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The most recent major hurricanes to hit the U.S. left hundreds of people dead and caused billions of dollars worth of damage.

Hurricane Beryl was the first of the 2024 Atlantic hurricane season, according to the National Oceanic and Atmospheric Administration. Exceptionally warm ocean temperatures caused it to strengthen into a Category 5 storm rapidly in early July. It’s winds peaked at 165 mph (270 kph) before weakening to a still-destructive Category 4.

When hurricane Beryl hit Texas, it had dropped to a Category 1 storm. Beryl has been blamed for at least 36 deaths. The storm caused an estimated $28 billion to $32 billion in damages, according to AccuWeather’s preliminary estimates.

Hurricane Idalia slammed into Florida on Aug. 30, 2023 with 125-mph (201-kph) winds that split trees in half, ripped roofs off hotels and turned small cars into boats before sweeping into Georgia and South Carolina where it flooded roadways and sent residents running for higher ground.

The category 4 hurricane was the largest to hit Florida’s Big Bend region in more than 125 years. The storm left 12 dead and produced 5 to 10 inches of rain across Florida, Georgia and the Carolinas, leaving damages topping $3.6 billion, according to the National Hurricane Center.

Hurricane Ian briefly reached maximum Category 5 status before weakening to a Category 4 storm as it blasted ashore in September 2022 in southwest Florida. The storm caused more than $112 billion in damage in the U.S. and more than 150 deaths directly or indirectly, according to the National Oceanic and Atmospheric Administration.

The agency reported that Ian was the costliest hurricane in Florida history and the third-costliest ever in the U.S. as a whole. In addition to Florida, Ian impacted Georgia, Virginia, the Carolinas and Cuba before it fell apart Oct. 1, 2022.

Hurricane Ida roared ashore in Louisiana as a Category 4 storm with 150-mph (241-kph) winds in late August 2021, knocking out power to New Orleans, blowing roofs off buildings and reversing the flow of the Mississippi River as it rushed from the Louisiana coast into one of the nation’s most important industrial corridors.

At the time it was tied for the fifth-strongest hurricane ever to hit the mainland. At least 91 deaths across nine states were attributed to the storm – most from drowning, according to the Centers for Disease Control and Prevention. Damages from the storm were estimated to be about $36 billion.

Hurricane Zeta left millions without power when it hit southeastern Louisiana on October 29, 2020. It had weakened to a tropical storm after leaving the Yucatan Peninsula but intensified to a category 3 storm before making landfall.

The hurricane caused five direct fatalities and about $4.4 billion in damage in the United States, according to the National Hurricane Center.

When Hurricane Delta slammed into Louisiana on Oct. 9, 2020, residents were still cleaning up from Hurricane Laura, which had taken a similar path just six weeks earlier. Delta was a category 4 storm before it made two landfalls – both at category 2 intensity, according to the National Hurricane Center.

It first hit the Yucatan Peninsula before coming ashore in southwestern Louisiana. Delta cost $2.9 billion in the United States and was linked to six deaths in the U.S. and Mexico, according to a report from the National Hurricane Center.

Hurricane Laura, a category 4 storm, roared ashore in southwest Louisiana on Aug. 27, 2020, packing 150-mph (240-kph) winds and a storm surge as high as 15 feet (4.5 meters) in some areas. Laura was responsible for 47 direct deaths in the United States and Hispaniola, and caused about $19 billion in damage in the U.S., according to the National Hurricane Center.

The deaths included five people killed by fallen trees and one person who drowned in a boat. Eight people died from carbon monoxide poisoning due to unsafe operation of generators.

OpenAI may be changing to a for-profit company, but according to CEO Sam Altman, that doesn’t mean he’s about to strike it rich.

Altman told OpenAI employees in an all-hands meeting Thursday that there are no plans to give him a “giant equity stake” in the newly for-profit enterprise, CNBC reported, citing an anonymous employee. On the subject of his receiving an equity stake in the company, Altman reportedly added, “There are no current plans here.”

The CEO’s statement contradicts reports that OpenAI considered giving him a 7% stake, which could hike his net worth by $10 billion, Bloomberg reported. OpenAI is working to raise $6.5 billion at a $150 billion valuation, which would make it one of the highest valued startups ever.

The possible equity grant would also make Altman, who is already a billionaire according to Forbes estimates, one of the richest people in the world, Bloomberg reported.

During the meeting, both Altman and OpenAI chief financial officer Sarah Friar said investors were concerned about Altman not having an equity stake. On Thursday, Reuters reported that OpenAI was considering changing to a for-profit benefit corporation, with the nonprofit entity remaining intact and being granted a minority stake in the for-profit side.

In response to a question about the possibility of Altman receiving equity, an OpenAI spokesperson directed Fortune to a statement by board chairman Bret Taylor.

“The board has had discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made,” Taylor said in the statement.

The changes come as recent executive departures force the company to shake up its leadership. On Wednesday, Mira Murati, the company’s chief technology officer, stepped away from her role after six and a half years. Another two senior employees followed her out the door.

