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Good morning! A Sam's Club with robots making pizza and no cash registers could be the new norm for the warehouse club. CEO Chris Nicholas spoke to BI about what he wants shopping "in the future" to feel like.
In today's big story, Goldman Sachs thinks the past decade of big returns from the S&P 500 is coming to a close.
What's on deck:
- Markets: Americans' rising pile of debt is making banks nervous.
- Tech: SoftBank-backed creator-economy startup Jellysmack is cutting staff.
- Business: New York magazine and Olivia Nuzzi are parting ways.
But first, is this the end?
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The big story
A new era for stocks?
Forget the economy; Goldman Sachs is projecting a hard landing for future stock returns.
The bank's portfolio strategy research team forecasts the S&P 500 will see annualized returns of 3% over the next decade, writes BI's Filip De Mott.
That'd be a sharp comedown for stock investors, who have enjoyed 13% in annualized returns for the major index over the past 10 years.
Setting aside the market's recent strength, Goldman's forecast still isn't great. Annualized returns of 3% would put it in the 7th percentile of performance since 1930.
Goldman's rationale for the pessimistic take includes two things even a rookie investor can appreciate: The market is overvalued AND too concentrated.
Currently, the S&P 500 cyclically adjusted price-to-earnings ratio is 38, well above the index's average of 22. And the usual suspects — tech giants like Nvidia and Meta — have done much of the heavy lifting in helping the S&P 500 to record highs.
Not everyone agrees with Goldman's forecast.
This very newsletter recently included commentary from experts who said the two-year-old bull market still had plenty of gas left in the tank.
It seems the only industry consensus we have about stocks' future is there is no consensus. Case in point: Goldman is bullish on a short-term perspective, recently raising its year-end S&P 500 price target.
BI's Matthew Fox has a rundown on predictions from the bulls, the bears, and those somewhere in the middle.
UBS, for example, sees another big gain for the S&P 500 next year, writes BI's Jennifer Sor.
The bank said a "no landing" for the US economy means the S&P 500 could rise roughly 13% from its current levels. Inflation would remain somewhat elevated in the scenario, but the bank still sees room for the Fed to cut rates, which is bullish for stocks.
On the other side of the spectrum are JPMorgan, which has maintained its bearish outlook this year in the face of a surging market, and Stifel, which has predicted a massive market downturn in 2025.
At the center of the debate sits artificial intelligence. Bears point to the tech as overinflating valuations with little to no evidence of it meaningfully driving revenue. Bulls say the hype is warranted, as the impact of AI is inevitable, like the rise of the internet.
News brief
Top headlines
- Flight logs show Elon Musk's private jets are busy hitting swing states as he campaigns for Trump.
- Ex-Twitter CEO Parag Agrawal has moved his AI startup out of stealth, calling it Parallel.
- 'The million-dollar question of this election': Women's health startups are confronting a shifting legal landscape.
- Putin's expanded BRICS summit proves he has friends — but risks buckling under its own contradictions.
- Medicare coverage will change in 2025. Some boomers are already struggling to keep up with their medical bills.
3 things in markets
- Big banks brace for losses as Americans' debt piles up. US consumers and businesses are struggling to pay off auto, credit, and commercial real-estate debt. In response, US banks have steadily increased their cash reserves in anticipation of loan losses. (But don't fear the worst; cash reserves are still far from Great Depression levels.)
- Profits, not politics. Bank of America doesn't see November's election substantially impacting the stock market. Share price movement is driven by profit growth, and policies' impact on a sector can be the opposite of what investors expect.
- A famed short-seller doesn't want beef with Tesla. The EV giant reports earnings on Wednesday, but Carson Block won't be betting against Elon Musk's company. The investor known for his short bets said Tesla's massive size and Musk's ability to pull "rabbits out of the hat constantly" means he'll steer clear.
3 things in tech
- A creator-economy startup is laying off staff and pointing the finger at Meta. The SoftBank-backed company Jellysmack is cutting 22 US staffers. A Jellysmack representative told BI it was "scaling back certain operations in our Creator Program on Meta due to the opacity of their new monetization model." The program originally helped creators make money by sharing their content across Meta's platforms.
- Wall Street can't quit Nvidia. Banks have kept hiking their price targets for the chip titan, whose share price is up almost 200% this year. But it's not deterring analysts, who remain upbeat about the next-gen Blackwell chip and Nvidia's web of enterprise partnerships.
- Advertisers rally against iPhone "Distraction Control" over fears it could sabotage websites. French groups representing around 800 companies in media and advertising signed an open letter lobbying Tim Cook to suspend the feature, which would allow Safari users to hide images, pop-ups, or ads. They called it "an existential threat" to online advertising.
3 things in business
- Disney says it will appoint a new CEO in 2026. The company said it would announce a successor for Bob Iger before his contract expires in December of that year.
- New York magazine and Olivia Nuzzi are parting ways. The star reporter was placed on leave after her editors learned she'd had a relationship with Robert F. Kennedy Jr. While a third-party investigation into Nuzzi's work found "no inaccuracies nor evidence of bias" in her reporting, the magazine said they'd still mutually decided to go their separate ways.
- The vibecession, according to science. Americans are financially better off now than they were at the beginning of the pandemic. So why is everyone so concerned about inflation? A new study details the emotional toll of rising prices, which could explain why the vibes are so rank right now.
In other news
- These tech investors are trawling UC Berkeley to fund the next Perplexity or Databricks.
- Ken Griffin's move to Florida means losing millions on homes he never even lived in.
- McDonald's is the latest election battleground for Trump and Harris.
What's happening today
- General Motors, GE, Verizon, and other companies report earnings.
- The IMF World Economic Outlook is published.
- NBA season begins with New York Knicks at Boston Celtics and Minnesota Timberwolves at Los Angeles Lakers.
The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. Amanda Yen, fellow, in New York. Milan Sehmbi, fellow, in London.
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