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

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

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

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

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

Paradox

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

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

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

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

Zoom Out

Stories we’re watching...

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

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

Events

Coming up this week...

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

ICYMI

Last week's highlights...

Dow Jones

S&P 500

Nasdaq

Bitcoin

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

🏠 Housing’s sad paradox

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

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

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

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

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

Greenhouse

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

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

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

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

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

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

Plug

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

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

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

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

⛏️ A White House crypto wish

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

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

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

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

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

Spin

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

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

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

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

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

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

Pear

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

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

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

🚗 Initial Porsche Offering

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

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

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

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

Gazprom causes gas problems (NIKOLAY DOYCHINOV/ Getty Images)

Putinflation

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

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

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

⛽ Russia’s gas halt 

__Post-Labor Day labor update...__ While you were packing coolers and beach towels for the unofficial "last weekend of summer," the Labor Department was packing stats. The August jobs report [showed](https://www.wsj.com/articles/august-jobs-report-unemployment-rate-economy-growth-2022-11662062706) slowing job and wage growth — but a still historically *strong* labor market.

- __The US added 315K jobs,__ slightly lower than expected and the lowest monthly gain since April 2021. FYI: in July the US gained 526K roles.
- __The unemployment rate jumped__ to 3.7% from 3.5% in July, mostly because more people started looking for work.
- __Average hourly earnings grew__ 5.2% from a year earlier, slowing from July's pace.

__Investors are eating the porridge...__ Some are calling this a "goldilocks" report because it's not too hot, not too cold (but juuust right). While the labor market is cooling, job growth is still way higher than prepandemic levels, and unemployment is just off its half-century low of 3.5%.

- __*Bad news = good news*__ in this inflationary economy. Investors were relieved jobs didn’t come in too hot, which could compel the Fed to be more aggro with rate hikes. 
- __Terrible news = bad news.__ Investors were relieved labor didn’t slow *too* much, suggesting the Fed’s flation-fighting hasn’t gone too far (yet).
- __Still:__ While job openings outnumber available workers nearly 2-to-1, layoffs are making headlines. __[Ford](https://robinhood.com/stocks/F/)__, __[T-Mobile](https://robinhood.com/stocks/TMUS/)__, __[Wayfair](https://robinhood.com/stocks/W/)__, and __[Snap](https://robinhood.com/stocks/SNAP/)__ have all announced cuts.

Breakfast temp: just right (Paul Bersebach/Getty Images)

Werk

__Pain’s more bearable when it’s predictable…__ This report keeps the Fed on track to raise interest rates by 0.75 or 0.5 percentage points this month. Fed chair Jerome Powell [said](https://snacks.robinhood.com/newsletters/3Xy3kid2cGsNJewaxEmlYl/articles/6Y0wD0l9WHev2iy2va9eoS/) he plans to keep hiking till inflation’s under control. While gas and food prices have come down, they’re still near 40-year highs. JPow did warn there’s economic and labor-market pain ahead. It takes time for all the consequences of higher rates to manifest, but expectations of pain could help reduce market shocks.

The “goldilocks” August jobs report is warm enough to satisfy investors, but a bigger slowdown could be ahead

__The great American battery boom…__ Companies are investing billions in the US battery biz, and it’s all for EVs: last week __[Honda](https://robinhood.com/stocks/HMC/)__ and __LG Energy__ announced plans to [build](https://techcrunch.com/2022/08/29/honda-and-lg-energy-plan-to-build-a-4-4-billion-lithium-ion-plant-in-the-us/) a $4.4B US EV battery plant, __[Toyota](https://robinhood.com/stocks/TM/)__ pledged an extra $2.5B to its US battery factory, and __Bosch__ said it'll spend $200M to build fuel cells in South Carolina. __[GM](https://robinhood.com/stocks/GM/)__, __[Stellantis](https://robinhood.com/stocks/STLA/)__, and __Hyundai__ have committed billions to made-in-USA batteries, taking advantage of billions in EV funding through President Biden’s infrastructure and climate bills to gain juice in the e-race. 

__Congress has crypto q’s…__ The SEC's not the only one [demanding](https://snacks.robinhood.com/newsletters/1wtJg97QxjQGWOy95mSzca/articles/5b0PqoHAz9hncG9uOSIyUF/) answers from crypto's top players. Last week the House Committee on Oversight and Reform sent [letters](https://www.cnbc.com/2022/08/30/coinbase-ftx-binance-get-inquiries-from-congress-on-crypto-scams.html) to __FTX__, __Binance__, and __[Coinbase](https://robinhood.com/stocks/COIN/)__ asking how they’re protecting customers from scams (industry-wide, $1B+ has been reported stolen since 2021). The committee also hit up regulators and the Treasury Department to find out what they’re doing to keep consumers safe. Reply due date: September 12. Meanwhile, a bill to regulate stablecoins is heading to the CA governor's desk. Legislators may be done sitting on the sidelines.

