Davis Wilson:

The $18B Instagram/Facebook "Wrist Slap"

Meta agreed to pay $18 billion this week to settle a lawsuit brought by dozens of state attorneys general. The lawsuit alleged that Facebook and Instagram harmed teenagers by encouraging excessive social media use and contributed to mental health issues.

In addition, Meta agreed to make significant changes to how teenagers use Facebook and Instagram, including a default two-hour daily time limit for users under 18.

Meta denied the allegations and said the settlement does not constitute an admission of liability. The company also won't be writing an $18 billion check anytime soon. The payments will be spread over the next 10 years, reducing the annual cost to $1.8 billion – a rounding error for a company with Meta's earnings power.

From an investing standpoint, this doesn't change the Meta story in any meaningful way. Advertisers pay for access to billions of users across every age group, and adults with disposable income are far more valuable than teenagers. The market seemed to agree. Meta shares moved higher following the announcement.

Meta remains one of the highest-quality businesses in the world. Nothing announced this week changes my long-term outlook on the company. The stock remains one of the largest positions in my personal portfolio. And I recommend you own it yourself.

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Enrique Abeyta:

Fed's Warsh Signals Inflation Fight Isn't Over

Federal Reserve Chairman Kevin Warsh warned Friday that the central bank may not be finished fighting inflation, saying recent price readings had not convinced him that underlying trends were improving and stopping short of any commitment on the path for interest rates.

"We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed," Warsh said in prepared remarks delivered at the Federal Reserve's annual symposium in Jackson Hole, Wyoming. "Otherwise, we have work to do."

Speaking on his 100th day as chairman, Warsh described an economy he said "appears to have strengthened," with business and consumer spending holding up and a slowdown in hiring he attributed to a flattening labor supply. But on inflation, he said financial conditions did not look restrictive to him.

Warsh also pointed to the breadth of price increases. About half the items in the Fed's preferred inflation basket are rising faster than 3%, compared with roughly a third in the two decades before the pandemic. The Fed's current benchmark rate stands at a target range of 3.5% to 3.75%.

As in prior appearances, Warsh declined to offer either forward guidance or a reaction function — the economic conditions that would prompt a policy response.

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Greg Guenthner:

Bitcoin and Cathie Wood Are Partying Like It's 2021 Again

Bitcoin and the Ark Innovation Fund (ARKK) are both up more than 20% in August, something that has happened only four other times since Cathie Wood launched her flagship ETF in 2014.

The pairing brings back memories. Late 2020 and early 2021 were the age of zero interest rates, stimulus checks, SPACs, meme stocks, crypto millionaires, and seemingly every company finding a way to put "innovation" in its pitch deck. ARKK became one of the defining trades of the era. Bitcoin was right there with it.

Now that old duo is leading again. ARKK was already among Wall Street's riskiest trades outperforming earlier this month, while bitcoin accelerated after breaking out of a months-long range last week.

The only previous months in which both gained at least 20% were April 2020, November 2020, January 2023, and November 2024, according to Yahoo Finance analysis of AlphaSpace data.

What happened afterward was generally favorable, particularly for bitcoin.

Across those four episodes, bitcoin's median return was about 5% over the next month, 29% over three months, 43% over six months, and 137% over a year. Median returns for ARKK, the Nasdaq Composite, and the S&P 500 were also positive at every interval.

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