Good morning. Today, Fortune focuses on the following topics:
- Arsenal manager Mikel Arteta talks about why he publicly accepted DNA sequencing.
- McDonald's CEO Chris Kempczynski is striving to revive the allure of this hamburger giant.
- AI is approaching a turning point where cash flow turns negative, and Wall Street believes so.
- Market: Standing still for now. (Also: Dan Ives is back!)
- In France's "poor" bond situation, "the sell-off risk is becoming self-fulfilling."
- Have a runny nose? You're not alone, or at least it's quite common.
- The "breeding program" for Singapore government employees.
Headline 1
Why has Arsenal's Mikel Arteta publicly discussed his acceptance of DNA sequencing?
Mikel Arteta is known for his strict self-discipline and management style that follows the principle of "accumulation of marginal gains." Each small improvement may seem insignificant on its own, but together they determine success or failure. In Arteta's world, there is hardly any other option. As one of the greatest coaches in English football history, Bill Shankly once said, "If you're number one, then you're number one; if you're number two, then you're nothing at all."
For Altta, health is the "foundation" of elite-level leadership. Therefore, he agreed to have his entire genome sequenced in order to better understand how his body functions and potential future health risks.
When he was young, Arteta suffered from a serious heart condition. He said that this test indicates an increased likelihood of him having celiac disease, as well as a certain degree of lactose intolerance.
Extended Reading: Why Did Mikel Arteta Decide to Make Public the Results of His DNA Sequencing? —— Kamal Ahmed
The UK Tax and Customs Administration ( HMRC ) launched an investigation into Manchester City's tax affairs in 2018 – FT
McDonald's "McDonald's Dilemma" is a real phenomenon.
McDonald's CEO Chris Kempczynski is working hard to reshape this dominant hamburger chain brand.
The $5 Sausage McFull套餐 didn’t work. Neither did the option that allowed customers to freely combine items, such as choosing a combination of Fish and Fries for $6. Growth has slowed down, and reports on the number of customer visits to stores are also declining. Wall Street has noticed that McDonald’s stock price has fallen by 32% since its historical high in February.
CEO Chris Kempczynski has been trying to persuade customers to return to Golden Arch. However, so far, a series of new menus introduced by the company and the aggressive marketing efforts undertaken to promote these menus have not been successful.
Worse still, some of the efforts McDonald's made to reverse these downward trends have had the opposite effect, according to a report by Phil Wahba, as mentioned in Fortune.
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- Citi shortens analyst training programs to two years; Wall Street and private equity firms compete for young talent – Sasha Rogelberg
- Patagonia The CEO is concerned about political apathy, so the company is providing $100 to each of 112,000 people to help them make voting plans for three friends – Tatiana Sataua
- The author of “AI Snake Oil” believes that chatbots will evolve into “oracles of truth” – while the news industry will head towards a place it hasn’t been to in 200 years – Nick Lichtenberg
- After retirement, Warren Buffett often spends his evenings staring at YouTube – watching clips of Glenn Close, advertisements from the 1950s, and talent shows from Uzbekistan – Preston Fore.
Falling prospects
AI is approaching a negative inflection point in cash flow, and Wall Street believes that spending will slow down in 2027.
The industry is heading towards a turning point: the entire sector is experiencing negative cash flows, while the largest cloud providers are beginning to slow down their capital expenditures on data centers. This chart, provided by Columbia Business School, shows “how quickly financing constraints are tightening,” he wrote in a recent paper. “Based on current estimates, in 2026, the combined capital expenditures of five companies will exceed their operating cash flows for the first time.”
He wrote, "Internal cash generation is still considerable, but it is no longer sufficient to fund the planned investment pace without relying more heavily on external capital or without moving assets and liabilities off the balance sheet of the operating company's financing structure."
Other analysts are already predicting that 2027 will become the year when AI capital expenditure begins to slow down. A Ohsung Kwon from Wells Fargo stated to clients this week: "We expect that the market will soon start to consider 2027 as a potential peak year, possibly after the third-quarter earnings reports and following the mid-term elections." He added, "Currently, most investors agree that AI capital expenditure is likely to slow down significantly in 2028."
Samuel Tombs and Oliver Allen believe that this rate of expenditure is simply not sustainable. In their most recent email, they stated: 'Investments related to AI may continue to grow very strongly, but the pace of capital expenditure for hyperscale cloud providers seems to will slow down in 2027, and supply constraints as well as higher borrowing costs will increasingly have an impact.'
Analysts from the five largest hyperscale cloud providers predict that the growth rate of nominal capital expenditure in 2027 will be significantly lower than in 2026. Even so, this expected slowdown is worth noting. Supply-side constraints are becoming an increasingly serious issue in the tech industry, with bottlenecks in the supply of advanced chips and electrical equipment, power grid capacity, as well as construction labor and materials becoming more apparent.
They stated that higher borrowing costs driven by rising long-term bond yields will compress the plans of those companies that are already leveraged. However, as long as financing remains readily available and large tech companies continue to expect that AI can bring exceptionally high returns, these factors "are unlikely to hinder the construction process."
SpaceX seeks $40 billion in financing to acquire NVIDIA chips in a funding round led by Apollo – FT
Market
Traders pause their actions after the S&P 500 reaches a record high
The S&P 500 hit a new record high yesterday, and traders seem to have taken the opportunity today to lock in profits. Asian and European markets fell slightly, and U.S. stock index futures declined before the opening of trading in New York.
