Good morning readers. Stocks pulled back from record highs on Monday, with the S&P 500 and Nasdaq dipping despite a surge in AI-related technology stocks. While Nvidia and Super Micro Computer saw significant gains, other tech giants like Apple and Tesla faced losses, dampening overall market performance. Outside the tech sector, Ford and Macy's experienced notable increases, while airlines JetBlue and Spirit struggled after abandoning merger plans. Investors considered profit-taking amid ongoing market volatility, awaiting signals on interest rates from Federal Reserve Chair Jerome Powell later in the week. Economic data releases will further shape market sentiment in the coming days.

Let’s jump into today’s storylines.

In today’s digest:

• Apple got a €1.8 billion fine from the EU

• Headline Hustle: Trump can stay on the ballot in 2024, Ex-Twitter execs are suing Elon Musk for $128 million in unpaid severance, over-the-counter-birth control pills are coming to the U.S.

• NYCB gets downgraded twice in two months

• Pulse Points: What’s Trending

TECH

Apple faces the music with €1.8 billion EU fine

In a world where tech giants often play by their own rules, the European Commission has decided it's time for a tune-up, fining Apple a hefty €1.8 billion for playing off-key in the music streaming market.

The move strikes a chord in the ongoing symphony of antitrust actions, spotlighting Apple's restrictive encore against app developers and the broader implications for competition and consumer choice.

Singing the wrong tune

The curtain rose on this drama when the European Commission, following a 2019 complaint from Spotify, investigated Apple for antitrust violations. Apple was found to be orchestrating a market monopoly by preventing app developers from directing iOS users to alternative, potentially cheaper, music subscription services outside the App Store. This conduct, lasting nearly a decade, not only stifled competition but may have also hit a sour note with consumers, leading to inflated prices for music streaming subscriptions.

The European Commission's probe into Apple's practices unveiled a deliberate attempt to maintain a stranglehold on the music streaming app market.

• By muzzling developers from promoting alternative subscription avenues, Apple effectively silenced competition, ensuring its App Store remained the only show in town.

• This anticompetitive behavior, according to the commission, was a clear abuse of Apple's dominant market position, prompting a significant fine and a call for change to ensure a fair and competitive digital marketplace.

Apples response? The company hit back hard at the EU's fine, saying Spotify is really the one coming out on top from this decision. Apple argues that Spotify, the biggest music streaming service in Europe, has used Apple's App Store and tech to grow big without paying Apple a dime. This is because Spotify doesn't use Apple's system to sell subscriptions, avoiding a 30% fee Apple charges. Meanwhile, Spotify sees this EU decision as a win for a more open internet, claiming Apple's rules unfairly limit how they can talk to their users about deals and upgrades, a restriction Apple Music doesn't face.

Looking ahead…this fine could set the stage for more tension between Apple and European regulators, and it might encourage closer scrutiny of Apple's business practices in the future. The iPhone maker will need to adjust how it operates, paying close attention to the rules and regulations set by the European Commission, especially regarding how it treats other companies in its App Store.

IN THE KNOW

Headline Hustle

☑️ Supreme Court rules Trump can stay on the ballot in 2024. The Supreme Court unanimously overturned Colorado's ruling barring former President Donald Trump from appearing on the state's Republican presidential primary ballot. This decision, citing Section 3 of the 14th Amendment, clarifies that no state can invoke the insurrection clause to exclude candidates from federal elections. Although not determining Trump's involvement in insurrection, the ruling emphasizes that enforcing Section 3 falls under Congress's jurisdiction. Professionals reacted with mixed opinions, highlighting the decision's significance and implications for future accountability.

🫰 Former Twitter CEO sues Elon Musk for more than $128 million in severance. Former Twitter executives, including CEO Parag Agrawal and CFO Ned Segal, are suing Elon Musk and X Corp. for $128 million in unpaid severance. They claim Musk, after acquiring Twitter for $44 billion, retaliated against them and breached contractual commitments. Allegations include nonpayment to employees, vendors, and landlords, with over 25 lawsuits filed. The complaint references Musk's purported threats and boasts about avoiding severance payments. Filed in California's Northern District, the lawsuit emerges amid failed settlement talks in a related case. X Corp. and Musk haven't responded publicly.

💊 You can now get over-the-counter birth control pills. For the first time in the U.S., birth control pills will be available over-the-counter, marking a significant milestone in reproductive rights. Perrigo's Opill, priced at $19.99 for one month or $49.99 for three, offers a convenient option without a visit to the doctors office. This move, backed by the FDA's approval last year, is hailed by activists like Dana Singiser as a game-changer for accessibility. The availability of Opill sparks hope for easier access to contraception amidst ongoing debates on women's health.

FINANCE

NYCB's deposit rating plunges out of investment grace

In the banking world, falling stars can lead to more than just wishes—especially when Moody's decides to dim your glow not once, but twice in a single month.

What happened: In a double whammy, Moody's took its red pen to NYCB's main banking subsidiary's deposit rating, marking it down four notches and placing it well outside the cozy realm of investment grade. This second cut deepens the wound inflicted by a previous two-notch downgrade in early February. With the bank's stock value taking a nosedive—plunging 73% this year—the alarm bells rang louder following the revelation of "material weaknesses" in its commercial loan review process. The banking community is now keenly watching NYCB's deposit pool, wary of the potential ripple effects of these downgrades.

Why it’s happening: The heart of Moody's decision lies in growing concerns over NYCB's financial pulse and operational health. A surprise fourth-quarter loss and an uptick in provisions for loan losses have cast a long shadow over the bank's ledger. The revelation of significant lapses in its commercial loan review process has further dented confidence, raising red flags about NYCB's deposit stability and the looming threat of a funds exodus as clients scramble for safer havens.

What’s next? With its back against the wall, NYCB is at a crossroads. The path forward involves a strategic shuffle to shore up lost deposits, possibly through higher-cost brokered deposits, fresh debt issuance, or tapping into Federal Reserve lifelines. Each of these routes comes with its own set of financial hurdles and will require NYCB to tread carefully to avoid further jeopardizing its financial health.

SNIPPETS

Pulse Points

• The Supreme Court has temporarily halted the enforcement of Texas' immigration law permitting the arrest and detention of individuals suspected of illegal entry.

• Anthropic introduced Claude 3, its most advanced AI suite, with models outperforming OpenAI's GPT-4 and Google's Gemini Ultra in benchmark tests.

• France is the first country to constitutionally guarantee abortion rights, following a landmark vote by lawmakers.

• Sergey Brin emerged from retirement, motivated by AI's promising direction, and discussed Google's AI advancements and the flawed launch of its image generator Gemini Pro saying the company “definitely messed up”.

• Jack Teixeira, suspected of leaking Pentagon documents, agreed to a plea deal for up to 16 years in prison.

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