__Recession-omics…__ the word on everyone’s lips. The probability of a US recession [soared](https://www.bloomberg.com/news/articles/2022-06-15/fed-s-inflation-fight-spells-pain-ahead-for-tight-labor-market) this quarter as the Fed aggressively hiked interest rates to tame stubbornly rising inflation. But while #flation hurts the economy, so does *fighting* it: higher rates discourage borrowing/spending and encourage saving, which should cool consumer demand and prices. They also lower companies’ growth expectations, which have slumped stocks into a bear market. And historically [most](https://www.cnbc.com/2020/03/14/not-every-bear-market-is-accompanied-by-an-economic-recession-but-chances-are-high.html) S&P 500 bear markets have been accompanied by recessions. All eyes are on whether the Fed can cool the economy without igniting a downturn — which seems increasingly tougher.

__Crypto winter dawns...__ Move over, web3. "Contagion" became the quarterly buzzword as the crypto market continued to tumble along with stocks, losing $2T in market cap since its November high. Algorithmic stablecoin __TerraUSD's__ crash wiped out $40B in market value seemingly overnight, while crypto lender __Celsius__ froze billions in customer funds. The trouble spread to other crypto companies like __[Coinbase](https://robinhood.com/stocks/COIN)__, __Crypto.com__, and __Gemini__, all of which laid off employees as investors jumped ship. Bipartisan crypto regulation proposed in the Senate could be a win for the struggling industry — though with contentious midterm elections approaching, no one's holding their breath. 

__A tale of two labor markets…__ is the quarter’s biggest paradox. While rebounding sectors like hospitality and travel couldn’t hire fast enough (see: [travel-pocalypse](https://snacks.robinhood.com/newsletters/1Qt2T96PxTPi4D1SE8Gee4/articles/5wYWNmL0OQwFnJ4JDNCU2m/)), pandemic thrivers slowed hiring and cut positions. Unemployment is at [record](https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm) lows and wage growth has doubled from 2019. Still, companies like __[Meta](https://robinhood.com/stocks/META)__, __[Twitter](https://robinhood.com/stocks/TWTR)__, __[Netflix](https://robinhood.com/stocks/NFLX)__, and __[Uber](https://robinhood.com/stocks/UBER)__ have had mass layoffs as slowing growth threatens the bottom line. The tech industry made 8X more job cuts last month than it did during the first four months of the year combined. But with two job openings for every unemployed person, job seekers should be better off than in previous downturns.

A choppy quarter (Mike Hill/Getty Images)

Zoom Out

3 key themes of the quarter…

- __[$156M](https://snacks.robinhood.com/newsletters/71oOBinwjs2uPx02aEH9Xz/articles/58i2EhnWJE0Zzvla002jLS/):__ How much “Top Gun: Maverick” raked in on opening weekend, a Memorial Day record. Movie-ticket sales hit a 40-year low in 2020, but are rebounding as studios send hit franchises like “Batman” to theaters — and ship others to streaming.
- __[3.48%](https://www.cnbc.com/quotes/US10Y):__ The 10-year Treasury yield’s high this quarter, an 11-year record, as investors anticipate more inflation + higher rates. IOUs are getting pricier, from credit-card interest to gov’t bonds.
- __[$280](https://www.coindesk.com/business/2022/04/13/jack-dorseys-first-tweet-nft-went-on-sale-for-48m-it-ended-with-a-top-bid-of-just-280/):__ The highest bid for an NFT of Jack Dorsey’s first tweet in an April auction — a year earlier it had sold for $2.9M (womp). Prices of Bored Apes and other viral NFTs have plummeted with non-fungible trading volume.
- __[$6.1B](https://www.cnbc.com/2022/06/23/russia-ukraine-live-updates.html):__ How much the US has committed to support Ukraine since Russia’s invasion, which has [killed](https://www.nytimes.com/live/2022/06/18/world/ukraine-russia-news-deaths) tens of thousands. The EU recently approved Ukraine’s candidate status to join the bloc, giving the country new hope.
- __[$44B](https://www.cbsnews.com/news/elon-musk-twitter-deal-board-endorsement-qatar-economic-forum/):__ How much Elon Musk [agreed to buy](https://snacks.robinhood.com/newsletters/1zpLKuQGHlxnAe3BYLQXii/articles/2igH2dzMBSwHyPrxwOz4J6/) Twitter for, including a $21B personal investment equaling one-fifth of his net worth. Musk said [three things](https://www.cnbc.com/2022/06/21/elon-musk-says-3-issues-need-to-be-resolved-before-twitter-deal-closes.html) stand in the way of the takeover: fake accounts, debt financing, and shareholder approval.
- __[€0.95](https://snacks.robinhood.com/newsletters/1aPeIVnSAv0nbiyhbzDAM4/articles/7EvckqNHxnZk4b7BnAy6Wi/):__ How many euros one US dollar will get you. The greenback is up 9% this year and has [strengthened](https://www.wsj.com/articles/the-dollar-is-winning-in-a-messy-global-economyand-that-matters-in-the-fight-against-inflation-11652617801) against currencies like the Japanese yen, the Chinese yuan, and the euro. It’s an economic bright spot for the US (and American tourists).

