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Corporate America Is Heading to the Supreme Court. Here’s What’s at Stake for Investors

The Supreme Court is back in session, and corporate America has money on the line. This term’s docket takes aim at everything from energy and retirement plans to the cut Apple takes from its App Store. Rulings may not land until June, but investors won’t wait that long to start positioning.

Oil on trial: The justices kicked off Monday with Suncor Energy (opens in a new tab) and ExxonMobilXOM, which are trying to shut down Boulder’s climate lawsuit. The oil giants say state courts shouldn’t referee a global problem governed by federal law, while Justice Elena Kagan drew parallels to the tobacco and opioid fights. With Justice Samuel Alito recused, a 4-4 split could leave the companies on the hook.

• Boulder expects its communities to spend upward of $100M (opens in a new tab) responding to the effects of climate change over the coming decades, putting a hefty price tag behind its case.
• A ruling in Boulder’s favor could give fresh momentum to dozens of similar lawsuits (opens in a new tab) already filed by states, cities, and tribes seeking to hold fossil-fuel companies liable.

Private Equity Knocks On The 401(k) Door

On Oct. 6, IntelINTC took the spotlight in a fight over the hedge funds and private-equity holdings tucked inside its 401(k) plan. The company added alternatives after 2008 to soften market swings, only to watch the funds lag during the bull market and draw a lawsuit from former employees. The ruling could reshape how easily workers can sue plan fiduciaries just as the Trump administration looks to bring more alternative assets into retirement accounts.

• Plaintiff victory could cool demand for private funds in 401(k)s, squeezing a potential growth market for ApolloAPO and BlackstoneBX.
• AppleAAPL has its own money fight before the Court over the 27% fee (opens in a new tab) it charges on purchases routed outside the App Store.

The long wait: The American Investment Council and Managed Funds Association blame retirement plans’ limited use of alternatives on “unwarranted litigation risk,” raising the stakes of Intel’s case. Apple, meanwhile, wants its contempt finding tossed, while Epic calls its workaround “evasion and defiance.” None of these fights ends quickly, with the Court often saving its closest calls for late June. Until then, Wall Street gets to do what it does best: price the verdict before it exists.

Airfares Surge 23.4% as Higher Jet Fuel Costs Eat Into Airline Profits

Flyers are paying more, but airlines aren’t seeing much of the upside. US airfares climbed 23.4% (opens in a new tab) in August from a year earlier, helping carriers forecast double-digit third-quarter revenue growth. However, much of that boost is being swallowed by jet fuel costs that have hit multi-year highs during the Iran war and led Wall Street to cut profit estimates across the sector.

• Hopper pegs Thanksgiving round-trip fares at $402, up 31% from last year, while Christmas flights are 23% pricier at $452.
• Delta's share of the Big Four's pre-tax profit has climbed to 51% (opens in a new tab) from 42% over two years, while American's slid from 15% to an estimated negative 5%

Fuel burn: More capacity cuts could be coming if fuel stays expensive. Raymond James analyst Savanthi Syth expects airlines to trim flights if jet fuel holds near $4 to $4.50 a gallon, which could support fares. Delta Air LinesDAL reports Friday, putting the industry’s response to higher costs in focus. As Qantas CEO Vanessa Hudson put it, “You can’t run the business on the hope that the Strait of Hormuz is going to open at a certain time.”