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Last week, Panini filed an antitrust lawsuit against Fanatics alleging that it had engaged in “calculated, intentional, anticompetitive conduct” to establish a monopoly in the trading card industry.
On Monday, Fanatics countersued, alleging interference with business relations and a breach of duty to negotiate in good faith.
The dispute comes down to licensing rights for NBA and NFL trading cards.

Track President Brandon Igdalsky addresses the media and fans as NASCAR debuts the new FANATICS fan shopping experience at Pocono Raceway on Friday morning prior to the weekends events for the running of the Windows 10 400 in Long Pond, PA.
David Hahn | Icon Sportswire | Getty Images

Sports platform Fanatics and competitor Panini have in recent days become enmeshed in a legal battle, with a pair of lawsuits between the trading card rivals.
Last week, Panini filed an antitrust lawsuit against Fanatics alleging that it had engaged in “calculated, intentional, anticompetitive conduct” to establish a monopoly in the trading card industry. On Monday, Fanatics countersued, alleging interference with business relations and a breach of duty to negotiate in good faith.

The dispute comes down to licensing rights for professional sports league and their associated trading cards: Panini currently has the league and player union licenses to produce trading cards for the NBA and NFL. It’s held those exclusive rights since 2009 and 2016, respectively.
But Fanatics secured long-term deals with both leagues and their unions to take over the exclusive rights once the existing deals expire in 2025 and 2026, respectively.
In its antitrust suit against Fanatics, Panini alleged that “Fanatics positioned itself to drive Panini and other potential competitors out of the market, and erected barriers to entry blocking their return.”
Panini also alleged that it was not “given an opportunity to bid or otherwise compete for the licenses Fanatics acquired.”
Fanatics, in its countersuit, denied antitrust behavior and said it won the rights because of a superior offer and because Panini had “failed to capitalize on its opportunities.”

Fanatics claims Panini “embarked on a protracted, unlawful, and deceitful campaign of unfair trade practices, strong-arm tactics, and tortious misconduct to hamper Fanatics Collectibles’ nascent business, in the hopes that it could force Fanatics Collectibles to pay an extortionate amount for Panini to terminate its licenses early.”
In a statement provided to CNBC, David Boies, chairperson of Boies Schiller Flexner and the legal counsel for Panini, said that Fanatics’ lawsuit is “a desperate attempt to avoid dealing with its serious antitrust liability as set out in the litigation filed against it last week.”
“If Panini had been as unsuccessful as Fanatics pretends, Fanatics would not have had to use decades-long exclusive dealing arrangements to lock it out of the market, or improperly cut off Panini’s supply, interfere with Panini’s production facilities, and raid its employees,” Boies said in the statement.
Fanatics declined to comment further on the lawsuits.
Fanatics, which started as an e-commerce platform in 2011, has quickly grown to hold exclusive merchandise rights spanning from the NFL and NBA to the International Olympic Committee.
In recent years, the company has turned toward trading cards and collectibles and sports betting, looking to deepen the connection it has already made with millions of sports fans through its apparel business.
In 2021, Fanatics signed a deal with MLB and its players association to become the exclusive licensee of baseball cards, ending what had been a 70-year relationship between Topps and MLB. The move also helped to terminate a SPAC merger for Topps after it lost the MLB rights. Topps was ultimately acquired by Fanatics in January 2022.
In recent months, the company has looked to advance its trading cards and collectibles business, adding things like game-worn jersey patches to rookie cards and launching a livestream shopping experience where card collectors can take part in live card “breaking.”
The company’s specific trading card business was valued at $10.4 billion in September 2021 after a $350 million Series A round that included Silver Lake, Endeavor Group holdings and private equity firm Insight Partners, according to multiple media reports. The NBA and MLB, as well as their player unions, also have equity stakes in the company as part of their licensing deals.
In December, the three-time CNBC Disruptor 50 company raised $700 million to bring its valuation to $31 billion. More

Lucid generated just over $150 million in revenue in the second quarter, less than Wall Street had expected.
Deliveries of its Air electric luxury sedan also fell short of expectations during the period.
But a $3 billion capital raise in May has extended the company’s cash runway by about a year, into 2025.