By the #s

6 notable numbers...

__The housing cooldown…__ The days of obsessive __[Zillow](https://robinhood.com/stocks/Z)__-scrolling and cheap mortgages are likely over. Home-buying demand is finally cooling as mortgage rates spike to the [highest](https://edition.cnn.com/2022/05/05/homes/us-mortgage-rates-may-5/index.html#:~:text=The%2030%2Dyear%20fixed%2Drate,from%20this%20time%20last%20year.) levels since ’09. Last month, mortgage applications fell to a 22-year low, while brokers __[Redfin](https://robinhood.com/stocks/RDFN)__ and __[Compass](https://robinhood.com/stocks/COMP)__ had mass layoffs. Average mortgage payments are now 31% [higher](https://www.nytimes.com/2022/06/23/realestate/owning-renting-disparity.html) than rent — which could speed the cooldown. As rates rise, fewer people will be eligible/willing to take out loans. Yet home prices [won’t](https://fortune.com/2022/04/04/redfin-red-hot-housing-market-shows-first-signs-cooling-mortgage-rates/) cool until supply improves, and that could take [years](https://www.nationalmortgagenews.com/news/home-inventory-wont-return-until-at-least-2024-zillow#:~:text=It%20will%20take%20several%20years,of%20experts%20surveyed%20by%20Zillow.). In May, the median existing-home price topped [$400K](https://www.nar.realtor/newsroom/existing-home-sales-fell-3-4-in-may-median-sales-price-surpasses-400000-for-the-first-time) for the first time as inventory remained brutally low. 

__Retail’s inventory glut…__ After years of struggling to get products on shelves, big retailers now have *too much stuff*. __[Walmart](https://robinhood.com/stocks/WMT)__ said nearly a quarter of its inventory is “unwanted” as shipments meant for stay-at-home szn (think: puzzles, throw pillows) arrive months too late. Ditto for teen faves like __[Abercrombie](https://robinhood.com/stocks/ANF)__ and __[American Eagle](https://robinhood.com/stocks/AEO)__, which are sitting on 40%+ more inventory than a year ago. Now the __[Amazon](https://robinhood.com/stocks/AMZN)__ and __[Target](https://robinhood.com/stocks/TGT)__ are having huge sales events to shed extra merch. The discounts could lure stimmy-less shoppers to stores and help cool inflation.

__Knockoff economy…__ In Russia, CoolCola’s the new __[Coca-Cola](https://robinhood.com/stocks/KO)__. Imitation brands are [sprouting](https://www.wsj.com/articles/western-brands-are-up-for-grabs-in-sanctioned-russia-11655870706?mod=business_lead_pos4) up after Western big shots like __[Nike](https://robinhood.com/stocks/NKE)__ and Coke left because of #sanctions. Despite the corporate exodus, Russia’s economy has been surprisingly resilient: the ruble has rebounded to seven-year highs and shelves are still stocked thanks to more domestic production. Former __[McDonald’s](https://robinhood.com/stocks/MCD)__ locations in the country recently [reopened](https://snacks.robinhood.com/newsletters/74Rmw5VlxBTIazWlkKzrHf/articles/6JLig31chFCLXR55AUMuC6/) as rebranded Russian versions, with 98% local ingredients (and the same ketchup packets).

