CONSUMER TRENDS

SHEIN’s Risky Rebrand

Chances are, you’ve heard about fast fashion company, SHEIN, that’s had a surge in popularity due to its quick turnaround and ability to keep up with trends. Because they have no distinct style of branding besides their ability to make cheap clothes quickly, they have no customer loyalty. As soon as a cheaper company comes out and starts producing clothes at a fraction of the cost of SHEIN, they lose their customers. How does SHEIN mitigate this? Recently, the company has been trying to legitimize its brand, not by actually improving operations with better labor practices or better quality clothes, but by trying to change people's perception of the company. When most people think of SHEIN, they think of poor quality, bad labor practices, controversy, the list goes on. SHEIN has been trying to combat this misconception by collaborating with celebrities in an attempt to legitimize themselves—when in reality all they are doing is pulling these celebrities' carefully cultivated brands down with them. This marketing ploy of “luxury SHEIN” most likely to fail as SHEIN’s biggest consumer demographic (tweens, teens, and young adults), has been trending towards cheap clothing—which is what SHEIN is known for. So while conceptually trying to rebrand to be taken more seriously makes sense, it likely won’t because it isn’t what their main consumer base wants. If SHEIN rebrands itself as luxury and increases its price, they will see a significant decrease in customers who never really had loyalty to the company in the first place.

GLOBAL OUTLOOK

The Godfather of AI Issues a Warning

On Tuesday, AI royalty took the stage as John J. Hopfield and Geoffrey E. Hinton received the Nobel Prize in Physics for creating the building blocks for the AI magic we use today. Hinton is a British Canadian scientist dubbed  as “the Godfather of AI.” 

• On X, The Nobel Committee wrote, “They have shown us a new way of using computers..and guide us to tackle many of the challenges our society faces.”

• AI is extremely useful in everyday life, whether it's tools like ChatGPT helping with essays, Google answering random questions, or Siri setting your five alarms for that 8:30 you have; we can agree we use AI one way or another. 

That being said, let's be real: the rate at which AI advances is getting… a little creepy. Last year, Hinton left his job at Google so he could openly share his unease about where the technology is headed. Even the Godfather is raising an eyebrow! 

• When he left Google, he stated, “The idea that this stuff could get smarter than people — a few people believed that…But most people thought it was way off. And I thought it was way off… I no longer think that.” 

• Hinton is concerned with the hands in which the rapidly growing technology is put in. He applauded his former student Ilya Sutskever for firing Sam Altman, the CEO of OpenAI, though he was reinstated shortly after. Hinton claims AI is in the hands of people who don’t care much about safety and only about profits. 

In an interview with 60 Minutes later last year, Hinton described just how good at manipulating humans AI could get, describing that AI models will be able to know every novel there ever was, political connivances, basically everything, and they’ll know how to do it. Now that's pretty mind-blowing to wrap your head around. So the real question is: how will this play out in the real world, and are we ready for it? 

The Sun Finally Sets on the British Empire

After lengthy negotiations, the United Kingdom has agreed to hand back the territory of the Chagos Islands to the island country of Mauritius. The Chagos Islands are an atoll archipelago in the middle of the Indian Ocean - which the British government has claimed since 1814. The UK government announced last Thursday they had reached a deal with the Mauritius government, granting them sovereignty over the islands. In exchange, Mauritius granted a 99-year lease of the jointly run UK/US military base in Diego Garcia, the largest island of the archipelago. The deal is expected to be ratified in 2025. President Biden, who pressured the UK government into taking the deal, welcomed the news in a statement released last week. This resolves decades of dispute between the British government and the native Chagossians who were displaced illegally in the 1960s and 70s to make room for the American military base. There remains mixed feelings on part of the Chagossians, who expected a deal without strings attached. One thing is clear: Brittania no longer rules the high seas.

China’s New Dilemma: Pushing for Babies

Regardless of which country you’re in, when a government worker knocks on your door to find out if you’ve gotten pregnant yet, you’re going to be creeped out. After years under the “One Child Policy” in China, people are facing a completely different invasion of privacy: the government’s insistence on having babies.  After the forced abortions and fines of the “One Child Policy,” many women in China do not want children nor do they feel like they could maintain their standard of living with a child as childcare costs have spiked and homeownership continues to be expensive. Therefore, China’s fertility rate has plummeted to the lowest in the world, settling around 1.0 when the replacement rate is 2.1. This oncoming population collapse has pushed Beijing to take a heavily “pro-birth” stance, disseminating posters that support families with three kids, providing prenatal vitamins with marriage certificates, and assembling committees to go door-to-door to discuss pregnancy. 