Murati wrote in a note published to X that she felt the time was right for her to depart.

“There’s never an ideal time to step away from a place one cherishes, yet this moment feels right,” she wrote in the note.

OpenAI has in recent months faced a wave of high-level exits, including those of two cofounders, Ilya Sutskever and John Schulman. Sutskever, a former board member, helped orchestrate Altman’s short-lived ouster from the company in November before leaving to start his own AI startup, Safe Superintelligence. Schulman left OpenAI to join competitor Anthropic.

Not a lot of activity this week when it comes to big, nine-figure rounds with ony two of $100 million or more. No single sector dominated either, as money was spread all over the place from contact centers to cybersecurity.

1. Zing Health, $140M, healthcare: Medicare Advantage insurer Zing Health raised $140 million from investors that included Health2047 Capital Partners and First Trust Capital Partners. The Chicago-based startup’s mission is to provide managed care Medicare Advantage plans “that address social determinants of health to reduce healthcare disparities among historically underserved populations.” Founded in 2019, the company has raised $330 million, per Crunchbase.

2. Whatfix, $125M, information technologies: Whatfix locked up a $125 million Series E led by private equity firm Warburg Pincus. The San Jose, California-based startup is a digital adoption platform — a software application that helps users learn how to use other software products more easily. Large enterprises deploy these platforms to help their employees more effectively use new technology tools. The new round comes at a reported valuation of around $900 million — 50% higher than its Series D valuation in a SoftBank Vision Fund 2-led round in 2021.

3. Supabase, $80M, database: Supabase, an open source developer platform and Postgres database service raised an $80 million Series C round led by Craft Ventures and Peak XV Partners. The San Francisco–based startup is being helped by the database demand AI is creating. Founded in 2020, the company has raised $196 million, per Crunchbase.

4. Ujet, $76M, contact center: Perhaps no space is more ripe for an AI takeover than the contact centers industry — and VC investors seem to agree. Ujet, an AI-powered cloud contact center startup, locked up a $76 million Series D led by Sapphire Ventures. The cash infusion values the company at $500 million, per Bloomberg. The San Francisco-based startup’s platform allows clients to use generative AI technologies for “more efficient, hyper-personalized customer experiences at enterprise scale,” according to the company’s release. Contact and customer service centers are an obvious use for the ever-improving conversational AI technologies being produced. More AI means fewer people needed to take or route calls and perhaps even more efficiency for large companies using it. That’s likely why investors have funded a slew of startups such as Level AI, Parloa and several others this year. Founded in 2015, Ujet has raised $177 million, per Crunchbase.

5. (tied) Centivo, $75M, healthcare: Buffalo, New York-based Centivo, which offers a primary care-centered health plan, secured $75 million in a mix of equity and debt financing. The round included investment from Cone Health Ventures and JPMorgan Chase‘s Morgan Health unit. Founded in 2017, the company has raised $226 million, per Crunchbase.

5. (tied) Harmonic, $75M, artificial intelligence: Harmonic, which has developed an artificial intelligence platform for the development of mathematical superintelligence, closed a $75 million Series A funding round at a $325 million post-money valuation led by Sequoia Capital. Founded in 2023, this is the Palo Alto, California-based company’s first disclosed round, per Crunchbase.

7. Mendaera, $73M, healthcare: San Mateo, California-based Mendaera, a healthcare startup leveraging robotics, AI and imaging to enhance patient care, announced the closing of $73 million in Series B funding led by Threshold. Founded in 2020, the company has raised $97 million, per Crunchbase.

8. Torq, $70M, cybersecurity: New York-based Torq, a developer of a no-code automation platform designed to enhance security operations, closed a $70 million Series C led by Evolution Equity Partners. Founded in 2020, Torq has raised $192 million, per the company.

9. Utility Global, $53M, energy: Houston-based Utility Global, which tries to reduce emissions and improve energy efficiency through clean energy generation systems, raised $53 million as part of an ongoing Series C led by the OPG Pension Plan. Founded in 2018, the company has raised $86 million, per Crunchbase.

10. Three companies that raised $50 million each, tied for the No. 10 spot this week, including: San Mateo, California-based Route 92 Medical, San Diego-based 858 Therapeutics and Cambridge, Massachusetts-based Mirai Bio.

The biggest deal of the week came from Europe.

Nike’s new leader started at the bottom of his company and made it to the very top. That might just be his biggest edge.

After the call that would transform his life, Elliott Hill hung up the pay phone, stuffed everything he owned in his car and drove from Ohio to Tennessee so he could start his dream job at Nike NKE 0.06%increase; green up pointing triangle.

But when he walked into the company’s Midwest regional sales office for his first day of work, there was just one problem. Hill’s new boss told him that it wasn’t exactly a job. It was actually going to be a six-month internship.

“An internship?” he thought.