Zoom in

3 emerging trends…

The biz themes that defined this turbulent quarter, from recession-omics to a “crypto winter”

Dow Jones

S&P 500

Nasdaq

Bitcoin

This month in the US the average price of a gallon of gas hit $5 — up by nearly $2 from a year ago

🌊 A rough spell: the Q2 edition

__Non-fungible fanny pack…__ Apes swung into the concrete jungle this week, and their bananas weren't just on the blockchain. The second annual ApeFest, an IRL music festival tied to the popular Bored Ape NFT collection, wrapped up yesterday in NYC (think: Coachella for crypto diehards). Token holders [took over](https://www.vice.com/en/article/z34ep4/this-is-a-great-time-to-buy-nftnyc-attendees-see-opportunity-in-crypto-chaos) Times Square, suggesting that NFTs could survive crypto winter's chill by hitting the pavement.

- __Non-fungible fun:__ Bored Ape Yacht Club NFTs served as event tickets — an IRL use for the sought-after tokens. Performers included LCD Soundsystem, Lil Baby, and Amy Schumer. 
- __Not as fun:__ The fest may not have helped Bored Ape prices, some of which [have crashed 78%](https://decrypt.co/102905/bored-ape-ethereum-nfts-drop-below-100k-first-time-almost-year) from their April highs. It’s a theme: top NFT collections like Doodles and Meebits are also down big-time. 

__Can’t funge this…__ The “right-click, save” crowd may be prevailing over NFT promoters. Despite [contradicting](https://www.wsj.com/articles/nft-sales-are-flatlining-11651552616) [reports](https://blog.chainalysis.com/reports/chainalysis-web3-report-preview-nfts/) over whether the NFT market collapsed earlier this year, the bear market hasn't done NFT collectors any favors. Trading volume has plummeted to its lowest point since June of last year. But that hasn't killed corporate token interest: 

- __Exclusive:__ On Wednesday, ecomm behemoth __[Shopify](https://robinhood.com/stocks/SHOP)__ [announced](https://www.protocol.com/shopify-nft) "token gating" as a way for merchants to give NFT holders access to exclusive IRL shopping events.

NFTs take the Big Ape-le (Noam Galai/Getty Images)

APED

__Real-world uses ≠ users…__ While NFT event tickets show digital assets aren’t limited to blockchain transactions, they haven’t created mainstream appeal. Thousands of token fans rocked out at ApeFest, but as of January most NFTs were owned by just a few hundred thousand people. Perhaps efforts like Shopify's to make tokens part of daily life could change that.

ApeFest tosses NFTs into the real world as digital tokens come for brick-and-mortar events

__Bad aftertaste…__ Warning: this news may cause indigestion. You’ve probably heard of __Daily Harvest__, the plant-based meal-delivery service that seems to sponsor every other YouTuber and podcaster. Now some influencers are losing their appetites: Daily Harvest is [embroiled](https://www.wsj.com/articles/daily-harvest-recalls-lentil-and-leek-crumbles-after-customers-report-getting-sick-11655924044?mod=business_featst_pos2) in a scandal after several customers said they’d gotten sick after eating its lentils. 

- __Violently ill:__ On __Reddit__, __TikTok__, and Insta, customers said they got sick after eating DH’s Lentil + Leek Crumbles. Many reported liver damage and fevers, and some said they had their gallbladders removed. 
- __#LentilGate:__ According to Reddit users, DH first responded to customer concerns by asking if they’d cooked the lentils correctly. The company later issued a recall and said it was investigating the mysterious issue, along with the FDA. It’s also offering customers a $10 credit (womp). 

