the Constitution. Historically, the court has typically ruled in line with public opinion. But in a recent Economist-YouGov poll, 51% of respondents said they support Biden’s relief plan while 40% were opposed. Critics worry it’ll exacerbate inflation and penalize those who’ve already paid off debt. Supporters say it’ll help money-strained Americans get by — while progressives want cancellation of *all* $1.6T in student debt.

Supremely high tuition problems (Saul Loeb/Getty Images)

Cancel

__Student loans are a Sisyphean struggle…__ Just as the mythical Sisyphus had to roll a boulder uphill only to have it roll down again for eternity, loans will keep piling up forever unless a key issue is resolved: college (in)affordability. One-time forgiveness would be a much-needed relief for millions, but it won’t fix the long-term problem: college tuition has jumped 5X more than inflation in the past half century.

Student loan forgiveness is in SCOTUS’s hands as Biden’s plan hits roadblocks

__Broken (rate) record…__ Investors grew antsy last week after strong labor-market data stoked fears that the Fed could continue hiking interest rates well into next year. Refresher: America’s central bank is expected to raise rates by a half percentage point on Wednesday, a slowdown from the past four “jumbo” hikes of 75 basis points. Inflation has started to ease, but a still hot jobs market coupled with resilient spending could prompt Fed Chair Powell to lengthen his rate-hiking campaign. That could boost the likelihood of financial pain next year.

__Never-ending soup and salad…__ none of the clean-up. Dining out is having a moment as uneven food inflation makes eating at restos a *relative* bargain compared to cooking at home. That could benefit Olive Garden parent __[Darden Restaurants](https://robinhood.com/stocks/DRI/)__, which also owns LongHorn Steakhouse. In its last reported quarter, the faux-Italian icon saw sales rise 6% from last year, but still disappointed expectations. We'll see whether there’s a festive light at the end of the breadstick when Darden reports Friday.

Events

Coming up this week...

__A fresh breath…__ Zero Covid is becoming a little less zero. Last week, China started loosening strict Covid rules that had kept the country in alternating states of lockdown for nearly three years. The decision followed rare public protests and economic turmoil (think: shuttered businesses, slowing growth, and disruptions to __Foxconn's__ key iPhone-assembling factories). Now China’s scrapped most testing and quarantine requirements. But its socially distant policies may’ve contributed to low immunity, and experts fear [outbreaks](https://www.latimes.com/world-nation/story/2022-12-01/risks-for-china-of-ending-zero-covid-policy) could surge again.

__Fillin’ up the tank…__ all the way to the top. Last week, crude-oil prices hit their lowest level of the year as global demand slipped. Despite OPEC production cuts in October and Europe’s Russian-oil ban, investors have been skeptical about buying the energy dip with recession fears looming. Meanwhile, natural-gas prices are down more than 35% since August, as warmer winter weather and inflated utility bills keep people from cranking the heat. Still, if OPEC keeps extending output cuts (or China demand rebounds), it could drive prices higher down the road.

Zoom Out

Stories we’re watching...

- __[Shop](https://snacks.robinhood.com/newsletters/NdAZrycsfEJxhCIGcwPD2/articles/6pToWcdBKPXG0jQ24TTTF8/):__ __[Walmart's](https://robinhood.com/stocks/WMT/)__ CEO said a rise in shoplifting could lead to price hikes and store closures. Retailers like __[Target](https://robinhood.com/stocks/TGT/)__ are bulking up security after losing hundreds of millions from organized retail theft. 
- __[CGPT](https://snacks.robinhood.com/newsletters/1tqjd2M4HaTR4MDXIMoYcr/articles/7IJUQSHnMsihoZe3E8Wbv2/):__ __OpenAI’s__ impressive new chatbot is causing shock, awe, enthusiasm, and concern (think: that it’ll replace creative labor and kill homework). Meanwhile, the “generative AI” industry is booming.
- __[Fly](https://snacks.robinhood.com/newsletters/1alSYApz9fMDqEf8i3IPRi/articles/57oSplJXqjshMECfFvOKjX/):__ __[Delta](https://robinhood.com/stocks/DAL/)__ agreed to boost pilots’ pay in a $7B+ deal that could end years of contract negotiations — and pressure rivals to hike wages. It could have consequences for airlines if travel demand sinks.

ICYMI

Last week's highlights...