It was an inauspicious start, but Hill lasted longer than six months at Nike. In fact, he would spend his entire career at the same company. He started in 1988 and got promoted every few years for the next few decades. By the time he retired in 2020, he was president of Nike’s consumer division.

But he was recently lured back for one last job—and this time, it wasn’t an internship.

He was just hired as the next CEO.

When John Donahoe abruptly stepped down as Nike’s chief executive last week, his ouster marked the end of a rough stretch in which the company lost its edge—and billions of dollars in market value. Before he was named CEO, he’d never worked at Nike. He’s being replaced by someone who’s basically his exact opposite.

Hill, a 60-year-old company lifer who calls Nike “a core part of who I am,” is the latest example of a curious business archetype: the Intern CEO.

Doug McMillon started at Walmart as an hourly associate unloading trailers. Mary Barra worked for General Motors as a student before she took a full-time job on the assembly line inspecting fenders and hood panels. Christian Klein hauled monitors from the basement of SAP’s headquarters to the engineers and developers upstairs. “And not flat screens,” he told me. “The heavy ones.”

All three have been with their companies ever since. All three are now leading those companies.

When Ursula Burns was a summer intern at Xerox in 1980, it was completely unimaginable to her that she would one day be CEO.

“I didn’t know that we had a CEO,” she told me.

But after getting her master’s degree in mechanical engineering, Burns started moving up the Xerox corporate ladder. She worked in the research lab, business planning, the C-suite, global manufacturing and internal operations. Then she ran the whole company from 2009 to 2016.

Starting at the bottom of a company and climbing to the very top has always been an improbable career path. But these days, it feels closer to impossible.

The median job tenure of U.S. workers has dropped below four years, the lowest number in decades, according to newly published federal data, as job-hopping has become increasingly common for talented young employees. Mobility is hot. Loyalty is not. Which means Intern CEOs might be a dying breed.

They may not have firsthand knowledge of how other companies function, but they do have institutional knowledge of their own. They remember which ideas worked and why. They also remember every cockamamie strategy suggested by people who knew precisely nothing about the company but pretended to know it all. What they lack in perspective, they make up for with experience. Where outsiders see problems, interns see promise. And they have the credibility to sell their vision for change when it’s necessary.

“If you’re going through a transition in the company,” Burns said, “having someone who understands the heart and soul of the place is valuable.”

Nike is currently going through one of those transitions.

As my colleague Inti Pacheco has explained, the company made a series of costly strategic missteps in recent years, like sprinting away from retail stores and toward e-commerce. Meanwhile, increased competition and stalled innovation resulted in meager sales, sunken morale and something of an identity crisis for the sneaker giant.

This company founded by runners even missed out on America’s latest running boom. The only thing more blasphemous for Nike would be losing Michael Jordan to Hoka.

Nike fell behind under Donahoe, whose experience at the company before he took over was limited to a board seat. He spent the formative part of his career at Bain, where he started as a lowly associate consultant and became CEO. He left for the top jobs at eBay and ServiceNow. Nearly five years ago, he traded software for shoes and found himself running Nike.

In other words, he was the epitome of a Consultant CEO. He’s being replaced by the quintessential Intern CEO.

Hill’s first job out of college was an entry-level position on the training staff of the Dallas Cowboys, where he worked for a year before pursuing his master’s degree in sports administration. While he was at Ohio University for graduate school, he took a class on sports marketing and wrote a paper about one of his favorite brands: Nike.

So when a Nike executive named Tim Joyce visited campus, Hill arranged for a meeting, put on his best suit and begged for a job. Then he kept pestering Joyce for months. As graduation approached, Hill promised to never call him again if there was no way he would get hired. Otherwise, he was going to keep calling until Joyce said no. He finally said yes on a Friday. Hill started on Monday.

“I never told my mom it was an internship,” he said on the Fortitude FW Podcast last year. “I told her I got hired.”

Once he managed to get his foot in the door, he never let it close on his Nikes. As an intern, he packed boxes in the warehouse and picked up phones whenever the office needed help with customer service. “I pretty much did everything they asked me to do—and then some,” he says.

At the time, he was still paying off his student loans. But with that attitude, he turned his internship into a proper job as an apparel sales representative. Over the next two years, he put 120,000 miles on his Chrysler minivan.

There was nothing even remotely glamorous about this work: The man was going to mom-and-pop shops in Texas and Oklahoma peddling Lycra.

Hill was so far down the org chart and so far away from corporate headquarters that it took a decade for Nike co-founder Phil Knight to have any clue who he was.

Even today, when the subject turns to the company’s chairman emeritus and largest individual shareholder, Hill sounds like an intern ready to fetch coffee. In reverential tones, he calls Knight the most inspirational person he’s ever met—and “the person I tried the hardest to make proud.” And he did: Knight himself led the push to bring Hill back.

Now the company is in the hands of somebody who cares about Nike and its culture so deeply that he cries when he talks about how much the brand means to him—somebody willing to do everything he’s asked and then some.

