By Matthew Gutierrez and Shawn O’Malley
Guess the new $400,000-per-year job that doesn’t require a college degree?
Walmart store managers. They act as midlevel executives because they oversee stores with roughly 350 workers and ~$100 million in annual revenue, including a rapidly growing e-commerce business.
Their annual base salary is around $128,000, but stock grants (up to $20,000) and bonuses (up to 200%) have pushed total compensation to new heights.
Noted Walmart’s CEO, who started as an hourly worker 30 years ago: “We are asking them to act like owners and to think like owners.”
— Matthew & Shawn
Here’s today’s rundown:
Today, we'll discuss the three biggest stories in markets:
Why Blackstone is building a data center empire
The hottest job in corporate America
What’s driving soaring childcare costs, again
All this, and more, in just 5 minutes to read.
POP QUIZ
Chart of the Day
In The News
🔨 Blackstone is Building an Empire of Data Centers
To be cliche, an old expression on Wall Street suggests it’s best to “sell shovels during a gold rush.” In other words, while everyone is chasing the next big trend, a better business is selling them the tools and resources they’ll need.
It’s a lesson the Wall Street titan, Blackstone, knows well. The shovels in this metaphor are data centers, and the gold rush is AI.
Selling shovels: In 2021, Blackstone, the world’s largest private equity firm, acquired the data center operator QTS for $10 billion. It’s a small but valuable part of the firm’s $1 trillion real estate empire.
Whether brilliant foresight or luck, Blackstone’s investment in data centers seems very prescient now as companies like Meta and Microsoft pour money into computing power underpinning AI models.
Bloomberg describes data centers as “industrial parks filled with computers,” but Blackstone actually thinks its QTS investment may be one of the most profitable in its history.
Where it’s happening: Phoenix, Arizona, and Northern Virginia, outside Washington, D.C., are some of the biggest data-center hubs.
Why it matters:
Impacts of a gold rush: Supplying Big Tech with computing power isn’t cheap; pending QTS data center projects are expected to consume roughly 6 gigawatts of electricity (the equivalent of powering about 5 million homes.)
While data centers allow you to keep your pictures in the cloud and ask ChatGPT for help with almost anything, evidently, they can have big impacts on the communities they’re positioned in and, specifically, their electric grids.
Despite data centers’ vast electricity consumption, these extensive complexes don’t offer the same economic benefits for many communities as shopping centers, hotels, or office parks, facilitating consumer spending and more jobs.
Said one data center researcher, “There’s a lot of data center growth happening, and that growth is not evenly distributed across the US…It's consolidating in certain locations, and this could create a power crunch in those areas.”
Yet, QTS argues it brings hundreds of millions of dollars in tax revenue to communities.
Bloomberg cites estimates suggesting server racks for AI computing consume four times as much power as cloud processes, making data centers all the more in demand.
For Blackstone, its bet on QTS is working out; QTS’s valuation has risen to ~$25 billion.
Recommended Reading:
💼 Hottest Job in Corporate America? Executive to Lead AI
Many feared the rise of the internet would destroy jobs and industries. But it created countless careers and opportunities globally.
Could the same be said for AI? It’s too early to tell, but hospitals, government agencies, law firms, universities, insurance companies, and other firms have launched new roles to utilize artificial intelligence. The New York Times is calling AI-focused executives “the hottest job in Corporate America.”
Case study: In September, the Mayo Clinic in Arizona created a new job: chief artificial intelligence officer.
A former radiologist who specializes in AI has helped build an AI model that could improve the diagnosis of a rare heart disease by looking for hidden data in ultrasounds, another example of how AI can lead to medical breakthroughs.
“We’re really trying to foster some of these data and A.I. capabilities throughout every department, every division, every work group,” said the Mayo Clinic’s CEO. The chief A.I. officer role was created because “it helps to have a coordinating function with the depth of expertise.”
The calculus is quite simple: Organizations want to maximize the technology. They also want the clout. “Organizations want to say, ‘Yeah, we have a chief A.I. officer,’ because that makes them look good,” noted one AI consultant.
The rise in AI executives feels akin to the rapid growth in chief information officers and chief technology officers during the 1980s and 1990s.
Why it matters:
Although AI executive rolls off the tongue nicely, there’s real work: How to navigate the technology’s power and risks? It’s a big question, with few concrete answers (so far).
