Good morning readers. In a rollercoaster of a trading day, stocks tumbled as Federal Reserve chairman Jerome Powell doused hopes of a rate cut in March. The Dow Jones Industrial Average plummeted by 317.01 points, marking its worst performance since December. The S&P 500 and Nasdaq Composite weren't spared either, posting their worst days since September and October, respectively. Powell's remarks sent markets reeling, dashing expectations for a March cut and demanding further proof of positive inflation data. Nevertheless, the Fed hinted at policy restraint rollback later this year, offering a glimmer of hope.

Let’s jump into today’s storylines.

In today’s digest:

• Chinese retailers redraw the map of global e-commerce

• Headline Hustle: Hackers are trying to “wreak havoc” on U.S. infrastructure, regional banks are back in focus after Bancorp stock plummets, Allen Media Group wants to buy all of Paramount Global

• Introducing the new wave of carbon capture technology

• Pulse Points: What’s Trending

TECH

From the Great Wall to Wall Street, Chinese retailers make their mark

Chinese online retailers are shaking up Madison Avenue from halfway around the world. Armed with aggressive ad campaigns on social media giants like Facebook and Instagram, savvy sellers like Temu and Shein are leveraging low production costs and tariff loopholes to target U.S. consumers. It's a digital gold rush, and everyone's invited.

Big bucks, big growth

Meta, the parent company of Facebook and Instagram, is set to report a jaw-dropping 22% revenue growth for the quarter, with analysts estimating a whopping $39.2 billion. A significant contributor to this growth? You guessed it—Temu and Shein. In the previous year's third quarter alone, these two Chinese retailers accounted for approximately 3% of Meta's total growth.

But their growth doesn’t stop there:

• In 2023, Temu witnessed an explosive increase in downloads, soaring by over 500%.

• Shein wasn't far behind, with a remarkable 52% growth in the same year. These numbers are nothing short of impressive in an already crowded digital marketplace.

There are risks looming on the horizon. While their rapid ascent is undoubtedly impressive, it's not all smooth sailing for these e-commerce giants. Both companies currently find themselves embroiled in a legal battle, facing allegations of questionable business practices and intimidation of suppliers. Shein is also under the watchful eye of China's internet regulator, subject to a security review that could potentially disrupt its supply chain.

Adding to the mix, U.S. lawmakers have criticized the import tariff exemption that these companies enjoy, deeming it an unfair advantage against American competitors.

Everyone is feeling it. The ripple effect of Chinese retailers' rapid ascent is felt across the e-commerce spectrum. Etsy CEO Josh Silverman has pointed out the impact on advertising costs, and even Amazon is extending an olive branch to Chinese companies to fend off the Temu and Shein competition, adding fuel to the advertising industry's dependence on China.

Zoom out: Shein and Temu, with annual sales estimated at over $30 billion and $16 billion respectively, have significant financial resources at their disposal for advertising. According to experts, Facebook is the most effective platform for their advertising needs, offering the broadest reach across various channels like TikTok, mobile games, and ecommerce ads. And it doesn’t look like they’re stopping anytime soon.

Headline Hustle

🇨🇳 FBI Director warns Chinese hackers are preparing to “wreak havoc” on U.S. infrastructure. FBI Director Christopher Wray issued a stark warning before the House Select Committee, highlighting the imminent threat posed by Chinese hackers to the United States. Wray emphasized that these hackers are strategically positioning themselves within American infrastructure, with the intent to “wreak havoc” and cause real-world harm to citizens and communities. The alarming disclosure highlights the deep concerns at the highest levels of the U.S. government regarding the Chinese cyber threat to critical nationwide infrastructure, including water treatment plants, electrical systems, and oil pipelines. Despite assurances from China, skepticism remains about their intentions.

📉 NY Community Bancorp’s stock plummets 38% after latest report. New York Community Bancorp's shockingly poor financial report has sent ripples across regional banks. The bank suffered an unexpected $252 million loss in the last quarter, in stark contrast to the prior year's $172 million profit, mainly due to a massive $552 million in loan losses. Shares plummeted by 38%, hitting a 25-year low. CEO Thomas Cangemi blamed this on a $40 billion asset acquisition, leading to regulatory capital requirements that limit lending capacity. While it's not a collapse, it has cast a shadow over the bank's future, affecting regional bank stocks.

💰️ Allen Media Group makes $14.3 billion offer for Paramount Global. Media entrepreneur Byron Allen has launched a $14.3 billion bid to acquire Paramount Global, marking his second attempt in less than a year to secure the home of CBS and the Paramount Hollywood studio. This move comes as David Ellison's Skydance Media and Warner Bros. Discovery also express interest in Paramount. Allen, known for his extensive cable network portfolio, aims to retain Paramount's cable networks, including Comedy Central and Nickelodeon, and the CBS broadcast network if the deal proceeds. Paramount has been grappling with the challenges of making its streaming business profitable amid a shifting media landscape.

SUSTAINABLE FUTURE

The solution to carbon emissions? Storing it beneath the ocean floor

In a bold bid to tackle carbon emissions, ship operators are now venturing into uncharted waters – literally. They’re exploring a novel approach: transporting supercooled, liquefied CO2 deep beneath the ocean floor for storage.

The high seas of carbon capture

These specialized vessels represent a bold leap in carbon capture and storage (CCS) technology.

• Each ship is engineered to carry over 25,000 metric tons of CO2, supercooled to a dense liquid state at minus 50 degrees Celsius.

• This makes liquefied CO2 more manageable for mass transport, despite its higher pressure and temperature demands compared to liquefied natural gas.

Once the liquefied CO2 is loaded at onshore terminals, its ferried to depleted offshore oil wells for permanent storage. This method of sequestering CO2 is not just a logistical challenge but also a test of environmental stewardship.

But this ambitious endeavor is not without its concerns. The long-term safety and environmental impact of storing vast quantities of CO2 under the seabed remain largely untested. While the risk of marine pollution from potential leaks is considered low, there are concerns about the possibility of accidental leaks affecting marine life. Moreover, the injection of fluids into deep geological formations, including CO2, raises fears about inducing seismic activity, though such risks are deemed more likely at onshore sites.

Looking ahead…as the world grapples with the urgency of climate change, this venture into seaborne CO2 transportation is gaining traction. Despite potential risks, the initiative opens a new chapter in the global effort to mitigate carbon emissions, offering a glimpse into a future where the deep sea plays a pivotal role in safeguarding our planet.

SNIPPETS

Pulse Points

• Mastercard has developed a proprietary generative AI model to assist thousands of banks in detecting and preventing fraudulent transactions, claiming it can boost fraud detection by up to 300%.

• The digital-news startup the Messenger is closing less than a year after its launch.

• A judge dismissed Disney's federal lawsuit against Florida Governor Ron DeSantis, which claimed retaliation for criticizing a controversial education law.

• Adidas plans to sell its unsold Yeezy inventory at least at cost, aiming to recoup losses without writing off the majority of the stock.

• Biogen announced it will stop selling and developing its controversial Alzheimer’s drug Aduhelm to refocus on other treatments for the disease.

• Floridians are now barred from updating or changing their gender on driver's licenses, as per a memo from the Department of Highway Safety and Motor Vehicles reported by CNN.

• The Baltimore Orioles, owned by Peter Angelos and family for over 30 years, are being sold to a group led by billionaire David Rubenstein, for $1.7 billion.

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