Tesla's Upshift
In this issue of the Peel:
Market Snapshot
Happy Tuesday, apes.
Sometimes all it takes is one, and yesterday, Tesla got the people goin’ like they hadn’t been in quite a while. We’ve got a whole lotta data to look forward to this week, from inflation expectations to actual inflation and…more inflation, so get ready.
Equity markets took the view of this week in stride, largely powered by those expectations as well as Tesla's early morning jump that we’ll talk about below. That seemed to make optimism the vibe of the day, with all 4 of the U.S. majors rising along with gold, oil, and basically everything except the euro (losers).
Anyway, it’s tough for the euro to win and then the dollar and U.S. treasuries to gain. The 2-year and the 10-year yields both moved higher in anticipation of the week’s figures, beginning with consumer expectations yesterday. We’ll see if they can keep that energy.
Let’s get into it.
Paradise Means Leaving Thumb Drives Behind
You’ve got enough things to worry about. A thumb drive full of deal docs and data shouldn’t be one of them.
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It’s obviously a win-win as far as VDRs go. It’s also one more way SRS Acquiom maximizes efficiency throughout the deal process— from due diligence, to payments, all the way through post-closing. That’ll keep your clients happy and you looking great at what you do.
Need more convincing?
Macro Monkey Says
Friends Again
Alright, Charter subscribers, you can put down the pitchforks and torches. ABC and ESPN are back together, alive, and well on a (cable) TV near you.
Since this past Thursday morning, subscribers procuring cable TV services from Charter Communications (CHTR, +3.18%) have been forced to suffer—arguably, have been tortured—without access to Disney-owned channels like ESPN, ABC, and some other little bullsh*tty things.
As of yesterday, those channels are back online, just in time for Monday night football.
We hope you caught the game and, more importantly, that you had [INSERT BEST PLAYER OF GAME HERE] on your fantasy team, but even if not, there are still some big takeaways from this kerfuffle (what a word).
Netflix, Amazon, HBO (not calling it “Max”), and the rest of team streaming have been slow-moving grim reapers to linear TV owners, operators, and distributors like the two reunited besties listed above. In fact, it was largely influenced by streaming itself that led to the challenges in the first place.
"... Disney has essentially allowed Charter to distribute Disney+ and ESPN+ to its pay-for Spectrum TV customers."
After first saying that “the video ecosystem is broken”, Charter CEO Chris Winfrey settled Monday with the (exact opposite) statement that “this deal sets the framework for what should be developed throughout the entire industry.”
Whether or not he meant to sound like he just fixed the entire TV/streaming market, the deal has big implications for the market as a whole.
In this deal to allow Charter to continue carrying ABC and ESPN, Disney has essentially allowed Charter to distribute Disney+ and ESPN+ to its pay-for Spectrum TV customers. For this, Charter will pay Disney a boatload more to continue carrying the above networks.
More specifically, the deal outlines that:
"... Charter did lose access to carrying channels like Disney’s Freeform, Disney XD, and FXX."
As such, Charter did lose access to carrying channels like Disney’s Freeform, Disney XD, and FXX. I don’t know what I’m gonna do without my Phineas and Ferb on XD, but maybe we’ll find a way.
As with most deals like this, it’s a win-win and lose-lose for both parties, but clearly, the Ws are expected to outweigh the Ls.
Disney and Charter don’t really directly compete with each other, but two immediately obvious trade-offs include:
Win-win and lose-lose. Just the way we like it, right?
While it’s not clear that the deal will become a textbook strategy for other industry players, the demonstration of flexibility to make sure consumers are maximally entertained with whatever they want whenever they want is clearly the industry’s priority. Keeping consumers happy is a near-impossible task, so can’t wait to see how it plays out.
What's Ripe
Tesla (TSLA) ↑ 10.09% ↑
Meta Platforms (META) ↑ 3.25% ↑
What's Rotten
JM Smuckers (SJM) ↓ 7.01% ↓
Moderna (MRNA) ↓ 1.71% ↓
Thought Banana
UAWoah
Boasting 400,000 current members and nearly 600,000 retirees, the United Auto Workers union might—just might—be going to war with their employers.
For weeks now, this union has been jabbing back and forth with industry owners including Ford, GM, and Stellantis (who makes Jeep, Fiat, Ram, Maserati, and more) over 4-year labor contracts set to expire at the same time as your first assignment: 11:59 pm this Thursday (you're welcome for the reminder).
"For weeks now, this union has been jabbing back and forth with industry owners including Ford, GM, and Stellantis... "
From the start, the UAW has had one goal in mind: 40% pay raises. And late yesterday, the group showed their first sign of willingness to negotiate on that demand.
For some background, union leaders have been advocating throughout the negotiation process for members to go on strike at all three of the above firms in an attempt to force the employers to meet their terms.
According to UAW President Shawn Fain, that 40% figure comes from the average salary increases automaking execs have received over the last 4 years. In response, those automakers fired back with somewhere between a 9% and 14.5% raise, at times tacking on up to an additional $16k in inflation-protected bonus payments.
In response, Fain has taken the very mature and professional steps of literally throwing proposals with less than a 40% jump in the trash while on live streams to demonstrate his disgust.
"... Fain has taken the very mature and professional steps of literally throwing proposals with less than a 40% jump in the trash..."
As of writing, a deal is still a long way off, but the UAW has shown a willingness to come down to the ~35% range for their sought-after raises.
After watching American Airlines pilots secure the 40% bag and UPS drivers move into the 1%, it makes sense for the UAW to be aggressive. Plus, with labor markets still as f*cked as they are, unions gotta take advantage of labor having the upper hand over capital whenever they can.
Either way, the fight’s on.
The big question: Will UAW members strike at the end of this week? If so (and if not), what kind of impact would this have on the car market and economy?
Banana Brain Teaser
Yesterday —
What has rivers but no water, cities but no buildings, forests but no trees, deserts but no sand, and mountains but no rocks?
Answer
It's a map.
Today —
If you flip 5 coins and they all come up heads, what is the probability that the 6th coin will be heads?
Shoot us your guesses at [email protected] .
Wise Investor Says
“Ultimately, nothing should be more important to investors than the ability to sleep soundly at night.” — Seth Klarman
How would you rate today’s Peel?
Happy Investing,
Patrick & The Daily Peel Team