Economically speaking, with a 1.0 replacement rate, the Chinese population pyramid and society will be facing severe issues ranging from lack of workers to strained government budgets, so it is clear that Beijing must take some form of action to correct this issue. While some mothers say that it’s easy enough to brush aside the “pro-birth” injections from the government, many others fear that the desperation of the state is a sign that the issue will only get worse, and consequently, so will the government measures. Already, certain provinces have encouraged women to register pregnancies with the government and heavily discourages abortion amongst the community. While it is not near the level of control as during the “One Child Policy” era, it represents the consistent governmental belief that they can make the health decisions of their citizens.

Low fertility rates are not only seen in China: governments like Japan, Germany, and the US have been struggling on balancing low levels of fertility while not infringing on the rights of women. Fear of population collapse plays out across themes of policy, from abortion to immigration, and it has been a key point across both the Trump and Harris campaigns in regard to child tax credits and promises to reduce everyday costs. Ultimately, the recent shift in priorities for China represents a new wave of solutions in fighting low fertility rates branded by governmental oversight and only time will tell how it will end.

MACRO

Fed Heads in a Spin: Rate Cut Showdown

.he Federal Reserve met in September to debate whether they should engage in a big cut rate. Their minutes revealed a divide amongst their officials regarding how much they should cut interest rates, and it also highlighted their struggle to balance inflation with sustaining national economic growth without triggering a future recession. 

Most favored a half-point reduction, but some members pushed for a quarter-point cut. Members who pushed for a quarter-point cut expressed their concerns regarding the consistent inflation rate this year and argued that a quarter-point cut would provide more predictability than a half-point reduction. 

There have been recent economic indicators that suggest the diminishing risks of a significant economic turndown, such as 

• Increased hiring and 

• Solid consumer spending. 

Because of this, the Fed has concluded that their projections from the September meeting, which are that there will be quarter-point cuts at the end of November and December meetings, are accurate.

Policymakers also plan to continue reducing their pandemic-borne bond holdings. Officials emphasize that the Fed’s balance sheet reduction will persist, even if interest rate targets are adjusted. 

Ultimately, the Fed is being cautious as to what monetary policies they can implement that will be able to manage inflation and support economic growth.

The Port Strike is Over

The port strike, which had been anticipated for weeks, began on October 1, 2024, at midnight and wrapped up in just three days. Due to the short duration, relatively little damage was done because companies had rushed deliveries in anticipation of the strike’s start. 

In case you missed last week’s article:

The International Longshoremen’s Association (ILA) is a union that represents 85,000 dockworkers up the Atlantic and Gulf coasts. Of those members, almost 50,000 went on strike on October 1st, demanding concessions from the United States Maritime Alliance (USMX), which represents employers in the longshore industry on the Atlantic and Gulf coasts. 

To recap, the ILA requested:

• $5/hour per year raise for the next six years

  • For context: The current top-paying ILA contract has a rate of $39 per hour

• Protection from automation

The tentative deal they received:

• $4/hour per year per raise for the next six years

  • FYI: This will raise wages by 62% over the 6-year contract

  • For context: When the USMX had offered a $3/hour raise before the strike, and that’s when ILA president Dagget had moved back to the $5/hour raise demand

• Automation details are TBD

This port strike is evidence of the effectiveness of collective bargaining. “It is a victory for all parties involved—preserving jobs, safeguarding supply chains, and preventing further economic disruptions,” Timmons, President of the National Association of Manufacturers, wrote.

Both parties knew the potential consequences, and it is fortunate that the USMX met the union halfway, avoiding what could have been a week-long strike leading to supply chain delays lasting into December or January, according to Peter Sand, chief shipping analyst at Xeneta. Workers were excited to return to work and did so early Friday morning– ready to make income again. Now that the ILA and USMX have agreed on a pay raise, the current contract will extend until January 15, 2025, while they attempt to work out a final deal or face another strike.

September Jobs Report: An Overachiever Amongst Underperformers

On Friday, October 4th, 2024, September’s U.S. jobs report was released. It reported that employers added 254,000 nonfarm payroll growth. This metric is a gauge for the number of people employed in the United States, save for those in farming, private households, non-profits, active military, and proprietors. According to Investopedia, nonfarm payroll workers employee data accounts for 80% of workers contributing to the GDP (Gross Domestic Product). Learn more here.

This figure shocked the 3rd quarter’s trend of decreasing job growth, which began following March 2024, a surprise to all.

The unemployment rate continued to decline from August’s figure of 4.20% to 4.10% – a welcome complement to the job growth data. 

The present and potential consequences of the jobs data for key economic stakeholders are as follows:

Voters: 

• The economy was the most critical issue for 2024 voters. A strong resurgence in job growth could boost overall confidence in the effectiveness of the Biden Administration’s economic policy, giving Kamala Harris enough momentum in the polls to edge out Donald Trump in the polls. 

The Stock Market:

• Following the jobs reports released on Friday, October 4th, The NASDAQ Composite, Dow Industrials, and S&P 500 indexes rose by 1.2%, 0.8%, and 0.9%, respectively. (Wall Street Journal)

The Federal Reserve: 

• Outstanding job growth coupled with lowering unemployment reaffirms the possibility of the “soft landing” the Federal Reserve aims to achieve.