__Hungry for influence…__ Before this brand-crushing debacle, DH was thriving. It had sold $250M of meal subscriptions in 2020 and hit a $1.1B valuation thanks to its army of influencers and celeb investors (like: Serena Williams, Gwyneth Paltrow, and Bobby Flay). It’s not the only one relying on influencers: 

- __#SponsoredContent:__ Brands are expected to spend $16.4B on influencer marketing this year as consumers increasingly discover products on TikTok and Insta. 
- __#ZaraHaul:__ Last year, Insta influencers mentioned Zara 300K times, reaching 2M+ people. Smaller brands like __Glossier__ and __MVMT__ have also relied on influencers to boost awareness.

Crumble

__Viral marketing can be a double-edged sword…__ Social media can help startups blow up quickly and cause them to blow up (in a bad way) just as fast. Some Daily Harvest influencers who said they got sick from free meal kits are bashing the biz on social (see: this [Tok](https://www.tiktok.com/@abby.silverman/video/7110783566761561386) with 100K+ likes). Daily Harvest’s crisis is a reminder that the influencer strategy can backfire.

Viral meal-delivery service Daily Harvest is taking heat after some of its lentil influencers and customers said they got sick

Fourth of July BBQs are going to cost 21% more this year because of inflation

🐵 NFTs take NYC

__Empty pod…__ Juul’s empire could be disappearing in a cloud of mango-flavored vapor. Yesterday WSJ [reported](https://www.wsj.com/articles/fda-to-order-juul-e-cigarettes-off-u-s-market-11655904689) that the FDA plans to ban Juul in the US. Refresher: In 2020 the FDA asked smoke juggernauts to apply to sell e-cigs (even un-flavored ones). Fast-forward to now: __[British American Tobacco](https://robinhood.com/stocks/BTI)’s__ Vuse — which just unseated Juul as the top US vape — got approved to stay on the market. But it sounds like Juul’s 125K-page application *hasn’t*.

- __Glory daze:__ Juul became the top US e-cig seller in 2018, three years after launching its sleek vapes. That year, Marlboro maker __[Altria](https://robinhood.com/stocks/MO)__ splurged $12.8B for a 35% stake in Juul, which was threatening its cig biz. Then…
- __Things went up in smoke:__ The FDA banned flavored e-cigs in 2020 while investigating whether companies were marketing to kids, who were getting hooked on USB-like vapes.
- __Puff, puff, plunge:__ Juul ditched flavored pods and its e-cig market share [plummeted](https://www.nytimes.com/2021/07/05/health/juul-vaping-fda.html#:~:text=Juul's%20share%20of%20the%20vaping,and%20expand%20its%20reach%20again.) from 75% to 42%. Altria’s $13B Juul stake was worth just $1.6B as of March. Now it could lose its US biz. 

__Burned on both ends…__ Last week the FDA announced separate plans to limit addictive nicotine in traditional cigs. The rule isn’t expected to go into effect for years, if at all. But regulatory heat could hurt cig sales, which are already [forecast](https://www.wsj.com/articles/biden-administration-targets-removal-of-most-nicotine-from-cigarettes-11655842130?mod=business_lead_pos12) to fall to $95B this year from $99B last year. For Altria it’s a double whammy.

The FDA’s big warning label (Mario Tama/Getty Images)

Burnt

__Regulators don’t like getting burned…__ neither do investors. The FDA says Juul ignored its warnings on marketing. Altria’s stock has fallen 13% this year while it’s tried to save Juul. But shares of rivals BAT and __[Philip Morris International](https://robinhood.com/stocks/PM)__ are up as they’ve shifted focus to “smokeless” tobacco [products](https://snacks.robinhood.com/newsletters/CxZPNYACQmhAcH97Htdw6/articles/4g0VxGDmv3EbCjtFiFJMZ9/), like IQOS, and avoided regulatory drama with vapes.

