Monday Apr.26, 2021

💰 100 days of Biden

_"Big Tech 5" earnings are now in session [Donald Iain Smith via GettyImages]_

Hey Snackers,

"Nomadland" won Best Picture at the Oscars — and Netflix won in general. This week is the Big Tech Oscars: Apple, Amazon, Microsoft, Google, and Facebook drop earnings. They're trying for Best Actor in a Revenue-Generating Role.

Stocks dipped for the week, on reports that President Biden is considering hiking capital gains taxes on the wealthy. On Friday, US health regulators said J&J Covid vaccinations can and should resume.

100

Biden's first 100 days: the biggest moves affecting the economy and the markets

100 days later... (in SpongeBob voice). This Thursday marks President Biden's 100th day in office. We’ve seen big changes since Inauguration Day — so we're zooming out on Biden's first 100 days through the lens of the economy and business:

The Big Stimulus: Biden campaigned on it, but we didn't expect how massive it would be. The $1.9T package was more than twice as big as the 2009 recession package. $1.4K checks fueled a rebound in "revenge spending," and boosted economic growth expectations.
The Vax Rollout: Biden pledged an achievable target of 100M shots in his first 100 days. 230M shots have already hit American arms. Biden expanded eligibility to all adults, speeding up biz reopenings — and boosting spending on travel and restaurants. Now, the US is providing vax supplies to India, where Covid is surging.
Infrastructure Makeover: Biden unveiled a $2.3T proposal to give America's infrastructure a major facelift. It would be the biggest federal program since the '60s Space Race, and could boost construction-related companies.
Serious Tax Hikes: Biden's infrastructure plan requires bumping the corporate tax rate to 28% from 21%. He also wants to raise income taxes on the wealthy, and reportedly, nearly double taxes on investment gains to ~40% (for people earning $1M+). Stocks and Bitcoin plunged on the reports.
Green Push: Pre-election, Biden pledged $2T to clean energy. His infrastructure plan includes EV rebates and 500K electric vehicle chargers. He also unveiled a new target to slash US emissions by 2030. That could boost EV makers and clean energy companies.

Biden went big... His first 100 days brought the biggest step-change in the role of government since LBJ. While Biden ran as a centrist, his policies have been more left-leaning than expected. But it's TBD what he'll be able to achieve with Dems’ slim majority in Congress. The infrastructure bill may not fly — ditto for the tax hikes. Going forward, we'll see if these could pass without GOP support. Also top of mind: whether stricter regulation could hit Big Tech and finance.

Events

Coming up this week...

Big Tech earnings... drop together. Amazon, Google, Apple, Microsoft, Facebook, and Twitter report quarterly earnings this week. Big deal, since those first five companies make up ~17% of the stock market's value. Earnings will be compared to a year ago, when people flocked to tech to survive #LockdownLife. The vax rollout could mean less phone-scrolling and online-ordering. We'll see if reopenings affected results.

EV earnings... Nio (aka: the "Tesla of China") reports Thursday, and Tesla (the "Tesla of Tesla") reports today. Electric vehicle sales have been thriving globally: Tesla already revealed a record 185K deliveries last quarter, while Nio delivered a record ~20K cars (a fraction of Tesla's). Buuuut: Tesla is facing increasingly real competition from Chinese EV makers — and OGs like Volkswagen and GM. We'll see if that impacted sales.

Zoom Out

Stories we're watching...

Pod battle intensifies... Last week, Apple unveiled a slate of (colorful) products. The headliner was AirTags, fancy Bluetooth buttons for tracking valuables. But the Fruit dropped something else that could be big: paid pod subscriptions, for ad-free listening and exclusive content. We'll see if Spotify, which has invested big in pods, will launch its own subs to lure creators.

SpaceX takes flight (again)... Last Friday, Elon Musk's SpaceX launched four NASA astronauts to the International Space Station in its third-ever crewed flight. This month, SpaceX also won a $2.9B NASA contract to build a lunar landing system, beating out Bezos' Blue Origin. NASA's on a mission to commercialize space travel (think: Hotel ISS), and SpaceX is playing an increasingly big role.

ICYMI

Our biggest stories last week...

Earth Day Edition: How industries like food and transportation (plus Bitcoin) are affecting the environment.
Dogecoin's rally: The joke, the rise, and the punchline of Doge's massive rally.
Rising prices: Spending more on your PB&J? Consumer goods companies like General Mills are raising prices for the first time since 2018.

