| |  | TOGETHER WITH |  | | | Good morning.
European exchanges halted trading early Monday after several major stock indexes plummeted without warning. Sweden's benchmark fell 8% and Denmark's 6%, before recovering later in the day. According to sources who spoke to Bloomberg, the flash crash was caused by US bank Citigroup's London trading desk, which accidentally made a large erroneous transaction on the OMX Stockholm 30 Index. Unsurprisingly, the details are undisclosed.
The next time you spill a Coke at your desk or miss a Zoom meeting, take a moment to feel good about not sending a shockwave rippling through global markets. | | | • | | JetBlue's offer to take over Spirit fails to take off. | | • | | The EU is threatening Apple with billions in fines for allegedly blocking competition in the digital payments space. | | • | | An obscure US Treasury bond will pay 9.6% interest for the next six months. | | | | |  | Airlines | Spirit Rejects JetBlue Takeover Bid to Side With Frontier | | Going once, going twice, sold! To… the lower bidder? It’s not often that a transaction ends with the highest bidder going home empty-handed, but that’s pretty much what just happened in the airline industry.
On Monday, ultra-budget Spirit Airlines bid bon voyage to over half a billion dollars when it rejected JetBlue’s takeover bid in favor of Frontier Airlines’ more frugal offer. Like passengers on its own cramped, perk-free flights, Spirit asked itself: Do I deserve better than this? and answered with a resounding no. | Spirit in the Sky | | So what gives? First, let’s set some tray-table stakes. In early February, Frontier agreed to buy Spirit in a $2.9 billion cash and stock deal. In early April, JetBlue did Frontier one better with a $3.6 billion offer, prompting Spirit’s board to review both options. Acquiring Spirit would have allowed either bidder to put together one of the largest airlines in the nation, creating a true low-cost competitor to Southwest, American, Delta, and United.
Spirit’s review process ended Monday when it picked Frontier, with its board citing the regulatory risk associated with getting a deal across the finish line with JetBlue: | • | | Likely looming largest on Spirit’s heads-up display is JetBlue’s “Northeast Alliance” with American Airlines. Struck last December, the controversial agreement sees the two companies teaming up to augment service in and out of New York City and Boston. The Justice Department has the deal in its crosshairs and is suing to unwind it. | | • | | "We believe a combination of JetBlue and Spirit has a low probability of receiving antitrust clearance so long as JetBlue's Northeast Alliance with American Airlines (AAL) remains in existence," said a letter from Spirit to JetBlue released early Monday. "Given this substantial completion risk, we believe JetBlue's economic offer is illusory, and Spirit's board has not found it necessary to consider it." | | | | Cabin Fever: In a failed attempt to assuage concerns, JetBlue offered Spirit a $200 million break fee if its proposed deal was canned by regulators. Now, JetBlue says it may consider taking a hostile bid directly to shareholders.
Economy-Class Empire: So just how big will the Spirit-Frontier fleet be? Together, the airlines would fly over 280 jets and would be the fifth-largest US airline in terms of seats. Executives claim the tie-up of the low-cost airlines will lead to more price competition with the big four, particularly at underserved airports, and express the humble hope that this will help earn landing clearance from the DOJ. | | | | | | Big Tech | The EU Accuses Apple of Abusing Its Mobile Payments Power | | The conversation about the future of digital wallets is due to reverberate with the sound of real coins clinking in billions of virtual pockets. Analysts at Juniper Research predict that by 2026, $12 trillion in payments will be processed using the technology.
On Monday, the European Union made clear that it wants that enormous market to be open and monopoly-free. EU regulators threatened to fine Apple to the tune of billions for allegedly engaging in anti-competitive practices by denying rivals access to its mobile Apple Pay system. | Change in Apple’s Wallet | | At the core of the spat is whose software gets to use whose hardware. The European Commission (EC) says Apple has blocked competitors from accessing the near-field communication (NFC) technology on its devices. NFC lets phones connect to payment systems, which in turn offer the convenience of tapping and paying for items at physical checkouts. Tap-and-pay uses software that lets you store payment methods, hence the moniker digital wallet.