In an aerial view, a sign is posted on the exterior of Lucid headquarters on March 29, 2023 in Newark, California.
Justin Sullivan | Getty Images

Luxury electric vehicle maker Lucid Group reported that its second-quarter revenue fell short of Wall Street’s expectations after it delivered fewer of its Air luxury sedans than expected during the period.
But a recent capital raise has extended the EV maker’s runway by a year, into 2025. The company also said it has begun to ship vehicles to Saudi Arabia. That country’s Ministry of Finance agreed last year to buy at least 50,000, and up to 100,000, EVs from Lucid over the next decade.

Here are the key numbers from Lucid’s second-quarter report, together with Wall Street consensus estimates as reported by Refinitiv:

Loss per share: 40 cents. It was not immediately clear if that was comparable to Wall Street expectations of a loss of 33 cents, according to analysts surveyed by Refinitiv.
Revenue: $150.9 million vs. $175 million expected.

Lucid shares rose more than 3% in extended trading.
Lucid’s net loss for the quarter was $764.2 million, or 40 cents per share. A year ago, Lucid reported a net loss of $555.3 million, or 33 cents per share. Revenue in the second quarter rose to $150.9 million from $97.3 million in the same period in 2022.
Lucid said on in July that it delivered 1,404 Air sedans in the second quarter. That was about 600 fewer than Wall Street had expected. The company delivered 1,406 vehicles in the first quarter of 2023, and 679 vehicles in the second quarter of 2022.  
Lucid ended the second quarter with $6.25 billion in available liquidity, including $5.5 billion in cash and the remainder in available credit lines, enough to last into 2025, CFO Sherry House said.

Lucid had $3.4 billion in cash and an additional $700 million in available credit lines as of March 31, which it said at the time was sufficient to fund its operations into the second quarter of 2024. It raised about $3 billion in a stock offering at the end of May.
Lucid reaffirmed the production guidance it provided in May, when it said that it expected to produce “over 10,000” vehicles in 2023. It had originally estimated 2023 production of between 10,000 and 14,000 vehicles in February, despite a claimed “more than 28,000 reservations” for the Air at that time.
Lucid hasn’t provided an update on Air reservations since, but there have been signs for months that the company faces a lack of demand for the well-reviewed but pricy sedan.
In a bid to spur demand following price cuts from Tesla and other EV rivals, Lucid on Saturday said that it will trim Air prices by as much as $12,400. The company reduced the price of the base-model Air Pure by $5,000, to $82,400.
It cut the price of the higher-end Touring and Grand Touring by $12,400 to $95,000 and $125,600, respectively.
The lower prices apply both to vehicles in Lucid’s inventory and those being built to order now. The lower prices on existing vehicles will be valid while supplies last, Lucid said.
A Lucid spokesperson declined to say how many vehicles are currently in its inventory.
Lucid confirmed on Monday that it still expects to launch new versions of the Air later this year, and a second model — a luxury SUV called Gravity — in 2024.
Lucid said in June that it struck a deal to supply Aston Martin Lagonda with electric-vehicle powertrains, battery systems and related technology. In return, it said at the time, Lucid will receive about $232 million in phased payments and a 3.7% stake in the British supercar maker.
Correction: Lucid’s May capital raise totaled $3 billion. A key point in this story previously misstated that number. More

Boeing said Monday it aims to be ready to fly NASA astronauts with its Starliner capsule for the first time by March.
The company delayed the launch twice this year — most recently due to issues with the spacecraft’s parachutes and a type of tape used in its assembly.
Starliner continues to be a costly and behind-schedule endeavor for Boeing, with the company absorbing about $1.5 billion in cost overruns to date.

Boeing’s Starliner spacecraft is seen before docking with the International Space Station on May 20, 2022 during the uncrewed OFT-2 mission.

Boeing said Monday it aims to be ready to fly NASA astronauts with its Starliner capsule for the first time by March, resetting its timeline after the company delayed a planned launch this summer.
“Based on the current plans, we’re anticipating that we’re going to be ready with the spacecraft in early March,” Boeing VP and Starliner manager Mark Nappi said during a press conference.

