Finimize - 🍏 Apple entered the AI race

Apple revealed its new AI-fueled tools | Elliott bought a $1.9 billion stake in Southwest Airlines |
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Hi Reader, here's what you need to know for June 12th in 3:11 minutes.

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Today's big stories

  1. Apple played catch-up with its rivals, revealing its very own AI system for the first time
  2. Europe’s interest rate cut is casting a new glow on these assets – Read Now
  3. Activist fund Elliott Investment Management snapped up shares in Southwest, eager to give the struggling airline a first-class makeover

Apple Bites Back

Apple Bites Back

What’s going on here?

Apple launched its new AI system, Apple Intelligence, snapping at the heels of far-ahead rivals.

What does this mean?

Apple has become the latest tech giant to introduce AI features, trailing after the likes of Google, Microsoft, and Amazon. The imaginatively named “Apple Intelligence” will be able to summarize Shakespeare’s plays, create art, whizz through complex numbers – and just about everything in between. Now, the behind-the-scenes is something of a tangled web. Apple’s planning on using a combination of on-device processing, Apple data centers, and third-party large language models like OpenAI’s ChatGPT to process the workloads. Mind you, Apple might be leaving the door open by outsourcing information requests, potentially allowing competitors to copy its strategies.

Why should I care?

Zooming in: This time it’s different… Promise.

Apple doesn’t have much choice but to chase the AI trend. The company’s sales have fallen in five of the last six quarters, with the iPhone’s less-than-impressive upgrades pushing customers into the clutches of competitors instead. So Apple will be hoping that this AI launch and partnership with OpenAI will add some pizzazz to the next generation of iPhones, due to be launched later this year. The tech titan knows better than to rely on word of mouth, though: Apple will likely be laser-focused on convincing the world to trade in its old models, promising that the gadgets will be worth it this time around. That said, investors are already on a shopping spree, sending Apple’s stock up 5% after the announcement.

The bigger picture: Devil’s advocate.

Elon Musk has a checkered history with OpenAI and Apple. So it wasn’t exactly a surprise when he posted on X, formerly Twitter, that trusting OpenAI to keep everyday users’ data secure is “crazy”. And that might be more than a case of a scorned ex: there have been thousands of data leaks made by companies with the best intentions, after all.

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Analyst Take

Europe’s Interest Rate Cut Is Carving Out Opportunities

Europe’s Interest Rate Cut Is Carving Out Opportunities

The big picture in Europe looks a bit different for investors this week.

And that’s because last week, the European Central Bank officially began chipping away at its record-high lending rates.

It’s a big deal: the pivot from interest rate hikes to cuts should have a serious impact on bonds across the bloc – and create some attractive opportunities.

That’s today’s Insight: the opportunities that arise as Europe’s interest rates fall.

Read or listen to the Insight here

Five active ETFs that could whip your portfolio into shape

Experts wax lyrical about the benefits of getting active.

Brain teasers are said to help you through old age, a daily walk can wipe away the late-night overthinking, and a bit of hot yoga could even keep your knees nice and limber.

Active ETFs could get your portfolio moving, too. While passive funds buy you a slice of a whole index, active ones seek to beat the market by buying and selling assets at opportune times.

They’re increasingly popular with retail investors, as they have the potential to diversify portfolios, make more complex investment strategies accessible, and maybe even outdo the market.

Our free guide has run through five main types of active ETFs, how you’d use them, and why you might want to: take a look to discover the benefits of an active lifestyle.

Check Out The Guide

Heavy Load

Heavy Load

What’s going on here?

Activist fund Elliott Investment Management went wheels up, adding a $1.9 billion stake in Southwest Airlines to its cargo.

What does this mean?

Activist investors buy stakes in companies and then push for change to jack up share prices. Elliott Investment Management, to name one, now holds about 11% of Southwest Airlines. That makes it one of the airline’s biggest investors – and, with its new-found muscle, the company is demanding fresh management and a thorough business review. By slashing costs and upgrading tech, Elliott hopes to push Southwest’s stock up 77% in the next year. This sort of deal is nothing new for the battered and bruised air travel market, though: earlier this year, activist investor Carl Icahn snagged 10% of JetBlue and two board seats.

Why should I care?

Zooming out: Heading south… west.

The current crop of activists is just the latest wave drawn to the airline industry. That probably has something to do with airlines’ tanking stock prices, as their previous forecasts prove to have been overly optimistic. They might be boasting record passenger numbers, but airlines are contending with higher labor costs, scorching jet fuel prices, and aircraft supply bottlenecks. Poor Southwest is having a particularly rough time. It’s struggled to make money due to its mostly domestic network and history of low fares. The airline also has an all-Boeing fleet, so it’s feeling the effect of the manufacturer’s recent turbulence more than most.

The bigger picture: Meanwhile in Blighty.

Mind you, it’s not just well-established US firms being picked off. Activists have been eyeing up British companies too, eager to convince them to list overseas. Many think the firms could benefit from listing in the US specifically, where investors have deep pockets and fewer concerns around sustainability issues. Plus, UK stocks look cheap compared to American ones – and that’s been attracting both foreign and local bargain hunters.

You might also like: How to invest like an activist.

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💬 Quote of the day

"The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts."

— Bertrand Russell (a British philosopher)
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⛽ Shale And Hearty

Energy heavyweights including Exxon, Chevron, Occidental Petroleum, and ConocoPhillips have been making a ton of deals over the last year.

Really, a ton: about triple the amount from the year before.

The trend comes down to a widespread belief in the industry. US oil and gas giants see demand sticking around, and they're bracing for that.

Read The Quicktake

🎯 On Our Radar

1. Chowing down. Twenty years on, a look at the legacy of the documentary Super Size Me.

2. You need a lot of time and knowledge to be a value investor. Well, unless you have a digital assistant to do the heavy lifting for you.*

3. Riding the wave. Inside the world of river surfing in the Midwest.

4. Today’s top companies won't necessarily rule the roost tomorrow. Brush up your investing skills with this rundown.**

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