Three Things (12/6)

Gensler out, Atkins in

Chair change … President-elect Donald Trump announced the nomination of Paul Atkins, a pro-cryptocurrency advocate, as the next chair of the Securities and Exchange Commission. This decision marks a clear pivot from the agency’s recent leadership under Gary Gensler, known for his stringent crypto enforcement.

Atkins, a former SEC commissioner and CEO of Patomak Partners, has long championed free-market principles and innovation. As chair, he is expected to bring a lenient regulatory approach, focusing on transparency and reducing red tape in the digital assets space. Congressman Patrick McHenry expressed confidence in Atkins, calling him a leader who could “restore faith in the SEC” and promote clarity for digital assets.

In contrast, critics like Congressman Brad Sherman fear Atkins’ approach may lead to lax oversight, potentially exposing investors to fraud. Still, the crypto community is optimistic, with Coinbase’s legal officer praising Atkins’ balanced perspective.

Image via PixelPlex

The SEC plays a vital role in U.S. financial markets, overseeing securities, enforcing regulations, and protecting investors. Under Gensler, the SEC adopted a rigorous stance on cryptocurrencies, classifying many as securities and filing lawsuits against major platforms like Binance and Coinbase.

In other news, Bitcoin reached a record high of $100,000 this week, boosted by renewed investor optimism following the incoming administration’s promises of crypto-friendly policies.

Benioff bets big on AI

Earnings recap … Salesforce’s (CRM) latest earnings reveal a mixed performance but shine a spotlight on its ambitious AI-driven future. The company reported Q3 revenue of $9.44 billion, surpassing Wall Street’s estimate of $9.34 billion, but missed on earnings per share at $2.41 versus the $2.44 forecast. Despite this, shares surged 10% as investors rallied around Salesforce’s AI initiatives.

At the heart of the buzz is Agentforce, the company’s new platform featuring autonomous digital agents. CEO Marc Benioff described this as a pivotal moment in technology, likening the rise of AI to a “revolutionary transformation.” Agentforce, introduced just days before quarter-end, has already secured 200 deals, with thousands more in the pipeline.

Benioff envisions AI agents complementing human efforts by handling repetitive tasks with speed and efficiency. “We’re fundamentally reshaping how businesses operate,” he emphasized, hinting at a future where AI could extend to robotic automation layers. Analysts are optimistic; Wedbush raised its price target to $425, citing Agentforce as a potential growth catalyst.

Still, skeptics question the pace of AI monetization. Salesforce’s cautious Q4 guidance, slightly below consensus, tempered some enthusiasm. Salesforce’s challenge now lies in delivering on Agentforce’s potential while navigating Wall Street’s heightened expectations.

Record travel fuels airlines

Winners and losers … Airline stocks soared this week after key players upgraded their fourth-quarter guidance, citing robust holiday travel demand and strategic improvements. American Airlines (AAL) and Southwest Airlines (LUV) both reported stronger-than-expected revenue, lifting investor confidence. American anticipates up to 1% growth in revenue per available seat mile (RASM), reversing prior projections of a decline. Meanwhile, Southwest boosted its outlook to a 7% increase in unit revenue, thanks to network optimization and capacity tweaks.

These updates cap a strong year for the sector, in aggregate. The U.S. Global JETS ETF is up over 35% in 2024, with United Airlines leading the S&P 500 with a staggering 157% gain.

However, not all airlines are flying high. Spirit Airlines (SAVE), still reeling from a blocked merger and pilot shortages, filed for bankruptcy last month. Chief Commercial Officer Matthew Klein claimed legacy carriers are “gunning for us,” accusing competitors of exacerbating pilot shortages and gate restrictions.

This week in Washington, airline executives clashed with senators over so-called “junk fees.” Critics labeled baggage and seat selection charges as a form of extortion, while airlines defended them as consumer choice. Frontier Airlines’ (ULCC) controversial “bounty bag” program drew ire, with senators demanding greater transparency in ticket pricing.

One more thing: Google DeepMind’s (GOOG) new AI weather model, GenCast, is outperforming the world’s most accurate forecasting systems, including predicting extreme events shaped by climate change. By leveraging machine learning, it delivers faster, probability-based projections up to 15 days into the future.

Disclosures:

As of writing, GOOGL is a holding in Titan's Flagship strategy.

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