Netflix to Launch Ads in November

MARKET MOVERS

• Netflix is launching an ad-supported tier in November. Netflix announced that its new ad-supported tier will roll out on November 3 and cost $6.99 per month. Although significantly cheaper than the company’s standard plan at $15.49, the new “Basic with Ads” plan will be pretty basic, with ads. Investors and analysts are extremely optimistic that this will spark a Netflix turnaround.

• Samsung and TSMC win exemption from new U.S. chip restrictions on China. The U.S. Department of Commerce granted Samsung and TSMC authorization to continue receiving chip-making equipment and other items needed to maintain its memory-chip production* in China. Samsung dominates the production of two major types of memory chips—DRAM and NAND flash. The majority of TSMC’s revenue came from North American customers.

• Apple and Goldman Sachs to offer high-yield savings accounts. Apple Inc. is forging a partnership with Goldman Sachs Group Inc. to offer high-yield savings accounts to users of Apple’s credit card, the Apple Card, marking the tech company’s latest move into the financial-services space.* The savings accounts are expected to roll out in the coming months.

• US inflation remains persistently high at 8.2 percent. CPI increased by 0.4% in September; Core CPI increased by 0.6%. Increases in the shelter, food, and medical care indexes were the largest of many contributors to the monthly seasonally adjusted all items increase. These increases were partly offset by a 4.9-percent decline in the gasoline index. The energy index fell 2.1 percent over the month as the gasoline index declined.

• Kroger to buy Albertsons for $24.6 billion. One of the biggest deals in the history of the grocery industry in the U.S. By combining, the companies would gain greater scale and leverage to negotiate with vendors. The deal would also bolster the grocers’ market share and technology to compete better with Walmart Inc. and Amazon.com Inc.* The companies said Kroger will acquire Albertsons for $34.10 a share.

WHAT TO WATCH

• Loop Capital says buy Micron Technology as the semiconductor downcycle nears a bottom. Analyst Charles Park expects Micron’s earnings to bottom and inventories to peak in the fiscal second quarter of 2023. He expects DRAM fundamentals to bottom in 1H23, with the share price typically bottoming a couple of quarters ahead. Although the N-T macro and demand uncertainties remain and semis will likely face further pressure.*

• BofA strategists see more pain in store before stocks reach low. Thursday’s rally in US stocks after a hot inflation print resembled a “bear hug”* amid oversold conditions, high cash levels and the lack of a credit event, strategists led by Michael Harnett wrote in a note. The development was the latest in a volatile year marked by fears of a recession with the Fed unbending in its resolve to bring prices under control.

• Morgan Stanley says the 30% sell-off in ‘clean tech’ is a good buying opportunity. They think the recent move in clean tech stocks is overblown and doesn’t reflect fundamental changes in the outlook for clean energy. They expect the IRA will drive significant demand* for clean energy technologies and accelerate clean hydrogen growth in the US. Morgan Stanley’s highest conviction stocks are Plug Power and Sunrun.
  

• Sony and Honda plan to start U.S. deliveries of their electric vehicle in 2026. Honda’s electric vehicle plans put it in competition with firms* such as Elon Musk’s Tesla as well as companies like Volkswagen, Ford, and Stellantis. Sony Honda Mobility, as it’s known, aims to start taking pre-orders for its vehicle in the first half of 2025, and hopes to start sales before the end of that year.

• America’s red-hot warehouse market shows signs of cooling. The average warehouse vacancy rate across the U.S. inched up to 3.2% in the third quarter from 3% in the previous quarter. Retailers including Target Corp., Walmart Inc., and Nike Inc. are coping with excess inventories* after a shift in consumer spending habits. Companies are also more cautious about signing leases as they look to restrain high supply-chain costs in a wavering economy.