__Canned peas FTW…__ Budgets are tight, but America still has to eat. __[Kroger](https://robinhood.com/stocks/KR/)__ had a record year in 2021 and sales jumped again last quarter as buyers kept stocking up on fresh veggies despite hot prices. Kroger’s online sales have doubled in the past two years, and its shares have risen 7% this year while the S&P 500 has slid 18%. But soaring grocery prices have made it seem (relatively) less inexpensive for some to dine out, which could push some shoppers to ditch grocery stores for fast-food joints. We’ll see if inflation is biting Kroger’s profits when it reports Friday. 

__Lots of balls in the air…__ It’s a big week for pro sports. The NFL season kicks off Thursday and the US Open finishes Sunday. But today a lot of athletes earn more *off* the field: Serena Williams, who just played her final match, has earned $95M in career prizes — and $350M from sponsors. Billionaire LeBron James has earned twice as much from investments and endorsements as he has from his NBA salary. As the celeb-prenuer trend intensifies, Serena, LeBron, and NFL stars like Aaron Rodgers have also launched their own VC funds.

- __[Yoda](https://snacks.robinhood.com/newsletters/7uCGMJLhs14s1sypnfbMZy/articles/1pR9LPf91XLbRQokb9oax3/):__ __[Disney’s](https://robinhood.com/stocks/DIS/)__ reportedly exploring a Prime-style membership to give Mickey fans special perks and cross-sell its offerings across streaming, merch, and theme parks. 
- __[Suds](https://snacks.robinhood.com/newsletters/70AWukI131xlHFLP88EM8T/articles/6EIEdveXK2qaTduU5Hv0ex/):__ __[Bed Bath & Beyond](https://robinhood.com/stocks/BBBY/)__ shares tanked last week after the cash-needy retailer said it would slash costs by closing 150 stores and cutting 20% of workers. 
- __[Fluffy](https://snacks.robinhood.com/newsletters/7uCGMJLhs14s1sypnfbMZy/articles/79Rlso2ot9nMNwcMKx6B6e/):__ __[Petco](https://robinhood.com/stocks/WOOF/)__ and __[Chewy](https://robinhood.com/stocks/CHWY/)__ said pet owners aren’t trading down on fancy foods for their furries. Despite #flation, owners are splurging on gourmet meals (think: doggy Clif bars). 

The “goldilocks” jobs report is warm enough for investors, but there could be pain ahead

The International Space Station is closer to Earth than San Francisco is to LA (and there’s way less traffic)

🥣 The “goldilocks” jobs report

__(Yoda voice) “Sell more stuff, you will”…__ A new force is awakening in the __[Disney](https://robinhood.com/stocks/DIS/)__-verse. Yesterday The __Wall Street Journal__ [reported](https://www.wsj.com/articles/disney-explores-amazon-prime-like-membership-program-to-offer-discounts-and-perks-11661978329?mod=business_lead_pos6) that the House of Mouse is exploring an __[Amazon](https://robinhood.com/stocks/AMZN/)__ Prime-style membership (a Disney adult’s dream). It could give fans perks and discounts — and give Disney a new way to promote its offerings and boost loyalty. 

- __Expanding (biz) empire:__ A membership program could tie together Disney’s streaming content (think: the new “Obi-Wan Kenobi” series), products (think: toy lightsabers), and experiences (think: “Star Wars” rides at Disneyworld). 
- __Integrated experience:__ Disney+ is said to be building tech that lets viewers order products using in-show QR codes. So in the future subscribers could book a Disneyworld trip and buy members-only merch without peeling their eyes off Yoda bae.

__Membership mania…__ Disney isn’t the only one taking a page from the Prime playbook: titans like __[Apple](https://robinhood.com/stocks/AAPL/)__ and __[Walmart](https://robinhood.com/stocks/WMT/)__ have launched subscription bundles in recent years to boost loyalty and sales. Memberships give companies tons of customer data, which helps them to strategically upsell.

- __Powerful perks:__ Earlier this month Walmart said it would add __[Paramount+](https://robinhood.com/stocks/PARA/)__ streaming to sweeten the deal for its $98/year Walmart+ membership program.
- __Subs for all:__ Disney already has a membership for superfans ($100-$130/year). But the new program would target more casual customers.

Dreaming of Baby Yoda same-day delivery (Chukrut Budrul/Getty Images)

Yoda

__Memberships are peak “flywheel”...__ Disney CEO Bob Chapek has said he wants to use his company’s “franchise flywheel” to unlock fresh ways to cross-sell products. Translation: make fan-favorite franchises like “Star Wars,” “Toy Story,” and the Marvel Cinematic Universe even more lucrative by converting fans into loyal subscribers — and generate greater consistent monthly revenue.