“That does not mean we have a launch date in early March,” Nappi added. “We’re now working with NASA — Commercial Crew program and [International Space Station] — and ULA [United Launch Alliance] on potential launch dates based on our readiness … we’ll work throughout the next several weeks and see where we can get fit in and then then we’ll set a launch date.”
The company continues to work toward Starliner’s crew flight test, which is planned to carry NASA astronauts to the ISS in a final demonstration before beginning regular spaceflights.
Boeing delayed the launch twice this year — most recently due to issues with the spacecraft’s parachutes and a type of tape used in its assembly — and now expects the capsule won’t fly crew until next year.

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On Monday, representatives from NASA and Boeing said work to replace the problematic tape is expected to be complete by the end of September, and a parachute drop test is planned for “mid-to-late” November. Boeing’s Nappi noted that the parachute work “is the critical path” toward being ready in March.
NASA’s Commercial Crew manager Steve Stich said Starliner is 98% complete in terms of progress toward the agency certifying the spacecraft to carry its astronauts.

As for the timing of Boeing’s first operational flight, Stich deferred, saying it depends on the timing and outcome of the final test flight.
“Could we fit it into the end of next year? It’s probably a little too early to tell whether we could fit that flight in or not,” Stich said.
Starliner continues to be a costly and behind-schedule endeavor for Boeing. Due to the years of delays and development cost overruns, Boeing last month reported that it’s absorbed about $1.5 billion in overrun costs to date. More

AMERICAN CHIPMAKERS account for a third of global semiconductor revenues. They design the world’s most sophisticated microprocessors, which power most smartphones, data centres and, increasingly, artificial-intelligence (AI) models. But neither the American firms nor their Asian contract manufacturers produce any such leading-edge chips in America. Given chips’ centrality to modern economies—and, in the age of AI, to warfighting—that worries policymakers in Washington. Their answer was the CHIPS Act, a $50bn package of subsidies, tax credits and other sweeteners to bring advanced chip manufacturing back to America, which President Joe Biden signed into law on August 9th 2022. On the surface, the law appears to be having an impact. Since 2020, when it was first floated, chipmakers have announced more than $200bn-worth of investments in America. If all goes to plan, by 2025 American chip factories (fabs, in the lingo) will be churning out 18% of the world’s leading-edge chips (see chart 1). TSMC, a Taiwanese manufacturing behemoth, is splurging $40bn on two fabs in Arizona. Samsung of South Korea is investing $17bn in Texas. Intel, America’s chipmaking champion, will spend $40bn on four fabs in Arizona and Ohio. As the CHIPS Act celebrates its first birthday, and as the administration prepares to start doling out the money, both Democrats and Republicans, who agree on little else these days, regard it as a bipartisan triumph.Any triumphalism may, however, be premature. Leading-edge fabs being built in America are slower to erect, costlier to run and smaller than those in Asia. Complicating matters further, the chipmakers’ American investment binge comes at a time when demand for their wares appears to be cooling, at least in the short term. That could have consequences for the industry’s long-term profitability.The Centre for Security and Emerging Technology, a think-tank, estimates that in China and Taiwan, companies put up a new plant in about 650 days. In America, manufacturers must navigate a thicket of federal, state and local-government regulations, stretching average construction time to 900 days. Construction, which makes up around half the capital spending on a new fab, can cost 40% more in America than it does in Asia. Some of that extra cost can be defrayed by the CHIPS Act’s handouts. But that still leaves annual operating expenses, which are 30% higher in America than in Asia, in part owing to higher wages for American workers. If those workers can be found at all: in July TSMC delayed the launch of its first fab in Arizona by one year to 2025 because it could not find enough workers with semiconductor industry experience.The planned American projects’ smallish size further undermines the economics. The more chips a fab makes, the lower the unit cost. In Arizona, TSMC plans to make 50,000 wafers a month—equivalent to two “mega-fabs”, as the company calls them. Back home in Taiwan, TSMC operates four “giga-fabs”, each producing at least 100,000 wafers a month (in addition to numerous mega-fabs). Morris Chang, TSMC’s founder, has warned that chips made in America will be more expensive. C.C. Wei, the current chief executive of TSMC, has hinted that the company will absorb these higher costs. He can afford to do this because TSMC will continue to make the lion’s share of its chips more cheaply in Taiwan, not in America. The same is true of Samsung, which will spend nearly 90% of its capital budget at home. Even Intel is investing more in foreign fabs than in American ones (see chart 2). As a result, if all the planned investments materialise, America will produce enough cutting-edge chips to meet barely a third of domestic demand for these. Apple will keep sourcing high-end processors for its iPhones from Taiwan. So, in all likelihood, will America’s nascent AI-industrial complex.The law may have unintended consequences, too. Chip firms which accept state aid are barred from expanding manufacturing capacity in China. Besides crimping the desire of firms like TSmc and Samsung, which have plenty of Chinese customers, to invest more in American fabs, such rules are prompting Chinese chipmakers to invest in producing less fancy semiconductors. The hope is that lots of older-generation chips can do at least some of what fewer fancier ones are capable of.According to SEMI, an industry research group, in 2019 China made about a fifth of “trailing-edge” chips, which go into everything from washing machines to cars and aircraft. By 2025 it will produce more than a third. In July NXP Semiconductor, a Dutch maker of trailing-edge chips, warned that excessive supply from Chinese firms is putting downward pressure on prices. In the long run, this could hurt higher-cost Western producers—or even drive some of them out of business. In July Gina Raimondo, America’s commerce secretary, acknowledged that China’s focus on the trailing edge “is a problem that we need to be thinking about”.Hardest to predict is the CHIPS Act’s effect on the semiconductor industry’s notorious boom-and-bust cycle. Usually chipmakers would be boosting capacity at a time of rising demand. Right now the opposite is true. Pandemic-era chip shortages have been replaced by a glut, now that consumers’ insatiable appetite for all things digital appears, after all, to be sated. TSMC’s sales declined by 10% in the second quarter, year on year, and the company now expects a similar drop for the whole of 2023. Intel’s revenue was down by 15% in the three months to June, compared with a year earlier. Samsung blamed a chips glut for its falling revenues and profits. Intel’s share price is half what it was at its recent peak in early 2021. Chip executives point out that prospects for their industry remain rosy. They are probably right that demand is bound to revive at some point. Yet “inventory adjustments” (reducing oversupply, in plain English) are taking longer than expected. And when inventories finally adjust, the business that emerges may be less lucrative. Since early 2021 Intel, Samsung and TSMC have lost a third of their combined market value, or nearly half a trillion dollars. A few more anniversaries may be needed before the CHIPS Act’s impact on American economic security can be properly evaluated. Investors are already making up their minds. ■ More