Apple's iOS mobile operating system has a 27% market share in Europe, according to data firm Statista. The EC’s charge — namely, that Apple had “restricted third-party access to key technology necessary to develop rival mobile wallet solutions on Apple‘s devices,” could come with headline-grabbing, multi-billion-dollar fines larger than Latvia’s GDP: | • | | Under EU rules, Apple could be fined up to 10% of its global revenue (that’s a potential fine of $36.6 billion). For now, the charges are part of a "preliminary view" in which regulators allege the company "abused its dominant position." Apple still has the chance to respond before any formal conclusion is made. | | • | | Especially hurt by Apple’s control are a consortium of French banks, including BNP Paribas, Société Générale and La Banque Postale. They developed their own payment system, called Paylib, but it can’t run on Apple devices (Google's Android phones do allow it). Other services that can’t access Apple’s NFC tech include PayPal, Google Pay, Lydia, and Venmo. | | | | Familiar Foes: Like a comic book hero-and-villain duo, Apple and the EC seem destined to do battle forever — in serialized installments, of course. Earlier this month, the EC added a second charge to an ongoing investigation into allegations that Apple has distorted competition in music streaming (the probe was triggered by a complaint from rival Spotify). And then let’s not forget that the two are still battling it out in appeals court over a €13 billion bill for alleged tax evasion — levied by the Commission in 2016 and overturned in 2020. | | | | | | SPONSORED BY Alumni ventures | Invest in Startups Years Before They Go Public | If you’re hoping to tap the vast potential of professional venture capital, you have a few options: 1. Cut your teeth on Wall Street for over a decade before landing a job at a venture capital firm – if you’re lucky 2. Amass a sizable fortune so that you can cut a check for millions to a traditional VC firm 3. Invest with Alumni Ventures You might never guess, but one of these routes is significantly easier than the others (hint: it’s #3). Alumni Ventures makes it easy for any accredited investor to get access to highly-competitive startup opportunities through smart, simple venture funds. They build you a professional venture portfolio of 20+ venture-backed startups—the same ones backed by big-name venture firms. For differentiated returns, investors must tap into differentiated strategies. Start investing early in the next generation of great companies, in private rounds, before they take off. Start your venture portfolio with Alumni Ventures today. | | | | | | Investing | I Bonds are Set to Pay 9.6% In Annual Interest Through October |  | | Have $10,000 or less that’s sitting around and depreciating in value as inflation makes literally everything but a free walk in the park more expensive? The US Treasury Department may have just the tonic to make things feel a little bit better.
On Monday, the Treasury announced that Series I savings bonds, an inflation-protected investment backed by the US government, will pay 9.62% interest through October 2022. | A Bond Like No Other | | Series I savings bonds are more commonly known as I Bonds, but obviously have nothing to do with iPhones, iBooks, or iMacs, apart from prescient branding. What makes them unique is that they pay a fixed rate of return set by the Treasury Department as well as an inflation-adjusted variable rate of return. The second of these changes every six months and moves in tandem with the Consumer Price Index (CPI). In other words, the money that goes into these bonds is protected from inflation by one of the most creditworthy institutions in the world — the US government.
Is there a catch to this too-good-to-be-true scenario? Of course there is: | • | | You can only buy a maximum of $10,000 in I Bonds per calendar year (though as little as $25), and they must be purchased on the online government portal TreasuryDirect. Buyers can stretch that a little further by using their federal tax refund to buy an extra $5,000 worth of I bonds, or buying them through businesses, trusts, or estates. | | • | | While the 9.6% inflation-adjusted rate set Monday — based on the latest CPI data from March, which pegged annual inflation at 8.5% — is the highest since the I Bonds launched in 1998, there's another downside for some: the bonds can only be redeemed after a full year. | | | | “Even if future inflation numbers go back to normal, that would still result in a competitive return for I Bonds over the next couple of years,” wrote Ken Tumin, an analyst at Lending Tree. “The primary downside of I Bonds is the purchase limit.”
Cashout Caveat: I bonds mature after 30 years, so investors can earn interest on them for a good three decades. If you cash out before five years, however, expect a penalty: the last three months of interest. In a year featuring the S&P 500 down by almost 15% and economic headwinds galore, even that might be worth it in 12 months' time. | | | | | | Extra Upside | | | | | • | | While a delectable dinner and perfectly-paired bottle of wine are tough to beat, a few drinks tonight can make tomorrow morning… not so fun. But with Surely Wines, you no longer have to compromise your health or productivity when you enjoy an expertly crafted bottle. Their low-sugar, gluten-free wines are crisp and delicious — while complex enough for a wine “snob,” without the negative effects of alcohol. Turn any evening into “Wine Night” and get 20% off for the next 48 hours with code UPSIDE20. P.S — Surely offers a 100% satisfaction guarantee on all orders, no questions asked!* *Partner | | | | | | |  | Just For Fun | | | | | Written by Sean Craig and Brian Boyle. | | No longer want to receive these emails? Unsubscribe here. Copyright © 2022 The Daily Upside, LLC., All rights reserved. 1230 York Avenue, Box 154, New York, NY 10065 | | | | |
