👛 Amazon’s EBT economics

Payment problems… As a global recession looms, ecomm giants are launching more affordable payment options — because more shoppers need them. Americans burned through their pandemic savings faster than anticipated this year as prices surged at the fastest pace in four decades. With consumers further tightening their belts, online retailers are trying to make shopping more accessible:

• Prime relief: This month Amazon launched an “Access” hub for customers to explore affordable options (think: discounts, coupons, and EBT SNAP payments — aka: digital food stamps). Shoppers who receive government assistance can get discounted Prime memberships, pay over time, and shop without cards.
• Full carts, can’t lose: Last month Instacart said it would expand its SNAP program in the coming years to help low-income shoppers buy essentials like diapers, which aren’t covered under food-exclusive SNAP.
• Delivering assistance: A growing number of food banks are using DoorDash and Amazon to deliver nourishment to people in need.

Unwelcome U-turn… Poverty is making a regrettable rebound. US poverty plummeted to record lows during the pandemic thanks to massive government stimulus. Now that federal aid has dried up and many pandemic benefit programs have disappeared, experts predict US poverty could soon hit a 50-year high.

• Less spending: Inflation-adjusted spending at stores and restaurants has dropped since April (barring an unexpected August bump).
• Missed payments: Shoppers who can’t pay for gas and groceries up front are racking up “buy now, pay later” late fees, and even defaulting on their loans.

Take it to the bank… Banks kick off earnings season this week, with JPMorgan Chase, Citi, Wells Fargo, and Morgan Stanley dropping Q3 numbers. Last quarter’s theme: soaring interest rates. High rates are good for banks because they earn higher returns off customers’ idle cash and loans. They’re also bad for banks because they discourage borrowing, spending, and investing. Analysts expect banks will (again) report lower earnings than last year. The IPO-and-merger boom of 2021 is over, so lower deal-making revenue’s expected.

Break out the Biscoffs… Delta’s revenue nearly doubled last quarter thanks to strong vacay demand. Airlines are expected to report frothy sales for their latest quarter after summer excursions rebounded to prepandemic levels. But with holiday airfares set to be the priciest in five years, more Americans might just celebrate at home. Airline stocks have lost altitude this year, and the industry’s typical domestic holiday boom could fizzle (even with Europe “on sale”). We’ll see whether inflation cloud’s Delta’s forecast when it reports Thursday.

E.T. phone home… more like UN phone Jerome. Last week, the United Nations called on the US Fed and other central banks to stop their aggressive interest-rate hikes. A UN agency warned that the global economy was “on the edge of a recession” and that further monetary tightening risks pushing it to a prolonged downturn worse than the ’08 financial crisis. As the USD has strengthened on the back of surging rates, debt-laden developing economies are edging closer to default, and could bear the brunt of a worldwide recession.

Elon’s albatross… The Elon vs. Twitter saga has a new plot twist: last week, Elon told the company he'd buy it at his original offer price of $54.20/share, after trying to back out of the deal over what he said were spam-bot issues. Now a Delaware judge has ruled that Elon has until October 28 to seal the deal if he wants to avoid a trial. If key details (like: debt financing) get resolved, both sides could file a motion to end the pricey lawsuit. Twitter’s A.E. (After Elon) era could begin a new chapter for the internet’s “town square.”

• Nescrisis: Nestlé (aka: the world’s largest coffee company) committed $1B by 2030 to protect coffee from the climate crisis. Think: climate-change-resistant java trees and farming with regenerative methods.
• #Ad: Kim Kardashian agreed to pay a $1.3M fine to settle SEC charges related to an Insta post promoting alt coin EthereumMax. The Kim crackdown is a sign that securities regulators are marking their territory in the crypto-sphere.
• Gassy: OPEC, Russia, and other allies will curb oil production by 2M barrels a day — the biggest cut since 2020. It’s a blow to the US and G7 allies who want low oil prices for consumers (and to punish President Putin).

• Arms: A new generation of private brokers (including a limo driver from St. Louis) are cashing in on arms deals to Ukraine. The US has authorized over $300M in private deals this year, up from $15M last year.
• HardG: UK regulators are trying to block Meta from taking over GIF search engine GIPHY for $400M. Struggling GIPHY argued it needs the deal because GIFs are increasingly seen as “cringe”’ and “for boomers.”
• SCOTUS: The Supreme Court is set to hear two cases, Gonzalez v. Google and Twitter v. Taamneh, which could decide how much responsibility web companies have over user-generated content — including from terrorist groups.

• Monday: Columbus Day and Indigenous Peoples’ Day
• Tuesday: Earnings expected from Pepsi
• Wednesday: Earnings expected from Wipro
• Thursday: Jobless claims. Earnings expected from BlackRock, Delta, Domino’s, Infosys, Walgreens, and Progressive
• Friday: Earnings expected from Citi, Wells Fargo, JPMorgan Chase, US Bank, UnitedHealth, PNC Financial, and Morgan Stanley

Authors of this Snacks own: shares of Amazon, Delta, Google, and Twitter

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