February 15, 2023

Top stories today: 1) CPI falls less than expected to 6.4%, 2) EU bans fossil fuel cars from 2035, 3) Buffett has record buying year, and 4) China threatens countermeasures.

Hi, and welcome to today's Bay Area Times daily newsletter. Top stories today: 1) CPI falls less than expected to 6.4%, 2) EU bans fossil fuel cars from 2035, 3) Buffett has record buying year, and 4) China threatens countermeasures.

0. Data and calendar

All values as of 3 AM PT / 6 AM ET, other than S&P500 close (1 PM PT / 4 PM ET).

All times are ET.

1. CPI falls less than expected, to 6.4%

  • Broad CPI: 0.5% MoM and 6.4% YoY, expected 0.4% and 6.2% YoY, respectively.

  • Core CPI: 0.4% MoM and 5.6% YoY, expected 0.3% and 5.4%, respectively.

Food categories show the highest increases

Will core inflation go back to its historical 2% level?

  • As we said yesterday: main risk is core inflation stabilizing in the 3-5% range. We see that as the most likely scenario, assuming the current rate curve, peaking at around 5%. Core inflation is very sticky, and in 2021 it really decoupled from the 1.5%-2.5% range it had been hovering in since 2012.

Markets still price in 3 hikes of 25 bps

  • From 2 hikes last week, as some Fed officials made some slightly dovish statements. - Bloomberg

2. EU bans fossil fuel cars from 2035, partial ban from 2030

  • Will likely lead to price increases, unless the EU and the world manage to produce more cheap and reliable energy production (hydro and clean coal/gas, perhaps nuclear, likely not wind and solar). - WSJ 

3. Buffett has record buying year, increasing Apple position

  • Still has $128B in liquidity (vs $689B market cap), although now it's less important to allocate that into equities, given short-term rates are at 4-5%. It is odd that Buffett has been holding cash for so long, given he could just allocate it into the stocks he already owns. This lack of optimization is likely related to his lack of overperformance over the past few decades.

Buffett also sold 86% of his TSMC position

Leading the stock to be down 6% in the pre-market:

4. U.S. knew about China balloon since its launch; China threatens countermeasures

Washington Post.

  • China will "take countermeasures": China is strongly opposed to this and will take countermeasures against relevant US entities that have undermined our sovereignty and security to firmly safeguard our sovereignty and legitimate rights and interest." said Foreign Ministry spokesman Wang Wenbin. - Bloomberg

  • 3 other objects likely private, non-Chinese: "We don’t see anything that points right now to these being part of the PRC spy balloon program or in fact, intelligence collection against the United States of any kind." said National Security Council spokesman John Kirby. - Bloomberg

  • U.S. detour could have been accidental. But what's known for sure, according to U.S. officials, is that the balloon was of a spy nature. - Washington Post

5. Airbnb grows revenue 24% to $1.9B

Profits of $319M, with a 17% net margin

6. Nubank has 112% revenue growth; still unprofitable and trading at 5 P/B

What Nu wants you to see:

What they don't want you to see:

Nu Q4 financial statements, Bay Area Times analysis.

The company's earnings report and presentation seem to try to bury its actual balance sheet while promoting non-GAAP measures, where the company, of course, is growing. In its balance sheet, you will find that 2022 was another unprofitable year, and that Nu's book value is under $5B, while it trades at a $23B market cap, after dropping about half since its IPO in late 2021. - Reuters, press release

7. Tubi.tv reaches 64M MAUs

  • Free ad-supported model seems to be working.

  • Fox-owned, previously denied $2B offer. - Bloomberg

Not available in Europe, so there's room for international growth

8. Ethereum NFT sales bounces, led by new platform Blur

  • Ethereum is still 78% of total NFT sales ($1.03B in January). - Reuters

  • Blur is a new platform targeted at pros, currently advertising zero fees. Its rise coincided with the platform airdropping BLUR tokens to its users. - Coindesk

  • Opensea's winner-takes-all status has been threatened, and it is unclear whether it has sustainable competitive advantages.

9. Poll: Londoners want to WFH, richest would need 20%+ pay raise to work on-site

  • The future is hybrid. That's what most popular with employees, and also what likely leads to the best mental health.

10. Other headlines

  • Microsoft's AI continues to go crazy, but markets seem to be OK with it.

  • Google launches Privacy Sandbox (their version of pixels 2.0) for Android.

  • Air India, now private, buys record 470 planes from Boeing, Airbus.

  • Elon Musk donated $1.9B of Tesla stock to charity in 2022.

  • Instagram shutting down live shopping.

  • Salesforce bill being cut from $20M/year to $5M at Twitter.

  • Buzzfeed launches OpenAI-powered Infinity Quizzes.

  • Github Copilot Enterprise now available for everyone, $19/mo.

  • Firefox CEO is interviewed by The Verge. We're unconvinced that it won't die in the world of Chrome and Edge.

  • Vice adds $30M in debt, could be close to bankruptcy.

  • Youtuber selling Notion templates making $1M.

  • Stephen Wolfram has a 19K-word explainer on ChatGPT and LLMs.

Crypto roundup

  • BUSD, winding down, losing market cap to USDT.

  • Crypto anti-money laundering bill to be reintroduced by Sen. Warren.

  • Andrew Tate and his brother have 21 Bitcoin confiscated.

  • Ken Griffin's Citadel discloses 5.5% stake in crypto bank Silvergate.

  • Coinbase CEO Armstrong continues his plan to sell 2% of his shares per year.

Washington and more

  • Trump's lawyer is asked to testify, suggesting evidence of crime.

  • Brainard's Fed departure is confirmed.

  • FTC commissioner resigns, accuses Chair Khan of abuse of power.

  • Nikki Haley officially enters Presidential race, seen as a potential VP to Trump.

  • Ohio town hit by toxic train crash told to drink bottled water.

  • Biden's brother Jim involved in $140M Saudi deal.

  • Kushner's $2B Saudi check being investigated by Sen. Wyden (D-Ore.).

  • New book: Bush warned Obama about Middle East wars, Russia seeking Ukraine.

  • Giuliani, Judge Jeanine will have to face Smartmatic defamation suit.

  • Sen. Dianne Feinstein will not seek reelection, Rep. Adam Schiff could be frontrunner.

  • Bolsonaro says he will return to Brazil in March.

  • Bidens ordered burgers and lobster risotto for Valentine's Day: sources.

  • Male birth control pill works in mice experiment, would require one pill before sex.

  • LinkedIn data: 91% of applicants want salary range in job post.

11. Interesting tweets, memes, and images

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