What else we’re Snackin’

Work: Four strategies for managing your job search anxiety.
Learn: What are ETFs, and why are they like investment smoothies?
Chill: The Stoic cure to frustration: how to keep cool when others disappoint.
Build: Why it's so hard to create habits (fewer decisions = more action).

This Week

Monday: Earnings expected from Tesla and Canadian National Railway
Tuesday: Earnings expected from Microsoft, Google, Starbucks, Pinterest, AMD, UPS, and General Electric
Wednesday: Earnings expected from Apple, Facebook, Spotify, Shopify, and Boeing. US Interest Rate Decision
Thursday: Weekly jobless claims. Earnings expected from Amazon, Twitter, Nio, Mastercard, Altria, and Caterpillar. US reveals first set of GDP data for first quarter of 2021
Friday: Disneyland parks reopen in CA. Earnings expected from Exxon, AstraZeneca, and Chevron

Authors of this Snacks own shares of: Apple, Google, Tesla, Microsoft, and Amazon

ID: 1620491

Latest Stories

Bottom lines

20m

April 19: AmEx up, paint ain’t, banks sank

Norway now has a wealth fund worth $290k+ for every citizen of the country

William Coulman, David Crowther3h

More wind power capacity was installed last year than ever before

Tom Jones, David Crowther3h

Do you want to run the State Department of McDonald’s?

A couple of days ago, a tweet making fun at McDonald’s hiring a “Manager for Diplomatic Relations” went viral.

At first glance, the idea that McDonald’s, a burger franchise known for its double quarter pounders and perfectly salted fries, is expanding its diplomatic influence with policy makers in Foggy Bottom and the world at large sounds comical. But it’s actually crucial.

There are more than 40,000 McDonald’s locations spread across 115 countries around the world, and 90% of these stores are independently owned and operated franchises that pay royalties to the parent organization to operate. Tens of thousands of franchises operated by different owners with different beliefs, priorities, and values can get complicated, fast.

As we noted in Snacks in February, McDonald’s received heavy backlash from franchisees in countries including Saudi Arabia, Oman, Jordan, Kuwait, and Pakistan after McDonald’s Israel donated thousands of free meals to IDF personnel. But it wasn’t McDonald’s, as an entity, that made the donations. It was the owner of the company’s Israel franchises, who was acting under his own volition.

Tom Jones, David Crowther

The data doesn’t lie: Taylor Swift is the biggest pop star on the planet

TOPSHOT-CORRECTION / AUSTRALIA-ENTERTAINMENT-MUSIC-SWIFT

Matt Phillips

Nuke stocks up on AI excitement

For most of humanity, the thought of “nuclear-powered AI” sends a shiver down the spine. But the stock market is all for it! Just check out the list of top performing S&P 500 stocks this year. Just behind established AI plays — Super Micro Computer and Nvidia, you’ll find Constellation Energy, the largest operator of nuclear plants in the U.S. NRG Energy, which also operates nuclear plants, isn’t far behind. Bloomberg reports that CEO of power distributor Exelon — which spun off Constellation in 2022 — says in the Chicago area alone, AI could drive a 900% jump in demand for energy from data centers.

Rani Molla

China makes Apple remove WhatsApp, Threads, Signal and Telegram from app store

In its latest move to restrict foreign tech, Beijing has ordered Apple to remove a number of popular messaging apps from its app store there, including WhatsApp, Threads, Signal and Telegram.

These apps had only been available through VPNs but were popular nonetheless, according to the Wall Street Journal.

Apple said the Chinese government asked them to remove the apps in the iPhone maker’s second biggest market over “national security concerns.” Last week, China told its state-owned telecoms to phase out the use of US chips by 2027.

Exclusive | China Orders Apple to Remove Popular Messaging Apps

Rani Molla

Tesla's recall reveals just how bad Cybertruck delivery numbers have been

Thanks to a recall of Tesla’s Cybertrucks, we now know how many of them have actually been delivered: 3,878 since the EV company began releasing them to customers in November.

In its third and fourth quarter earnings report, Tesla said that its current Cybertruck production capacity was greater than 125,000 a year. Musk had previously said he expected to produce 250,000 Cybertrucks a year by 2025.

Either way, that’s a lot more than the roughly 775 it’s delivered each month so far.

