Good Morning! Shippers are pulling $35 billion from the Red Sea amid fears of attacks. Apple is on a rescue mission for its $17 billion watch business - it needs to make engineering changes to prevent a ban. A private equity firm is straight-up tapping America’s spring water for its latest investment. Plus why randomness doesn’t feel random, and the must-read parts from KKR’s 75-page market outlook.

Today’s edition is brought to you by tea—the incentive protocol that ranks and rewards open-source software to boost the overall quality of the software supply chain. Sign up here.

_{SQUEEZ OF THE DAY}

Cannabis Stonks Collapsing

You might think 2023 would be a great time to invest in cannabis companies. After all, a bull market is tearing through the S&P 500, dispensaries are popping up everywhere, and potential drug reforms seem right around the corner.

But, despite the industry arguably becoming more mainstream and lucrative than ever, marijuana-related stocks just had a rough 2023. An index tracking 100 cannabis companies has dropped over 15% this year, hitting an all-time low in October.

The issue lies in the industry's heavy reliance on federal reform. Additionally, cannabis company shares, along with ETFs, are limited to trading over the counter or on smaller Canadian exchanges, restricting their presence on major platforms like the NYSE.

This regulatory environment has dampened the optimism of investors expecting significant industry progress. Pot stocks have experienced dramatic highs and lows over the years. Tilray is trading around $2 yet hit a high of $214 in 2018. And Curaleaf has wiped out roughly $10 billion of shareholder value since its 2021 peak.

Takeaway: Will 2024 be the year that cannabis stocks rebound? Investors are closely watching for the potential reclassification of marijuana as the next catalyst. The drug is currently a Schedule I drug, which presents significant hurdles for both financing and studying the drug.

_{SPONSORED BY TEA}

Ranking, Rewarding, and Revolutionizing Open-Source Software

tea is a web3 protocol that’s designed to enhance the sustainability and integrity of the software supply chain by enabling open-source software developers to capture the value that they create. 

Founded by the creator of Homebrew—the largest macOS package manager with tens of millions of users—Max Howell started tea because he’s on a mission to solve the problem of open-source software contributors not being fairly rewarded for their important work.

The tea Protocol uses an algorithm called Proof of Contribution to quantify the impact of a software project across the software ecosystem. The algorithm assigns each project a dynamic score—referred to as the project’s teaRank—based on the project’s orientation within, and utilization by the software ecosystem over time. 

Find out what’s brewing and join the OSS rewards revolution by getting involved with the communi’tea!

Sign up for the tea Incentivized Testnet waitlist here.

_HEADLINES

Top Reads

• The private equity firm tapping America’s spring water (BB)

• Apple on rescue mission for $17 billion watch business (YF)

• The U.S. is producing more oil than any country in history (CNN)

• Shredded Zuck’s ACL recovery threatens his MMA career (YF)

• Shippers have diverted $35 billion from Red Sea over fears of attack (CNBC)

• Why inflation’s last mile might not be so hard (Axios)

• U.S. seeks 8-month prison term for lawyer who traded M&A secrets (Reuters)

• The office market had tough 2023, next year looks worse (WSJ)

• How Swiss authorities bungled Credit Suisse oversight (Reuters)

_{CAPITAL PULSE}

Markets Rundown

Stocks closed higher and the Dow notched its fifth-straight record.

Movers & Shakers

• (+) Affirm ($AFRM) +15% after the company announced an expansion of its BNPL partnership with Walmart.

• (+) Chewy ($CHWY) +9% after Jefferies initiated coverage of the pet company with a buy.

• (–) Lyft ($LYFT) -4% after a director at the rideshare company sold stock.

Private Dealmaking

• Cevian Capital acquired a $1.3 billion stake in UBS Group

• H.I.G. Capital bought the spine business of ZimVie for $375 million

• Meltwater, a media monitoring company, raised $65 million

• Twin Health, a metabolic care startup, raised $50 million

• SimSpace, a cybersecurity risk management provider, raised $45 million

• ON, an AI chatbot for brands/enterprises, raised $25 million

For more PE, VC & M&A deals, subscribe to our Buysiders newsletter.

_{BOOK OF THE DAY}

The Power Of Creative Destruction

Crisis seems to follow crisis. Inequality is rising, growth is stagnant, the environment is suffering, and the COVID-19 pandemic has exposed every crack in the system. We hear more and more calls for radical change, even the overthrow of capitalism. But the answer to our problems is not revolution.

The answer is to create a better capitalism by understanding and harnessing the power of creative destruction—innovation that disrupts, but that over the past two hundred years has also lifted societies to previously unimagined prosperity.

To explain, Philippe Aghion, Céline Antonin, and Simon Bunel draw on cutting-edge theory and evidence to examine today’s most fundamental economic questions, including the roots of growth and inequality, competition and globalization, the determinants of health and happiness, technological revolutions, secular stagnation, middle-income traps, climate change, and how to recover from economic shocks.

They show that we owe our modern standard of living to innovations enabled by free-market capitalism. But we also need state intervention with the appropriate checks and balances to simultaneously foster ongoing economic creativity, manage the social disruption that innovation leaves in its wake, and ensure that yesterday’s superstar innovators don’t pull the ladder up after them to thwart tomorrow’s.

A powerful and ambitious reappraisal of the foundations of economic success and a blueprint for change, The Power of Creative Destruction shows that a fair and prosperous future is ultimately ours to make.

“A cutting-edge analysis of what drives economic growth and a blueprint for prosperity under capitalism.”

_{DAILY VISUAL}

The impact of the Fed pivot on GDP

_{SPONSORED BY GUIDDE}

Magically Create Video Documentation with AI

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Simply click capture on our browser extension and the app will automatically generate step-by-step video guides complete with visuals, voiceover and call to actions.

The deal closer? guidde is 100% free.

Try it here and watch your team’s productivity skyrocket.

_{DAILY ACUMEN}

Liquid Modernity

In our swiftly changing world, known as Liquid Modernity, where everything is in constant flux, the rapid pace of change is driven by evolved brains and advanced technology.

With our brains processing thoughts at a lightning speed of 50,000 to 70,000 per day, combined with swift neuronal activity, our lives are undergoing continuous transformation.

However, amid this constant change, wisdom reminds us not to let fleeting emotions guide permanent decisions. The advice to "never make a permanent decision based on temporary emotions" serves as a crucial reminder against hasty choices that might lead to lasting regrets.

As societal norms evolve, urging us to embrace change, there's also a call to reassess and commit to enduring structures that offer stability over the long term. The key question is: Are you navigating the fluidity of change, or are you seeking comfort in stability in this ever-shifting world?

_{ENLIGHTENMENT}

Short Squeez Picks

• How to build conflict skills 

• Why randomness doesn’t feel random

• How to handle an emotionally charged negotiation

• A 7-point plan to succeed in your new leadership role

• The must-read parts of KKR’s 75-page market outlook 

_{MEME-A-PALOOZA}

Memes of the Day