The US is the world’s largest producer, consumer, and exporter of corn

🎓 Student loan forgiveness limbo

__50-cent Big Macs…__ for *life*. As inflation bites into budgets, fast-food giants are unwrapping deals to lure customers. This week __[McDonald’s](https://robinhood.com/stocks/MCD/)__ kicked off its holiday promos, [offering](https://www.mcdonalds.com/us/en-us/deals.html) three weeks of perks for its app loyalty members. Last season, McD’s teamed up with Christmas queen Mariah Carey to promo 12 days of freebies for app users. This year the McFlurry icon is offering deals like $0.50 Big Macs and a chance to win free food for life. It’s a tasty strategy:

- __McDonald’s loyalty program__ has 25M+ US members, despite launching just last year. For reference: __[Chipotle](https://robinhood.com/stocks/CMG/)__ has 30M loyalty members and __[Starbucks](https://robinhood.com/stocks/SBUX/)__ has 28M.
- __Nearly two-thirds__ of McD’s US members had used the app in the three months leading up to September. Last quarter, digital transactions made up half of McDonald’s sales. 

__The (loyal) consumer combo…__ From IHOP to Taco Bell to Panera, fast-casual brands are turning to loyalty programs to drive app downloads and court new customers. Digital orders make up a third of total US restaurant sales, up from less than a quarter prepandemic. 57% of restaurants offer some sort of loyalty club, and 41% of consumers say those programs encourage them to spend. A sweet bonus for brands: they can use customer app data to personalize offers.

McFishing for deals (Rafael Henrique/Getty Images)

McDeal

__Rewards are guilt soothers…__ Nabbing a free drink at Starbucks makes it easier to swallow the $30 you spent on lattes that month, and hitting the McDonald’s drive-thru rather than eating in is easier when you feel like you’re getting a deal. Like many businesses, McDonald’s has hiked prices to offset rising costs. Now it’s leveraging loyalty to keep customers hungry.

McDonald's serves up beefy holiday promos to drive app traffic (and ease drive-thru guilt)

__Taking a temp check…__ when the situation's already heated. A new [survey](https://www.cnbc.com/2022/12/07/just-8percent-of-americans-have-a-positive-view-of-cryptocurrencies-now-cnbc-survey-finds.html) suggests that Americans are increasingly skeptical of crypto. Only 8% of respondents had a positive view (down from 19% in March), while 43% had a *negative* view (up from 25%). The timing of the survey, conducted late last month, may have something to do with those #s. Earlier in November __FTX__ collapsed spectacularly, and the ensuing [contagion](https://snacks.robinhood.com/newsletters/5oS3vfl3q3m34Ud64MuTOf/articles/6GVY28qbI5kcW4Y5gvzbIM/) likely made some investors crypto-phobic. But the cold symptoms started earlier: 

- __Market slap:__ A late-spring selloff, ignited by the collapse of the __terraUSD__ algo stablecoin, ended with crypto's market cap down $2T from its high last year. 
- __Blockpain:__ A [study](https://www.bloomberg.com/news/articles/2022-11-16/vast-majority-of-retail-investors-in-bitcoin-lost-money-bis-says) published last month estimated that, between 2015 and 2022, 80% of retail investors lost money on __[bitcoin](https://robinhood.com/crypto/BTC/)__. (FYI: the study used crypto app downloads, most of which happened when BTC was over $20K.)

__When the going gets tough…__ big money goes shopping. While some institutional investors (like Canada’s biggest pension fund) are said to be stepping back from crypto, others are whipping out their checkbooks. This week __[Goldman Sachs](https://robinhood.com/stocks/GS/)__ said it plans to spend tens of millions investing in, or outright buying, crypto companies. And at least one crypto exchange, __Bitstamp__, said it saw a 57% increase in November in institutional registrations over the previous month.

Coined

__It's easy to be "crypto curious" when times are good…__ Last year, more than 60% of US adults said they were planning on buying crypto or wanted to learn more. Crypto's no longer at its high, and the economy’s not doing so hot either. The performance of public crypto-first cos like __[Coinbase](https://robinhood.com/stocks/COIN/)__ — which recently said it expected annual revenue to be down 50% from last year — could provide insight into whether America’s dim view of crypto is sticking.

