⌛ Rewinding the quarter

Monday, March 28, 2022 by Snacks
Remind me what year it is? [Massimo Ravera/Getty Images]

Remind me what year it is? [Massimo Ravera/Getty Images]

Remind me what year it is? [Massimo Ravera/Getty Images]

Remind me what year it is? [Massimo Ravera/Getty Images]

Last Week’s Market Moves
Dow Jones
34,861 (+0.31%)
S&P 500
4,543 (+1.79%)
Nasdaq
14,169 (+1.98%)
Bitcoin
$44,421 (+6.32%)

Hey Snackers,

We’re only three months into 2022, but it already feels like this first quarter has lasted a year. Just as Covid seemed to be waning in the West, Russia invaded the sovereign nation of Ukraine, launching a war that’s taken thousands of lives and driven Europe into one of its darkest times since WWII.

Today, we’re zooming out and zeroing in on the news and trends that’ve shaped markets and biz in the past three months — and helping you prep for what’s next.

Zoom Out

1. Three themes that defined the first quarter…

The smog of war… Russia’s war on Ukraine has roiled markets and mobilized world leaders and businesses. The West has weaponized finance to punish President Putin’s onslaught, from sweeping sanctions to yacht seizures. The US stopped buying Russian oil, and major companies like McDonald’s and Coke halted business there. Meanwhile, the EU is scrambling to phase out Russian energy by 2027. Reduced supply from Russia has caused prices of oil, gas, wheat, nickel, and other key commodities to skyrocket. Oil fuels the global economy, from manufacturing to farming to shipping. High energy prices will likely slow economic growth — and could even trigger a US recession.

Inflation nation intensifies… so does pump anxiety. US inflation reached a new 40-year high last month, with consumer prices up 8% from a year ago. A gallon of gas is hitting $7 in some states. After two years of near-zero interest rates, the stimulus party’s over: the Fed started raising rates this month to cool prices, though only by half of what was expected. Despite all the war-driven uncertainty, Fed Chair Powell emphasized plans for more rate hikes. Now the US is in “boomflation” — inflation paired with strong growth and a nearly recovered labor market. But in an econ nightmare scenario, we could get “stagflation”: high inflation + sluggish growth.

The big bear(ish) market… Your portfolio might be feeling it. Stocks kicked off the year at records, after the market-tracking S&P 500 index gained 27% last year. Fast-forward three months: major indices are all down so far, and the techy Nasdaq is down 10% from its record in November. Giant tech stocks like Amazon and Microsoft are weighing down the whole market. As rates and inflation rise, the value of companies’ potential future growth is also falling. Cue: stock prices are being “corrected.” Meanwhile, pandemic thrivers like Peloton, Netflix, and Pinterest have plunged as demand sags.

#s

2. Six notable numbers…

  • $4.5B: Value of bitcoin alleged to have been stolen by a “financial rapper” and her husband in the biggest cryptocurrency theft (Netflix’s next scammer show?). Cybercrime is on the rise, and US crypto regulation is in the works.
  • $250B: How much Meta lost in one day after reporting its first dip in daily active users. Facebook’s profit-puppy ad biz also took a hit from Apple’s privacy changes, while TikTok’s swiping up users.
  • 1.4M: The highest recorded number of new US Covid cases in a single day (January 10). National cases have fallen and all statewide mask mandates have been lifted. But reported cases are still rising in about 10 states.
  • $3.2B: The value of Kim Kardashian's Skims shapewear line, which doubled over the past year and was boosted by a major cash injection. Celeb-preneur brands like Rihanna’s Savage X Fenty lingerie and makeup biz have thrived.
  • 18%: The percentage of China’s 1.4B population using digi-yuan wallets. China is among 87 countries creating state-controlled digital currencies, though it currently bans unregulated coins like bitcoin.
  • $65M: How much Ukraine has raised in crypto donations so far. It was one of many unconventional ways, along with no-show Airbnbs and Etsy donations, that people supported global efforts.
Zoom In

3. Three trends that surfaced...

The IPO-palooza is over… IPOs slowed to a trickle this quarter: there was a 25-day span without a single one. That's a stark contrast to last year, when 1K+ companies raised a record $268B. Part of the reason private giants like Stripe are holding off: 70% of last year’s IPOs ended the year trading below their offering prices. Even Rivian, the first-to-market EV-truck maker with last year’s biggest debut, has slipped 50% since IPO’ing. Instacart and others have canceled planned IPOs, and the rest of the year’s expected to stay slow.

Ready Player (Every) One… US consumers spent $60B on video games last year — twice as much as they spent on streaming movies and TV. Gaming deals hit a new high score this quarter: “GTA” maker Take-Two revealed plans to buy Farmville maker Zynga for $12.7B in the biggest gaming deal of all time — until Microsoft beat that a week later with a $70B bid to buy “Call of Duty” maker Activision. Now gaming’s entering a new phase: the metaverse. Tech giants Meta and Nvidia are spending billions building metaverses, and gaming platforms like Roblox could be crucial to snagging early meta-users.

Moderation mayhem… Tech has been in the moderation hot seat, from the usual suspects (Meta, Twitter) to Spotify and TikTok. Joe Rogan created a Spotifiasco when medical experts and Neil Young called out Covid misinfo on his Spotify-exclusive pod. Rogan’s history of using racial slurs also surfaced. Spotify stood by Earth’s biggest podcaster, but made its moderation policies public for the first time. Others like TikTok and Twitter have had to deal with multiplying misinfo about Russia’s war in Ukraine. And Meta allowed users to call for violence against Russian invaders.

What else we’re Snackin’

Other big stories…

  • Testing: The US lagged behind other countries in making Covid tests available during Omicron’s spread. But profits boomed for self-test makers like Abbott, test sellers like Walgreens, and test processors like Labcorp.
  • Web3: The buzzword of 2022. Blockchain buffs are bullish on Web3, a decentralized user-owned internet that could replace Web1 (think: info sites like AOL) and Web2 (think: social sites like Facebook).
  • She-cession: US unemployment is nearly back to pre-pandemic levels, but women’s jobs are returning more slowly than men’s, partly because of unequal childcare duties and high-burnout jobs.
  • Blood: Four years after Theranos founder Elizabeth Holmes was charged with fraud over her blood-testing tech, the jury’s in: she likely faces 9-18 years in prison. But the conviction hasn’t dented biotech funding.

Snack Fact of the Day

Sci-fi author Neal Stephenson coined “metaverse” in his 1992 best-seller “Snow Crash,” in which people use virtual avatars to escape a dystopia

This Week

  • Monday: Earnings expected from XPeng, Jefferies, Ginkgo Bioworks, and TPG
  • Tuesday: Earnings expected from Lululemon, McCormick, Chewy, and Micron Technology
  • Wednesday: Earnings expected from Paychex and Dave & Buster's
  • Thursday: Weekly jobless claims. Earnings expected from Walgreens, BlackBerry, and Blend Labs
  • Friday: March unemployment rate
  • The weekend: The Final Four March Madness basketball games are on Saturday. The Grammys are on Sunday.

Authors of this Snacks own: bitcoin and shares of Apple, Netflix, Twitter, Spotify, Amazon, Zynga, and Microsoft

ID: 2097730

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