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| Hey Insiders, Wednesday's edition of Inside Business takes a look at: - Economists: U.S. recession likelihood declines
- How is Barbie's movie hype boosting sales?
- Carvana stock soars on $1.2B debt reduction deal
Make sure to keep reading and check out the Knowledge Hub and Quick Hits. If you find this newsletter helpful, please share it with your friends and colleagues. Shriram
p/Shriram | |
| 1 | | The likelihood of a U.S. recession has declined in recent months, according to economists. This is due to a number of factors, including the slowing of job growth and the easing of supply chain disruptions. However, economists warn that it is still too early to declare victory, as there are a number of risks that could still derail the economy. More: - The U.S. unemployment rate is near a 50-year low of 3.6% and is expected to remain there for the rest of the year.
- Despite slowing in recent months, wage growth is still outpacing inflation as the Federal Reserve continues to consider raising interest rates to combat inflation.
- Supply chain disruptions have eased, but they have not completely been resolved.
- The war in Ukraine and the potential slowdown in China, as evident by its low 0.4% GDP growth in Q1 2023, are other risk factors for the economy.
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What the numbers say: With "Barbie" from Warner Bros. Discovery soon to be released, sales of goods with a Barbie theme have increased, accounting for $1.5B in 2022 worldwide. Over 100 brands, including Bloomingdale's, Kohl's, Crocs, and Gap, have partnered with Mattel to offer Barbie-inspired products, with retailers like Bloomingdale's and Aldo experiencing significant success from their exclusive Barbie collections. Relevance: Despite concerns about rising prices and a preference for spending money on services rather than non-essential things, retailers are taking advantage of the popularity of Barbie to draw customers and boost sales. Barbie products appeal to adults looking to indulge in a nostalgic trip down memory lane because of their capacity to elicit nostalgia and happy childhood memories. More Info: Comparing June to the prior year, sales of discretionary general merchandise decreased by 9% in units sold and by 4% in revenue. But as retailers pander to trends like looser-fitting jeans, dressier clothing, and cutting-edge beauty items, consumer spending has recently increased to a record-breaking $12.7B thanks to the success of Amazon Prime Day and other promotional events. | | | |
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| 3 | | Carvana, a car retailer, has signed a deal to restructure its debt to significantly reduce its outstanding debt by more than $1.2B and eliminate most of the maturities on its unsecured notes. Additionally, the company aims to raise capital through a $1B share sale and restructure its operations to improve its financial position. More: - On Wednesday, Carvana's shares increased by more than 35% to $53.99, the company's highest open price in over a year.
- Despite a surge from $4 to $40 per share (Tuesday close) this year, the company's stock is still approximately 90% below its peak of nearly $377 in August 2021.
- The arrangement to restructure Carvana's debt included Apollo Global Management, the company's largest bondholder, and it applied to senior, unsecured notes worth about $5.2B.
- Despite declining revenue to $2.97B from $3.88B in the second quarter, the company's gross profit per unit (GPU) grew by 94% to $6,520.
- Carvana reported a net loss for the second quarter of $105M, or 55 cents per share, compared to a net loss for the same time last year of $439M, or $2.35 per share.
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| 4 | | Amazon's sales of cooling items have significantly increased due to a severe heat wave in the U.S. In the 30 days that ended on July 14, sales of air conditioners on the platform increased by 248%, while sales of fans increased by 60%; searches for "single room AC units" and "portable misting fans" also increased significantly, and the best-selling automotive product was a sun cover for car windscreens. More: - The best-selling items on Amazon's home and kitchen website were lightweight, breathable bed sheets, and the most popular item on their toys and games page was a hammock pool float.
- Consumer purchases have been impacted by climate change and extreme weather patterns, as evidenced by the rise in air purifier sales during wildfires with poor air quality.
- According to the National Energy Assistance Directors Association, home energy bills are expected to increase by 11.7% this summer, averaging $578, but could reach $706 in hotter regions like Texas and Louisiana.
- The association is also pleading with Congress to give an additional $3B for summer cooling assistance to help six million households and asking utilities to stop shutting off service for past-due payments.
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| 5 | | President Biden will issue new guidelines that will give the FTC more power to challenge big tech mergers that harm competition. The guidelines will also take into account the effects of such mergers on workers and markets and could create a major shift in how antitrust laws are enforced. More: - FTC Chair Lina Khan and Assistant Attorney General Jonathan Kanter, both known for their opposition to big mergers that stifle competition, will head the enforcement of the guidelines.
- The guidelines would bring new antitrust enforcement policies after nearly 40 years of little change since the Reagan administration.
- The USDA and 32 state attorneys general have also partnered to target anticompetitive behavior in food markets.
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| 6 | | Declining home affordability, supply-side disruptions, and tighter lending standards caused a decline in U.S. home building in June, down 8% from May. "Although builders continue to remain cautiously optimistic about market conditions," the outcome may rest on the Federal Reserve's upcoming policy meeting. More: - Building permits for new housing units also fell 3.7% in June to a seasonally adjusted annual rate of 1.44 million, down 15.3% from a year ago.
- Mortgage rates hitting a recent peak of 7.22% before dropping to 6.89% last Friday (per Mortgage News Daily) have made it more difficult for new buyers to afford a home.
- Despite elevated interest rates, builders' use of sales incentives has declined, with only 22% of builders reporting price cuts in July, down from 25% in June and 27% in May.
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| 7 | | Quick Hits: - It's true: there really is a once-in-a-lifetime IRS kickback available to 80% of businesses. Apply Now.*
- Johnson & Johnson is the third pharmaceutical corporation to sue the Biden administration, claiming that Medicare's new power to reduce prescription prices is unconstitutional under the first and fifth amendments of the U.S. Constitution.
- Aston Martin has the best-ever pipeline of vehicles, according to Goldman Sachs, which has caused a jump in shares that have recovered from severe losses since its IPO in 2018.
- Estee Lauder disclosed that a hacker had gained access to its systems, disrupting its business operations and raising the possibility of additional disruptions.
- Sovereign wealth funds in the Middle East are offering funding to private equity behemoths like KKR, EQT, and Brookfield in order to support significant deals this year.
- Level up your AWS knowledge. Packed with tips and tricks, the Amazon Web Services Cookbook is a must-have resource for both novices and experts.*
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Term of the Day Programmatic advertising: Programmatic advertising is a business practice that uses software and algorithms to automate the process of buying and selling advertising space. Question of the Week Do you think it's ever acceptable to bring politics into the workplace? Join the conversation |
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 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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