It worked for Hill as an intern. It might just work for him as the Intern CEO.

Company behind ChatGPT is aiming to raise around $6.5 billion in funding set to close next week

Apple AAPL 0.12%increase; green up pointing triangle is no longer in talks to participate in an OpenAI funding round expected to raise as much as $6.5 billion, an 11th hour end to what would have been a rare investment by the iPhone maker in another major Silicon Valley company.

Apple recently fell out of the talks to join the round, which is slated to close next week, according to a knowledgeable person.

Two other tech giants, Microsoft and Nvidia, have also been in talks to participate in the round. Microsoft is expected to invest around $1 billion, adding to the $13 billion it already has put into the company, according to people familiar with matter.

The funding talks aren’t completed and it is possible the participants and investment amounts could change.

Venture-capital firm Thrive Capital is leading the round and putting in around $1 billion. Investment firm Tiger Global Management and United Arab Emirates state-backed company MGX are also in talks to participate.

OpenAI is also in the process of overhauling its corporate structure from a nonprofit into a for-profit company. That change, which was encouraged by many of the investors in the round, will be a complicated process for the startup. If it doesn’t complete the change within two years, investors in the current round will have the right to request their money back.

Concerns about Beijing’s mineral-resources dominance hang over a deal to control the world’s largest zinc smelter

It is a bruising ownership fight in South Korea over the world’s largest zinc smelter. Fueling the dispute: fears the company could one day fall into China’s hands.

On one side is the 50-year-old Korea Zinc, led by Yun B. Choi, chairman and grandson of the co-founder, with officials arguing South Korea’s industrial strength is under siege. On the other is a South Korean private-equity firm headed by the country’s second-wealthiest individual, Michael ByungJu Kim, who has joined forces with the family of the other co-founder.

At the center of the dispute is Korea Zinc’s Onsan smelter in the city of Ulsan, South Korea, and the firm’s proprietary technologies. It is arguably a crown jewel of American hopes of creating a supply chain independent of China, which accounts for roughly half of the world’s refined zinc. Korea Zinc says it is asking Washington for backup.

Korea Zinc’s co-founders were friends turned business partners, who hailed from the same province in what is now North Korea. The firm’s name in Korean, Koryo Ayeon, uses a centuries-old name for the Korean state. Korea Zinc produces raw materials for cars, electric-vehicle batteries and semiconductors.

Kim, who is worth roughly $10 billion and moonlights as a fiction writer, sits atop his eponymous MBK Partners. He and his Seoul-based private-equity firm had long been praised locally for dealmaking prowess in South Korea. It owns a handful of Chinese companies and has a small contingent of Chinese investors. MBK, emphasizing its overwhelming ties and investments within both Korea and Japan, has promised to not sell Korea Zinc to the Chinese.

That pledge hasn’t toned down the rhetoric from Korea Zinc and its allies. They have labeled MBK as a corporate raider only interested in profits. Should MBK take control, a company official said this week, Korea Zinc’s core technology would be leaked overseas and South Korea’s industrial competitiveness would collapse. The company’s chief technical officer and senior engineers threatened to resign if MBK emerged victorious.

“MBK has the keys if they take over,” said Kim Ki-june, an executive vice president at Korea Zinc. “They can hire anyone they want.”

The showdown over Korea Zinc illustrates how the mere potential of technology shifting to Beijing can complicate dealmaking in once-sleepy corners of the global supply chain. Despite Western efforts, China’s advantage in minerals has only expanded, in everything from nickel to cobalt to lithium.

China’s mineral dominance

Korea Zinc declined to say if it had been successful in engaging U.S. assistance. In a disclosure Wednesday, the company said it had applied for “national core technology” status with the South Korean government for some of its technologies. The review takes about 15 days. If granted, government signoff would be needed if a foreign buyer ever emerges for Korea Zinc.

Western officials worry about Beijing’s ability to vex supply chains or create an uneven playing field by flooding the market with supply.

Washington can only do so much because China’s buying spree has spread from Africa to Argentina, while there are 50 entries on the U.S. critical mineral list and “protecting them all is impossible,” said Hayley Channer, director of economic security for the United States Studies Centre at the University of Sydney in Australia. “One day it might be Korea Zinc, the next it could be any number of mining companies globally.”

Two years ago, the U.S. and a number of allies, including South Korea, agreed to work together on efforts to diversify critical mineral supply chains. The coalition recently formed an alliance with financiers to better coordinate investments.

“The U.S. is taking it very seriously because it has realized the risks around overdependence on China for critical and strategic minerals,” said Ian Satchwell, who advises governments, business and other organizations on minerals and energy policies.

Zinc is one of the minerals deemed critical by the U.S. Korea Zinc and its sister affiliate accounted for 8.5% of refined zinc output globally last year, according to Wood Mackenzie, a research and consulting firm. Refineries within China accounted for 49%.

The Seoul-based Korea Zinc also processes copper, nickel and other metals, and produces sulfuric acid, which is used by semiconductor manufacturers to clean wafers. It owns scrap-metal operations in the U.S.