Hospitals like Baptist Health in Jacksonville, Florida, are looking at ways to leverage artificial intelligence to cut down on administrative tasks which contribute to burnout for nurses and doctors.
Its doctors are using an app from Microsoft’s Nuance unit to transcribe and document patient visits.
While hospitals are requiring doctors to review AI-generated notes before putting them in patient records, there are concerns that process may become too automated.

When Dr. Tra’chella Johnson Foy greets her patients, she sits across from them facing away from the computer in the exam room. Then, she pulls out her phone, and asks for permission to record the appointment.
“It listens in on our visit so I can pay more attention to you,” explains Foy, a family physician at Baptist Health in Jacksonville, Florida, while looking straight at her patient.

Foy and other doctors at Baptist Health have been using the DAX app, powered by artificial intelligence, from Microsoft’s Nuance division since last year. The program transcribes doctors’ and patients’ comments, then creates a clinical physician summary formatted for an electronic health record. 

Dr. Trachella Johnson

The app frees doctors from having to type up notes during patient visits, and from having to finish them up at night. A practice so common doctors have a nickname for it.
“Pajama time — which should be the time where you’re getting ready to wind down and go to bed. We’re usually still charting and noting and doing things that are going to enhance the life of the patient but not necessarily our own quality of life,” Foy said.

The cost of tackling burnout

Harnessing AI programs to put pajama time to rest, and helping doctors and nurses fight burnout, is a top priority for Baptist Health’s chief digital and information officer, Aaron Miri.
“There’s new economies of scale … that health care will be able to get into [by] leveraging AI,” Miri said. “You eliminate all the administrative redundancy, and bureaucracy overhead, and you allow folks to work at top of license.”