Within the past 24 hours, French bonds have seen another round of moderate rebound. However, this morning yields have risen again: as of press time, the yield for the 10-year OAT bond is 4.88%.
S&P 500 futures fell 0.07% this morning. Yesterday, the index rose 0.58% to close at a record high of 7,818.93 points.
In Europe, the Stoxx 600 index fell by 0.48% in the early session, while the UK FTSE 100 index declined by 0.44% before noon.
In Asia, the South Korean KOSPI index fell by 1.98%, Japan's Nikkei 225 index fell by 0.92%, and India's Nifty 50 index fell by 0.84%. China's CSI 300 index was closed due to the National Day holiday.
Brent crude oil is priced at $101 per barrel.
Bitcoin is reported at $83,721.
Dan Ives is back, and —— you guessed it —— he’s bullish on tech stocks.
Dan Ives, a well-known tech bull who left Wedbush earlier this year, has returned with his first research report published at the new merchant bank Yorkville Ives. Not surprisingly, his first opinion is bullish on tech stocks – to be precise, 49 of them.
He and his colleagues suggested, "At this stage of the AI lifecycle, the determining factor is supply, not demand. We believe that the construction of AI is still in its early stages, and we will remain very optimistic about the prospects for technology winners in the coming years. At least until 2027, infrastructure will still be limited by supply." His top five stocks are NVIDIA, Microsoft, Palantir, Apple, and CrowdStrike.
If France is unable to resolve its "terrible" bond problems, "the risk of selling off may become self-fulfilling" – and Le Pen is waiting for the right moment.
Investors are still trying to assess the extent of the financial troubles faced by the French government. In recent weeks, there has been a significant sell-off of French bonds, with related yields approaching record highs.
In Piper Sandler, Nancy Lazar and Karina Mayer consider this situation to be "terrible." In their latest report, they stated: "Political uncertainty has finally prompted the market to raise concerns about France's poor fiscal stance. Over the past 35 years, French government spending and taxation have consistently exceeded GDP by 50%."
Peter Schaffrik of RBC and his colleagues stated in an email seen by Fortune: "France is facing real structural fiscal and political problems, which makes it difficult to see what could turn the market around." If the government passes the 2027 budget, it will bring some fiscal discipline, he said. "But starting from next year, France will still need to maintain the same pace of discipline over the next four years in order to reduce the budget deficit to 3% by 2030 – and no French government in modern history has ever achieved such a speed."
On the alternate seats is also Marine Le Pen and her far-right National Rally. Elections are expected to be held next April to replace President Emmanuel Macron. Le Pen typically receives about a third of the votes in polls, which is sufficient for her to advance to the second round of voting and gives her a real chance of winning the presidency. According to Macquarie's Thierry Wizman and Gareth Berry, her proposals include a significant reduction in spending on immigration services, the abolition of entire national institutions, reducing job losses in the public sector, and the elimination of more than 120 overlapping taxes.
They said to the clients: "Le Pen's plan... is likely intended to convey a message to bond traders, that she is aware of the burden brought about by rising yields, and that she already has a framework for dealing with it."
Today's Chart
Are you sick now? It's most likely a common cold.
According to data from the US Centers for Disease Control and Prevention (CDC), the incidence of the most common viruses such as influenza and COVID-19 is currently on the decline. Except for the common cold, which for some reason is surging in the United States. Epidemiologist Katelyn Jetelina stated: "This level is higher than at any time since 2019 (the previous season recorded on the CDC website). An increase in autumn is expected, but the magnitude of this one is quite significant." She has written a widely praised disease column on Substack.
She said, "Unfortunately, apart from sleeping, drinking plenty of water, and staying at home when sick, there isn't much you can do about a cold."
Today's Numbers
90% of mortgage holders
The proportion of homeowners with mortgage loans whose current loan rates are lower than the current market average of 7.3% are therefore reluctant to move. According to Goldman Sachs' Pierfrancesco Mei, mortgage rates have risen by more than one percentage point since February.
Today's front page
- Concerns over Houthi attacks on Saudi Arabia outweigh the recovery of supplies, leading to rising oil prices – CNBC
- CDC: Monitoring the risk of plague in Russia, ready for any threat – Axios
- Within Bessent's Ministry of Finance: Tension, Staff Turnover, and Unmet Economic Goals – WSJ
- As oil and gas flows increase, Iran intensifies attacks on vessels in the Strait of Hormuz – Bloomberg
- How Houthi militants won in the Red Sea and sparked a new war in Yemen – NYT
- Insights into Hamas' terrorist tunnels used to carry out one of the bloodiest massacres on October 7 in Gaza – NY Post
Let me mention one more thing.
The Singapore government has developed a new algorithm to help employees “reproduce” again.
In 2025, Singapore's total fertility rate dropped to 0.87 children per woman, far below the level required for population replacement. The government decided to take action and launched FirstDate, a dating website designed to help government employees find partners with one another.
In order to avoid the drawbacks of applications such as Tinder and Hinge, where there are far fewer women than men on these platforms, resulting in women being overwhelmed by a large number of matches while men receive very few – FirstDate uses a Nobel Prize-level matching theory algorithm. Users fill in their personal information and attempt to match with other singles. However, the algorithm only displays match results that are mutually preferred by both parties, meaning that based on their respective profiles, there are no better options than those assigned by the system. After receiving a match, users have 72 hours to decide whether to establish contact.
By restricting users' choices and only providing options to view potential partners that do not actually exist based on their own profiles, Singapore hopes to increase the success rate of dating. The website for this pilot project states: "Tired of swiping through endless profiles? This is the end of that."
