🛢️ Biden gets pumped up

Thursday, June 16, 2022 by Robinhood Snacks |
Where Biden wants oil production to go (Chip Somodevilla/Getty Images)

Where Biden wants oil production to go (Chip Somodevilla/Getty Images)

Where Biden wants oil production to go (Chip Somodevilla/Getty Images)

Where Biden wants oil production to go (Chip Somodevilla/Getty Images)

Yesterday’s Market Moves
Dow Jones
30,669 (+1.00%)
S&P 500
3,790 (+1.46%)
Nasdaq
11,099 (+2.50%)
Bitcoin
$22,399 (+1.26%)

Hey Snackers,

Cue the creepy doll song: after announcing that “Squid Game” was returning for a second season, Netflix gave the green light to a “Squid”-themed reality show — with a record $4.5M cash prize. Honeycomb carvers, assemble.

Stocks jumped after the Fed approved the largest interest-rate hike since 1994. The three-quarter-point hike was higher than originally anticipated, but investors had mostly priced it in. Fed Chair Powell said it’s becoming harder to cool the economy while avoiding a downturn.

Slick

1. Biden tells oil giants to stop pumping profits and to start pumping more oil — but he may be talking to voters

Drill, baby, drill… President Biden wants oil giants to pump more oil and extract fewer profits. This week he urged Chevron, Exxon, Shell, BP, and other oil biggies to ramp up supply and boost refining capacity — which is at its lowest in years. After imposing restrictions on fossil-fuel development, Biden appears to be backtracking from his clean-energy image. It may be necessary:

  • Prices. Are. Wild. In the US the average gas price hit $5/gallon, partly because Russia’s war on Ukraine has strained supply. But oil giants also crunched it by cutting production when demand sank mid-pandemic. Spoiler: they haven’t revived supply yet.
  • Profits are gushing, oil isn't. Profits at BP, Exxon, Shell, and Chevron more than doubled from 2021 last quarter. And oil companies plan to spend billions on buybacks and dividends for shareholders. Biden said the soaring profits are “not acceptable.”

#PumpAnxiety intensifies… High gas and utility bills hurt wallets. They also hurt public support for the president, who’s tried and failed to ease prices (think: releasing record strategic oil reserves). Now Biden’s shifting the blame to oil companies, but Americans are divided:

  • Dems blame oil corporations for the high prices: some want a 21% “windfall” tax on oil profit.
  • Republicans blame Biden and want to reopen refineries that were closed for polluting.
THE TAKEAWAY

Pump pleas may be symbolic… Biden’s approval ratings have tanked ahead of midterms, and gas prices play a huge part in that. It’s unlikely Biden will get approval to impose taxes on oil profits (because: gridlocked Senate). But there may be petroleum-scented relief on the horizon: experts expect US oil production to ramp up to pre-pandemic levels by next year.

Stacked

Billion-dollar Lego factory… some assembly required. Lego plans to drop $1B on its first US factory (in Virginia) as demand for its colorful blocks stacks up in one of its biggest markets. The family-owned Danish toy giant plans to spread the investment over the next decade, creating nearly 2K new American jobs.

  • Building blocks: Construction of the new carbon-neutral factory begins this fall, with the digs expected to be operational in 2025.
  • Supply stacks: Lego says the factory will help simplify its US supply chain, which has mainly been served by its Mexico factory.

“Go play with Lego, Elsa”… Despite inflation and the no-stimmy era, parents are still splurging on new playthings — an extension of the pandemic toy frenzy. Last year, Lego’s revenue jumped 27% to $8B as parents WFH’d with kids. Rivals Mattel and Hasbro also saw double-digit growth thanks to demand for iconic franchises like Hot Wheels and Barbie. Now:

  • Brick-flation: Lego plans to hike prices on some toy sets by up to 25% starting in August and warned its growth boom might slow.
  • Fine print: US toy sales ticked up this year after a period of unprecedented growth. But pricier playthings could force parents to trade down or wait for discounts.
THE TAKEAWAY

Playing wide is a hedge… While Mattel and Hasbro have focused on their target customer (kids), Lego has expanded its portfolio to appeal to consumers of all ages. That’s helped it grow faster than rivals. From intricate builds like the “Star Wars” Death Star (4K pieces) to nostalgic faves like the set of “Seinfeld” and James Bond’s Aston Martin, Lego’s adult offerings could help protect its biz — even if parents ditch kids’ sets.

What else we’re Snackin’

  • Closed: Home brokerage platforms Redfin and Compass laid off about 10% of their employees — yet another sign that the housing market is cooling as mortgage rates soar.
  • Rekt: Tesla’s advanced driver-assistance features (think: Autopilot) are in the hot seat. Regulators found that the majority of reported crashes believed to involve similar tech happened in Teslas.
  • Shift: iPhone assembler Foxconn plans to build its first EV battery plant in Taiwan. Foxconn’s been moving from China into countries like Vietnam as China’s Covid lockdowns complicate production.
  • Score: After landing some MLB games, Apple secured a 10-year exclusive partnership with Major League Soccer — which reportedly costs at least $250M/year. The Fruit is playing the sports-streaming long game.
  • DeFried: Embattled crypto lender Celsius hired restructuring lawyers after freezing billions worth of customers’ assets. It could be the company’s last-ditch effort to survive crypto winter.

Snack Fact of the Day

YouTube’s TikTok knockoff, dubbed “Shorts,” has 1.5B+ monthly viewers

Thursday

  • Jobless claims
  • Golf’s US Open begins
  • Earnings expected from Adobe, Kroger, and Smith & Wesson

Authors of this Snacks own: shares of Exxon, Shell, Apple, Tesla, and Netflix

ID: 2248627