Two families under one roof

Founded in 1974, Korea Zinc was added to the Young Poong conglomerate. The co-founders, who resided in South Korea before the 1950-53 Korean War, had both grown up in an area that is now part of North Korea. The split ownership, unique among South Korean conglomerates, became described as: “Two families under one roof.”

But in recent years, a rift developed between Choi, the third-generation chairman of Korea Zinc, and Chang Hyung-jin, the son of the Young Poong founder. The disagreement centered on ownership control and board power. Chang and MBK have questioned some of Korea Zinc’s investments, corporate governance and profitability since Choi became chairman in 2019.

Young Poong, Chang and his family are Korea Zinc’s largest shareholder, with a combined stake of roughly 33%. But board power and management control largely rested with Choi.

To change that, Chang found a willing partner with MBK, one of Asia’s largest private-equity firms with more than $30 billion in assets under management. Together they would seek to amass a stake of up to 47.7% of Korea Zinc—enough clout to secure voting rights needed to eventually shake up the board.

MBK and Young Poong launched a $1.5 billion tender offer on Sept. 13, open to any Korea Zinc shareholder willing to sell. Since then, shares of Korea Zinc, which has a market capitalization of around $11 billion, have soared nearly 30%.

That prompted MBK on Thursday to raise its per-share offer to about $1.7 billion. The deadline for share sales ends Oct. 4. Whatever the offer brings in, Young Poong will split the final total stake with MBK, which will retain one additional share. MBK would assume management control if they succeed.

China controversy

The deal has brought unusual backlash to MBK and Michael ByungJu Kim, whom local media has praised for having a “Midas touch” in South Korea’s merger-and-acquisition industry. The 60-year-old Kim, whom MBK didn’t make available for an interview, founded the private-equity firm in 2005, after senior roles in Asia at Goldman Sachs and Carlyle.

Kim was born in South Korea but immigrated to the U.S. in his teens. A graduate of Harvard Business School, the Korean-American billionaire has interests that stretch well beyond finance. He owns a rare 18th century Bible and likes to read King Lear. He wrote a semi-autobiographical novel in the U.S., called “Offerings,” which became a bestseller in the U.S. in 2020 and is set to become a Hollywood film.

Kim has also been a proponent of China’s promise. In his annual letter to investors, Kim questioned others who had retrenched from the country. “We are believers in China in the mid- to long-term,” he wrote. “For now, it’s mostly Korea plus Japan for us. But China shall return.”

Korea Zinc has argued that there is no way to forcibly stop MBK from making sales to China and that the risks of a critical technology transfer loom large. The mayor of Ulsan—where Korea Zinc has operations—recently called for each of the city’s 1.2 million residents to buy shares, so the firm avoids getting sold to a Chinese company in the future.

MBK, in the entirety of the firm’s existence, has never sold a Korean company to a Chinese buyer, said Kim Kwang-il, a MBK partner overseeing the Korea Zinc deal. Chinese entities make up less than 5% of MBK’s total investors. MBK expects to hold on to Korea Zinc for roughly a decade.

Young Poong and MBK claim some of Korea Zinc’s investments under Choi went through without board approval and raised corporate-governance concerns. For example, a private-equity firm run by a close friend of Choi’s attracted Korea Zinc funds and has focused on industries outside mining. Korea Zinc said major investments went through proper channels.

“Transferring core technologies to Chinese firms would hurt Korea Zinc,” said Kim Kwang-il. “Private equity is about increasing the acquired firm’s value, and doing something that goes against that is unimaginable.”

Nike’s coming earnings are likely to be as stinky as a pair of sweaty old sneakers and gym shorts—but that could be the end of the bad news for the stock. The good news is that there is hope for a turnaround following the looming return of longtime exec Elliott Hill on Oct. 14, who will succeed the retiring John Donahoe as CEO.

The iconic maker of Air Jordans needs a refresh. The company has struggled mightily in the past few years, losing market share to upstarts such as Deckers Outdoor-owned Hoka, Swiss running shoe maker On Holding, and privately held New Balance. Adidas has also enjoyed a bit of a resurgence this year.

So what’s next for Nike? We’re sticking with our recommendation of it from June even though the stock, at a recent $88, has done the opposite of its signature swoosh this year, tumbling nearly 20%. Wall Street has already given Nike the equivalent of a technical foul call, with shares trading for just under 29 times earnings estimates. Sure, that’s still a premium to the broader market. But it’s below its historical average forward price/earnings ratio of nearly 36. Nike is also valued at a slight discount to Deckers. But Deckers, at a P/E of 30, is well above its average multiple of 23. And On Holding is uber-expensive, trading at almost 50 times earnings estimates.