Disney is reportedly exploring a Prime-style membership to cross-sell products and experiences

__Kroger canned peas for your uncle...__ grass-fed lamb and organic sweet-potato kibble for Fluffy. Americans love pampering their pets, but we thought inflation would take that down a notch. While consumers have started trading down from name-brand groceries to generic labels for *themselves* (think: __[Kroger](https://robinhood.com/stocks/KR/)__ bread vs. Nature’s Own), they're still feeding their pets premium chow:

- __[Petco](https://robinhood.com/stocks/WOOF/) and [Chewy](https://robinhood.com/stocks/CHWY/)__ said pet owners aren't trading down from fancy foods for their furry friends. Owners continue to pamper pets with increasingly human-ified foods.
- __Fancy Fido:__ Petco recently teamed up with Clif to make a version of its power bar for pets and [launched](https://www.prnewswire.com/news-releases/petco-expands-popular-wholehearted-line-with-new-human-grade-fresh-food-for-dogs-301611352.html) a line of frozen human-grade meals for dogs.
- __*It’s the paws for me…*__ Petco’s CEO said that Gen Z and millennial consumers are leading the growing demand for pet health and wellness products.

__Safeway frozen pizza for Paul…__ seared salmon for Princess. Petco’s CEO said consumers are increasingly seeking out “fresh, human-grade food for all members of the family” (we’d hope the human ones, at least). Still, both Petco and Chewy saw slowing demand for lucrative goodies like chew toys and leashes and bigger-ticket items like crates and beds.

- __Chewy stock fell Monday__ after it reported 13% year-over-year sales growth (lower than expected). It cut its sales outlook as consumers spent less on discretionary items. 
- __Petco also lowered__ its annual forecast as #flation curbed spending on non-food goodies.

Furflation

__Consumers hate skimping on dependents…__ Many would rather cut back on personal purchases than trade down on helpless little ones. It’s true for pets and (unsurprisingly) truer for babies. The global baby-care market is [expected](https://www.prnewswire.com/news-releases/baby-care-products-market-to-reach-58-8-billion-globally-by-2031-at-4-5-cagr-allied-market-research-301601759.html) to hit $59B by 2031, from $38B last year. And despite __[Bed Bath & Beyond’s](https://robinhood.com/stocks/BBBY/)__ [slumping](https://snacks.robinhood.com/newsletters/70AWukI131xlHFLP88EM8T/articles/6EIEdveXK2qaTduU5Hv0ex/) sales, last year its prized Buybuy Baby brand saw [20%](https://www.bloomberg.com/news/articles/2022-08-25/bed-bath-beyond-s-grasp-for-cash-puts-baby-brand-on-the-line) growth.

Petco and Chewy say consumers aren’t trading down on fancy pet food, despite ’flation

Disney is reportedly exploring a Prime-style membership to cross-sell products and shows

It's been more than 100 days since a US company raised over $25M in an IPO

🎡 Disney… Prime?

__Missing the coupon catalog...__ It's back-to-school season, but dorm staple __[Bed Bath & Beyond's](https://robinhood.com/stocks/BBBY/)__ already flunked the semester. Shares of the struggling home goods retailer sank 21% yesterday after it revealed its plan to cut costs and raise cash. BB&B is:

- __Closing 150 of its namesake stores:__ As of May, it had 955 stores, including Buybuy Baby. Total sales plunged 26% last quarter — even worse than other recent quarterly drops.
- __Slashing 20% of its workforce:__ The cost-cutting attempt comes as BB&B burns through its cash reserves: it ended May with just $100M on hand vs. $1.1B a year earlier.
- __Raising $500M in financing:__ BB&B said it secured the $$ to brace its business after going through $325M last quarter. It also [filed](https://www.cnbc.com/2022/08/31/bed-bath-beyond-shares-crater-after-meme-stock-files-share-offering-of-undisclosed-amount.html) to sell an undisclosed # of its shares.

__Fitted sheet on a twin XL mattress…__ Bed Bath has bigger problems. In April it said it lost out on $175M in sales due to out-of-stock items. In June, BB&B ousted its ex-CEO for failing to fix its misfortunes. And last month, activist investor Ryan Cohen sold his entire BB&B stake. 

- __Pivot:__ As part of an unsuccessful turnaround effort, BB&B aggressively expanded into private-label brands, launching nine since last spring. 
- __Fail:__ BB&B thought exclusive brands could help it gain a competitive edge, but it led to some shoppers struggling to find the recognizable national brands they actually wanted.

