Meta’s main character moment

👋 Good morning! Right now, the stock market appears to be at the mercy of whatever news emerges from Iran. Stocks rose on Wednesday as hopes for peace talks climbed, even if Iran is rejecting outreach.

The S&P 500 (^GSPC) gained 0.4%, the Dow (^DJI) 0.7%, and the Nasdaq (^IXIC) 0.8%. Critically, Brent oil futures dipped below the $100 mark.

On the agenda this morning:

🥽 Meta’s main character arc

👋 Sora long, AI video

🏀 Load and expand

🦾 Worker productivity is on the rise. How much is because of AI is hard to say.

☹️ Mood check

📆 What we’re watching Thursday: A fairly quiet earnings and economic calendar with a few deep cuts will keep the focus on Iran and whatever emergent tech news that comes up. That arena has been busy, as you’ll see below.

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⚖️ Meta and YouTube were found negligent in landmark social media addiction lawsuit. The jury ruled that the companies were liable for $3 million in damages, but it’s seen as a bellwether for many other lawsuits in the works.

🚚 The Iran war and AI advances are creating winners and losers among transport stocks. The longer journeys with a closed Strait of Hormuz mean higher fees and more days at sea for companies like Maersk.

🏡 Zillow’s CEO says that supply is still the key to the housing crisis. Lower mortgage rates can only do so much.

📈 Morgan Stanley’s Mike Wilson says the S&P 500 will still see a profit boom, despite the war. Though markets have been roiled by high oil prices, the bank’s chief investment officer said that strong, continued corporate earnings will keep the index resilient.

⚠️ Meanwhile, other Wall Street analysts see recession odds spiking. EY-Parthenon chief economist Gregory Daco sees a 40% chance of a recession, which could easily rise if things get worse in the Middle East.

✈️ TSA chief says nearly 500 officers have quit. And the current travel problems are set to outlive any shutdown deal.

🏆 Gold gains as traders consider the likelihood of ceasefire talks succeeding. Even, of course, as initial proposals from the US were clearly rejected.

🚀 SpaceX may be looking for as much as $75 billion in its IPO. Investors are waiting for the company to file with the SEC, perhaps this week, for a debut on the public markets in June.

See what else is trending on Yahoo Finance.

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Meta on Wednesday made a small number of cuts across some of its teams. A report from Reuters earlier this month suggested this may be part of a much larger staffing move still to come.

A Meta spokesperson told Yahoo Finance, “Teams across Meta regularly restructure or implement changes to ensure they’re in the best position to achieve their goals.”

But this was just one in the steady drumbeat of Meta-related headlines as the company looks to keep pace in the AI moment.

Late Tuesday, the company disclosed new stock incentive plans in SEC filings that could see some of its top execs – but not Mark Zuckerberg – earn nine-figure stock awards if the company’s market cap tops $9 trillion.

Earlier this week, the Wall Street Journal profiled not CEO Zuckerberg, but Zuckerberg’s AI agent. This story followed reports that a rogue AI agent being run by an engineer at the company had unwittingly created a data security vulnerability. And that story came about a week after Meta said it had acquired Moltbook, a social network for AI agents.

Unrelated to its AI efforts, Meta was ordered to pay a $375 million civil penalty in a case brought against the company in New Mexico after a jury found it failed to protect children on its platform. A jury in a Los Angeles court on Wednesday also found Meta and YouTube failed to warn users about the dangers of their platforms.

As one of the world’s largest companies running several of the world’s largest social platforms, no one should really be surprised to see Meta in the headlines on these or any other days. But the ebbs and flows of the AI economy have sent the spotlight toward its biggest protagonists on a rolling basis. Right now, the time is Meta’s.

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As the Morning Brief went to press on Tuesday, headlines crossed that OpenAI was shutting down its AI video-generation tool, Sora. The decision also resulted in Disney’s $1 billion investment in the company — which involved licensing some of its IP for use in Sora — falling through.

With OpenAI staring down an IPO as soon as this year, the company has been keen to focus its staff on what works and cut bait on what doesn’t.

Brian Sozzi flagged two charts on Wednesday that showed Sora’s MAUs were declining, and its downloads had plummeted since the fall.

Of course, many companies would be ecstatic to have millions of users and millions of downloads. But most companies aren’t worth $840 billion. And most companies aren’t OpenAI.

