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Good morning readers. If you own a Wyze security camera or plan on buying one, listen up. The company suffered a security lapse over the weekend that allowed its customers to look into other people’s homes momentarily. What started with 14 customers peeking into strangers' homes snowballed to a staggering 13,000. Despite the company’s efforts to strengthen its security measures, the breach has triggered widespread outrage and loss of trust. As affected users voice their frustrations, Wyze faces the challenging task of containing the fallout and repairing its damaged reputation amid increasing scrutiny.

Let’s jump into today’s storylines.

In today’s digest:

• The Magnificent 7 are bigger then some countries now

• Headline Hustle: George Santos is taking Kimmy Kimmel to court, Capital One acquires Discover Financial in all-stock deal, U.S. proposes draft to UN Security Council for Gaza ceasefire

• The EU’s fight against TikTok

• Pulse Points: What’s Trending

MARKETS

The 'Magnificent 7' outshine entire economies

In a world where the rich keep getting richer, seven companies of the tech industry have taken wealth accumulation to a whole new level.

The "Magnificent 7" – Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla – are now so financially powerful that their combined market cap doesn't just dwarf that of major corporations; it rivals the economies of entire countries.

A startling reality

Deutsche Bank's latest findings reveal a concentration of power not seen since the dizzying heights of the 2000 dot-com bubble and the pre-Depression era of 1929. It's a déjà vu that's making market analysts and investors alike sit up and take notice. While the tech sector's elite have always been known to shuffle the deck of dominance, the "Magnificent 7" have solidified their positions at the poker table, showing no signs of folding anytime soon.

Despite their unparalleled success, these companies are not immune to the ebbs and flows of the market. Nvidia's recent surge and Tesla's dip highlight an underlying volatility that contradicts their collective front of invincibility. Yet, they continue to outpace broader market indices, a testament to their enduring dominance and the innovative spirit that propels them forward.

But no empire lasts forever. And cracks in the façade are beginning to show.

• Experts hint at a coming shift, driven by the resilient U.S. economy and a broader economic landscape ripe for diversification.

• The spotlight on AI and tech stocks, while bright, may be blinding investors to promising opportunities in emerging sectors.

The dominance of these few, while a testament to their success, raises red flags about market stability and the potential for future bubbles. The reliance on a handful of companies for market growth echoes historical precedents that didn't end well. But it also opens up a dialogue about diversification, risk management, and the potential for new sectors to emerge from the shadows of these tech giants.

Looking ahead…as the Magnificent 7 continue to shape our world, let's remember that true strength lies in variety. The future of investing is not just in the hands of a few but in the opportunities that await those willing to look beyond the giants.

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IN THE KNOW

Headline Hustle

🎬️ George Santos is suing Jimmy Kimmel. Former Representative George Santos is taking late-night host Jimmy Kimmel to court, alleging deception and copyright infringement. Santos claims Kimmel misled him into creating personalized Cameo videos, only to broadcast them on national TV and social media, violating their agreement. Filed in the Southern District of New York, the lawsuit cites copyright infringement, fraudulent inducement, breach of contract, and unjust enrichment. ABC and Disney, Kimmel's employers, are also named defendants. Santos seeks damages and injunctions to protect his rights. CNN awaits responses from Kimmel, ABC, and Disney representatives.

🤝 Capital One acquires Discover Financial Services for $35.3 billion all-stock deal. Capital One Financial is poised to acquire Discover Financial Services in a $35.3 billion all-stock agreement, with Discover shareholders receiving a 26% premium. The merger, expected to finalize in late 2024 or early 2025, will result in Capital One owning 60% and Discover 40% of the combined entity. This move is set to enhance Capital One's credit card offerings and deposit base. Notably, Capital One intends to retain the Discover brand. The deal reflects evolving dynamics in the financial sector, signaling potential shifts in merger activities.

🇺🇸 U.S. proposes a temporary ceasefire in Gaza in draft UN resolution. The United States has submitted a draft resolution to the UN Security Council, advocating for a temporary ceasefire in Gaza amid ongoing conflicts with Hamas. This move, diverging from a vetoed Algerian proposal for an immediate ceasefire, highlights the US's nuanced stance on Israel's defense rights while expressing concerns over potential regional instability from an expanded Israeli ground operation. Amidst international calls for urgent peace, the resolution's focus on hostage release and diplomatic efforts underscores a cautious approach to conflict resolution.

TECH

EU puts TikTok under the microscope for minors' safety

In a decisive move, the European Union has launched an investigation into TikTok, scrutinizing whether the popular social media platform has breached the bloc's new online-content rules designed to shield minors and curb harmful content. This marks the second major probe under the scope of the Digital Services Act, setting a precedent for online accountability.

Protecting our children

At the heart of the investigation is TikTok's commitment to protecting its youngest users. Despite TikTok's assurances of implementing robust measures to keep teenagers safe and deter children under 13 from the platform, the EU's inquiry aims to peel back the layers of these claims, ensuring that TikTok's practices align with the stringent requirements of protecting minors.

The company faces the possibility of hefty fines—up to 6% of its global annual revenue—if found in violation of the EU's stringent regulations.

But the probe extends beyond mere policy compliance, delving into the mechanics of TikTok's algorithm and its role in content recommendation. It raises critical questions about the balance between user engagement and safety, particularly the ease with which young users might find themselves in harmful content "rabbit holes."

Big picture: As the EU tightens its regulatory grip, this investigation sends a clear signal to digital platforms about the non-negotiable priority of user safety, especially among vulnerable demographics. With no definitive timeline for its conclusion, the ongoing scrutiny reflects the EU's steadfast commitment to fostering a safer online environment, setting a benchmark for digital platforms worldwide.

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SNIPPETS

Pulse Points

• The FBI and international allies have seized a dark-web site used by LockBit, a notorious ransomware gang responsible for global cyberattacks, including one that disrupted US healthcare services.

• Reddit has entered a licensing deal, worth approximately $60 million annually, allowing an unnamed major AI company access to its user-generated content, as reported by Bloomberg.

• Masayoshi Son of SoftBank Group is aiming to raise $100 billion for a new venture to compete in the AI chip market, targeting rivals like Nvidia.

• The Biden administration is allocating $1.5 billion to GlobalFoundries for expanding its computer chip production in New York and Vermont.

• House Republicans were shocked by the recent retirements of key figures and rising stars within the GOP, given the current turmoil in the House.

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