Beyond’s big bummer (Joe Raedle/Getty Images)

Flunk

__Private labels can hurt public love…__ Private labels like __[Costco’s](https://robinhood.com/stocks/COST/)__ Kirkland and __[Walmart’s](https://robinhood.com/stocks/WMT/)__ Great Value brands can boost affordability for consumers and fatten profit margins for companies. But they can also alienate consumers if not done right: BB&B says it’ll quit three of its house brands including Haven and slash inventory on others to refocus on brand names like Cuisinart and Oxo.

Bed Bath & Beyond tanks after unveiling a plan to raise cash, featuring store closures and layoffs

__[Snap's](https://robinhood.com/stocks/SNAP/) growth cracked…__ then its stock popped. Snap, the social giant responsible for popularizing disappearing messages, is [cutting 20%](https://www.cnbc.com/2022/08/31/snap-confirms-20percent-job-cuts-and-announces-business-restructuring-.html) of its 6K+ employees. CEO Evan Spiegel said the self-described camera company may suffer slow revenue growth into next year. To cut costs further, Snap’s scrapping: the "Pixy" photo drone, Snap Originals premium shows, and Snap Games. The stock soared as much as 15% after the news. Meanwhile: __[Netflix](https://robinhood.com/stocks/NFLX/)__ just swiped two Snap execs to lead its fledgling [ads biz](https://snacks.robinhood.com/newsletters/1hJKveGEOmvpzuLtfVejiF/articles/43M2Oild3MGMPYMecA8Q7K/) (awk). 

__The social biz sours…__ as the ads meal ticket sags. Snap's not the only social staple feeling the pain. __[Meta](https://robinhood.com/stocks/META/)__ froze some hiring in May, and in July reported yet another quarter of declining sales as Facebook ads slump. __[Twitter](https://robinhood.com/stocks/TWTR/)__ "significantly" slowed hiring, laid off 30% of its recruiters in July, and last month told employees their bonuses are at risk. A few things eating into ad revenue:

- __iOMess:__ __[Apple's](https://robinhood.com/stocks/AAPL/)__ iOS [privacy push](https://snacks.robinhood.com/newsletters/3pnV87VuDPifCjtp4W4gHh/articles/7vbuNAkTTZcIt3oAQiUaOr/) made profitable ad targeting a lot harder. 
- __Economean:__ #Flation and rising interest rates cut into advertisers' budgets.
- __TikToffed:__ Competition from TikTok means a smaller slice of the ad-spend pie.

Snapped

__Socials are going basic…__ because times are complicated. Nice-to-haves like camera drones and original content may be top priorities when the cash is flowing, but as the economic outlook darkens, social cos are cutting back. In the hypercompetitive tech world, slashing innovation today risks irrelevance tomorrow — a fact likely on Meta's mind as it chugs full steam ahead into the metaverse (at least it has $40B in cash reserves to fall back on).

Snap slashes its workforce as social titans struggle to revive their profit puppy lifeline: ads

Bed Bath & Beyond tanks after unveiling a plan to raise cash, featuring closures and layoffs

During World War II, M&M's were exclusively sold to the US military

🛁 Bed Bath’s cash crunch

__A proper(ty) predicament…__ China’s growth forecasts are getting slashed as its property market wavers. FYI: up to three-quarters of China’s household wealth is in real estate. Home sales have slipped for 11 months straight (China’s longest slump on record) while property prices have tanked. The US may be in a housing recession, but China is in a full-on property-market *depression*.

- __Profits:__ __[Country Garden](https://robinhood.com/stocks/CTRYY/)__, China’s biggest developer, saw profits plunge 96% in the first half of the year. __Evergrande__, China’s second-largest developer with $300B in debt, defaulted on its US bonds in December.
- __Protests:__ Hundreds of thousands of Chinese homebuyers are refusing to pay their mortgages because of building delays and sinking property prices. 
- __Plan:__ To spur investment, China’s central bank slashed the five-year mortgage rate by 15 basis points, matching its biggest cut on record.