Administrative processes like documenting visits, requesting insurance pre-authorization for procedures, and processing bills account for about 25% of health-care costs, according to a National Bureau of Economic Research study. 
The researchers estimate adopting AI to simplify those tasks could help hospitals cut their total costs by 5% to 11% in the next five years, while physician groups could achieve up to 8% savings, and health insurers up to 10%.
But the upfront investment won’t be cheap: An Advisory Board survey of health-care executives last year found that 1 in 4 expected to see costs for artificial intelligence and analytics increase 25%.
Larger health systems like Baptist may be in a better position to fund that investment than smaller hospitals, and more likely to have the tech staffing to help integrate the new generative AI solutions.
“If it cost me X, but I just made my patients a whole lot happier and my physicians a whole lot more productive? Well, there’s an answer right there by itself,” said Miri.

Keeping people in the mix

Right now, hospital systems working with the new generative AI programs to automate administrative tasks are requiring doctors and nurses to check over the automated documents before they’re included in medical records.
“What organizations are doing is they’re looking at these high-impact use cases, but also making sure that they mitigate the risks and looking at ways that we can choose the scenarios where we put a human in the middle,” said Dr. David Rhew, chief medical officer and vice president of health care for Microsoft’s Worldwide Commercial Business.
But there are concerns that as organizations look to cut costs and boost efficiency, automation could take humans out of the mix.
Former FDA Commissioner Scott Gottlieb worries that generative AI could eventually eliminate some doctors’ jobs by creating “large language models that operate fully automated, parsing the entirety of a patient’s medical record to diagnose conditions and prescribe treatments directly to the patient, without a physician in the loop.”
Patients are also wary of how the technology could be used for their own care. Nearly two-thirds of those surveyed in CNBC’s All America Survey last month said they would be uncomfortable with AI being used to diagnose medical issues.
Dr. Lloyd Minor, the dean of the Stanford School of Medicine, worries more about how the fast-moving technology could be used to impact patient access to care.
“My deepest fear is that medical data is used in a pernicious way, either to block access to the appropriate health care, or to distort the way that health care is delivered,” said Minor, who helped launch an initiative to promote responsible use of AI.
Last month, health insurers Cigna and UnitedHealthcare were each sued over the use of conventional computer algorithms to deny medical claims.

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“Generative AI should open doors for access, it should provide pathways for providing equitable care that have not existed in the past,” Minor said.
In July, the White House secured a pledge from seven of the leading U.S. companies in artificial intelligence to commit to collaborating within the industry to build in safeguards into the fast-evolving technology.
The group included Google, Amazon Web Services and Microsoft — all three have launched generative AI products for health care.
Health systems are already a popular target for hackers and data thieves, despite rigorous regulatory privacy requirements. Generative AI is developing so quickly, the fear is that efforts to develop safety guardrails for the new technology are already playing catch up.
“It’s very important for us as a society to embrace the responsible AI principles of being able to move forward … so that the good actors are defining the future and not allowing the bad actors to potentially define that,” said Rhew. More

Warner Bros. Discovery plans to simulcast live games on cable TV and Max streaming in October.
The company plans to charge users more if they want to watch sports on Max.
The new streaming tier will be branded under the Bleacher Report name and will include highlights and interviews in addition to games.
There won’t be any exclusive MLB or NBA games on Max in 2023.

Julio Rodríguez of the MLB’s Seattle Mariners was the American League Rookie of the Year in 2022.
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Warner Bros. Discovery has targeted the beginning of the Major League Baseball playoffs to debut a sports tier for its Max streaming service, according to people familiar with the matter.
The company plans to simulcast games from the MLB, National Basketball Association, National Hockey League and National Collegiate Athletics Association, including college basketball’s March Madness, on Max. It also intends to add content from its sports media outlet Bleacher Report, such as highlights and interviews.

Warner Bros. Discovery plans to brand the new tier using the Bleacher Report name, the people said. The company wants to target a younger audience that increasingly skips the traditional pay-TV bundle and would be more aligned with a digital sports brand such as Bleacher Report.
Time Warner acquired Bleacher Report in 2012. It has operated as a subsidiary of Warner Bros. Discovery since WarnerMedia and Discovery merged last year.
Warner Bros. Discovery executives hinted at charging users more for sports during the company’s second-quarter earnings conference call last week, with CEO David Zaslav noting customers would “hear from us on that soon.” The company said last week it ended its second quarter with 95.8 million global direct-to-consumer streaming subscribers.
“Our view is sports is a such a premium offering with a very focused and passionate fan base that generally … it needs to be monetized incrementally,” said JB Perrette, CEO and president of global streaming and games, during the conference call.
Current discussions center around Max simulcasting MLB playoff games on both TBS and Max, said the people familiar with the matter, who asked not to be named because the discussions are private. No MLB games would appear exclusively on Max.

