👀 Big Tech vs VCs

Big Tech's beat venture capitalists to AI investments, China has a serious problem, and a hack for runners | [Finimize](   TOGETHER WITH     Hi {NAME}, here's what you need to know for September 11th in 3:15 minutes.   🧐 You could learn from your mistakes, or you could get the cheat sheet from the experts. Join us for [Five Top Tips Every Options Trader Should Know]( today, and see how the pros break down options trading. [Grab your free ticket]( Today's big stories - Big Tech has been hogging the AI opportunities, leaving venture capital firms stuck in limbo - Your guide to margin trading, and its potential risks and rewards – [Read Now]( - Fresh data suggested that China’s headed toward a drawn-out period of deflation, which would be another blow for its stuttering economy Out In The Cold [Out In The Cold] What’s going on here? Big Tech has [broken]( into the private market, leaving venture capital (VC) firms stuck outside. What does this mean? Microsoft, Amazon, Alphabet, and Nvidia have enough cash to fill more than a few super-powered data centers – and they’re using it to play VC. In writing checks for private AI startups like OpenAI, Anthropic, Scale AI, and CoreWeave, Big Tech is lining the little guys’ coffers so well that they have no reason to even think about a stock market listing. That’s a problem for the real VCs out there. See, they make “exit money” by cashing out when the startups they’ve invested in go public. Without those listings, VC firms are left holding company stakes instead of cold, hard cash. Why should I care? For markets: Dolly Parton’s “Jolene”, but for VCs. With private companies staying private, the venture-backed initial public offering market is headed for its worst year since 2016. That exit money is whittling down in a big way: the total count across the industry is expected to be 86% lower this year than in 2021. And it’s not like VCs will be able to knock Big Tech out of the game: besides a ton of cash, tech firms are offering startups perks like cloud credits and partnerships. So VCs might need to explore new pastures, like younger and riskier startups or ultra-niche market pockets. The bigger picture: The exception, not the rule. The AI hype is hiding the fact that most of the tech sector is still stuck in a slump. Many companies – especially ones that don’t specialize in AI – are struggling to get their books back on track. After all, their corporate clients have been watching the pennies, wary of worsening economic outlooks. And of course, the ones that are splashing the cash are punting for alluring AI offerings. That explains why most major tech companies are growing slower than before, while smaller ones are actively shrinking. You might also like: [Invest like a venture capitalist](. Copy to share story: [( 🙋 [Ask a question](mailto:questions@finimize.com?body=Ask us a question: Where are you writing from? Let us know and we'll mention it when we reply.&noapp=true&subject=Out In The Cold&utm_campaign=daily-global-11-09-2024&utm_source=email) Analyst Take Buying On Margin: Here's The Skinny About What It Is And How It Works [Buying On Margin: Here's The Skinny About What It Is And How It Works]( Buying on margin is an [investment strategy]( that allows folks to borrow money (usually from a brokerage) to snap up more stocks or other assets than they’d otherwise be able to afford. By accessing, or leveraging, existing capital to increase their purchasing power, they’re [shooting]( for a boost in their returns. It’s not a slam-dunk move, though: [buying on margin]( can increase their potential profits, sure, but it also amplifies their potential losses. Today’s Insight is free to read: [your guide to margin trading, and its potential risks and rewards](. [Read or listen to the Insight here]( Make the most of your options, so they don’t get the best of you When the going gets tough, the tough get to grips with [options strategies](. After all, the more volatile markets are, the higher options prices tend to rise. Thing is, these are complex, risky trades – so [you need to know how to pull them off](. Our [latest guide](, made with IG, tells you everything you need to know about selling options as a beginner. (If you’re more advanced, sit tight: they only get more technical from here.) You’ll discover the [different types of options you could sell](, see how the process would play out, and find out how you could make income through “premiums” if your trades are done right. [Check Out The Guide]( On The Precipice [On The Precipice] What’s going on here? China’s inflation [reading]( came in lower than expected this week, suggesting that the country’s teetering on the edge of economy-sinking deflation. What does this mean? Consumer prices in China were just 0.6% higher this August than last. That’s lower than economists expected, even though food prices were pushed up by the effects of bad weather. And when you strip out food and other especially volatile prices like energy, the remaining “core inflation” was 0.3% – the lowest reading in over three years. But remember, while the US and Europe would celebrate smaller price tags, China seems to be heading into a prolonged period of deflation, or falling prices. In fact, by one measure, it’s already there. The so-called “GDP deflator”, which tracks price changes for all goods and services produced in an economy, has shrunk for five quarters. That’s the longest streak in over two decades. Why should I care? The bigger picture: Brace yourself, China. Deflation could pile more pressure on China’s straining economy. See, when prices keep falling lower, shoppers hold off on non-essentials, anticipating cheaper prices with every passing month. That dries up sales for a host of companies, which can force them to scrimp on everything from production to the number of employees on their payrolls. To add insult to injury, deflation makes it harder to keep up with loan repayments, as wages fall while debt stays the same. Zooming in: China’s problem is an expensive one. Economists believe that China’s government will need to push around $1.4 trillion into the economy over two years to force it forward. Plus, they say that financial first aid – more than double the “bazooka” package unleashed after the global financial crisis in 2008 – should target households, not the industrial sector. Otherwise, the newly bolstered industry could start pumping out more products without any new shoppers to buy them, which would push prices down even lower. You might also like: [China’s shrinking population is driving deflation – and creating investment opportunities.]( Copy to share story: [( 🙋 [Ask a question](mailto:questions@finimize.com?body=Ask us a question: Where are you writing from? Let us know and we'll mention it when we reply.&noapp=true&subject=On The Precipice&utm_campaign=daily-global-11-09-2024&utm_source=email) 💬 Quote of the day "So long as the memory of certain beloved friends lives in my heart, I shall say that life is good." – Helen Keller (an American author) [Tweet this]( SPONSORED BY DIREXION Swap social media pings for short-term trade updates When you’re a risk taker by nature, you know you want to beat the market. So if you’re not willing to settle for plain-vanilla trading tactics, you might want to look into [more advanced trades](. And as luck would have it, [Direxion has a few options for you](. 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