Analysts are optimistic that Hill can return Nike to its former glory. Evercore ISI’s Michael Binetti conceded in a report after Hill’s rehiring was announced that Hill has a big mess to clean up. He wrote that “this turnaround will be complex…and will take time,” while noting that “Nike is in the middle of a difficult cleanup of popular retro products that got oversaturated and un-special in recent years.” But Binetti added that “retailers are already seeing overwhelming force from the company to get back to growth in the U.S.,” and that this could be a “blueprint to return the rest of the world to growth soon.” Nike has particularly struggled in Europe and China.

Wall Street expects the company’s fiscal-first-quarter results, due out on Oct. 1, to be the trough. Earnings are forecast to plunge 45%, while sales are expected to fall 10% from a year ago in the current quarter. But analysts are predicting smaller declines over the next few quarters and a return to growth a year from now, with revenue expected to be up about 5%. What’s more, sales are forecast to rise in all of its key geographic markets.

Bank of America’s Lorraine Hutchinson also praised the comeback of Hill, saying in a report that Nike needs a leader “with a fresh perspective to lead it through the next strategy and accelerate the focus on product.” She added that the CEO change “bodes well for the effort to rejuvenate innovation, rekindle wholesale relationships, and rebuild sales.”

Under Donahoe, who was formerly the CEO of eBay and software maker ServiceNow, the criticism of the company was that Nike’s innovations were more about how to use technology to sell the sneakers as opposed to making the products actually cool and desirable. “Donahoe’s efforts to prioritize direct selling over product development and retail relationships have seemingly created opportunities for more innovative competitors,” said Morningstar analyst David Swartz in a report.

To quote the old Spike-Lee-as-Mars-Blackmon Nike ads from the late ’80s and early ’90s: “It’s gotta be the shoes.” As long as Hill understands that, Nike’s stock looks like a slam dunk at these levels.

What swoon?

The bears usually come out in full force in September, historically the worst month for stocks. And while the market got off to a rough start in the Labor Day–shortened first week, it’s been all rainbows and sunshine since then. The Federal Reserve’s jumbo-sized rate cut —with the promise of more easing to come—reignited hopes for a soft landing for the U.S. economy, while inflation pressures continue to recede. The Dow Jones Industrial Average and the S&P 500 index are at record highs, while the Nasdaq Composite isn’t far from one. New stimulus from China has added to the excitement, helping to lead to a rebound for many top Chinese tech stocks. The bulls have taken charge once again.

But October, another notoriously volatile month, looms—and with it a crucial week for investors and the Fed. A slew of jobs numbers, including the Job Openings and Labor Turnover Survey (Jolts), ADP’s report on private-sector jobs growth, weekly jobless claims, and the September nonfarm payrolls jobs report are all due out, as are the latest Institute for Supply Management manufacturing and services surveys.

The payrolls report is most likely to move markets. Economists forecast a slight increase in job gains for September, to 145,000, compared with 142,000 in August. Investors are hoping to see slightly cooler numbers, which would justify further rate cuts from the Fed. If the numbers disappoint too much, alarm bells could start to sound about a rapidly weakening economy, putting a damper on Wall Street’s currently chipper mood.

“We don’t expect a recession in the next 12 months. But the problem is now that’s the consensus view,” says Sébastien Page, chief investment officer at T. Rowe Price. “The market is pricing in a soft landing...if not something better.”

Is it ever. The S&P 500 is now trading at 21 times earnings estimates for 2025, above its five-year average forward price/earnings ratio of 19 and inching closer to its high of 23. With that in mind, Page told Barron’s that investors need to be selective about what and when they buy, particularly heading into an increasingly uncertain presidential election. He also thinks the recent broadening out of the rally will continue as earnings growth improves for more cyclical companies outside of tech and the Magnificent Seven. He likes the industrial, healthcare, and energy sectors.

Jeff Weniger, head of equity strategy at ETF provider WisdomTree, is bullish on more rate-sensitive and value-oriented sectors as well. He argues that big dividend payers, such as real estate companies, utilities, and financials, are better bets than tech and other growth stocks. Weniger says the speed and magnitude of rate cuts is “the No. 1 driver for the market right now.” If short-term rates continue to come down rapidly, that will make income-producing stocks, as well as bonds, more attractive.

Great expectations on Wall Street may prove to be the biggest hurdle investors must overcome. Traders are now pricing in nearly 50-50 odds of another half-point rate cut at the Fed’s Nov. 7 meeting. Page notes that it would be “unusual for the Fed to cut so aggressively outside of an imminent or present recession,” while Weniger says that he sees “no crisis in the immediate future.”

So investors need to tread carefully. The biggest risk to the rally could be that the market is pricing in larger rate cuts than are needed. The perfect recipe for further gains in earnings—and stock prices—is probably a series of quarter-point cuts. That would show the market that the Fed is still confident that the economy isn’t losing momentum too rapidly.

That would be less like a swoon, and more like floating on air.

History doesn’t repeat but often rhymes, as the oft-cited Mark Twain quote goes. But there are classic couplets, as well as what passes for rhymes in popular song lyrics. The latter comparison seems more apt when past market and economic cycles are seen as precedents for the present.

