Good morning readers. From gridiron to the silver screen, Michael Oher, the real-life inspiration behind the Oscar-winning film "The Blind Side," is now making headlines off the field. He's tossed a legal hail mary into a Tennessee court, aiming to tackle the conservatorship held by Sean and Leigh Anne Tuohy. Oher alleges they promised adoption but played a financial trick play, keeping millions from him.

Talk about things coming out of left field.

Let’s jump into today’s storylines.

In today’s digest:

• China’s economic challenges

• Headline Hustle

• Coinbase’s crypto cavalry

• Pulse Points: What’s Trending

ECONOMY

China’s economy faces a triple threat: credit crunch, property crisis, and weak consumer sentiment

China's economy is facing a storm of challenges, and the clouds are only darkening. The latest credit data for July 2023 reveals a staggering slump in demand for borrowing from businesses and households, a situation exacerbated by looming property fears and weak consumer sentiment. Here’s a deeper dive on the driving factors behind this alarming trend.

Credit crunch = confidence shaken

In a startling revelation, local currency bank loans in China plunged by 89% in July to 345.9 billion yuan ($47.64 billion), the lowest since late 2009. This slump in demand for borrowing from businesses and households is not just a blip on the radar but a sign of a deeper malaise. As Xiangrong Yu, chief China economist at Citi, puts it, "all the factors just cannot mask how weak credit demand is and how low risk appetite is." Without imminent rate cuts, China may miss its growth target of around 5% this year.

Their property sector is reeling…and on the brink of collapse. Developer Country Garden is on the brink of default, having suspended trading in at least 10 of its mainland-China traded yuan bonds. The entire real estate sector needs to contract by about 10 percentage points to align with countries like Japan or South Korea. Louis Lau of Brandes Investment Partners warns, "The more the government tries to help the real estate industry, the longer it takes for the industry to find a reasonable bottom."

Consumer sentiment isn’t so hot either. Retail sales are expected to rise 4.7% year-on-year in July, a modest increase from June. However, this doesn't mask the underlying weakness in consumer sentiment. The government's dilemma in aiding the real estate industry may further complicate matters, prolonging the industry's recovery.

A delicate balancing act. China's economic challenges are a complex puzzle, with each piece interlinked. The credit crunch, property crisis, and weak consumer sentiment are not isolated incidents but symptoms of a broader economic uncertainty. As Lu Ting, chief China economist at Nomura, observes, "The weak July credit data suggest the downward spiral of the property sector continues, and worsening geopolitical tensions add to the uncertainty." The situation demands a delicate balancing act from the Chinese government, one that will be watched closely by the rest of the world.

Headline Hustle

💀 OpenAI could go bankrupt by end of year. OpenAI's ChatGPT is in a delicate financial situation, spending around $700,000 daily, with the potential for bankruptcy by 2024 if revenue doesn't turn positive. Despite revenue projections of $200 million in 2023 and an ambitious projection of $1 billion in 2024, the company faces serious challenges ahead. Key issues include a decline in user visits from 1.9 billion to 1.5 billion between May and July, losses doubling to $540 million since ChatGPT's development, and competition from rival chatbots. The situation is further complicated by API cannibalization and GPU shortages. Do Sam and the OpenAI team have enough in the tank to survive? We think they do.

💰 Students need to choose between loan payments or groceries. In a financial squeeze that's bound to send shockwaves through households across America, federal student loan payments are set to resume this fall, leaving 56% of borrowers facing the grim choice between paying off their debt and affording basic necessities like rent and groceries. This alarming statistic, revealed in a recent survey by Credit Karma, underscores a looming crisis that even high earners can't escape.

TECH

Coinbase launches pro-crypto policy group

In a significant move within the cryptocurrency landscape, Coinbase has launched the Stand with Crypto Alliance, an independent nonprofit organization that aims to advance pro-crypto legislation and foster a better understanding between crypto advocates and U.S. regulators.

Who are they and what will they do?

The Stand with Crypto Alliance's primary goal is to create a U.S. regulatory framework for digital assets. This comes at a critical time when the relationship between crypto advocates and regulators is filled with disagreements and complexities. And Coinbase knows all too well what that looks like. They’ve been in an ongoing battle with the SEC since getting sued by them earlier this year.

Their response? “Turn around, bend over, and I’ll show you where my show fits.” Hamilton would be so proud.

It won’t be easy…while the promise of crypto is exciting, the industry must overcome significant hurdles, including fraud and bankruptcy (insert SBF). The vision of instant, free financial transactions is appealing, but realizing this vision will require careful navigation of the challenges that lie ahead.

A stand worth taking. Coinbase's launch of the Stand with Crypto Alliance is like a fresh breeze in the crypto landscape. Some argue it's a stand worth taking, a fight worth fighting. But the alliance is not just about Coinbase; it's about every individual who believes in the potential of digital assets.

So, dear reader, whether you're a crypto enthusiast or a curious onlooker, keep an eye on this alliance. It might just be the spark that ignites the future of finance.

After all, in the world of crypto, anything is possible.

Pulse Points

AI is coming for your job…if you work at IBM. In May, IBM CEO Arvind Krishna, revealed the company's intention to substitute nearly 8,000 positions with Artificial Intelligence (AI). Back office functions, in particular HR, are seeing the most cuts.

Coach owner acquiring Michael Kors, Jimmy Choo for $8.5 billion. Tapestry, the fashion giant responsible for Coach and Kate Spade, announced on Thursday that it will purchase rival Capri Holdings in an $8.5 billion deal. Read more about it here.

Zuck v. Musk, no more. The much-anticipated cage match between tech giants Mark Zuckerberg and Elon Musk seems to be off the table, as Zuckerberg has called off the showdown, accusing Musk of delaying the event. “It’s time to move on.”

Thank you for reading! Let us know what you thought about this edition by replying to this email.