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Table of Contents

• Wall Street Buys Insurance Against AI Firms Going …

• United CEO Calls for National Wealth Tax

• The Dirty Truth About 'Passive' Laundromat Income

• 'War Risk Insurance' Adds $20K to Private Jets

• Netflix Hits the Wall and Panics

• Poll of the Day: Holiday Gift Guide Survey 🎅🏻

• Poll of the Day: Public Benefit Fund

What’s the Stock Market Up To, Eh?

$SPX ( ▲ 0.28% )  $DJI ( ▲ 1.02% )  $NDX ( ▲ 1.59% )  

Companies Mentioned in Today’s Newsletter

$AIG ( ▲ 1.51% )  $CRWV ( ▲ 1.65% )  $META ( ▼ 1.59% ) $NVDA ( ▼ 0.29% ) $GOOGL ( ▼ 1.14% ) $AMZN ( ▲ 0.07% )  $MS ( ▲ 1.08% )  $NFLX ( ▼ 1.66% )  $GOOGL ( ▼ 1.14% )  $UAL ( ▲ 2.27% )  

Wall Street Buys Insurance Against AI Firms Going Broke

Credit default swaps (CDS) gained a notoriously bad reputation during the 2007–2008 global financial crisis. The market collapsed when massive entities like American International Group $AIG ( ▲ 1.51% ) (AIG) defaulted on billions of dollars in credit default swaps they had written to cover mortgage-backed securities and corporate debt, forcing a federal government bailout. Investor Warren Buffett famously criticized the instruments, calling them "financial weapons of mass destruction" due to their immense scale, lack of government regulation, and hidden risk.

So, you’ll be pleased to hear they’re making a comeback….

Tech groups went on a $466 billion borrowing spree this year to hoard data centers and microchips, prompting Wall Street to scramble for financial fallout protection. As a result, weekly trading in “financial weapons of mass destruction” (a.k.a credit default swaps) linked to tech giants surged from under $2 billion in July to over $9 billion in September as jittery investors braced for the boom to unravel, the Financial Times reports.

It turns out that pouring hundreds of billions into algorithmic magic causes a sudden case of economic vertigo. As Manish Kabra, head of U.S. equity strategy at Société Générale, explained to the FT, “CDS has become a key bellwether of investor sentiment towards hyperscaler funding and the broader AI trade,” noting that “the market is increasingly focused on two things: CDS and free cash flow.”

When traders care more about default insurance than disruptive algorithms, you know the market vibe has shifted. The anxiety isn't restricted to speculative startups either. While "neocloud" provider CoreWeave $CRWV ( ▲ 1.65% ) sees its debt selling in distressed territory with CDS spreads topping 1,000 basis points, insurance costs for titan mainstays like Meta $META ( ▼ 1.59% ), Nvidia $NVDA ( ▼ 0.29% ), Alphabet $GOOGL ( ▼ 1.14% ), and Amazon $AMZN ( ▲ 0.07% ) have also hit all-time highs. Jim Caron, chief investment officer at Morgan Stanley $MS ( ▲ 1.08% ) Investment Management, called these swaps a “cheap hedge,” arguing, “Clearly when you’re in a market where the risk is very concentrated, what you want to buy is CDS.” Meanwhile, Robert Dafforn, chief investment officer at Polus Capital, highlighted the sector's “very highly levered” borrowing, cautioning that “whatever the weakest link is will actually start to deteriorate the system.”

United CEO Calls for National Wealth Tax

Imagine taking home $32.3 million a year running a major airline and waking up one morning deciding that tax season isn’t painful enough. That is the position taken by United Airlines $UAL ( ▲ 2.27% ) CEO Scott Kirby, who’s raised eyebrows across corporate America this week by calling for a national wealth tax and near-total inheritance levies on massive fortunes.

I do also want to credit him with wearing a rather nice tie on stage, even if the knot does look like he did it in the dark. When asked in a New York Times interview about the public’s eroding trust in corporate executives, Kirby didn't offer more legroom or complimentary snacks. Instead, he took aim at economic disparity: “Wealth inequality has become a danger to our society, and we need to address that,” he said. His solution is a federal wealth tax — to prevent the rich from dodging payments by moving states — and an aggressive estate tax overhaul. “We should have a national wealth tax — it won’t work by state because people will just move,” Kirby said. “And I think we should have inheritance taxes that get close to 100 percent at some level. I would pay them.”

It is an extraordinarily progressive stance from an eight-figure CEO. Yet the irony reaches cruising altitude when contrasted with Kirby's strict defense of airline fee unbundling. When pressed on why basic economy passengers are charged extra just to avoid the dreaded middle seat, Kirby explained, “There are some customers who want to sit in a window seat or a better seat, and that costs money to deliver.”

So, to recap: Confiscating up to 100% of an ultra-wealthy estate to save society? Reasonable. Letting a tired passenger sit in an aisle seat for free? Slow down, compadre. You’re starting to sound like a revolutionary!

Quote of the Day

The Dirty Truth About 'Passive' Laundromat Income

If your social feeds are anything like mine, you’ve probably seen hypnotizing videos of creators dumping fat buckets of quarters into cash counters, promising that owning a laundromat is the ultimate path to passive wealth. It turns out, though, the viral dream has a dirty secret: Running a laundromat involves a lot less relaxing and a lot more scrubbing.

As Brian Wallace, chief executive of the Coin Laundry Association, told the Wall Street Journal, “We do kind of bristle at the thought that it’s somehow some magic business where you show up once a week and collect quarters and go home.”

