The Metaverse is not when Ready Player One comes to life, it’s actually the moment where the digital matters more than the physical. Here’s a very interesting theory on why we may be looking at this Metaverse thing all wrong:
- Facebook, or should we say “formerly known as”, made their big announcement this week that their new name has officially been changed “Meta.” in an effort to be seen as a metaverse company moving forward. Zuckerburg’s move is meant to reflect growth opportunities beyond the Facebook social media platform and into online digital realms known as the metaverse. Facebook has already been investing heavily in creating a new reality of shared online spaces inhabited by digital avatars, with projects ranging from virtual-reality glasses to an e-commerce platform. Read more here.
- YouTube is crushing it, raking in a whopping $7.2B in revenue, up 43% for the 3rd quarter. Pretty Impressive stuff. Read more here.
- On a different note, Amazon has underperformed the S&P 500 by almost 20% this year. Not much to worry about though. The ongoing strength from “The Big 5” and other trillion-dollar titans has meant that concentration is still hovering around multi-decade highs. We also mentioned in yesterday’s digest that the retail giant is also making moves to secure their own warehousing to boost their operations. Read more here.
- Inflation is on average 2.3% higher today than where it started the year across 31 countries. The average increase in central bank rates in these countries: 0.4% (median = 0%). This is the widest disconnect we are likely to ever see with many hikes to come in 2022. See the tweet here.
- US Money Supply has increased nearly 40% over the last 2 years. This is the largest 2-year increase ever. The Fed is busy printing, printing, printing. See this tweet.
- The number of single people looking to put down roots is rising, but they’re short on options in the current housing market. The number of one-person households reached 36.1 million in 2020, 38% of them being millennials and Gen Xers. Entry-level housing, or homes up to 1,400 square feet, is near a five-decade low. The result is bidding wars on these types of properties, with many young people being cut out of the wealth growth that homeownership can bring. Thankfully, there’s more than one pathway to wealth. Oh, and those 3D-printed homes are sounding like a pretty decent solution to the housing shortage, after all. Read more here.
- Speaking of the housing market, mortgage rates increased again last week and are the highest they’ve been in 8 months. The 30-year fixed rate is now at 3.30%, and the 15- year fixed rate rose to 2.59%. The increasing rates are continuing to reduce borrowers’ incentive to refinance. Purchase applications picked up slightly, and the average loan size rose to its highest level in three weeks, likely due to the higher price segments dominating purchase activity. Read more here.
WHAT TO WATCH
- 50,000 of Hertz’s brand new fleet of Teslas will be supplied to Uber drivers as soon as next week - that’s 50% of their recent 100,000 unit order. The Tesla rentals will start at $334 a week before dropping to $299 as the program gets underway, including insurance and maintenance, the best Tesla rental deal available on the market. Why this matters: this is the largest expansion of electric vehicles on a mobility platform in the US and one of the largest globally. The push for zero-emissions is really working in Tesla’s favor. Read more here.
- Apple's new feature makes it easier to opt-out of ad tracking, in fact, you have to opt-in. As we’re seeing, this is bad news for companies built on advertising. There’s speculation that Apple wants a subscription app-based company, not an ad-based economy. When Apple can flip a switch and wreak havoc in businesses, that’s the signal that consumer attention will need to be monetized in different ways moving forward. Subscription-based revenue models will do well. Listen to more here (14:39).
- McDonald’s is partnering with IBM to automate drive-thru lanes with AI. As part of the deal, IBM will acquire McD Tech Labs, formerly Apprente before McDonald’s bought the tech company in 2019. The Apprente technology uses AI to better understand drive-thru orders. This summer, McDonald’s tested the tech and results showed substantial benefits to both customers and employees. We’re bullish on all things AI, VR, and automation. Read more here.
- Fintech giants Stripe and Klarna are partnering up to capitalize on the fast-growing ‘buy now, pay later’ trend. The deal is a big win for Stripe as competition heats up with rivals like Square and PayPal. The partnership will make it easier for retailers to add Klarna as a payment option on their website. Stripe and Klarna are the world’s biggest private fintech companies, worth $95 billion and $46 billion respectively. Read more here.
“Bezos had imbibed Walton’s book thoroughly and wove the Walmart founder’s credo about frugality and a “bias for action” into the cultural fabric of Amazon. In the copy he brought to Kathryn Dalzell, he had underlined one particular passage in which Walton described borrowing the best ideas of his competitors.” The Everything Store, by Brad Stone
Bezos’s point was that every company stands on the shoulders of the giants that came before. The same goes for investing. The question lies - whose shoulders are you standing on?
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