Wednesday, Apr 13th 2022

Three Things (4/13)

Commentary

"It is not that we have a short time to live, but that we waste a lot of it." —Seneca

The below content and projections are the opinion of the authors. Any conclusions or takeaways are their own. This should not be considered as investment advice. Investing involves the risk of loss and returns are not guaranteed.

1) Inflation hits 41-year high as gas prices rise 18% while used cars show some signs of easing cost pressures

  • The consumer price index rose 8.5% in March compared to a year ago, the most since December 1981.
  • “Core” inflation – which excludes the cost of food and energy – rose less than expected in March.
  • The price of used cars, which has been significantly impacted by the pandemic, fell 3.8% in March, the most since 1969.

Titan’s Takeaway: The drop in used car prices may suggest the most acute inflation distortions are set to wane in the coming months. Persistently high headline inflation, however, will keep the Fed on track to act aggressively in the coming months, a view Tuesday’s steady decline in the stock market suggests is popular among investors.

2) CNN+ facing budget cuts as streaming platforms try to push into new content categories

  • Axios reports a ~$1 billion investment budget for the new service will be cut by “hundreds of millions” of dollars.
  • So far, $300 million has been spent to staff up and market the new service.
  • The company had expected the service to breakeven after four years, with U.S. subscribers topping 15 million; CNBC reported Tuesday CNN+ has so far drawn fewer than 10,000 daily users.

Titan’s Takeaway: The streaming business’ maturation was powered by bingeable, scripted content users could find or return to anytime, anywhere. Overlaying these audience habits on a brand best known for real-time news coverage appears a tall order.

3) Apple partner in China halts iPhone production as Covid lockdowns continue to stress global supply chains

  • Pegatron splits Apple’s iPhone manufacturing business in China with Foxconn and Luxshare Precision Industry.
  • Pegatron’s manufacturing plants in Shanghai and Kunshan had been operational, but were forced to close amid continued lockdowns in both cities.
  • Last month, Foxconn had paused some assembly operations in Shenzhen amid Covid restrictions.

Titan’s Takeaway: Apple’s scale and resources gives it a better chance than most companies at preventing these manufacturing disruptions from hitting its bottom line. But the persistence of recent Covid measures taken in China suggests supply chains may again become clogged in the third year of this pandemic.

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