Weekly Reads - January 2, 2023
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New year same problems; Americans are increasingly worried about the shape of the economy going into 2023. McKinsey’s polled over 2,000 Americans in December analyzing changes in spending and overall economic sentiment. The results were not good with participants feeling more negative about their access to economic opportunity despite unemployment remaining low at 3.7%. All demographics regardless of age, income bracket, gender, or race showed increases of negative sentiment mainly due to rising inflation reducing consumer buying power. Participants have indicated that they are spending more on items such as: essential goods, energy, childcare, housing, healthcare, and education. To pay for these items 24% of respondents said they decreased their debt payments or savings. It is clear consumers are being squeezed and are being forced to take on debt or use their savings to pay for everyday items. With high interest rates and inflation likely to persist into 2023 it is likely we start seeing more spending cuts by consumers and household debt rise.
Ticketmaster is under fire from the U.S Department of Justice who are facing intense pressure to fix the decision of allowing Live Nation and Ticketmaster to merge in 2010. The agency has opened an antitrust probe that could breakup Ticketmaster and Live Nation. Ticketmaster has been criticized by entertainment fans and regulators for increasing prices and reducing service which is the typical hallmark of a monopoly. Live Nation has responded to these allegations by pointing to the need for Congress to strengthen legislation to ban bots from purchasing tickets to help with ticket demand/supply and require all ticket sellers to display the full price for tickets including all associated fees. Ticketmaster has seen its fair share of probes since the 1990s and in one case the company admitted that their employees engaged in illegal computer intrusion, wire fraud, and conspiracy. The U.S Department of Justice has spent 15,000 hours looking over complaints and have zeroed in on six instances in which the company threatened to withhold tickets to venues who considered moving away from Ticketmaster. With a poor reputation among consumers and regulators there is a possibility we could see Live Nation and Ticketmaster broken up.
2022 was a crazy year for insider selling with corporate insiders selling valuable stakes in the largest companies in the world to reinvest in new unproven ventures. Elon Musk tops the list of the biggest stock dumpers after having to sell $23 billion in Tesla shares to fund his purchase of Twitter. Musk’s $23 billion sale was 25x larger than 2nd place seller Larry Page a director and cofounder of Alphabet. Like Musk, Page is reinvesting his proceeds into a new venture into space exploration starting his own SpaceX competitor Planetary Resources. With Tesla shares down 65% in 2021 and Alphabet shares down 39% these insider sells come during a time in which investors have little patience to deal with negative news or drama.