In that regard, the 1990s are viewed as a positive portent of the current decade. In 1994, the Federal Reserve sharply raised its policy interest rate to quash incipient inflation pressures. That Fed, led then by Alan Greenspan, was able to engineer a rarely seen soft landing for the economy. Once it was apparent that short-term rates had peaked (after doubling, to 6% from 3%), the dot-com bull market took off on the promise of the internet, notwithstanding Greenspan’s doubts about irrational exuberance among investors early in the legendary liftoff.

Fast forward to today, and substitute the sharp escalation by the Jerome Powell–chaired central bank in its fed-funds target range, to 5.25% to 5.5%, from near 0%, until the recent half-point cut. Once more, when it was clear the Fed was close to the end of its hiking cycle in 2023, stocks took off. This time the promise of artificial intelligence helped to send the so-called Magnificent Seven tech names sharply higher, lifting the S&P 500 to a record.

But to invoke another cliché, it’s different this time. And what’s most different now is the U.S. fiscal position, with huge deficits likely to continue, in contrast to the steady progress to a budget surplus at the turn of the last century.

One strong hint is the gold market’s performance relative to the stock market. In the 1990s, the yellow metal truly seemed a barbarous relic when the internet’s promise seemed unlimited. Gold slumped to less than one-third of what it was worth at its previous peak above $800 in 1980. In an impeccable example of government market timing, the U.K. dumped more than half of Her Majesty’s gold reserves in the late 1990s, near the low of bullion’s bear market.

But for all the seemingly unlimited potential for AI, gold has more than kept pace with stocks, outperforming the S&P 500 so far in 2024 and in the most recent one- and three-year time spans. To cite relevant exchange-traded funds, the SPDR S&P 500 ETF (ticker: SPY) returned 21.06% for 2024 through Wednesday, 33.67% for the most recent 12 months, and 10.31% per annum for the past three years, according to Morningstar data. For the SPDR Gold Shares(GLD), the corresponding numbers are 28.54%, 38.28%, and 14.59%.

Whatever bullishness the equity returns reflect, gold’s performance suggests expectations that politicians will do whatever it takes to deal with the budget, inflation being the most expedient means by which to reduce the debt burden.

To review, as the 1990s progressed, the federal budget deficit steadily declined and moved into a substantial surplus of more than 2% of gross domestic product by fiscal 2000.

Much of the credit for the turnaround in the nation’s fisc should go to the end of the Cold War and the attendant decline in real (that is, adjusted for inflation) defense spending. Tax increases, which may be equally credited to (or blamed on) the Clinton presidency and the Newt Gringrich–led Congress, also turned the red ink to black. A robust economy mainly filled Uncle Sam’s coffers and freed up capital for the private sector.

The present situation cannot be more different. Even before the steep economic downturn from the Covid pandemic, the federal deficit ran at 4.5% of GDP, a level previously associated with recessions, despite unemployment under 4% and a then-record stock market.

Trillion-dollar deficits loom as far as the eye can see. According to the outlook of the nonpartisan Congressional Budget Office, the deficit is projected to continue to exceed 5% of GDP for the rest of the decade, climbing to 6.1% by 2034.

At that point, the U.S. could hit its sustainable gross debt limit, at over 150% of GDP, according to a new paper by Giorgi Bokhua and Mark Warshawsky published by the American Enterprise Institute, a conservative-leaning think tank. Then the Social Security and Medicare trust funds will be exhausted, which will force the programs to be reformed, likely as part of a larger fiscal consolidation.

They add that the level of sustainable debt may be overestimated, based on their assumption that interest rates won’t be forced up, relative to growth, from the exceptionally low levels of the past decade.

But government interest expenses already exceed defense expenditures, as I and others have pointed out. Moreover, this is an increasingly dangerous geopolitical circumstance, with Russia’s war on Ukraine, China’s aggressive ambitions in the South China Sea, and Israel’s conflict with Iran proxies Hamas and Hezbollah threatening to explode in a wider Middle East conflict. Contrast that with the relative stability of the post-Cold War world before Sept. 11, 2001.

As noted, the most expedient way for a government to deal with debt and defense spending pressures is inflation. Maintaining nominal (current-dollar) GDP—essentially the economy’s top line—generates revenue for taxes to pay debt-service expenses. Suppressing real interest rates further helps make the debt less burdensome. The combination is referred to as financial repression, which is essentially a polite term for screwing bond investors who get stuck with negative returns.

That may be what gold is sussing out. In this highly contentious election campaign, the deficit and debt rank lower than cats and dogs in the political discourse.

Investors should keep that in mind before they think they can party like it’s 1999.

Caterpillar Stock Is Digging Out of the Mining Malaise. Why It’s Time to Buy.

The construction business is strong. The real growth for the company will come from a rebound in the mining sector, fueled by demand from China and elsewhere.