__Beyond real estate…__ China’s tech sector is slowing after intense Covid crackdowns and regulatory heat (think: big fines). __[Amazon](https://robinhood.com/stocks/AMZN/)__ rival __[Alibaba](https://sg.robinhood.com/ls/click?upn=6fntGirSE5selsQKrSSUHk6R8tCrM-2FUICq73HMQolwUPMmgwBRA9jrXSNGeB0n01BlnW_tN0j2bXf5PlAIJm8wjiAodXx1-2FSAXBw5H8-2Ft0ON7Ae4RkbHaaUxugO5tQJUyM9VLbnUo-2FvQBNIAytdR6xxsCFCtkao0p9V-2FYeo1n4inYuLDtlKHjZNY0fY8kzrpbV7GNNbui7wbPCJkheuffMRD6-2F7vtDgsD2JmGtT51OHkjSKjNseSOfmyAzyLauZ3sFR4bBJWMpjGllRqEAd5Nc4FHz76C-2F95zBhSh0VYK3TZpPo9VPrFolnLeaD8H2HmH-2Bf8KLaXdxly34Qk10yqyovcPYMeOt-2FOISrkzw9yB6V7D51yuoTIT0iX78oWXsk3W-2FJtiSNatBpxb-2BearN33xiyfkP4vAqwkyl4ue-2BRMSgLRPQ07nt2DgQKxL7-2FOSxT2X7dBJIfhM3t6KkYziAZ1OIRz3Ip1CMgtBM3-2BF3jDASErWOOG6-2Fk3wL56RO2bn6B8KDOYL0Ya3IX4WGOtaTQKOS-2BnYyeikaZUQ54o8IAPZMfFDDE95jw2jTWy-2FeEL379qHiKg20njPfXOpNtaXTgXWOmbnMLjKfukN6OyAQjeCcYsKQO7A8cNQ-2FwoZqW2KiJAoJB2RFyEE7Sjbpevchs5IhqsXsB50ZAq54IZcnivIX-2BobNUA-3D)__ and __[Tesla](https://robinhood.com/stocks/TSLA/)__ competitor __[Xpeng](https://sg.robinhood.com/ls/click?upn=6fntGirSE5selsQKrSSUHk6R8tCrM-2FUICq73HMQolwXOLexyLHOMKFaxuMxcc33-2FK_7q_tN0j2bXf5PlAIJm8wjiAodXx1-2FSAXBw5H8-2Ft0ON7Ae4RkbHaaUxugO5tQJUyM9VLbnUo-2FvQBNIAytdR6xxsCFCtkao0p9V-2FYeo1n4inYuLDtlKHjZNY0fY8kzrpbV7GNNbui7wbPCJkheuffMRD6-2F7vtDgsD2JmGtT51OHkjSKjNseSOfmyAzyLauZ3sFR4bBJWMpjGllRqEAd5Nc4FHz76C-2F95zBhSh0VYK3TZpPo9VPrFolnLeaD8H2HmH-2Bf8KLaXdxly34Qk10yqyovcPYMeOt-2FOISrkzw9yB6V7D51yuoTIT0iX78oWXsk3W-2FJtiSNatBpxb-2BearN33xiyfkPysfVRVnyh-2B9HNFRK27apLjWw6OaByiyDWP7oK247V8G41hGWidKPnDhOYcp6ySLze4QjvGj-2F3xsWO69MYlXhThQzVyhpntkn1KjJn57lLVEFCAVf0LKgA60ruLGE6PGRNFxtPXw67HLGmV7XAYZxmK8N5rRoAH9ZOOgjBiOFEHDsDMpMGfJWwz989Yd6lJwZqqWD1W-2F2yBOZAie4BA6xt68KiFmvQ3-2FDC9-2BOV-2FWbvrnNjSXLQtOCtWFzBugVjjmz1sqEKIK5BgZC9ItYjxrI3U-3D)__ just suffered their slowest quarterly growth ever, while gaming giant __[Tencent](https://sg.robinhood.com/ls/click?upn=6fntGirSE5selsQKrSSUHk6R8tCrM-2FUICq73HMQolwX8CZ9X1KmF4TPNVp3d-2B4JA42Ua_tN0j2bXf5PlAIJm8wjiAodXx1-2FSAXBw5H8-2Ft0ON7Ae4RkbHaaUxugO5tQJUyM9VLbnUo-2FvQBNIAytdR6xxsCFCtkao0p9V-2FYeo1n4inYuLDtlKHjZNY0fY8kzrpbV7GNNbui7wbPCJkheuffMRD6-2F7vtDgsD2JmGtT51OHkjSKjNseSOfmyAzyLauZ3sFR4bBJWMpjGllRqEAd5Nc4FHz76C-2F95zBhSh0VYK3TZpPo9VPrFolnLeaD8H2HmH-2Bf8KLaXdxly34Qk10yqyovcPYMeOt-2FOISrkzw9yB6V7D51yuoTIT0iX78oWXsk3W-2FJtiSNatBpxb-2BearN33xiyfkPxI0RhIiV3mTF0SgFU-2F50I-2FaulwFvUvFk3jKUzI9ouwf6Paitvz3GDqNUySYtGcqxumullXHrjkT5FYk-2Bw9tK5CDmEpHaM1LBcYOGNCmcFpVumZs3RXQ-2F8JHRnW-2BiegJZhpVy0sbiVuT8yNfIjTGf5CSD-2FFZAcBRqCbtPXKbGQvqKJqf1gt1u7jnWyfiWhm2blKXOlIQg-2BGBPx5Jw3M8g9NfvHaNgEzuw64foH1X6baVsxJ4bHYtJiA6lBXOOnIPeB2ZRwhP6xsFMnkYEfLahGg-3D)__ posted its first sales decline. To swerve a struggling domestic economy, tech titans are trying to expand into the US: 

