John Ternus is officially CEO of Apple, and he’s going to fold right out of the gate.

AIn his first big event as the top boss, next week’s “Surprise and Shine” media event at the company’s Cupertino headquarters, Ternus is all but confirmed to be unveiling the endlessly rumored foldable iPhone and he’s just launched the new AI-powered Siri previously showcased at this summer’s WWDC conference. It’s an attempt to make the 20-year-old iPhone feel young again, just as artificial intelligence ushers in a new era for consumer tech. The good news for Apple? After two decades, it has a massive reach to 2.5 billion devices, giving it an edge in the AI age unlike any other.

Rent the AI Runway

Apple’s AI strategy has been simple and well-regarded by Wall Street. Phase 1 involved sitting back and letting everyone else spend big on the AI models of tomorrow. For one salient data point showing why Apple has become Wall Street’s favorite anti-AI defensive play: As Alphabet has embarked on a capex spending spree worth roughly 40% of its revenue, Apple’s capex plans run a little closer to just 2% of revenue. For another data point: Apple, the stock market’s buyback king, authorized another $100 billion in buybacks this Spring, while Alphabet cut its 33-quarter buyback streak earlier this year.

With the imminent launch of Siri AI, Apple is now definitively entering Phase 2 of its AI long game. And it’s the same play the company has always run: leverage a massive consumer reach to become Silicon Valley’s top rent collector. If it ain’t broke, don’t fix it. The division crossed the $100 billion revenue mark for the first time ever in its last fiscal year. The unit recorded $30 billion in revenue in its most recent quarter, on typically juicy margins of around 75%.

By serving as the meeting point between end-users and top AI models, Apple is set to grow its Services unit even further. In fact, it already has:

• Apple scored $900 million last year taking a cut from in-app subscription purchases made within third-party AI apps, such as ChatGPT or Claude, and is on track to surpass $1 billion in third-party AI fee revenue this year, according to a Wall Street Journal analysis of AppMagic data.
• Meanwhile, then-CEO Tim Cook suggested in July that users could eventually pay for more powerful Siri AI models by way of upgraded iCloud+ subscriptions. In July, Apple said it reached 1.5 billion paid subscriptions across its platforms, including both first-party (like iCloud) and third-party (like Netflix) services.

Monthly Bill+: Speaking of Apple services, the company on Friday announced an immediate price hike on Apple TV+, from $12.99 per month to $14.99 per month, and bundled service Apple One, $19.95 per month to $21.95 per month. Prepare yourself for the “lock-in, jack prices” Phase 3 of Apple’s AI long game.

A hawkward silence fell upon Jackson Hole. While Federal Reserve Chair Kevin Warsh continued advocating for a “quieter Fed” in his speech to the annual conference on Friday, he also gave the strongest signal yet that the central bank is ready to hike rates as inflation becomes, as he put it, “more concerning.”

However, data waits for no man and a payrolls report due this week could complicate the short-term path to a hike.

This is What it Sounds Like When Hawks Cry

Since taking over as Fed chair in late May, Warsh has made it clear he is less comfortable providing forward guidance than his predecessor. On Friday, he emphasized the potential “hall of mirrors” problem: the market trades on Fed guidance and the Fed reacts to market prices, leaving both unmoored from the real economy.

He didn’t deviate much from that position. “There was no new information in Chair Warsh’s speech,” said LPL financial chief economist Jeffrey Roach. Warsh did explicitly say he believes the labor market is at full employment and that better-than-expected inflation readings over the summer did not persuade him that elevated prices have meaningfully improved. Those two points suggest a willingness to hike.

But Roach said the chair has talked like this before, only for policy to hold steady: “The money quote (ha!) implied a hawkish lean toward rates: If core inflation doesn’t slow further, the Fed will hike. But that’s the same message as in the FOMC’s last two monetary policy statements, which followed decisions where they nevertheless held rates steady.” Indeed, payrolls data this week could lengthen the odds of a September rate hike, which markets currently peg at 57%, according to CME Fedwatch:

• Bill Adams, chief US economist at Fifth Third Bank, said markets are pricing in the “obvious interpretation” of Warsh’s remarks, but that “the bar to a hike will likely look higher [this week], since payrolls will likely fall in the August jobs report.” The Trump administration’s decision to strip protected status for 100,000 to 200,000 employed Haitian migrants likely drove payrolls into negative territory for the second straight month in August, he noted.
• “Consecutive monthly declines for payrolls are rare outside of recessions, but—famous last words, we know!—this time looks different,” he said, adding the July decline was also the result of a policy decision, the government employing fewer teachers. Nevertheless, Adams said “the Fed will probably see higher risks to the employment side of their mandate” if the August payrolls report is negative.

No Moving Targets: John Luke Tyner, the head of fixed income at Aptus Capital Advisors, said Warsh did successfully settle some nerves on the market when he “clearly shot down” speculation he might abandon the personal consumption expenditures (PCE) price index, the Fed’s preferred inflation metric, for another. Warsh called the Fed’s objective of 2% PCE inflation “a firm, fixed target,” a clarification that Tyner said “creates a clear crosshair for the market to focus on.”

Darth Vader may be one of the only supporters of Flock cameras going viral on social media. Backlash is building against the controversial tech, as people online and in local council meetings across the country tell the company to flock off.

Disgruntled folks that disagree with the Sith Lord have taken matters into their own handsaws, destroying or blocking the AI-powered surveillance cameras. Lawmakers on both sides of the aisle have spoken out against the tech.

Flock Safety, the startup that’s been installing the cameras at a rapid clip, seems to think people are viewing its tech through a too-narrow lens.

Good Samaritan or Sauron?

Flock raised $500 million in its latest funding round for a valuation of $8.3 billion, backed by VC firms including a16z and Tiger Global, Fortune reported. The nine-year-old startup said its tech is used by more than 5,000 law enforcement agencies, who’ve tapped its cameras to aid 1 million police investigations and find about 10,000 missing persons.

More than 130,000 AI-powered cameras are active in the US, according to the tracking group DeFlock, of which the vast majority are Flock cameras. Critics think that’s 130,000 too many:

• Flock cameras being used for their intended purpose are already divisive for their privacy implications, with some saying they violate constitutional rights. But beyond that, critics are calling attention to how the cameras have been misused, including by police officers who’ve tapped the tech to stalk ex-partners. Others have raised cybersecurity concerns about the potential for the cameras to be hacked.
• Flock CEO Garrett Langley told Fox News over the weekend that he thinks people who talk about just privacy or safety are “prioritizing the wrong thing” and that “what we have to prioritize as a country is compromise.” Despite holding its ground, Flock this month reduced how long its cameras retain data by default from 30 days to 7 and rolled out an audit tool meant to root out bad actors. The company also patched cybersecurity vulnerabilities.

AI Angst: The updates are too little, too late in at least 100 cities that have already blocked Flock and its competitors by shutting down cameras or canceling contracts. Backlash against Flock has been brewing for years but seems to just now be boiling over. The timing feels like a catalyst: AI sentiment, at least for some, seems to have shifted from optimism to hostility as people protest data centers and speak out against everything from AI’s water-guzzling ways to waves of AI-related layoffs.