Caterpillar stock has powered higher as the well-oiled company managed through a difficult economic environment. Now, headwinds are turning into tailwinds, and the shares can build on their previous gains.

It might feel like an odd time to recommend buying Caterpillar stock. Shares have gained 28% this year, after all, eight percentage points better than the S&P 500, reflecting optimism following the Federal Reserve’s first interest-rate cut in four years and hopes that Chinese policymakers will finally revitalize China’s economy.

The stock, however, at about $378, only recently eclipsed its record high set in early April, and its multiple, at about 17 times 12-month forward earnings, is in line with its five-year average. That’s a sign that investors haven’t given the company full credit for improvements made to profitability and efficiency over the past few years, let alone the good news that could arrive in the months ahead.

Wall Street “estimates do not fully appreciate management’s ability to drive margin improvement,” writes J.P. Morgan analyst Tami Zakaria, who has an Overweight rating and a $435 price target on the shares. “The company has been able to cut fixed costs by restructuring its [mining] business, which should provide earnings upside as volumes push higher.”

Caterpillar is an American machinery giant. Its backhoes are ubiquitous on construction sites, and its massive mining trucks haul 400 tons of ore—sometimes without a driver in the cab. CEO Jim Umpleby , who took the reins of the heavy-equipment maker at the start of 2017, set the company on a path of profitable growth by cutting costs, expanding product offerings, and offering more recurring service-like sales.

His strategy has yielded benefits. Operating profit margins are currently about 21%, up nine percentage points since 2017. And since then, Caterpillar has generated some $35 billion in free cash flow, returning $15 billion in the form of dividends—it currently yields 1.5%— and buying back $25 billion of stock to reduce shares outstanding by about 19%.

While Caterpillar has paid out more than the total free cash flow it has generated, its balance sheet remains in excellent shape. At the end of the second quarter, the company had about $5 billion in debt less cash, a fraction of the $15.5 billion in earnings before interest, taxes, depreciation, and amortization, or Ebitda, it’s expected to earn this year. Investors typically don’t start thinking about debt levels until they approach two times Ebitda.

Caterpillar’s construction business is also performing strongly, boosted by the Inflation Reduction Act, other government spending, and the artificial-intelligence data center boom, says Stephanie Link, Hightower Advisors’ chief investment strategist. That strength can continue, which is good news for a business that accounts for roughly 40% of total sales.

But things could always be better. In the U.S., industrial activity has been mired in a prolonged slump, with the Institute for Supply Management Purchasing Managers’ Index—a measure of overall industrial activity in the U.S.—coming in below 50 for 21 of the past 22 months, one of the worst streaks on record. (A reading below 50 indicates that activity is contracting.)

Manufacturers probably breathed a collective sigh of relief when the Federal Reserve Board cut benchmark interest rates by 0.5 percentage point on Sept. 18, the first cut after 11 consecutive hikes. Lower financing costs can help end inventory destocking and poor industrial activity—and would help industrial manufacturers like Caterpillar.

Signs of improvement are already starting to show up. Inventories at Caterpillar’s 160 dealers, which serve 197 countries, dropped by $200 million in the second quarter, a good sign after rising by $1.4 billion in the first quarter. Falling inventories at retail locations are a harbinger of future sales growth.

But the biggest gains could come from Caterpillar’s resource business, which sells and services machines for the global mining industry. Mining-related activity accounts for around 20% of Caterpillar’s sales. That business is about 40% below its peak reached in 2012. That’s due, largely, to weakness in China, the world’s largest producer and consumer of mining commodities, where a slowdown in economic growth has hurt demand.

That has been tough for Caterpillar’s Asia-Pacific sales, which account for roughly 20% of total revenue, with China making up about half that. “China has been really a small part of our portfolio over the last couple of years,” said Caterpillar Chief Operating Officer Joseph Creed at a J.P. Morgan conference this past Tuesday.

Now, Chinese officials are trying to give the economy a kick-start, with interest-rate cuts, a reduction in required bank reserves to increase lending, and even a rate cut for existing mortgages, among other measures. “A recovery here will have implications for not only higher revenues but higher margins, as well,” notes Hightower’s Link, who calls the resource division “underappreciated.”

Just how effective the stimulus will be is hard to say. When the mining cycle turns, however, the impact can be material. BofA Securities analyst Michael Feniger noted in a recent report that capital expenditures in the global mining business are down about 30% from their 2012 peak, and as much as 50% when adjusted for inflation. As a result, the age of mining equipment has risen to record levels, as the industry has preferred to rebuild their machines, rather than buy new ones, to save some money.

When things improve, Feniger is looking for Cat to benefit from higher demand and higher pricing. He rates the shares a Buy and has a $376 price target for the stock, close to where the stock currently trades.

His target price, however, works out to about 14 times his estimated 2026 earnings per share of $27. With a resource recovery boost, earnings should easily top $30 a share by then, sending Caterpillar stock closer to $450, up about 20% from recent levels.

With improvement on the horizon, it’s still not too late to dig into Caterpillar stock.