- __Ecomm giant [Pinduoduo](https://robinhood.com/stocks/PDD/)__ is reportedly preparing to enter the North American market next month. 
- __[NetEase](https://robinhood.com/stocks/NTES/),__ China’s second-largest game developer, recently followed Tencent’s footsteps and opened a US studio.

Ever-growing real-estate anxiety (Liang Xiashun/Getty Images)

Tank

__Real estate’s stuck at home…__ even though companies can expand internationally. China’s property industry accounts for up to 30% of its GDP — roughly 2X as much as in the US. While experts say a 2008-style housing-and-financial-crisis combo isn’t likely, China’s property problems extend beyond its borders: every 1% decline in China’s GDP is estimated to cause a 0.3% dip in global GDP.

China’s property market is in a panic — and its slumping tech sector is looking abroad

__Recommerce on the rise…__ Suddenly that 2012 __[Volvo](https://robinhood.com/stocks/VLVLY/)__ in your garage and the vintage dress in your closet are looking valuable. As inflation continues to strain wallets, more consumers are [buying](https://www.cnn.com/2022/08/30/business/offerup-resale-report/index.html) goods secondhand.

- __Growth is booming:__ The US’s secondhand market is expected to more than double by 2026.
- __Used = mainstream:__ More than three-quarters of Americans say they buy or sell secondhand products.
- __Overstock opportunity:__ Liquidators are [taking](https://www.wsj.com/articles/glut-of-goods-at-target-walmart-is-a-boon-for-liquidators-11656927184) piles of unsold inventory from retailers like __[Target](https://robinhood.com/stocks/TGT/)__ and __[Walmart](https://robinhood.com/stocks/WMT/)__ and offloading it to resellers, boosting secondhand supply.

__Pre-worn, low-rise [Levi’s](https://robinhood.com/stocks/LEVI/)…__ Secondhand shopping became popular with sustainable Gen Z shoppers on social-friendly marketplaces like __[The RealReal](https://robinhood.com/stocks/REAL/)__, __[ThredUp](https://robinhood.com/stocks/TDUP/)__, and __[Poshmark](https://robinhood.com/stocks/POSH/)__. The fashion resale industry is forecast to double to $77B in the next five years. But thanks to #flation, young shoppers are beginning to buy other products secondhand too:

- __Used *everything*:__ Secondhand marketplace __OfferUp__ says that *non-clothing* categories like electronics, furniture, sporting goods, and auto parts make up 76% of its sales.
- __High tech, low cost:__ This month __[DoorDash](https://robinhood.com/stocks/DASH/)__ partnered with __[Facebook](https://robinhood.com/stocks/META/)__ Marketplace to deliver resale products. __[Uber](https://robinhood.com/stocks/UBER/)__ launched a similar program last year with Mercari.

Thrifty

__Recommerce is a “flation flourisher”…__ Inflation boosts recommerce by encouraging thrifty shoppers to buy and sell used items. But traditional retailers are also placing big bets on resale, which could push more consumers into the secondhand economy. __[Macy’s](https://robinhood.com/stocks/M/)__, Walmart, __[Gap](https://robinhood.com/stocks/GPS/)__, __[Adidas](https://robinhood.com/stocks/ADDYY/)__, __Everlane__, and __[Crocs](https://robinhood.com/stocks/CROX/)__ have all struck “resale as a service” partnerships with ThredUp (think: ecomm portals). Buzzy brands like __[Lululemon](https://robinhood.com/stocks/LULU/)__, Levi’s, and __Ikea__ have even [launched](https://snacks.robinhood.com/newsletters/6CeTU6j7yjNpeG4NHlfTr/articles/NolZPqOkShbND9vp856qV/) their own resale programs.