The MLB playoffs begin Oct. 3.

Adding the NBA

The NBA, which begins its regular season Oct. 24, has discussed a similar arrangement with Warner Bros. Discovery, where only games that air on the TNT cable network would be simulcast on Max, said the people familiar with the matter.
Any exclusive Max games would begin next year at the earliest and would likely be a part of the NBA’s rights renewal agreement with Warner Bros. Discovery, the people said.
The NBA has an exclusive window to negotiate new TV rights with Disney and Warner Bros. Discovery, its current broadcast partners, which ends April 2024.
Warner Bros. Discovery hasn’t finalized pricing for its planned sports tier yet, said the people. Max currently costs $15.99 per month without ads or $9.99 per month with commercials.
A Warner Bros. Discovery spokesperson declined to comment.
WATCH: Warner Bros. Discovery loses subscribers after Max launch, but shares rise on debt reduction More

Shares of Sage Therapeutics fell after the Food and Drug Administration approved the company’s oral drug zuranolone for postpartum depression, but not for major depressive disorder. 
Sage jointly developed the pill with Biogen.
The FDA’s decision to deny the drug’s approval for a much larger population of patients with clinical depression appears to be a notable setback for the two companies.

In this photo illustration, the Sage Therapeutics logo of a biopharmaceutical company seen on a smartphone and on a pc screen.
Pavlo Gonchar | SOPA Images | Lightrocket | Getty Images

Shares of Sage Therapeutics fell more than 50% on Monday after the Food and Drug Administration approved the biotech company’s oral drug zuranolone for postpartum depression, but not for major depressive disorder, a bigger potential market.
Shares of Biogen, which jointly developed the treatment with Sage, were up modestly.

The FDA’s approval late Friday made zuranolone the first oral treatment for postpartum depression, a common complication that affects 1 in 8 women during and after pregnancy and hinders their ability to function normally.
The two companies also applied for approval of zuranolone for major depressive disorder, also known as clinical depression. But the FDA said they did not provide enough evidence of the drug’s effectiveness in treating the condition, which affects a much larger population of patients.
Clinical depression afflicts approximately 17.3 million American adults, or about 7% of the people ages 18 and older, in a given year.
Zuranolone had the potential for $1 billion in peak sales, compared with $250 million to $500 million for postpartum depression, Jefferies analyst Michael Yee said in a research note Sunday.
He said clinical depression “was really the big upside driver here” for the companies, while postpartum depression is “much smaller and may not be hugely profitable.”

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Wells Fargo analyst Mohit Bansal also said the clinical depression market contributed to 85% of the firm’s future sales estimates for zuranolone. But “there could be a silver lining as the pricing power may be higher” in postpartum depression, he wrote in a Sunday research note. 
Sage and Biogen have not disclosed zuranolone’s price for postpartum depression treatment.
The FDA said additional studies might be required to support the drug’s approval for clinical depression. 
But Yee noted that Biogen is unlikely to “quickly move forward on another late-stage study” on the drug for clinical depression since the company is focusing on saving costs and recently announced layoffs. More

