Listen in podcast app

1. Market update

2. Quick chat about social media’s new 15$/month tax

3. Setting the table for the sports streaming transition

4. The cable bundle collapse is worse than you think

5. How athletes can have their cake and eat it too

6. Recommendations and Predictions

Listen on Apple, Spotify, or Google Podcasts.

QUICK UPDATE:

US equities rallied on Friday as bond yields fell. Large caps bested small caps: S&P 500 (+1.61%) vs. Russell 2000 (+1.35%).

Technology (+2.14%) and consumer discretionary (+2.12%) outperformed the broader market indices, while consumer staples (+0.08%) and industrials (+1.06%) lagged. Apple (+3.51%) and Boeing (+2.40%) led the Dow (+1.17%) higher; Coca-Cola (-0.47%) and Verizon (-0.39%) were the index's worst performers.

The Nasdaq gained 1.97%, while the "FAAMG" stocks rallied: Meta (+6.14%), Amazon (+3.01%), Apple (+3.51%), Microsoft (+1.66%), Alphabet (+1.85%).

The VIX dropped 5.62% to 18.49. The 30-year and 10-year Treasury yields declined to 3.878% and 3.958% respectively, while the 2-year yield fell to 4.861%.

If you aren’t in the Reformed Millennials Facebook Group join us for daily updates, discussions, and deep dives into the investable trends Millennials should be paying attention to.

📈📊Deeper Market Update💵📉

Data sourced: here & here

The S&P 500 has traded around 4,000 several times (including now) since first hitting that level in April 2021. Interest rates have been volatile, but earnings power has been constant.

Over the last week markets have dramatically adjusted their expectations for 2023 Fed policy and now expect Fed Funds to end the year well above the FOMC’s December 2022 guidance.

But even still, the VIX is bouncing around the historic average of 20 and the S&P500 continues to trade at 18X earnings.

Wall Street analysts have been cutting their 2023 S&P 500 earnings estimates by more than usual over the last 2 months (3.4 pct versus long run average of -1.0 pct). These cuts are, however, not as severe as a typical recession scare (-5.1/-4.4 pct in 2015/2016).

Corporate bond spreads over Treasuries (IG: 1.27 pts, HY: 4.18 pts) are lower now than the end of 2022 (IG: 1.38, HY: 4.81) and similar to a year ago (IG: 1.38, HY: 3.90). This market shares the equity market’s confidence that future earnings will remain stable, a bullish sign for stocks.

Even though Q4 2022 was a disappointing quarter in terms of S&P 500 companies beating analysts’ earnings expectations, the index still reported $52.42/share. That’s only 2.4 pct below the trailing 6-quarter average. The Street expects earnings to rebound after Q1 but even if they just hold constant that could be enough to support current equity prices.

This will be a busy week on the macro front, with Chair Powell testifying in front of Congress, January JOLTS, and February’s Jobs Report. Markets want to hear 50 bp in March is off the table… Will they get it?

China:

China’s equity market perked up last week and is now back to being up on the year. The same goes for the Chinese offshore yuan. The last week’s air pollution data from China’s 5 largest cities supports market confidence in the country’s economic reopening. Air quality is generally worse than the prior week(s), suggesting economic activity is increasing across the systematically important areas across the country.

Confidence in China’s economic reopening improved last week, lifting the country’s equity and currency values.

Official information on the country’s economy is not always as reliable as western investors would like, but many have found that air pollution has been a solid indicator of China’s economic conditions over the last 3 years. Moreover, it is real time data, so we don’t have to wait weeks or months to see how things are progressing.

China’s 5 largest cities in terms of their contribution to national GDP focusing on week over week comparisons.

pollution data here

#1: Shanghai:

The most recent week showed greater levels of air pollution than the week before, although not back to levels in early/mid-January. There have, however, been two “red” days in the last 2 weeks, the first since the very start of 2023. Economic activity in Shanghai looks to be on an upswing.

#2: Beijing:

Beijing’s air quality varies considerably by day, but it does appear that there has been a sustained pickup in economic activity since the start of February. Also worth noting: weekend pollution levels are quite high, which suggests an increasing level of discretionary personal travel. We do not see the same in the Shanghai data above.

#3: Shenzhen:

Air pollution is getting noticeably worse in this major global hub for tech manufacturing. Last week saw the greatest number of “red’ days this year, including over the weekend. The trend here looks quite positive from an economic perspective.

