💨 Goodbye, Puff Bars

Thursday, October 14, 2021 by Robinhood Snacks | Disclosures
The great chip scare [Victor Dyomin/Moment via Getty Images]

The great chip scare Victor Dyomin/Moment via Getty Images

Yesterday’s Market Moves
Dow Jones
34,378 (-0.0015%)
S&P 500
4,364 (0.30%)
Nasdaq
14,572 (0.73%)
Bitcoin
$57,279 (2.27%)

Hey Snackers,

A Bosnian man built his wife a “rotating house” so that she could simply spin away when unwanted visitors dropped by — and they say chivalry is dead.

Stocks rallied today, with the market-tracking S&P 500 index notching its best daily gains since March. Investors were heartened by expectation-topping corporate earnings, as big banks like Citi and Morgan Stanley reported profit growth.

Puff

1. Vuse Solo becomes the first e-cig authorized by the FDA — after doing what Juul didn’t

Scratch the mango e-juice... For the first time, the FDA has authorized an e-cigarette to stay on the US market. Refresher: Juul, Puff, and others still don't have the green light. The FDA authorized three Vuse vaping products from Camel-maker R.J. Reynolds, one of the world's largest cigarette companies. Unlike competitors, this vape is far from “cute”:

  • The Vuse Solo e-cig... looks more like an emergency medical syringe — no bright colors and no puffy-cloud illustrations.
  • The approved cartridges are strictly tobacco-flavored. A far cry from watermelon ice or cotton candy. Still, they contain as much nicotine as a pack of cigarettes.
  • The verdict: FDA said the health benefit of helping smokers ditch tobacco cigs outweighs the risk of getting kids hooked... on tobacco-flavored Vuse Solo.

First Vuse... The landmark decision means the FDA thinks some vapes could offer more benefits than risks — keyword: “some." The FDA rejected 10 other flavored Vuse products, which are popular with teens. As global tobacco use falls, smokers are trading paper for puffable nicotine tech. The e-cig market was worth $14B last year, and is expected to hit $22.5B by 2026. So far the FDA hasn't been sipping the e-juice.

  • The Vape Purge: Over the past few months, the FDA has ordered thousands of vaping products off the market, including Puff Bars.
  • Puff has surpassed Juul as a teen favorite thanks to its candy-like flavors, cheap disposable bars, and colorful packaging.
THE TAKEAWAY

Vice companies can’t have it all... Companies in industries like tobacco, alcohol, drugs, and weapons face unique risks. Case in point: Tobacco giant Altria, which bought a 35% stake in Juul, has been dealing with a torrent of litigation as regulators blamed Juul's marketing and Jamba Juice-inspired flavors for a teen-vaping epidemic — and Altria has lost billions. Juul and Puff rose to popularity thanks to their branding, but they may have to be more conservative like Vuse if they want to survive.

Dilemma

Say “supply shortage” again… Three major global problems have dominated headlines and weighed on markets. First, supply-chain snarls are straining everything from USPS delivery to Grape Nuts availability. Second, a chip shortage is slowing production of GM trucks, gaming consoles, and lots more. Third, a surge in ransomware cyberattacks has disrupted a large variety of organizations, including beef suppliers and big governments. Meanwhile, the IMF lowered its forecast for 2021 global economic growth this week. To get things on track, President Biden and other leaders are getting involved.

ETA on that rice cooker: 97 days… Corporations don’t necessarily have financial incentives to help solve global operations and security problems. So Biden’s encouraging them to address the far-reaching threats. Some examples:

  • Unblocking the supply chain: Biden brokered a deal for ports in LA and Long Beach, which process nearly half of US cargo, to operate 24/7 to ease the backlog.
  • Cracking down on hackers: Biden gathered 30 state leaders to combat cyberattacks, which cost victims $74B last year. The US also sanctioned a crypto exchange accused of letting criminals launder stolen Bitcoin.
  • Supercharging chips: Japan reportedly might partner with TSMC and Sony to build a $7B chip factory to address the shortage. Meanwhile, the White House spearheaded a $52B bill to boost domestic chip making in June.
THE TAKEAWAY

It’s a pandemic “prisoner’s dilemma”… When facing huge shared costs, individual companies often wait for someone else to pay first. But if no one pays, everyone loses — so governments sometimes get involved to spur action. Exhibit A: climate change. Without fines or rewards, companies have little financial incentive to curb pollution. Biden’s hoping that big bucks and hefty fines convince companies to tackle global economic threats together.

What else we’re Snackin’

  • Banked: Chase, aka America's largest bank, beat quarterly profit expectations after releasing $2.1B in reserves it had set aside for loan losses.
  • Bubbly: Delta posted its first quarterly profit that doesn't include federal aid since the pandemic began, but warned that rising fuel prices could hurt.
  • Nifty: Crypto exchange Coinbase is adding NFTs to take on marketplaces like OpenSea and Nifty Gateway.
  • Luxe: Louis Vuitton Moët Hennessy (aka LVMH) said sales of its fashion and leather goods were 38% higher than pre-pandemic levels at the end of the quarter.
  • Softrun: Japanese investment giant SoftBank funneled $400M into CA-based activewear brand Vuori — leggings are still thriving.

Snacks Daily Podcast

50M people are making money in the Creator Economy, but Airbnb’s CEO thinks the “Host Economy” will be even bigger.

Tune in to hear why his vision is way bigger than Airbnb.

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Snack Fact of the Day

Last week, 36% of workers in major cities were back in offices — the highest rate since the pandemic began

Thursday

  • Weekly jobless claims
  • Earnings expected from UnitedHealth, Morgan Stanley, Citigroup, US Bancorp, Walgreens, Domino’s, and Del Taco

Authors of this Snacks own Bitcoin and shares of Spotify, Delta, Chase, and GM

ID: 1875901