In reality, the glamorous quarter-collecting videos quickly give way to unglamorous reality checks. Atusa Parsa bought a laundromat in Fullerton, California, after social media won her over — only to discover the viral clips omitted basic operational training, like how to evict bathroom drug dealers with police assistance. As Parsa observed, “No matter how easy they make it look, the process is a little more involved.”

Even Carlos Ochoa — the TikTok creator known as "Laundromat Money" who helped spark the trend — warns viewers not to fall for the hype. “People are getting trapped into looking at all these videos that glamorize the industry and they forgo any other due diligence,” Ochoa said. Instead of passive bliss, new owners find themselves wiping dog hair out of washers or managing 13-hour staffing shifts.

Yet despite the chaos, some find peace in the mechanical grind. Sam Cohen, a former software developer turned owner, admitted, “The stress difference is amazing. The problems are very simple and straightforward.”

Song of the Day: Gabriel Jacoby, ‘Let’s Talk About It’

Here’s a seamless, funk-driven continuation of Gabriel Jacoby’s breakthrough Southern R&B style.

'War Risk Insurance' Adds $20K to Private Jets

When Houthi drone and missile strikes closed Riyadh’s main airport and forced commercial carriers to cancel over 5,500 flights in early October, wealthy travelers and executives in Saudi Arabia faced a uniquely high-society dilemma. Unable to book commercial seats, they scrambled to charter private jets.

Price gouging at 30,000 feet swiftly followed. Charter rates spiked over 50%, with a single 14-seater Bombardier flight from al-Qassim to Geneva jumping from €60,000 to €94,000. As Alexander Graham of private flight group Luxe Jets told the Financial Times, “Prices are going up because we’re losing availability, so for people that are willing to do it, it will be a bit more expensive.”

"A bit more expensive" turned out to be an understatement, with some European flights reaching $150,000. Charles Robinson, founder of EnterJets marketplace, explained the market logic: “Fewer operators are willing to fly into and out of affected airports, and those who remain in the market know it,” adding that “some are applying their own premium… simply because the demand is there and the competition isn’t.”

On top of inflated fares, insurers slapped on hefty "war risk" premiums. Toby Edwards, co-CEO at Victor, highlighted the extra sting: “If war risk insurance is needed, that’s when it starts to get significantly more expensive,” he said, noting that larger planes faced an additional $20,000 fee just for coverage.

Free Yourself From Advertising Forever!

Netflix Hits the Wall and Panics

Netflix $NFLX ( ▼ 1.66% ) was, until fairly recently, the unstoppable king of binge-watching. But skip the intro, and the streaming pioneer has run out of momentum. Struggling to discover its next global phenomenon on the scale of Stranger Things or Squid Game, the company abruptly fired content chief Bela Bajaria and film chief Dan Lin, right on the heels of laying off 1,000 employees last week.

It turns out, keeping millions of people glued to their couches gets harder when viewers drift toward YouTube $GOOGL ( ▼ 1.14% ) and TikTok. Co-Chief Executive Ted Sarandos complained internally that Americans were spending less time watching Netflix, while analytics firm Antenna reported zero net U.S. subscriber additions through most of the year. Unsurprisingly, a Netflix spokeswoman pushed back, declaring that third-party data is “not representative of Netflix’s business performance.”

So, what is the new game plan? For starters, it isn't videogames; an internal memo revealed that a tiny 3.5% of subscribers play them monthly. Instead, Netflix is pivoting toward cheaper video podcasts and creator content, which Sarandos characterized on an earnings call as “evolutionary, not revolutionary.”

Translation: Expect fewer quirky side projects and more old-school Hollywood plays. Netflix is even abandoning its pure-streaming dogma by granting major films like Narnia exclusive 45-day theatrical releases before they reach your living room. When the almighty recommendation algorithm stops working, even tech’s biggest disruptive giant might have to go back to selling movie theater popcorn.

Should You Check Your 401(k) Today?

👍️ 

Yes. It’s just hovering around those record highs.

Poll of the Day: Holiday Gift Guide Survey 🎅🏻

Do me a favor and tell me what you and your friends and family want in their stockings for Christmas/Hannukah/Festivus? We’re preparing our N2K Holiday Gift Guide and you can help by telling us what you need advice on, and your price range. Thank you, thank you, thank you! We aim to serve.

Poll of the Day: Public Benefit Fund

We asked: Does it concern you that Anthropic wants to give 5% of its value to a fund mitigating the impact of its products?

You answered:

🟨⬜️⬜️⬜️⬜️⬜️ It's like a fireworks company setting aside 5% of its profits to buy fire extinguishers. You have to appreciate the foresight, even if you’re a little nervous about why they think they’ll need that many extinguishers. (65)
🟨⬜️⬜️⬜️⬜️⬜️ 5% feels like the exact corporate sweet spot between "We are genuinely terrified of our own creation" and "…but not quite terrified enough to walk away from the other 95%." (50)
⬜️⬜️⬜️⬜️⬜️⬜️ I’m just glad that when the robot apocalypse finally arrives, it will come with a very politely worded, fully funded rebate program. (15)
⬜️⬜️⬜️⬜️⬜️⬜️ Look at it this way: At least they’re offering to pay a security deposit on the future. Most tech startups just smash the drywall and leave you to deal with the landlord. (22)
🟩🟩🟩🟩🟩🟩 Only in Silicon Valley can you invent a technology, warn everyone it might accidentally dismantle civilization, and then pitch "5% off civilization repairs" as an industry-leading ethical breakthrough. (258)
410 Votes via @beehiiv polls

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