Americans start souring on crypto while institutional investors like Goldman go shopping

- 📸 __Flashy…__ Crypto's faithful [descended](https://www.bloomberg.com/news/features/2022-12-06/sam-bankman-fried-s-ftx-gets-trashed-at-art-basel-miami-2022-by-crypto-fans?srnd=cryptocurrencies-v2) on Miami for Art Basel, and even FTX's collapse couldn’t sour the mood (too much). Attendees collected discarded FTX swag as souvenirs (picture: T-shirts in trash bags) and partied to a Grimes DJ set. 
- 🤖 __Techy…__ The September [merge](https://snacks.robinhood.com/newsletters/1wtJg97QxjQGWOy95mSzca/articles/4PkMBBDA5ADxTIJm447Hdh/) promised to cut __[ethereum](https://robinhood.com/crypto/ETH/)__ energy usage by more than 99%. A [new study](https://gizmodo.com/ethereum-merge-crypto-carbon-emissions-study-1849857714) suggests it succeeded — reducing the blockchain's energy consumption by an Ireland-sized amount (thanks, proof of stake).
- 🪙 __Coins…__ A judge ordered bankrupt crypto lender __Celsius__ to return $44M to its customers. For now, only crypto held in custody accounts (read: not yield-bearing) falls under the order. Celsius still owes its customers billions.

Party

McDonald's serves up beefy loyalty promos to fuel sales (and ease drive-thru guilt)

Last month the median rent for a Manhattan apartment hit $4K

🍟 McDonald’s app-y holidays

__“Are you tired of feeling like a robot when you talk to your computer?...__ Well, fear not, my friend, because chatGPT is here to save the day!” These prosaic lines were written by AI chatbot ChatGPT in response to “Write a humorous article about ChatGPT.”

- __Meet CGPT:__ The futuristic AI chatbot was released to the public last week by __OpenAI__ (the company behind [generative AI](https://snacks.robinhood.com/newsletters/3WEG5SgBgeQScK91kmZwOc/articles/6gWjpZswZYcdRi0vcvZQos/) tool Dall-E). 
- __It’s causing shock, awe, fear,__ and lots of __[Twitter](https://robinhood.com/stocks/TWTR/)__ memes. OpenAI said 1M+ people signed up to test CGPT in the first five days. 
- __Bot of many trades:__ CGPT is like a search engine that provides one result, combined with a sophisticated chatbot combined with a blandly unoriginal yet at times eerily human-sounding writer. It can answer questions, compose text based on prompts, and write self-reflective [poetry](https://twitter.com/karpathy/status/1600214083206193153). 

__A trained model…__ we’re not talking Gisele. In our unexclusive interview with CGPT, the bot told us where its words came from: “As a large language model trained by OpenAI, I have been trained on a massive amount of text data.” After some prodding, CGPT explained that said data is “typically compiled from a wide variety of sources, such as books, articles, and websites.” It essentially uses those text examples to make educated guesses about how to string together an answer. Yet there are concerns about CGPT’s powers. People fear that it’ll kill:

- __Homework:__ This probably *isn’t* a fear for most students, but educators are [concerned](https://www.theatlantic.com/technology/archive/2022/12/chatgpt-ai-writing-college-student-essays/672371/) that CGPT’s essay-writing abilities will destroy take-home assignments. __Lex__, a new [tool](https://francescod.medium.com/lex-a-new-ai-writer-tool-landed-96fb6408aed3) that uses CGPT, fills in sentences for you like a __[Google](https://robinhood.com/stocks/GOOGL/)__ Docs-style collaborator, 
- __Jobs:__ Like its art-generating cousin Dall-E, CGPT is generating concerns that AI tools could replace creative jobs (think: copywriting, design).
- __Originality:__ If people start relying on AI for their writing and creating, the intellectual output of future generations could be monotonous. There are also copyright-infringement concerns (think: image generators pulling from original designs).

How can AI help you today? (Jakub Porzycki/Getty Images)

CGPT

__Generative AI is a many-pronged tool…__ It could be valuable to automate work, though dangerous if it becomes a crutch. Meanwhile, investment is booming. __Jasper__, a genAI tool largely used for marketing copy, recently hit a $1.5B valuation. (As of October, OpenAI was valued at ~$20B.) And Google is previewing apps that’ll allow people to have their text rendered to images (similar to Dall-E).

