November 21st, 2022
Last week’s market summary (November 14th-November 18th, 2022):
- S&P 500: -0.32%
- Dow: +0.59%
- Nasdaq: -0.78%
- Bitcoin: +2.01%
Hey Junkies,
If there’s one powerful force that can finally make a global monopolistic corporation feel the heat, it’s…Taylor Swift fans. Live Nation incurred their wrath last week and was soon being called out by politicians and (by Friday) being investigated by the Department of Justice.
Mess with Taylor Nation and you can be sure that they’ll try to exact some Vigilante Sh*t revenge. But is Live Nation really to blame for the botched ticket presale?
We’ll let you decide after you get more of the details below. We’ll also break down a few more top stories from last week including Walmart’s continued dominance over Target in the 2022 retail wars.
Clint, Editor-in-Chief
What Everyone’s Been Buzzing About
1. Live Nation Is Heavily Scrutinized After Its Taylor Swift Presale Debacle
Tuesday was a rough day for Swift fans. Many woke up and excitedly visited Ticketmaster to buy their Eras Tour presale tickets. But they arrived to a site that was heavily bogged down. Virtual que wait times went as high as 8 hours and resale tickets began appearing on sites like StubHub for as high as $22,000.
This led many to direct their outrage at Live Nation, the entertainment company that merged with Ticketmaster in 2010. Many complained that Live Nation (which also owns and operates venues and manages over 500+ artists) controls too much of the entertainment industry, which allows them to quell competition and hike prices. And it wasn’t just Swifties who were criticizing the global entertainment giant. Politicians and criminal justice offices quickly joined the fray. First, Rep. Alexandria Ocasio-Cortez (D-N.Y.) tweeted this:
Daily reminder that Ticketmaster is a monopoly, it’s merger with LiveNation should never have been approved, and they need to be reigned in.
Break them up.
— Alexandria Ocasio-Cortez (@AOC) November 15, 2022
Then on Thursday, Nashville’s AG announced that he was opening an investigation into whether consumer protection laws were violated. And finally, it was reported on Friday that the U.S. Justice Department had opened its own antitrust investigation of Live Nation.
But while it is clear that Live Nation has an outsized market share in the entertainment industry, it’s less clear whether that had anything to do with the Taylor Swift presale fiasco. As their CEO pointed out, Live Nation doesn’t manage Swift but rather their competitor AEG does, who still chose to use Ticketmaster to sell their tour tickets. So it’s likely that the main reason for all of this unpleasantness was more benign: namely unprecedented server demand from Swifties and lots of bots that were aiming to ruin everyone’s day.
Still, all of the negative press and ensuing investigations haven’t done any good for Live Nation’s stock price. It finished the week down 13.30%.
2. Walmart Continues to Outperform Target in 2022
The last time we discussed Walmart and Target was after both company’s Q2 earnings. At that time, we discussed how their very different reports showed that high inflation was driving more customers to seek out Walmart’s bargains.
Well Q3 reports are now in and it’s clear that those trends are continuing. Walmart surprised investors by upgrading its outlook for both sales and profits in Q4. Target, meanwhile, reported a profit decline of 52% and it warned investors that it’s bracing for a sluggish holiday season.
Why is Target struggling while Walmart seems to be hitting its stride? According to Target’s own growth officer, the company saw a big increase in price sensitivity over the last two weeks of October that has only continued in the beginning of November.
In addition to inflation, many customers are worried that a recession may be coming. And unlike previous recessions, some analysts are predicting that the next economic downturn could be a “white collar recession.” That’s generally all bad news for Target — and investors know it.
3. Megabanks Have Begun Testing Digital Dollars for Wholesale Transactions
The New York Fed announced that it’s working with several large banks to run a 12-week simulated test of using digital tokens to settle transactions. Some of the big names that will be participating in the pilot program include Citigroup (C), Mastercard (MA), Wells Fargo (WFC), HSBC (HSBC), and BNY Mellon (BK).
You may have heard chatter before about countries that are testing out central bank digital currencies (CBDCs) for consumers. That’s not what this is. Instead, this wholesale CBDC would only be used to speed up the settlement time for transactions between financial institutions.
So even if this blockchain pilot is a success, you won’t be able to use these digital dollars as money. However, an eventual retail CBDC isn’t off the table. The White House and Federal Reserve have both said that their exploring the pros and cons of pursuing a public-use CBDC, but have yet to make a final decision.
4. Amazon Launched Another Healthcare Service
If you haven’t noticed, Amazon has been laser-focused lately on getting a bigger piece of the healthcare pie. Here are some of the moves that it’s made in just the past two years:
- November 2020 – Launched Amazon Pharmacy
- July 2022 – Purchased One Medical – a primary care membership-based organization
- This Week – Launched Amazon Clinic – a message-based telehealth marketplace
The latest addition, Amazon Clinic, is initially being offered in 32 states and can help treat 20+ health conditions (see the full list here). Customers can use FSA and HSA funds to pay for consultations. But in a rather glaring omission, Amazon Clinic can’t yet accept insurance.
5. Home Depot & Lowes Are Benefiting From the “Improve In Place” Trend
Last week, we highlighted yet another sign that the housing market is in a bad place right now. So you would expect that home improvement retailers are hurting too, right?
Lowes & Home Depot actually both topped their earnings expectations last week? Why?
Well while it’s true that home buyers are spooked by high prices and interest rates, home owners are sitting on record levels of equity. And rather than sell in an unfavorable market, many are choosing to use a portion of that equity (or cash savings if available) to renovate their current abodes.
So while homebuilder sentiment just hit its lowest level in a decade, home improvement stores are riding high thanks to the “improve in place” mindset.
What To Keep Your Eye on This Week
With this week being a holiday week, there aren’t many economic events on the docket. However, there are a few earnings calls worth following:
- Monday, November 21th: Dell Technologies (DELL), Zoom (ZM), Urban Outfitters (URBN)
- Tuesday, November 22nd: Medtronic (MDT), Vmware (VM), Dollar Tree (DLTR), HP (HPQ)
- Wednesday, November 23rd: Deere (DE), Full Truck Alliance (YMM), National Steel Company (SID)
Staff Favorites
At IJ, we know that many other publishers are creating great personal finance content. So each week we like to call out a few recent stories from our colleagues that we felt were interesting, eye-opening, challenging, inspiring…or just funny.
Here are our picks for this week:
- JP Morgan Buying Rental Homes Amid Housing Market Pressures (Fast Company)
- Opinion | Is This the End Game for Crypto? (New York Times)
- Opinion: Ron Baron Explains His Investing Philosophy With Goal of Doubling His Money Every 5 to 6 Years (CNBC)
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The post Swifties Are Mad at Live Nation: But Is It the Villain or the Anti-Hero? appeared first on Investor Junkie.
