DHUnplugged #657: Fatigue

Tipping – where we stand on the issue.

Oil prices plummeting – sign of the impending recession?

Tipping and other interesting “fatigues” are starting to set in.

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Warm Up
- PGA Tour partners with LIV
- Back from Bahamas - the water is clear and the sand is soft white
- AI still the rage!
- Zuck sneers at Apple
- Epstein - JP Morgan Update
- Tipping Fatigue

Market Update
- Markets Climbing the Wall of Worry
- Beer Wars - Taking Share back from Craft Brewers
- Rolling Recessions - Eurozone enters official recession
- BOA Moynihan has some comments...
- Seems like some Fatigue is approaching - too far, too fast

Zuck on Apple VR Headset
- Zuck points out that every Apple Vision Pro VR demo 'was a person sitting on a couch by themself'
- He explains, "our vision for the metaverse and presence is fundamentally social. It’s about people interacting in new ways and feeling closer in new ways. Our device is also about being active and doing things.
- "By contrast, every demo that they showed was a person sitting on a couch by themself. I mean, that could be the vision of the future of computing, but like, it’s not the one that I want."

LARRRRY!
- Lary Ellison - Oracle
- Good earnings report - plenty of orders coming in....
- The Oracle founder has surpassed Bill Gates to rank fourth on the Bloomberg Billionaires Index as shares of the software firm have climbed 42% this year.

Golf
- PGA and LIV merging
- A great deal of unrest about this
- PGA trying to figure out ways to help those that stuck it out and maybe penalize LIV players
- PGA said they could not afford to keep battling Saudi Arabia
- All pending litigation has been cancelled.
- One player Rory Mcilroy is really not happy about it and very vocal

Golf - US Open
- Los Angeles Country Club
- 290 Yard Par 3?

Beer - I Like Beer
- Anheuser-Busch InBev and Molson Coors Beverage are set to gain market share from craft beer makers in the United States this year as cost-conscious consumers are opting for cheaper six-packs, according to analysts and industry experts.
- Analysts polled by Refinitiv expect annual revenue to grow about 6% for Molson Coors and 7.5% for AB InBev in 2023, while craft beer maker Boston Beer Co is expected to post a near 3% fall in revenue, compared with last year's 1.6% rise.
- "Most cost-conscious consumers are still buying the same volume of beer, but in the less expensive category of beer,"

Beer Beer

AI Time
- Big worries about FAKE AI generated content ahead of the 2024 election
- Lots of fake media already
- Campbell's Soup is talking up that they have embraced AI
--- (We talked about when these off-beat names start to Tech-Wash that would be clue that surge could be over)
- The 154-year-old Campbell Soup Co. is embracing Silicon Valley-inspired artificial intelligence (AI) technology to ensure its success in food and beverage innovation continues. The company is doing this by tracking and curating billions of data points to find inspiration and leverage agile design methodology to accelerate the development of new products that resonate with consumers.
- “We leverage artificial intelligence to track and analyze these data points and it has become the main driver for the increase in number of products in our pipeline.”

Recession ? Various Eco Reports
- The euro zone has slipped into recession and Chinese data has disappointed, warning signs for world markets relieved that the March banking turmoil has not led to a full on credit-crunch and a U.S. debt ceiling crisis has been averted.
- Goldman Sachs lowered its odds of a U.S. recession in the next year to 25% from an already below consensus 35%
- The International Monetary Fund, meanwhile, no longer expects a UK recession this year.
- According to global outplacement firm Challenger, Gray & Christmas, job cuts announced by U.S.-based employers rose 20% to 80,089 in May.
- Deutsche Bank expects an imminent default wave, with a peak in the fourth quarter of 2024. It forecasts peak default rates on U.S. loans will near an all-time high at 11.3%.
- The U.S. Treasury yield curve remains deeply inverted, meaning longer-dated borrowing costs are lower than shorter-dated ones -- a gold-plated recession signal.

Euro-Zone Loan Demand

Credit Warnings

JP Morgan - Epstein Settlement
- JPMorgan Chase has reached an agreement to settle a lawsuit from victims of Jeffrey Epstein, the bank announced Monday.
- "We all now understand that Epstein’s behavior was monstrous, and we believe this settlement is in the best interest of all parties, especially the survivors, who suffered unimaginable abuse at the hands of this man," JP Morgan wrote in a statement.
- "Any association with him was a mistake and we regret it. We would never have continued to do business with him if we believed he was using our bank in any way to help commit heinous crimes," the bank added.

Bank of America on the economy and rates...
-Mr. Moynihan said on Monday:

Fed should take a pause on rates.
Economy is slowing down.
Consumer mortgages are way down due to higher rates.
Inflation still too high relative to 2% target.
Hybrid work impact is still being felt on commercial real estate.
He worries about commercial real estate in the greater scheme of things, but not for Bank of America.

Rates - UK
- U.K. borrowing costs, as measured by the yield on short-dated government bonds, rose above levels last seen following Britain's market-destabilizing "mini-budget" after labor market data showed rising wage growth on Tuesday.
- The yield on two-year gilts hit 4.754% at 10:13 a.m. London time, according to Refinitiv data, surpassing the 4.750% level set on Sept. 28.
- It is the highest level since late Aug. 2008.
- U.K. annual average wage growth accelerated from 6.6% to 7.2% in the February-April quarter, beating economist expectations.

Tipping Fatigue - Is a THING
- Also, two-thirds (66%) of the survey's respondents have a negative view about tipping, including 41% saying they feel like businesses should pay their employees better rather than relying so much on tips.
- The biggest change, within the past year at least, is that inflation is leaving people with less money to go around," Rossman tells FOX Business. "A lot of people seem to feel like things cost enough already, so they’re not as likely to tip on top of that.
-"But we were seeing a tipping decline even before the pandemic. It seems like the ‘tip creep’ that’s occurring – being asked to tip for things that didn't warrant a tip – is annoying a lot of people."
- Also, tip-pressure is making some uncomfortable
- Restaurant tipping - is it based on quality of service or just automatic?

Bear Market Over
- BOA says it is officially over
- So, new Bull market?
- Pause vs Skip helping with the thought of a rate cut possible
- What is the fascination with the labeling?

Jeremy Siegle on CNBC
- "Let me say one thing," Siegel told CNBC. "If we get a negative job report within the next month, next two months, it's going to hit headlines, first time since Covid. And then people are going to say, 'Oh, can I be assured that I'm going to get another job?' And that's going to play into politics and I think is going to pressure the Fed on the other side, and then they're going to begin to say, 'Okay, maybe inflation is going to get better."

4-Day Work Week
- Nearly a fourth of small businesses in knowledge-based industries are operating on a four-day schedule or planning to.
- Gussto/Bloomberg Survey

Bankruptcy
- Instant Pot and Pyrex Maker Instant Brands Files Bankruptcy
- Instant Brands, maker of the Instant Pot pressure cooker and Pyrex glassware, filed for bankruptcy on Monday after high interest rates and the pandemic’s gnarled supply chain drained its cash, making its debts unsustainable.
- The Downers Grove, Illinois-based company listed estimated assets and liabilities of as much as $1 billion in a bankruptcy petition filed in Texas. The Chapter 11 filing allows Instant Brands to keep operating while it seeks approval of a plan to repay creditors.
- Will receive 133 million in Chapt 11 financing