From upcycled clothes to used cars, the resale economy is booming as new products get pricier

Canada’s population is smaller than California’s

🇨🇳 China’s property panic

__Powell’s prognosis…__ The #flationary fight ain’t over. On Friday, Fed chair Jerome Powell [said](https://www.wsj.com/articles/feds-jerome-powell-set-to-speak-on-economic-outlook-at-jackson-hole-11661476059?mod=article_inline) he plans to keep hiking interest rates until inflation’s under control — which could take a while. The news disappointed some investors, who hoped rates had peaked after inflation cooled last month. Powell acknowledged “pain” ahead. Markets responded accordingly:

- __Stocks slipped__ in the US, Europe, and Asia yesterday after plunging last week. Gold also fell, and __[bitcoin](https://robinhood.com/crypto/BTC/)__ dipped below $20K to its lowest level since mid-July.
- __Tech tumbled,__ notably __[Apple](https://robinhood.com/stocks/AAPL/)__ and __[Nvidia](https://robinhood.com/stocks/NVDA/)__. Higher rates curb spending and lower companies’ future earnings. 
- __Currency climbed:__ The USD hit a 20-year high yesterday after investors ditched other currencies and investments for the relatively stable dollar.

__Bitter pill…__ Powell’s ready to make sacrifices. His statement disappointed investors but was no surprise. For months JPow’s [said](https://snacks.robinhood.com/newsletters/2xWxnsCtcEtYcv012Yelqy/articles/5RKIqhn4ILH2LzzUNrtBTn/) he’ll keep fighting inflation till it sinks to near the Fed’s target of 2% — even if it means some economic pain. Last Friday he doubled down. Now he expects:

- __Single whammy:__ “Softening of labor market conditions” (translation: job losses).
- __Double whammy:__ “Sustained below-trend growth” (read: a small recession).

Tie-tening monetary policy (Tom Williams/Getty Images)

__No pain, no gain…__ Powell’s prescription may hurt now, but a temporary slowdown is better for markets and consumers than spiraling inflation. The medicine appears to be helping Americans already: real disposable income rose in July after falling for months. But painful side effects include slumping stocks and increasing layoffs. Despite that, jobs have (so far) been resilient. August hiring data comes out Friday.

Powell doubles down on the fight against ’flation, paving the way for temporary “pain”

__Smart soup...__ Panera’s serving up broccoli-cheddar bread bowls with a side of AI. Yesterday two Panera locations in upstate New York started testing an artificial-intelligence bot called "Tori," which takes drive-thru orders and interacts with customers.

- __The voice-order tech__ is from __OpenCity__, a startup last valued at $27M. Panera is assessing Tori's accuracy and ability to cut wait times.
- __If customers dig Tori,__ Panera could expand it to more restaurants. FYI: nearly half of its 2K locations have drive-thru lanes.
- __Tori makes moves:__ OpenCity said Tori’s being used in more than two dozen restaurants, including a Popeyes in Louisiana.

__From Tori to taco elevators...__ Fast-foodies have invested heavily in drive-thru tech since the pandemic. While lockdowns are over, takeaway sales have stayed elevated: prepandemic, less than [70%](https://www.qsrmagazine.com/reports/future-fast-food-drive-thru-arrives-early) of fast-food sales came from drive-thrus. *Now it’s more than 90%.*

- __Need for speed:__ Taco Bell opened a table-free restaurant last month with taco-delivering "vertical lifts." __[Chipotle’s](https://robinhood.com/stocks/CMG/)__ adding more digital-order Chipotlanes, and __[McD's](https://robinhood.com/stocks/MCD/)__ is working with __[IBM](https://robinhood.com/stocks/IBM/)__ to automate drive-thrus.
- __Need for peeps:__ Food service and hospitality companies led July job gains as they scrambled to hire, but were still 1.2M positions short of prepandemic headcount.

Souper

__Labor pains lead to robo gains...__ North American companies bought a [record](https://www.reuters.com/technology/north-american-companies-send-robots-even-productivity-slumps-2022-08-29/) # of robots in the first half of this year to keep operations afloat. With nearly two roles open for every unemployed worker, total US labor costs surged a record 5% last quarter. While Panera locations aren't factories, it's hoping that robo drive-thrus will ease the labor crunch. If it’s successful, others could follow.

Bread-bowl icon Panera tests AI drive-thrus as labor shortages weigh on fast food

Powell doubles down on the fight against ’flation, prescribing some temporary “pain”

It costs the US Treasury 7.5 cents to print $1

🩺 Powell prescribes pain

__The future of finance…__ aims to leave its past in the dust. The ethereum Merge — a years-in-the-making reimagining of the world's second-largest crypto — is set for [mid-September](https://www.bloomberg.com/news/articles/2022-08-18/ethereum-developers-back-sept-15-target-for-blockchain-merge), and crypto fans are HODLing their breath. The Merge is meant to move the chain's consensus mechanism (think: verification process) from “proof of work” (PoW: old, power-hungry) to “proof of stake” (PoS: new, efficient). It's a critical moment for the seven-year-old crypto, with real — *ahem* — stakes:

- __Eth-ficient:__ PoS-powered ethereum is expected to use 99.95% less energy by having validators instead of miners add new blocks to the chain. Reminder: validators are people "[staking](https://www.businessinsider.com/personal-finance/staking-crypto)" (aka: depositing and locking up) ether as collateral; miners = tons of energy-sucking computers.
- __Dirt-eth:__ Right now, ethereum uses as much energy as the Netherlands and emits as much carbon as Singapore. 
- __Crypt-oh shucks:__ The Merge will *not* actually reduce transaction fees or speed up transactions. 

