Hey Snackers,
An 89-year-old German man and an 85-year-old Danish woman are keeping their young romance alive after the border between their 2 countries shut. They set up chairs on the border each day to share coffee, schnapps, and laughs. __Love knows no (corona) boundaries. __
US markets posted their 1st weekly decline in 3 weeks, with the Dow, the S&P 500, and the Nasdaq all falling.
And our 15-minute Snacks Daily podcast is looking at Friday's surprise: A sports betting app went public... in a world without live sports.
$321B in new PPP small biz loans adds to $3.7T estimated government deficit
Gone quicker than a 24-pack of TP... Remember that $349B in forgivable loans to small businesses from the $2T stimulus package? That ran out quickly — especially since not-so-small businesses got multi-million loans. Now Congress has approved an extra $321B for Paycheck Protection Program loans (PPP), which become "free money" for businesses if they keep their workers employed. All that free money though is adding up...
- $3.7T: That's how much the government expects to add to the national debt this year, aka its budget deficit. The previous record deficit? $1.5T in 2010.
- 110%: That's America's current debt-to-GDP ratio (like your personal debt amount vs. your annual salary, but for the country). US Gross Domestic Product is around $21.7T — the national debt is almost $25T.
The US borrows $$$ by offering IOUs to investors... They're called "Treasury securities", aka US government bonds. Most of that debt is held by regular Americans through pension and mutual funds and a large part is owned by foreign governments (think China).
- US debt is typically seen as a relatively safe investment — buyers are confident that America will pay them back, given the country's world-leading wealth, income, and economic resources. That low riskiness is reflected by the US' AA+ credit rating and helps explain why America pays barely any interest on its debt. But...
- Higher debt usually means higher interest rates. If investors think they might not get paid back, they might start demanding higher interest (higher risk, higher demanded reward).
- Tomorrow's generations will have to repay today's debts. But debt-financed government spending seems necessary to save the economy from the giant economic hole caused by the COVID-19 shutdown.
There are 2 ways to pay down national debt... and they both have consequences.
- Cut Spending: The government can divert spending on social services to repay bond investors instead. The more debt there is, the less money is left to pay for things like healthcare, education, and national defense.
- Raise Taxes: The government could tax businesses and citizens more in order to repay debt. But higher taxes can slow down economic growth, and potentially be counter-productive to debt repayment (if too-high taxes cause a recession).
Who's up...
Like your paranoid, can-hoarding neighbor... Netflix has been obsessively stocking its basement with movies and shows, aka "content-hoarding". No one's laughing now: Netflix added 15.8M paying (aka, non-moocher) subscribers last quarter — more than double the 7.2M expected. Video production across the industry has grinded to a halt, but Netflix has 2 years worth of already-produced shows/movies to release — a massive advantage over streamers and cable.
When the going gets tough, the pizza gets cheesier... Domino's is living in a rosier alternate reality. Sales at its US locations actually jumped 7% during the 4-week height of the economic lockdown in March/April. While others lay off employees, Domino's is hiring 10K more pizza whizzes. And forget ad-pocalypse — Dom's CEO said "we're not slowing down at all" re: advertising. As a delivery/takeout OG with a DIY attitude, Domino's is eating the corona-conomy.
...and who's down
Just call it the "Zoom Killer"... Zoom's got a new problem (and it's not privacy-related). Facebook just unveiled a video-conference service: Messenger Rooms. FB's Zoom bomb is free and allows meetings of up to 50 people with no time limit — Zoom's free version has a 40 min max. Oh, and Messenger Rooms also features AI-enabled 360-degree virtual backgrounds. Zoom stock has plunged nearly 12% since the announcement Friday.
So many Ts, so little time... AT&T has a lot going on: it's juggling CNN, HBO, TBS, Warner Bros, DirecTV, and AT&T wireless. It's also dealing with a triple corona-conomy whammy that soured its latest earnings (not pretty). AT&T's cable biz lost 1M customers just last quarter thanks to cord-cutting (cough, no live sports). It's also losing money on ad sales and cancelled TV/movie production. Oh, and its CEO just announced he's stepping down.
What else we’re Snackin’
- Journey: How the 1st woman to row solo across the Atlantic and Pacific Ocean dealt with solitude and isolation (pro tip: ABBA music).
- Visualize: The world's ultra-rich (over $30M net worth) mapped by country — the US has over half of the world's "ultra rich" population.
- Work: 3 tips to avoid WFH burnout (it's all about the boundaries, baby).
- Change: The psychology behind the quarantine makeover trend — that blue hair dye wasn't bought out of boredom (it's a coping mechanism).
- Caffeinate: How to make Dalgona coffee, the TikTok-viral, South Korean creamy sensation.
- Volunteer: 9 ways to help others and give back to your community during the pandemic — volunteering from your couch is a thing now.
This Week
- Monday: Earnings expected from Keurig Dr Pepper
- Tuesday: Earnings expected from Alphabet, Starbucks, Pepsico, Merck, Pfizer, 3M, Caterpillar, Ford, and JetBlue
- Wednesday: Earnings expected from Microsoft, Facebook, Tesla, Mastercard, Boeing, General Electric, Northrup Grumman, Yum Brands, Teladoc and Hasbro
- Thursday: Weekly jobless claims. Earnings expected from Amazon, Apple, Visa, Gilead, Comcast, Twitter, Shell, McDonald's, Altria, Kraft Heinz
- Friday: Earnings expected from Berkshire Hathaway, Exxon Mobil, Chevron, AbbVie, Clorox, Estee Lauder, Colgate, and Honeywell
Disclosure: Authors of this Snacks own shares of Berkshire Hathaway and Amazon.
ID: 1166186