Tuesday, Jun 14th 2022

Three Things (6/14)

Commentary

“The oak fought the wind and was broken, the willow bent when it must and survived.” — Robert Jordan

1) Stocks plunge into bear market territory: The S&P 500 continued its decline from last week and has now fallen more than 20% from recent highs, entering a bear market. The S&P 500 fell by 3.9%, and the NASDAQ composite plummeted by 4.7%. The yield on a 10-year U.S. Treasury note rose to 3.371%, the highest level since 2011.

Titan’s Takeaway: As economic data continues to deteriorate, the market expects a more aggressive rate hike at this week's Fed meeting. The market yearns for more clarity around the inflation story, but we believe the Fed's actions will only pull so much weight given the number of macro-dynamics at play.

2) Viacom18 wins rights for India’s cricket tournament: Viacom18, a Paramount joint venture, won the streaming rights for the Indian Premier League cricket tournament for $2.6B. Disney (ESPN) won the bid to own the television broadcast rights for $3B, and Amazon backed out of the auction days before.

Titan’s Takeaway: Disney's streaming service Hotstar has seen subscriber growth in the tens of millions over the last five years from streaming the event. But with the high price tag, uncertain market conditions, and lack of revenue from Indian subscribers, Disney may be thankful to pass the streaming reins to Paramount.

3) Prologis to buy Duke Realty: Duke Realty accepted Prologis’ $26 billion buy-out offer. Prologis is the world's biggest warehouse operator, and the deal adds 160 million square feet of warehouse and distribution space to its portfolio. According to CBRE, the U.S. will need an additional 330 million square feet of industrial space by 2025 to keep pace with e-commerce demand.

Titan’s Takeaway: Industrial REITs have seen their share prices get pummeled since late April after Amazon revealed it's looking to sublet warehouse space on a weaker demand outlook. With vacancy rates still at historic lows, Prologis clearly believes we're still in the early innings of the shift from brick-and-mortar to online; we tend to agree.

As of this writing, AMZN, DIS were a portfolio holding of Titan. This security may cease to be a portfolio holding at some point in the future.
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