TEN MONTHS ago the spectre of recession was haunting corporate America. Inflation was rampant, earnings were depressed and the Federal Reserve was rapidly tightening the screws. Instead, inflation has moderated, the jobs market remains tight and recession is no longer a certainty. The prospect of an elusive “soft landing” has combined with hype over the productivity-boosting promise of artificial intelligence (AI) to give investors a fillip. This year the S&P 500 index of big American firms is up by nearly a fifth. Markets are especially bullish about a handful of tech firms and carmakers. These are among the s&p 500’s most ai-obsessed members, according to our early-adopters index (which takes into account factors such as ai-related patents, investments and hiring). And they have done well in the here and now, too: all reported respectable second-quarter results in the latest earnings season. But what about the health of the broad swathes of the American economy that are less affected by the tech hype? Here the picture is more complex, but ultimately reassuring. Start with the bad news. Some of the businesses least prepared for an AI future are suffering in the present, too. Health-care companies look sickly: UBS, a bank, estimates that their profits slumped by nearly 30% compared with last year (see chart). CVS Health, a chain of chemists (ranked 218th in our AI index), is slashing 5,000 jobs after its earnings sank by 37%. Energy firms made half as much money in the second quarter of 2023 as they did a year earlier, when Russia’s invasion of Ukraine pushed up oil and gas prices. With other commodity prices also down, in part owing to lacklustre appetite from a sluggishly growing China, materials firms’ profits are down by 30%. As a consequence, overall earnings for S&P 500 firms are estimated to have slid by 5% in the second quarter, year on year, according to FactSet, a data provider. That is the biggest decline since early in the pandemic. But the pain has mostly been concentrated in a few sectors. Dig into the numbers, and much of the non-AI economy looks surprisingly robust. Capital-goods manufacturers, such as Caterpillar and Raytheon (which come in 204th and 341st in our ranking), are reckoned to have collectively increased their revenues by more than 8% in the second quarter, and their profits by twice as much—perhaps thanks in part to President Joe Biden’s taste for industrial policy. Even the oil-and-gas giants are doing better than the headline numbers suggest. The largest of them, ExxonMobil (ranked 236th), made nearly $8bn in net profit. That is down by 56% year on year but, bar that record-breaking result in 2022, still ExxonMobil’s highest second-quarter figure in nearly a decade.The resilience is perhaps most obvious for businesses with fortunes tied to the condition of the American consumer, who remains in rude health. Pedlars of consumer staples, such as foodstuffs and household goods, saw their profits rise by 5%, year on year, according to UBS. For purveyors of non-staple consumer goods, earnings shot up by 40%. On August 1st Starbucks, a coffee-shop colossus (ranked 116th in our AI index), reported a quarterly operating profit of $1.6bn, up by 22%. The next day Kraft Heinz, a seller of ketchup and baked beans (ranked 253rd), said it made $1.4bn in operating profit, two and a half times what it eked out a year ago. Consumer-goods companies have managed to maintain pricing power. Confectioners, for example, are charging 11% more for chocolates than they did last year, according to the Bureau of Labour Statistics. Hershey (332nd) has offset the rising cost of cocoa—and then some. Its operating profit rose by 23%, to $561m. PepsiCo (245th) lifted prices of its soft drinks and snacks by 15% in the second quarter alone. Its operating profit bubbled up by three-quarters, to $3.7bn. It now expects to increase sales by 10% and net profit by 12% this year, up from an earlier forecast of 8% and 9%, respectively.Americans aren’t just spending on sweets and cola. Air travel is recovering rapidly, particularly for international trips. American Airlines (266th in our AI index), Delta Air Lines (193rd) and United Airlines (183rd) collectively reported net profits of $4.2bn last quarter, the most since 2015. Hotels, inundated with leisure and business travellers, enjoy strong pricing power. Hilton, a chain (ranked a lowly 421st), said that its revenue per available room, a preferred industry measure, was up by 12%, year on year.How long can the bonanza last? Shoppers are gradually drawing down the savings they accumulated during the pandemic, when they received stimulus cheques from the government but lacked ways to spend them. Between August 2021 and May this year, households spent over $1.5trn of these savings, according to the Federal Reserve Bank of San Francisco. At that rate they will burn through the $500bn or so they still have before the end of the year. Although unemployment remains near historic lows, at 3.5% in July, wage growth has slowed. The resumption of student-loan repayments in October, after the Supreme Court struck down Mr Biden’s plan to cancel some student debts altogether, could see consumer spending fall by as much as $9bn a month, according to Oxford Economics, a consultancy. If rising interest rates eventually curb demand, firms will find it harder to continue raising prices, leaving margins more vulnerable. Higher rates will also knock companies with weak balance-sheets. In the first half of this year 340 companies covered by S&P Global, a credit-rating agency, declared bankruptcy, the highest number since 2010. More could suffer a similar fate, especially if a recession does hit. That is not completely out of the question. Goldman Sachs, a bank, thinks there is a 20% chance of a recession in America in the next 12 months. Citigroup, another lender, expects a downturn at the start of 2024. If that happens, not even the AI-friendliest of firms will emerge completely unscathed. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More