OpenAI’s impressive new chatbot causes a stir, inspiring enthusiasm and concern

__Crypto ads are in the spotlight…__ and investigators are turning up the heat. The Federal Trade Commission's reportedly [looking into](https://www.bloomberg.com/news/articles/2022-12-05/ftc-investigates-crypto-firms-over-misleading-advertising) numerous crypto companies in connection with potentially deceptive or misleading ads. Crypto firms found violating advertising laws could face large fines and be forced to refund customers. There's a *lot* for the FTC to sift through: crypto brands have shelled out $223M+ on US ads so far this year alone. 

__Fortune favors the warm…__ Big spending was the norm before crypto winter kicked off in May. Late last year, __Crypto.com__ said it would pony up $100M for a celeb-infused campaign (picture: Matt Damon [insisting](https://web.archive.org/web/20220127005704/https://www.youtube.com/watch?v=9hBC5TVdYT8) "fortune favours the brave"). It also reportedly shelled out $700M on its LA Lakers stadium-naming rights, while FTX [splurged](https://snacks.robinhood.com/newsletters/2jedAlq0iN3kyZjhRJ7QXZ/articles/1enAKmQ2NnWWzq409J1MHk/) for Miami. Meanwhile, __[Coinbase](https://robinhood.com/stocks/COIN/)__ spent $14M on a single Super Bowl ad. Now:

- __Courtside view…__ A class-action lawsuit accuses __FTX__-promoting celebs like Larry David and Tom Brady of pushing a "Ponzi scheme." 
- __Second thoughts…__ Only 8% of Americans have a positive view of crypto, down from 19% earlier this year.

Flashy

__Big spending doesn't negate big risk…__ for investors, crypto firms, *or* celeb promoters. Ad blitzes — like the $60M FTX spent on TV commercials — suggest a biz has cash aplenty and is here to stay, but brand image doesn't always = brand reality. As the FTC moves forward with its investigation, and dozens of investors file claims in bankruptcy court, expect the (more than) once bitten crypto world to be twice as skeptical about future ad splurges.

Glossy crypto ads lose their sheen as investigators probe possible misconduct

The most searched term on Google this year is “Wordle”

💬 ChatGPT enters the chat

__Calling a store associate…__ to unlock the fancy razors in the glass case. Yesterday, __[Walmart](https://robinhood.com/stocks/WMT/)__ CEO Doug McMillon [said](https://www.cnbc.com/2022/12/06/walmart-ceo-says-shoplifting-could-lead-to-price-jumps-store-closures.html) rising theft could lead to price hikes and store closures. America’s largest retailer is dealing with a surge in shoplifting that’s “higher than what it has historically been,” McMillon added. He said a lax approach from local prosecutors could lead to closures and higher prices if the problem persists. 

__Walmart isn’t the only one…__ Organized retail theft (think: criminal rings who steal large volumes of products only to resell them) is on the rise. Last year nearly 70% of retailers reported a spike, which contributed to losses of up to $69B. It can be hard to imagine that shoplifting could significantly affect multibillion-dollar corporate giants, but the scale has become so great it’s hitting their bottom line — and losing them hundreds of millions. 

- __[Target](https://robinhood.com/stocks/TGT/)__ is also dealing with an increase in stealing, which it says is mostly organized retail theft. Recently, Target’s CFO said shoplifting at its stores has jumped 50% from last year. So far this year, losses from theft have dealt a $400M blow to its profit margins. 
- __[Rite Aid](https://robinhood.com/stocks/RAD/)__ said it lost $5M last quarter from theft at its NYC locations, and last year __[Best Buy’s](https://robinhood.com/stocks/BBY/)__ CEO said that rising theft had been “traumatizing” for workers.

(Chris Hondros/Getty Images)

Lifted

__Corporate L’s can come in unexpected forms…__ When we talk about losses, we usually look at rising costs, slowing demand, and shrinking sales. But as America’s economic situation deteriorates, inflation isn’t retailers’ only problem: crime’s starting to become evident in earnings too. Now, retailers are bulking up safety measures like locking up items and adding armed guards. The downside: a less pleasant shopping experience.

Walmart says shoplifting could lead to higher prices and closures as losses from organized retail theft mount

__Falling flat…__ __[Pepsi’s](https://robinhood.com/stocks/PEP/)__ plans to lay off hundreds of corporate staff to streamline its biz. The soda and snack giant has nearly 309K employees worldwide, and over a third are US-based. The latest cuts are aimed at its beverage biz, but will affect snacks too. FYI: Pepsi owns the four big O’s of snacking (Cheetos, Doritos, Tostitos, and Fritos). It isn’t the only one crunching down: 

- __[Coca-Cola](https://robinhood.com/stocks/KO/)__ recently announced plans to restructure through a “voluntary separation program,” which includes buyout offers for some of its 6K North American workers. 