#4: Guangzhou:

As with its southerly neighbour Shenzhen, Guangzhou is seeing an uptick in airborne pollutants. The change in recent weeks is the most notable of any city we are looking at today.

#5: Chongqing:

Takeaway: It’s hard to take too much from any week’s data, but it does appear that there is a concerted effort to reinvigorate the Chinese economy.

💸Reformed Millennials - Post of The Week

Social Media Is Offically - “Pay to play”

from mobiledevdemo

Meta recently announced "Meta Verified," a paid verification product that confirms the identity of an account. But Meta Verified also provides subscribers with amplified reach. I contend that this product and others like it signify the end of the Internet's Grand Bargain.

The Internets Grand Bargain allowed social media to reach pro omnibus hominibus; in essence, it offered consumers free & universally-equal access to publishing tools in exchange for advertising opportunities. I consider the concept a foil to the "you are the product" aphorism.

Meta Verified, which will cost $11.99 (web) or $14.99 (iOS/Android), provides users with protection against impersonation, but also something else: "increased visibility and reach." In other words: the ability to pay for superior visibility.

Meta isn't alone in offering a paid product that provides superior reach: both Snap and Twitter offer similar products that amplify content from subscribers in Snapchat+ and Twitter Blue, respectively.

In the piece (link above), Eric argues that privacy policies like Apple's App Tracking Transparency (ATT) and impending legislation/regulation have undermined the economics of the Internet's Grand Bargain: personalized ads aren't as lucrative in the new privacy landscape.

Note that these products aren't paywalls: the choice provided to users isn't paid access or no access at all, but rather preferential treatment. Social media may be evolving into a two-tier ecosystem, where influence is derived from economic status.

🎙Podcast & YouTube Recommendations🎙

• The Best Invest Like The Best Podcast of the last 12 months:

Tweet thread breaking out some important notes

Joel Shackleton @JoelShackleton

Doug Leone recently appeared on the Invest Like the Best podcast with @patrick_oshag and it was one of those episodes where you just sit back and try and learn as much as you can. That said, it should have been called "Black Magic" - Frank Lewis's voice open.spotify.com/episode/1drc5v…

2:17 AM ∙ Mar 6, 2023

• Morgan Housel Has a Podcast About Money:

🔮Best Links of The Week🔮

• NewYork Times Blasts Tesla - Bluth has been early, but now the NYT is on board: “Public perception hasn’t yet caught up with the reality of the situation. If you want to work for a flexible, modern company, you don’t apply to $TSLA. You apply to 120-year-old $F.”

• "Sen. Mark Warner, D-Va., said Sunday he is introducing a broad bipartisan bill that will outline an approach to banning or prohibiting foreign technology like TikTok. Warner said he is working on the bill with Sen. John Thune, R-S.D., and that he is concerned over the type of content that Americans are seeing on the platform. Warner’s bill comes after U.S. House Foreign Affairs Committee voted Wednesday to advance a bill that would grant President Joe Biden the authority to ban TikTok." Source: CNBC

• "Operators of hotels, bars and restaurants—hit hard as the pandemic took hold—are now among the country’s fastest-growing employers, offsetting a slowdown in tech-related hiring. The leisure-and-hospitality industry is rebuilding its workforce after cutting back during the pandemic’s early days. In contrast, companies focused on providing business and tech-related services have slowed their growth in recent months. Because the hospitality industry includes a larger number of private-sector jobs than the tech and information sectors, the shift in hiring patterns has helped keep the U.S. unemployment rate at a 53-year low and the overall job market tight." Source: WSJ

• "For the first time, public companies are revealing how much compensation their CEOs are actually poised to get, by tabulating gains and losses in the stock awards that make up much of their pay packages. For Olivier Le Peuch, chief executive of oil-field-services company Schlumberger, the new disclosure shows the value of his pay jumped nearly $24 million during the course of last year, driven by a sharp rise in the company’s share price. At nuts-and-bolts-maker Fastenal, new equity awards for CEO Daniel Florness lost nearly half their value in 2022. The new measure of compensation, dubbed “compensation actually paid” under Securities and Exchange Commission rules, is designed to move executive-pay disclosure beyond the moment-in-time snapshots that investors have considered for years." Source: WSJ