__Growing up = growing pains…__ Dragging a chain worth $202B into the future isn't like flipping a switch. Plenty could go wrong, from bugs to industry consolidation (aka: dreaded centralization). Merge fans argue that if ethereum sticks with the old PoW, it risks getting left behind by new chains on the block (like: __[solana](https://robinhood.com/crypto/SOL/)__), but not all of cryptoland's on board:

- __Miner detail:__ In the new PoS future, ethereum miners (and their costly computer rigs) are no longer needed. One response: a proposed forked PoW ethereum chain living on after the merge (meet: ETHPOW).
- __Mis-stake:__ Critics worry PoS is less censorship-resistant than PoW, and that validators might be pressured into [censoring ethereum](https://fortune.com/2022/08/22/ethereum-community-censorship-fears-post-merge-tornado-cash/) at the protocol level.

Ethereum merges lanes (Jackal Pan/Getty Images)

At Stake

__The Merge is full steam ahead…__ and crypto's future is along for the ride. Picture a bunch of railroad engineers trying to swap out parts on a moving train — but the train's packed with priceless cargo and can't slow down. That's kind of like the Merge. Getting it wrong risks derailing the ethereum train *and* everything built on top of it (DeFi, Ape NFTs). If the upgrade succeeds, the train’ll run cleaner and could inspire the broader crypto industry to follow suit. If it fails? Hold on.

Ethereum's make-or-break moment nears as crypto readies itself for the big Merge

__The good, the bad, and the cryptic…__ Crypto’s so-called “Wild West” could be in for a reckoning. For over a year SEC Chair Gary Gensler has [said](https://www.wsj.com/articles/the-sec-treats-crypto-like-the-rest-of-the-capital-markets-disclosure-compliance-security-investment-mutual-fund-protections-blockfi-bankruptcy-bitcoin-11660937246) that many crypto products should be considered securities and regulated as such. Think: the same controls and protections as stocks and bonds. The SEC's doing more than talking: as part of an insider-trading case last month, it classified nine cryptos as securities. 

- __An asset is deemed a security__ by the SEC if it’s “an investment of money, in a common enterprise, with a reasonable expectation of profit derived from the efforts of others.”
- __Right now:__ A lot of cryptos are considered commodities, and lots of crypto products are virtually unregulated. 

__Scrutiny is brewing…__ This year, high-profile instances of crypto fraud have cranked up the heat from regulators and lawmakers. Recent meltdowns of some high-yield crypto lenders have added fuel to the fire. In many crypto-fraud cases, there isn’t much investors can do. People who had their funds locked by crypto lender __Celsius__, for example, are [begging](https://www.cnbc.com/2022/08/02/celsius-investors-owed-4point7-billion-beg-judge-to-recover-life-savings.html) bankruptcy judges for help. Now:

- __Crypto lenders__ (think: __BlockFi__, Celsius) are facing increased scrutiny. In February, BlockFi agreed to pay the SEC $100M for failing to list its crypto-lending product as a security. 
- __So are crypto exchanges:__ One Senate staffer [said](https://www.forbes.com/sites/michaeldelcastillo/2022/08/04/every-us-crypto-exchange-and-binance-is-being-investigated-by-the-sec-says-senator-lummis-staffer/?sh=2d872e422c27) *every* US crypto exchange is being investigated. And blockchain firm __[Ripple](https://robinhood.com/crypto/XRP/)__ is fighting a lawsuit that argues its XRP currency is a security.
- __Chasing clarity:__ A Senate proposal released this month [seeks](https://www.washingtonpost.com/business/2022/08/03/stabenow-boozman-bitcoin-cftc-bill/) to give *commodities* regulators the leading role in overseeing bitcoin and ethereum, while giving the SEC some oversight.

Heat

__Scrutiny may be reaching a boiling point…__ So far, the SEC’s strategy has been case-by-case enforcement actions and lawsuits. But if it can bring crypto under its purview, it could change the industry’s biz model. Listing securities carries rigorous disclosure and registration requirements meant to protect investors. While some crypto enthusiasts want it to stay unregulated, others believe that clear guardrails could boost the whole industry.

The “Wild West” of crypto could be reaching a regulatory boiling point

Ethereum

Solana

Dogecoin

While there could be as many as 20K cryptocurrencies, bitcoin and ethereum together make up more than half of crypto's total market value