AI executives might have to build models to understand customer data better. They might be tasked with helping bolster cybersecurity efforts, using artificial intelligence.
They may also hop on dozens of weekly calls, advising clients on utilizing AI better. Or they might help their colleagues automate auditing or other tedious, time-consuming processes.
Just don’t bet that the job title will stick forever. As LinkedIn’s chief economist said, “A.I. will be across many roles, and it will be so ingrained that the specific A.I. job title will start to go away.”
More Headlines
🍿 Amazon to add billions to its revenue by including ads in Prime Video
🤖 More Amazon news: The company plans to terminate its iRobot deal
👀 China restricts short selling in last effort to mitigate stock market selloff
📱 What to watch as most of the Magnificent 7 reports earnings this week
😬 Evergrande, a symbol of China’s property market crisis and formerly one of its largest developers, heads into liquidation
👪 Childcare Costs Are Skyrocketing Globally
We aren’t the only ones who thought we were out of the woods on inflation. Globally, soaring childcare costs aren’t slowing down, and the sky-high prices have driven women out of the workforce.
Average daycare fees rose 6% in 2023 globally and 9% in the U.S., adding stress that disproportionately falls on women, who typically face most childcare responsibilities.
Many women worldwide have reduced their work hours, forgone promotions, or dropped out of the workforce altogether, according to Bloomberg. Due to rising costs, some have decided to have fewer children or none at all.
Soaring: The average weekly daycare rate for one child in the U.S. was $321 last year, up from $284 in 2022.
In New York City, rates are nearly 20% higher and, as a result, the U.S. has one of the lowest percentages of women in the workforce among developed countries.
Creative solutions: New Mexico recently passed a measure that could allow it to fund universal preschool through oil revenue. Some individual companies are attracting top talent by offering years of maternity leave, not months. Other nations facing falling birthrates are calling for more government funding to lessen the burden.
Source: Bloomberg
Why it matters:
The economic cost of soaring childcare is staggering: Women forgo about $237 billion in wages to care for kids. In the EU, that figure is about $255 billion.
Studies have shown that greater female workforce participation increases output and reduces levels of inequality and extreme poverty.
One study found that New York City lost about $23 billion because parents had to scale back their working hours because of childcare issues.
“The economy as a whole pays a high price for leaving women out of the workforce,” noted one analyst at Bloomberg Economics. “Global GDP could be some 10% higher if female labor participation matched that of men.”
Quick Poll
Do you support government subsidies enabling "universal" preschool?
Yesterday, we asked: What is your preferred method of consuming books?
— One reader wrote, “Audiobooks are great if you are multi-tasking, but nothing will replace the feeling of reading and finishing a physical copy of a book. They make your home library look great as a bonus!”
— Said another on team Physical Books, “Used Kindle for a few years, but missed the smell of pages, plus love the idea of building a library.”
— An Audiobook voter added, “Great for long walks!”
— Also voting for Audiobooks, this reader commented, “My brain doesn’t know how to do much outside of multitasking. Thank you, audiobooks.”
TRIVIA ANSWER
See you next time!
That's it for today on We Study Markets!
Enjoy reading this newsletter? Forward it to a friend.
Was this newsletter forwarded to you? Sign up here.
Use the promo code STOCKS15 at checkout for 15% off our popular course “How To Get Started With Stocks.”
Partner with us.
Follow us on Twitter.
Keep an eye on your inbox for our newsletters on weekdays around 6pm EST and on weekends. If you have any feedback for us, simply respond to this email.
You can also leave your comments/suggestions/feedback anonymously here.
What did you think of today's newsletter?
All the best,
P.S. The Investor's Podcast Network is excited to launch a subreddit devoted to our fans in discussing financial markets, stock picks, questions for our hosts, and much more!
Join our subreddit r/TheInvestorsPodcast today!
© The Investor's Podcast Network content is for educational purposes only. The calculators, videos, recommendations, and general investment ideas are not to be actioned with real money. Contact a professional and certified financial advisor before making any financial decisions. No one at The Investor's Podcast Network are professional money managers or financial advisors. The Investor’s Podcast Network and parent companies that own The Investor’s Podcast Network are not responsible for financial decisions made from using the materials provided in this email or on the website.