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The NBA took another step on Wednesday toward expansion, with the league likely to add two new franchises — one in Seattle, another in Las Vegas — that are expected to each get bids up to $10 billion.

Folks who follow business news closely will wonder which of the billionaires who don’t yet own a professional sports franchise might be part of a new ownership group.

Readers who remember a different era of NBA basketball might wonder whether the Supersonics’ name makes a comeback.

The first business thought we have is that this move will be the latest test – or, perhaps, confirmation — of the argument that in a media landscape that has become increasingly unreliable, there is no safer bet than live sports.

We’ll leave a fuller discussion of whether the league’s competitive moment is really crying out for a further dispersion of talent to Kendall Baker, Jeff Tracy, and the team at Yahoo Sports AM.

But where we see one behemoth narrowing its focus in OpenAI, the NBA will expand its remit. Whether this analogy holds is a debate we look forward to continuing.

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“If oil stays high, it would be restrictive enough simply to leave [Fed interest rates] where they are while oil prices filter through the rest of the economy and cause a slowdown that you can cut into.”

— Cintrini Research founder James van Geelen, who wrote that very ominous and viral Substack post

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Economist Robert Solow famously said of productivity gains that resulted from the PC boom of the 1980s that you could see the benefits everywhere except in the data.

This is known as the Solow Productivity Paradox.

It feels like this is the baseline assumption of how AI’s impacts on the economy will feed through. Jay Powell, for instance, said last week that “I think economic forecasters are very skeptical of … periods of high productivity, because they’re so rare. And they’re often revised away.”

Worker productivity, however, has been elevated for the last few years. The most recent data released on Tuesday showed worker productivity in the fourth quarter of last year rose 2.5% compared to the prior year. In the 2010s, productivity rose at more like a 1% rate.

But again, as Powell notes, current productivity bumps aren’t really capturing any AI-related contributions yet.

In a note to clients published Tuesday, economists at Barclays led by Jonathan Millar argued that “a closer look reveals that the evidence in favor of sustained acceleration is still in dispute.”

The broad strokes of Millar’s argument note that productivity can be measured in two ways — either via income or output. The two measures, essentially what a company makes off a unit of labor or what it spends to receive the output of a unit of labor, should balance. But Millar’s team found that these measures have “diverged meaningfully.”

In a separate note out Wednesday morning, Oliver Allen at Pantheon Macroeconomics noted that the economic impact of AI-related productivity gains isn’t a settled question, either.

Read more.

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“Everyone” feels bad about their job.

Of course, you might say. There’s a classic knee-jerk reaction to dump on the boss and the grind. Another day in the salt mine. The retirement countdown, etc.

But survey data, where these questions are asked over and over again, does paint a picture that is at least consistent. It doesn’t look great.

Fresh data from ADP shows that barely a quarter of American workers strongly agreed that their jobs are safe from being cut. This is worse than in countries like Egypt and Nigeria, and speaks.

AI eating jobs is making people more nervous, and this anxiety may become a more dominant force in myriad facets of everyday life. And, not surprisingly, it’s mostly a negative force for doing a good job at work.

Read more.

• Economic data: Initial jobless claims, week ended Mar. 21 (205,000 previously); Continuing claims, week ended Mar. 14 (1.857 million previously); Kansas City Fed manufacturing activity, March (5 previously)

• Earnings calendar: Commercial Metals Company (CMC), Argan, Inc. (AGX), BRP (DOO), Pony AI (PONY), Seabridge Gold (SA), Braskem (BAK), Kodiak Sciences (KOD), Newsmax (NMAX)

• Economic data: University of Michigan sentiment, March final reading (55.5 previously); U. Mich. current conditions, March final reading (57.8 previously); U. Mich. expectations, March final reading (541. previously); U. Mich. 1-year inflation, March final reading (+3.4% expected previously); U. Mich. 5-10 year inflation, March final reading (+3.2% expected previously); Kansas City Fed services activity, March (6 previously)

• Earnings calendar: Carnival Corporation (CCL), Legence Corp. (LGN), Perpetua Resources Corp. (PPTA), TMC the metals company (TMC), Standard Lithium (SLI), Nano Labs (NA)

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Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.

Ethan Wolff-Mann is a Senior Editor at Yahoo Finance, running newsletters. Follow him on X @ewolffmann.

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