__Party in the pantry...__ Despite inflated prices, Americans have continued splurging on brand-name groceries from companies like Pepsi, __[Kraft](https://robinhood.com/stocks/KHC/)__, and __[Kellogg](https://robinhood.com/stocks/K/)__. Pepsi’s offset higher costs by hiking prices or shrinking product sizes (cough, [shrinkflation](https://snacks.robinhood.com/newsletters/jtHnqwq8xydDjbgiulBNB/)). Last quarter Pepsi doubled its annual sales forecast as snacking demand stayed strong. But recession fears are sparking concerns that consumers' label loyalty could be tested:

- __In October,__ Pepsi’s popular Frito-Lay brand saw sales volumes dip. Meanwhile, consumers across income levels are starting to trade down to cheaper private labels.
- __Now,__ Pepsi execs said they want to offset pressure on margins by preparing for “worsening macroeconomic conditions.”

Crunch

__Pepsi wants to future-proof its biz…__ Tech layoffs started when things were already getting rough for the sector, but __[Pepsi](https://robinhood.com/stocks/PEP/)__ is preparing for a snack-pocalypse that hasn’t happened yet. Other companies beyond tech are starting to cut headcount or freeze hiring, from __[Ford](https://robinhood.com/stocks/F/)__ to Walmart to __[Beyond Meat](https://robinhood.com/stocks/BYND/)__. Economists say there could be spillover effects on more industries.

Pepsi plans to lay off hundreds of workers as food titans try to future-proof their pantries

Walmart says shoplifting could lead to closures as losses from organized retail theft mount

This year, Fed officials have raised rates at the fastest pace since the early 1980s

🔓 Walmart’s shoplifting problem

__Extra Biscoff cookies for everyone…__ Yesterday __[Delta](https://robinhood.com/stocks/DAL/)__ agreed to [boost](https://www.cnbc.com/2022/12/03/delta-pilots-would-get-more-than-30percent-in-pay-raises-under-new-contract-deal.html) its pilots’ pay by at least 31% in a $7B+ deal that could end years of contract-negotiation clashes. In October, Delta pilots voted to strike if their union and the airline couldn’t reach an acceptable pay agreement. If the salary boost is approved, it’d be the first new pilots’ contract at a big airline since the pandemic began.

- __New terms:__ Delta pilots would receive an 18% pay bump as soon as the contract is signed, with the rest paid over the next three years.
- __New horizons:__ If the deal is OK’d, it could become the industry standard for contracts negotiated at rivals like __[American](https://robinhood.com/stocks/AAL/)__, __[United](https://robinhood.com/stocks/UAL/)__, and __[Southwest](https://robinhood.com/stocks/LUV/)__. Meanwhile, travelers may end up paying higher fares for longer.

__Failure to launch…__ US travel is booming again, but pilots have been in short supply after thousands retired during the pandemic. As the industry returns to profitability and daily life gets pricier, pilots want higher comp. But negotiations have been turbulent: last month American Airlines pilots rejected a 19% pay-hike proposal, saying it wasn’t enough. In September, pilots from United, __[JetBlue](https://robinhood.com/stocks/JBLU/)__, __[Spirit](https://robinhood.com/stocks/SAVE/)__, Delta, and other airlines picketed at major airports for better pay and more reliable schedules.

Delta’s jumbo pay day (Michael M. Santiago/Getty Images)

Land

__Higher pay could carry higher risks…__ Labor costs and fuel are airlines’ two biggest expenses, and most carriers’ costs have ballooned since the pandemic started. Locking in multiyear pay hikes could help keep pilots happy, but could have consequences for airlines if travel demand sinks again in 2023 or ’24, especially with a recession expected on the horizon.

