🍦 Soft landings and Big Tech earnings

Ignoring the (three) bears… The economy ≠ the stock market, but markets rallied last week after GDP #s showed the US economy grew an expectation-beating 2.9% in the final quarter of last year. The icing on the cake: the pace of growth slowed slightly from the previous quarter, suggesting the Fed's hikes are gently cooling the economy rather than freezing it. That’s reviving hopes for a Goldilocks-like "soft landing." The ingredients:

• Not too hot: Temp jobs fell for the fifth straight month, raising hopes that the labor market could cool without erasing many full-time roles. But fresh layoff announcements from companies like IBM and Hasbro could change the picture.
• Not too cold: Inflation cooled again last month, ending the year at 6.5% (still way above the Fed's target). And while job growth is slowing, the labor market’s still historically strong.

Juuuust right… Experts say continued consumer spending, which rose 2.1% last quarter but ticked down last month, will be key to avoiding a recession. While consumers are starting to rein in their daily budgets, some are "revenge inflation spending" on major purchases. American Express’s CFO said spending on experiential splurges like travel is "off the charts." Still, while consumer sentiment has improved this year, it’s still near historic lows.

Ad-pocalypse now?... Google and Meta report this week, at a complicated time for the industry. Ads make up 80% of Google’s revenue, and 98% of Meta’s. But in their last-reported quarters, Meta saw an annual drop in ad revenue while Google’s growth slowed. Meanwhile, Google’s dealing with an existential threat from ChatGPT, with a DOJ lawsuit that seeks to break up its ad biz. Facebook’s growth stalled last year and Insta barely grew as users flocked to TikTok (bringing ad bucks with ’em). Analysts expect lower earnings from the ad titans.

Apple's core… could be softer than usual. A year ago Apple reported record sales in its blockbuster holiday quarter. That could be hard to beat this year, as Covid crackdowns in China disrupted iPhone production (iPhones make up over half of Apple’s sales). Last year, global smartphone shipments posted their largest drop ever. The world’s most valuable public company is expected to report lower earnings and sales on Thursday. Still, Apple's the only Big Techie that’s avoided mass layoffs so far (partly since it didn’t do a mass hiring spree).

Prime pills… Call it a prescription subscription. Last week Amazon launched a subscription for unlimited meds. With “RxPass,” 168M Prime members can buy pills and get ’em delivered for $5/month (no insurance needed). RxPass offers 80 meds (think: blood pressure, anxiety, migraines) and targets people with numerous prescriptions. Nearly half of US adults take two or more meds daily, and retailers like Amazon, Walmart, and CVS are scrambling to get a bigger chunk of the lucrative prescription pie. Amazon’s differentiator: offering many drugs at a flat rate.

Living for the jump scares… Moviegoers are seeing dead people and studios are seeing green. Horror flicks are giving big blockbusters a run for their money. Universal Studios’ and Blumhouse’s “M3gan,” which follows a trendy murderous doll, has already raked in $130M at the box office — the latest hit in a series of successful horror releases. “Skinamarink,” an experimental horror with a tiny $15K production budget, earned $1.7M in two weekends. Horror could help boost the recovering movie industry, which is still far from prepandemic levels.

• Listicle: Meta is reportedly paying BuzzFeed millions to generate viral creator content as engagement falls for both. It’s a symbiotic social relationship.
• Searched: Google’s bread-and-butter ad biz could be toast with a new Department of Justice lawsuit. Regulators in the US and EU have been cranking the heat on tech giants.
• Swap: Tech layoffs are intensifying, but last year 80% of laid-off tech workers found a new gig within three months — and over half of those rehired got pay bumps.

• Starred: TripAdvisor, Google, and Yelp are teaming up against the booming fake-review biz. Potential solves include sting operations, lawsuits, and an FTC move to seek civil penalties.
• Tip: As digital checkouts take over, tablet prompts leave some feeling pressed to tip at coffee shops and drive-thrus. Service workers say it makes up for low wages and helps cover living expenses.
• WTFired: Laid-off remote workers booted from computers have been left confused about next steps. With 160K tech jobs cut last year, abrupt remote layoffs are becoming the norm.

• Monday: Earnings expected from Ryanair, Whirlpool, and SoFi
• Tuesday: Earnings expected from Spotify, UPS, GM, Match, Snap, UBS, Mondelez, Marathon Petroleum, Pfizer, McDonald’s, and Caterpillar
• Wednesday: Black History Month kicks off. Earnings expected from Meta, Align Technology, and Novartis
• Thursday: Earnings expected from Apple, Amazon, Google, ConocoPhillips, GoPro, Ferrari, Harley-Davidson, Merck, Honeywell, Estée Lauder, Starbucks, Shell, Canada Goose, Atlassian, Eli Lilly, and Hershey
• Friday: Earnings expected from Brookfield Renewable Partners

Authors of this Snacks own shares: of Amazon, Apple, CVS, Disney, Google, Match, Snap, Starbucks, and Walmart

ID: 2707520