Three Things (8/12)

Amazon partners with Pinterest and TikTok

Amazon partnered with Pinterest and TikTok to allow users to buy products through ads inside social media apps. Users can link their TikTok and Pinterest profiles to their Amazon accounts, which will allow them to see real-time pricing, delivery times, and Prime eligibility all on their “For You” pages. It’s a smart move for Amazon to show up in places where its Prime members spend the most time, but it’s nothing new given existing partnerships with Instagram and Facebook.

What’s unique about these new partnerships is that they’ve created a seamless shopping experience for customers who won’t need to leave their favorite social apps. It will certainly reduce friction between discovery and purchase, which boosts conversion rates. The partnership should also protect Amazon from losing market share to retailers inside TikTok shop and Pinterest. It seems Amazon is now seeing social media apps as opportunities rather than rivals.

The S&P 500 earnings gap shrinks

Over the last year the S&P 500’s earnings growth was largely driven by mega cap technology companies. Earnings for S&P 500 companies, excluding the Magnificent Seven, declined for five straight quarters, but according to Bloomberg, second quarter earnings for the ex-Mag Seven are set to grow 7.4% from a year earlier. The change represents a slow-down in profit growth for large caps and a recovery in earnings for companies originally left out of the artificial intelligence frenzy.

AI enthusiasm around the Mag Seven has powered equity returns over the last several quarters, but moderate second quarter earnings results so far spurred concerns that profits on AI investments are further off than expected. It’s possible that the broadening of earnings growth across the S&P 500 could perpetuate the rotation from large caps into small and mid caps, which was originally driven by a surprisingly light inflation print in July. Earnings attribution changes across the S&P 500 are natural and healthy for the index given they help reduce the risk of crowding in a few stocks and signify a positive outlook for broad economic growth.

Olympic medals surge in value

This year’s summer olympic games came to an end yesterday in Paris. Just over 1,000 medals were awarded to athletes competing in the olympics’ 339 events across 32 sports. The highly anticipated summer games occur every four years, and this year olympic medals were worth more than ever before given the prices of metals have surged.

The cost of the raw materials used to make a gold medal are around $900 and consist of only 6 grams of gold, or ~1% of the medal, and mostly silver, or ~92.5% of the medal. In 1908, the olympic gold medal was 100% real gold, but they held far fewer events and awarded less medals. The price of gold is hovering just below $2,500 and hit all-time highs in April thanks to inflation concerns, geopolitical tensions, and expectations of easing monetary policy. While olympians don’t tend to resell their medals and likely won’t (especially given they contain a piece of the Eiffel Tower this year), it’s no secret they could be sold for far more than their expensive metal value.

As of writing AMZN is a holding in Titan's Flagship strategy.

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