• Future target rate cuts will likely be issued to the tune of 250 basis points as opposed to the 500 basis point swing employed on September 18th. 

While the numbers bring good news, there still remains a great deal of economic uncertainty coming into the 4th quarter. Among the market's chief concerns are the upcoming presidential elections, which will determine near-future fiscal policy, and the Iran-Israel tensions, which have caused major fluctuations in crude oil prices. 

TECH

Smarter, But Not Safer: Privacy Risks in Meta Glasses

In September 2021, the tech world witnessed the launch of Ray-Ban Meta smart glasses–a product born from the collaboration between Luxottica, the parent company of Ray-Ban, and Meta (formerly Facebook). The glasses feature integrated cameras, speakers, and smart capabilities that allow users to capture photos and videos with little effort. 

While many loved the ease of integrating technology like this seamlessly into everyday life, Harvard students AnhPhu Nguyen and Caine Ardayfio, in a recent study, revealed certain safety concerns. With just a few hours of coding and access to low-cost tools, facial recognition software integrated with the smart glasses could quickly pull up information on individuals based on a single facial snapshot. To learn more, click here.

The ability to reveal personal information from unsuspecting individuals in public will urge policymakers and consumers to reconsider how their privacy is protected. Click here to learn more. 

Turkey Hits ‘Block’ on Discord

Turkey just added Discord to its growing list of digital no-gos. On Wednesday, the country blocked the messaging platform after Discord refused to share user data that authorities requested as part of an investigation into illegal content. The move comes on the heels of public outrage over the platform being used to praise a high-profile murder in Istanbul. Turkish officials are framing the ban as a necessary step to protect children from harmful content, but critics argue it’s another hit to free speech.

Why does this matter?

       Discord isn’t just for gamers; with over 150 million users, it’s a go-to for companies and communities. In Turkey, the platform’s block could stifle communication for startups and small businesses that rely on its free messaging services. Economically, this decision could spook international investors already wary of Turkey’s increasingly tight grip on tech platforms. Not to mention, compliance demands for tech companies operating in Turkey just got much more complicated.

      The timing is also interesting: Turkey’s move came just a day after Russia implemented its own Discord ban, citing concerns over terrorism and extremism. Turkey has previously blocked other platforms like Instagram and Roblox, making this the latest in a series of crackdowns that have big implications for tech companies and free speech.

The bottom line:

         Turkey’s growing tech regulation is raising eyebrows, and the Discord block may be just the tip of the iceberg. Keep an eye on how this plays out, especially if you’re in tech—or love chatting with friends on Discord.

AI Governance Takes a Prominent Stage at 79th UN General Assembly

The 79th United Nations General Assembly (UNGA) in September 2024 featured discussions on artificial intelligence (AI) governance, reflecting growing global concerns about the technology's rapid advancement and potential risks.

In the final UNGA address of his presidency, Joe Biden emphasized the urgent need for international cooperation on AI governance. He posed two critical questions: how to effectively govern AI amid the accelerated and competitive transnational development of the technology while also urging the world to ensure AI upholds human rights and dignity. Biden's remarks touched on the potential dangers of AI, including disinformation, novel bio-threats, and the technology’s inclusion in weapons of war, signaling a shift towards more cautious rhetoric from world leaders.

A high-level UN advisory body released a comprehensive report on AI governance, asserting that global regulation is "irrefutable" and that AI governance "cannot be left to the whims of markets alone." The report highlighted concerns about the concentration of AI benefits among a small number of countries and corporations. It recommended establishing a global AI fund to address the widening technological gap between developed and developing nations, aiming to mitigate the risk of exacerbating existing global inequalities. However, the practicalities of implementation and the will to establish safety measures remain unfocused and unclear.

Key governance recommendations included creating an independent international scientific panel on AI, with ​​an  “advisory Body comprised 39 preeminent AI leaders from 33 countries from across all regions and multiple sectors, serving in their personal capacity” to help with organizing biannual intergovernmental policy dialogues, and developing a shared repository of AI models and datasets aligned with UN sustainable development goals.

Despite prevailing geopolitical tensions, the UN's Summit of the Future demonstrated an unexpected level of cooperation on AI issues. However, corporate lobbying could dilute regulations globally, and transnational enforcement mechanisms remain uncertain. The gap between diplomatic rhetoric and practical implementation of AI governance could potentially undermine the UN's efforts to establish meaningful global oversight.

As AI capabilities continue to advance and become important in our technology, economies, and lives, the UN's efforts to shape global governance are noteworthy, even if only symbolically at worst. The effectiveness of these initiatives in mitigating AI risks and ensuring equitable benefits remains to be seen. The coming period will be critical in determining whether these multilateral efforts have enough political capital and strength to translate into enforceable global policies on AI development and deployment that will hopefully prioritize the collective good over narrow corporate interests.