The recall is over an issue with the gas pedal pad that, the National Highway Traffic Safety Administration says when pressed, “may dislodge, which may cause the pedal to become trapped in the interior trim above the pedal.” The cause of the issue: “unapproved” soap that the manufacturer used to aid in getting the pad on the pedal.

A Cybertruck customer this week posted a TikTok about a terrifying incident in which this happened and “held the accelerator down 100%” in his 6,000+ pound vehicle. Thanks to some quick thinking where he held down the brake and put it in park, he wasn’t injured.

This is the long-awaited Cybertruck’s second recall since it came out five months ago.

Tesla recalls the Cybertruck for faulty accelerator pedals that can get stuck | TechCrunch

Either way, that’s a lot more than the roughly 775 it’s delivered each month so far.

This is the long-awaited Cybertruck’s second recall since it came out five months ago.

Millie Giles & David Crowther

Cocoa hits $11,000

Cocoa prices are breaking records on an almost daily basis — with cocoa futures closing at (another) all-time high of $11,020 per metric ton yesterday.

That’s up 158% since the start of the year, and over 4x on the typical prices seen in 2022 — as crop production continues to fall short of demand.

Major cocoa-producing nations like the Ivory Coast and Ghana, which between them grow about two-thirds of the world’s cocoa, have seen excessive tree failure due to disease, changing weather patterns, and hot, dry conditions causing devastating droughts.

As such, consumers are starting to see the effects of the largest cocoa supply deficit in over 60 years: “shrinkflation” and reduced-cocoa recipes might soon hit your favorite chocolate bars, and Hershey stock was recently downgraded. Unfortunately, the worst may still be yet to come: the International Cocoa Organization expects production to lag behind demand by 374,000 tons for the 2023-24 season.

Why the World of Chocolate Is in Crisis

Governments and companies tackle the climate crisis as damage intensifies

Jack Morse

Read

Extreme weather has cost the US $2.6T, and the number keeps rising

Max Knoblauch

Read

The cost of waste: e-junk and emerging tech add to America’s pollution prob

Nia Warfield

Read

The biz of electric vehicles: the EV transition hits speed bumps

Bitcoin business will lose billions in the halving

Investors and miners have spent months prepping for the crypto-shattering event lying in bitcoin’s code. It’s finally arrived.

Friday, April 19th

10h

What’s happening

Casey Newton

Platformer

16h

Meta’s new AI paves the way for social networks where nothing is what it seems

Five ways of thinking about Llama 3, its latest large language model

Screenshot of Meta’s AI image generator, frog in a bathrobe

Matt Phillips

19h

World out of balance: It costs the US 3¢ to make 1 penny

The cost of producing the US penny rose 13% in fiscal 2023 to 3.07 cents. Yes, that means that Uncle Sam loses more than two cents for every cent it produces. (And no, you can’t make it up on volume.)

For the record, that’s the 18th-straight year the penny’s face value has been below production costs, fueling calls for abolishing the lowest value denomination coin. Canada started to phase out the penny in 2013, joining Australia, Brazil, Finland, New Zealand, Norway, and Israel, according to Smithsonian Magazine.

3.07¢

Pop Quiz!

What’s the world’s busiest airport?

Don't be a sucka

Rani Molla

21h

Netflix is going to stop sharing subscriber numbers

After posting subscriber numbers that beat expectations today, Netflix says it’s no longer going to share those numbers starting in the first quarter of 2025. That’s a big deal since subscriber numbers have long been one of the main metrics that investors have looked at.

“In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential,” its shareholders letter read. “But now we’re generating very substantial profit and free cash flow.” The company said that it will focus on revenue and operating margin as its main financial metrics, while it will look at time spent on the platform to gauge customer satisfaction.

Another way to read this? They’ve hit market saturation and just aren’t going to be growing that much anymore, and they thought they’d end on a good note. Going forward they’re focusing on how to get more money out of the customers they do have.

They’re doing so by cracking down on password sharing and charging for extra members. They’re also pushing people to ad tiers, which are more profitable than non-ad tiers.

“Scaling ads to become a more meaningful contributor to our business in ‘25 and beyond,” Netflix said.

Netflix’s ads membership grew another 65% in Q1 over the previous one, after rising 70% the quarter before, and 40% of signups in ad markets continue to be for those ad plans.

21h