Delta agrees to multiyear raises for pilots, pressuring its rivals — and future profits

__SPAC to square one…__ Yesterday __[USDC](https://robinhood.com/crypto/USDC/)__ stablecoin issuer __Circle__ said it was [bailing](https://fortune.com/crypto/2022/12/05/circle-pulls-the-plug-on-spac-as-stablecoin-giant-returns-to-profitability/) on plans to go public on the NYSE by merging with a special purpose acquisition company, aka SPAC. Circle is well known in crypto circles: its main stablecoin, USDC, tracks the US dollar (1 USDC = $1), and the company says it’s 100% backed by cash and US Treasuries. It’s the second-largest stablecoin by market cap (after __[Tether](https://robinhood.com/crypto/USDT/)__) with $43B in circulation. But now Circle’s walking back from its SPAC merger, possibly because it failed to receive the required SEC sign-off. 

__In love and crypto…__ timing’s everything. Circle first announced its SPAC plan last year when crypto was booming. Earlier this year, the merger could’ve valued Circle at up to $9B and made it one of the few publicly traded crypto companies. But times have changed:

- __TerraUSD,__ an algorithm stablecoin, blew up in May (unlike “fully reserved” USDC, it wasn’t backed by cash), and crypto prices have plunged further since FTX’s collapse.
- __While Circle said__ it had minimal financial exposure to __FTX__, the SEC might be hesitant to approve crypto-related deals as it sifts through the bankrupt exchange's wreckage.

SPACKED

__Contagion might not spare the strong…__ Circle's decision to scrap its public debut reflects the radically changed environment it now finds itself in. Some have asked whether the SEC could’ve done more to [prevent](https://www.theblock.co/post/189351/sec-facing-rising-scrutiny-after-ftxs-epic-implosion) FTX's loss of billions in customer funds, and officials are [pressuring](https://snacks.robinhood.com/newsletters/7L5hvnVgBnXhNL03JnlDFZ/articles/5KUvBxRDX4pvt3ukesQuac/) for stricter regulation. That a profitable, regulated, US-based company chose to walk back its billion-dollar debut shows just how far [contagion](https://snacks.robinhood.com/newsletters/5oS3vfl3q3m34Ud64MuTOf/articles/6GVY28qbI5kcW4Y5gvzbIM/) has apparently spread.

Circle's SPAC strategy fizzles as regulators and lawmakers sour on crypto

🧑‍🤝‍🧑 *If the dollar had a twin who grew up in blockchain country, and spoke fluent crypto…*

[Stablecoins](https://learn.robinhood.com/articles/1thUPqVffWfMYJvxthNrHn/what-is-a-cryptocurrency/#What_are_stablecoins) are a type of cryptocurrency pegged to real-world assets, like the USD. They let people transact on the blockchain while avoiding crypto’s infamous price swings. Some stablecoins are fully reserved, meaning they're 100% backed by cash or cash equivalents. Algorithmic stablecoins, on the other hand, are typically *not* fully backed, and what backing they do have is usually crypto.

 DEFI(NE)

Heard on the Block: “stablecoin”

Americans now expect they’ll need $1.2M to retire comfortably, up from $1M last year

✈️ Delta’s pilot payout

__Crossing off the Xmas list…__ one Paw Patrol toy at a time. A record 197M Americans shopped between Thanksgiving and Cyber Monday, up 10% from last year. Spending hit $9.5B as folks splurged on everything from new MacBooks to __Dyson__ Airwraps to “Encanto” dolls. 

- __[Amazon](https://robinhood.com/stocks/AMZN/)__ said it sold “hundreds of millions” of items between Thanksgiving and Cyber Monday in its biggest Thanksgiving holiday weekend ever. 
- __[Walmart](https://robinhood.com/stocks/WMT/)__ saw a 5% dip in store traffic, but its online searches for Black Friday discounts nearly 5X’d from last year.
- __Overall,__ holiday spend is forecast to grow between 6% and 8% this year — slower than last year, but still above historical averages.

__The consumer’s alive and well…__ but the clock is ticking. Investors keep a close eye on consumer spending because it makes up two-thirds of US GDP. In October, spending growth accelerated from September as inflation cooled slightly. Americans splurged on new cars, furniture, makeup, and eating out — a sign that discretionary spending’s still hot. But as inflation-adjusted “real wages” dip, shoppers are racking up debt to keep splurging:

- __IOUs up:__ US credit-card balances jumped 15% in Q3, the biggest year-over-year spike in over two decades. Meanwhile…
- __Savings down:__ Americans are stashing cash at the lowest rate since 2005 and dipping into pandemic savings to fund their lifestyles.

