🫣 China Is Spending $440B on THIS and It’s a Problem
Plus: Did Delaware Just Inadvertently Redefine CEO Pay?, Powell Has No Incentive For Rate Cuts, and More
This week’s market, investing, and business insights from insiders and experts outside the mainstream media:
Delaware's judicial activism is driving companies away. But there's a silver lining.
Elizabeth Warren urges Powell to cut rates. He has no incentive to do so.
Probably the most important report on the US Stockmarket.*
China is spending $440B on THIS and it’s a problem.
And more. Let’s get to it!
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Top Insights of the Week
1. 💰 Did Delaware Just Inadvertently Redefine CEO Pay?
Delaware’s rise in judicial activism is alienating companies.
A Delaware judge voided Elon Musk's $56B Tesla compensation package. Shareholders re-approved and appealed. Now it’s in legal limbo.
TripAdvisor filed for incorporation from Delaware to Nevada after a legal battle over shareholder fairness.
TransPerfect moved from Delaware to Nevada, citing a business-friendly environment.
But there's a silver lining. Voiding Elon's pay package highlights its unique tie to Tesla's stock. Showing he has skin in the game.
Elon’s ~$55B CEO package (he hit all his goals):
Granted the right to buy nearly 304 million shares of Tesla at $23.34 per share.
Required Tesla to grow its market value by $50B increments up to $650B.
Entirely performance-based with no salary unless Tesla hit these targets.
Most CEO pay packages are mediocre. They lack performance ties. Elon’s pay package could become a beacon for other boards. In turn, attracting better leaders and driving shareholder value.
2. 🚫 Powell Has No Incentive For Rate Cuts
Elizabeth Warren sends a letter to Powell to cut rates.
What does Powell have to gain or lose by bowing to political pressure? Absolutely nothing. He’s not up for reappointment.
Different story in 2021 when he was up for reappointment.
Biden Administration called inflation transitory. He had to support this message to secure a second term.
Now, Powell is concerned about his legacy and not breaking the economy.
Admires Volcker, who curbed inflation despite recession risks.
Wants to avoid Burns' mistake of letting inflation spiral in the 1970s.
3. 😯 Probably the Most Important report on the US Stockmarket you will read This Year*
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4. 🫣 China Is Spending $440B on THIS and It’s a Problem
China plans to build 150 new nuclear reactors in the next 15 years. The U.S. government, 0.
Why?
China’s nuclear reactors cost $2,500 per kilowatt. U.S. $10,000 per kilowatt.
China builds nuclear plants in about five years, half the time it takes in the U.S.
China's streamlined regulations. U.S. heavily regulated.
That’s a problem because AI will double or triple electricity needs. Renewable energy alone won’t cut it.
Just as billions have poured into AI, billions will flow into nuclear energy.
Bill Gates invests over $1B in a Wyoming nuclear plant.
Sam Altman’s Oklo, develops small nuclear reactors, raised $306M. And Helion, building the world’s first fusion power plant, raised $500M.
Jeff Bezos’s General Fusion, working on fusion energy technology, raised ~$300M.
China’s nuclear reactor expansion projected to cost $440B.
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Top 3 Charts of the Week
1. 🔌 Streaming Faces Cord-Cutting Trend
Record 50.4M streaming service cancellations in Q1 2024, up 80% from two years ago.
Majority (56%) of new subscriptions are ad-supported, indicating a shift towards cheaper, ad-filled viewing.
Streaming market is rapidly changing due to shifting viewer habits and preferences.
2. 👀 Adobe's Subscription Model Proves Successful
Adobe shares jumped 15% after record $5.3B sales and a $50M revenue beat from AI tool Firefly.
Adobe's shift to subscription and AI investments are driving major growth.
3. ‼️ NATO Members Increase Defense Spending
NATO's defense spending reaches record highs, with 23 of 32 members hitting the 2% GDP target.
Defense spending surged by 9% in 2023, with an 18% rise expected in 2024 due to heightened global tensions.
U.S. defense budget of ~$968B drives a 27% increase in the national deficit.
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