GM and BRRR.

On Monday we previewed three events that have since unfolded:
-Inflation Report
-Apple iPhone Event
-Monday Night Football Ratings

1) The inflation report dropped this morning, indicating inflation was slightly higher than expectations in August, driven mostly by a 10% surge in gas prices.

Markets are mostly flat in response. We cover this in detail in today’s lead story.

2) Apple’s new iPhones are largely as-expected, with minor upgrades to the casing and camera. However they did surprise analysts by not hiking prices. The stock is mildly lower this week.

3) Despite new Jets quarterback Aaron Rodgers rupturing his achilles early in the opening game of Monday Night Football, it set a multi-decade record with 22.64m viewers.

We think this boosts the medium-term investment case for US-based sports betting operators like Flutter (FanDuel) and DraftKings.

I haven’t initiated a position in a publicly traded company, but I was an early FanDuel employee and actively consult in the industry through my marketing agency, One Story Growth.

We did add another new name to the Watchlist this morning (premium members only).

As a reminder, for just $2/month or $12.99/yr, you’ll unlock trade notifications and a full view of our actively managed portfolio (+21% since inception in March) and watchlist as a premium subscriber.

Today’s newsletter is brought to you by The AI Tool Report. Please consider subscribing and opening their emails - it’ll directly support us at The BRRR. 👇

Market News

August Inflation Rebounds; Pressure on the Fed

The latest CPI report showed inflation picked up more than expected in August after two months of declines. Shelter inflation continued cooling but is still historically high.

While gasoline prices drove the overall increase, stubborn inflation in healthcare services reflects ongoing cost pressures there. Used car prices declined for the second straight month, helping partially offset gains elsewhere.

Overall, the report depicts an uncertain inflation outlook. While some moderation is occurring, persistence in categories like shelter and healthcare suggest ingrained price pressures remain entrenched. This likely keeps rate hikes on the table for the Fed despite market expectations of a September pause.

• CPI still rising: The consumer price index rose 0.6% for the month, higher than estimates of 0.5%, pushing the annual rate to 3.7% from 3.2% in July. This marked the largest monthly increase since June 2022. The core CPI, excluding food and energy, also exceeded forecasts, rising 0.3% versus 0.2% expected.

• Energy Index Jumps 5.6%: Gasoline prices spiked 10.5% higher in August, accounting for over half of the total monthly CPI increase. This was driven by rising crude oil costs and tight supplies.

• Core Services Inflation Stays Above 4% Annually: The core services index minus shelter rose 0.53% in August, keeping the annual rate above 4%. This shows persistent inflation in categories like medical care, education, and transportation.

• Medical Services Drive Increase: The medical care index rose 0.2% as hospital services increased 0.7% and prescription drug prices rose 0.4%, reflecting ongoing inflationary pressures in healthcare.

  Read more and here

Macro News

VCs Ghost Crypto For Shiny AI

The crypto venture capital space has lost significant momentum over the last few quarters as scandals like FTX have driven investors away, leading to a collapse in venture funding for crypto startups.

At the same time, artificial intelligence is rapidly soaking up much of the remaining capital still available from VCs in an uncertain macroeconomic environment, according to Chris Coll-Beswick, Founder and Managing Partner at startup accelerator Transcend Labs.

• Crypto funding down as AI rises: Global venture funding for crypto fell from a high of $12.14 billion in Q1 2022 down to just $2.34 billion in Q2 2023, a massive decrease of over 80% year-over-year. Overall global VC funding is down 49% compared to Q2 2022 when it totaled $127 billion. The number of crypto deals also dropped 37% while AI deals are spiking.

• Sequoia retreats post-FTX crypto crash: Prominent crypto investors like Sequoia Capital which backed FTX have been scaling back on crypto, with partners like Kevin Colleran not making any crypto investments in the last 18 months.

• AI grabs 20% of VC amid crypto fallout: AI startups like Anthropic, Adept AI, and Inflection AI have raised billions in recent massive funding rounds, with over $28 billion flowing into AI startups so far in 2023. This represents nearly 20% of all global VC money, showing investors pouring cash into AI amidst the crypto fallout.

• Crypto startups use AI to woo wary VCs: Coll-Beswick relays firsthand experience of how this is playing out, with one metaverse crypto startup in his accelerator network having a VC funding term sheet rescinded right after the FTX failure in November 2022. Many crypto projects now add AI elements just to appeal to cautious VCs.

  Read more

Today’s Reader Poll

Here are the results so far:

AI Art of The Day

Got feedback? Follow the writer on Twitter @frank_locascio and send a message.

The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.