Charging it to the credit card (Davide Bonaldo/Getty Images)

Spree

__Spending is a double-edged sword…__ It’s typically good for the economy, but it can exacerbate inflation (*bad* for the economy). Inflation is cooling, yet sustained levels of high spending could spell more trouble ahead. Last month, the US added a whopping 263K jobs while wages spiked. A hot labor market, coupled with high spending, could compel the Fed to keep hiking rates. With economists forecasting a 2023 recession, Americans could enter the next downturn with a lot less cash cushion than they had during the pandemic.

Holiday shopping is sweet so far, but the spending spree could be a double-edged sword

__Khakis < stretchy chinos…__ As workers return to offices, they’re keeping their clothes casual. That benefits legging legend __[Lululemon](https://robinhood.com/stocks/LULU/)__, which has been expanding its work-leisure offerings for years. Lulu thrived in the pandemic as loungewear became the norm everywhere. The good times stretched on in the September quarter as Lulu’s sales and profits beat expectations (again). Lulu also boosted its outlook in September, but we’ll see whether shoppers are still splurging on lavishly priced Lulu fits when it reports Thursday. 

__Tomato bisque FTW...__ While the market has tanked, __[Campbell Soup](https://robinhood.com/stocks/CPB/)__ stock is up 25% this year. The 153-year-old canned-soup icon has been on a pandemic streak ever since people started hoarding its pantry staples (snacks like Goldfish and Snyder’s make up over half its sales). In Campbell’s last reported quarter, sales were up 6% — impressive considering its soup sales had fallen for eight of the nine years up to 2020. Big food companies like __[Kellogg](https://robinhood.com/stocks/K/)__, __[Pepsi](https://robinhood.com/stocks/PEP/)__, and __[Kraft](https://robinhood.com/stocks/KHC/)__ have also outperformed. We’ll see if Campbell’s soup is still hot when it reports Wednesday.

__Yellen from the mountaintops…__ for tougher crypto regs. Last week Treasury Secretary Janet Yellen said that __FTX's__ collapse — and the loss of billions in customer funds — made crypto regulation urgent. Last week the Senate held a hearing on FTX with Rostin Behnam, chair of the Commodity Futures Trading Commission, who testified that his agency needs Congress to give it power to prevent future crypto calamities. The twist: Behnam's pushing for a bill (the Digital Commodities Consumer Protection Act) once promoted by then-FTX CEO Sam Bankman-Fried.

__Yes cap…__ On Friday, EU countries agreed to cap the price of Russian crude at $60/barrel. The cap sets a max purchasing price on Russian oil to hurt the Kremlin’s income, which is fueling its war on Ukraine. As of today, the EU will also ban seaborne imports of Russian oil (though pipelines will keep flowing). The cap might not be very effective, though, since China and India, the biggest buyers of Russian oil, don’t seem inclined to support it. Meanwhile, Russia has said it won’t sell oil to countries who implement a cap.  That could exacerbate the winter energy crunch.

- __[Flix](https://snacks.robinhood.com/newsletters/6lu5SX3Mu9XUcsOr8Kpcvz/articles/dY2i30JBP9dZB6uipp7PR/):__ __[Netflix](https://robinhood.com/stocks/NFLX/)__ reportedly plans to expand its Preview Club to boost engagement by letting viewers shape content before it goes live. The streamer added humor to “Don’t Look Up” based on (pre)viewers’ feedback.
- __[Sublet](https://snacks.robinhood.com/newsletters/4BnDIIkMxb1wrwqayVyd4h/articles/7jdIMZyT6wdK6Z3n9bBmtr/):__ __[Airbnb](https://robinhood.com/stocks/ABNB/)__ teamed up with landlords to boost the supply of (legally) Airbnb-able apartments, which it’s short on. No more need to tell your neighbors — ahem — “those are just my French cousins.” 
- __[Blue](https://snacks.robinhood.com/newsletters/6pxonrMd8XlBtrsfLNHMIq/articles/6jG1oibTTxKOr7u4BERmcu/):__ As __[Twitter](https://robinhood.com/stocks/TWTR/)__ tries to diversify beyond ad revenue with subs, Elon Musk criticized Apple’s 30% “app tax,” joining critics like Epic Games and __[Spotify](https://robinhood.com/stocks/SPOT/)__. But antagonizing Apple could have consequences.

When adjusted for inflation, global wages have fallen this year for the first time on record