The FDA may ban Juul in the US, dealing tobacco giant Altria a double whammy

__New CBD candle launch…__ #retweet. __[Shopify](https://robinhood.com/stocks/SHOP)__ and __[Twitter](https://robinhood.com/stocks/TWTR)__ have joined forces to help tweeters shop while scrolling. Shopify powers online sales for merchants like __[Allbirds](https://robinhood.com/stocks/BIRDS)__, [Heinz](https://robinhood.com/stocks/KHC), and your local succulent shop. It already controls over a [10th](https://www.drip.com/blog/shopify-statistics#:~:text=at%204.29%20Percent-,1.,in%20third%20at%2010.98%20percent.) of the global ecommerce market, and now it could get more: 

- __Check in:__ Twitter’s giving Shopify merchants the option to display up to 50 products on their profiles, plus features like live-stream hauls. Shopify’s paying Twitter for the perks. 
- __Check out:__ Shopify thrived mid-pandemic when businesses moved online. But the [stock](https://robinhood.com/stocks/SHOP) has slid 75% this year while sales growth has slowed for four quarters straight.

__Viral Tok ad > TV spot…__ As ad revenue slows, social giants are expanding shopping features to drive more $$. Creatively named launches include “Insta Shop,” “Twitter Shops,” and “__TikTok__ Shopping.” While social commerce still makes up less than 5% of online shopping, it’s growing fast: 

- __4X:__ Shopify said that orders placed through social apps like __[Snap](https://robinhood.com/stocks/SNAP)__ and TikTok quadrupled last quarter from a year ago.

Scrolly

__Big biz is moving from D2C to C2C…__ from direct to consumer to connect to consumer. It’s not enough for companies to have a website, one-click [checkout](https://apps.shopify.com/one-click-checkout), and shipping. To really connect, brands have to be where consumers are *most connected* (i.e.: social). That’s why US social sales could [hit](https://www.wsj.com/articles/twitter-adds-shopping-feature-for-shopify-merchants-11655899201) $168B by 2027 — nearly five times bigger than last year.

Twitter and Shopify team up to expand social shopping features as consumers splurge through their feeds

The cost of raw materials for EVs has more than doubled during the pandemic

💨 Juul’s last puff?

__Pringle and ready to mingle…__ Frosted Flakes and Pringles are breaking up. Cereal icon __[Kellogg](https://robinhood.com/stocks/K)__ said it’s [splitting](https://www.wsj.com/articles/kellogg-to-separate-into-three-businesses-11655810600) into three publicly traded companies: snacks, cereal, and plant-based meat (think: MorningStar patties). Kellogg became a snack giant thanks to faves like Cheez-Its and RxBars. Now it’s spinning off categories in hopes that specificity will boost *profitability*. The three biz lines are expected to go solo next year. 

- __Pop Tart-ed:__ Kellogg stock popped 2% yesterday and is up 6% this year as shoppers keep buying Rice Krispies despite inflation and smaller boxes (#shrinkflation). 

__Cereal killer…__ Kellogg’s cereal sales have been slipping for years as Americans ditch Fruit Loops for less neon-colored options. But snacking is on the up and up after spiking during lockdowns. Now: 

- __Snacks make up 80% of Kellogg’s sales__ and are growing faster than cereals and plant-based foods. Snacks boosted Kellogg’s profit last quarter, so it’s spinning them off to double down. 
- __Solo snacks have succeeded before:__ A decade ago, __[Kraft](https://robinhood.com/stocks/KHC)__ spun off its snack brands (Oreo, Triscuits) into a new public company called __[Mondelez](https://robinhood.com/stocks/MDLZ)__: today Mondelez’s market cap is twice Kraft-Heinz’s — and now it's [buying](https://www.cnn.com/2022/06/21/business/mondelez-clif-bar/index.html) __Clif Bar__ for nearly $3B.

Tony the Tiger’s going public (Bill Pugliano/Getty Images)

Flake

__Broader isn’t always better…__ Sometimes cereal problems should *stay* in the cereal aisle. With the split, Kellogg hopes to boost cereal margins (by fixing supply issues), expand plant-based market share (by attracting pure-play investors), and boost snack profits (by investing in new varieties). The strategy’s taking off: __[GE](https://robinhood.com/stocks/GE)__ and __[Johnson & Johnson](https://robinhood.com/stocks/JNJ)__ are breaking up biz categories in an attempt to boost profits, and __[Ford](https://robinhood.com/stocks/F)__ and __[Volvo](https://robinhood.com/stocks/VLVLY)__ plan to spin off their EV businesses.

Kellogg plans to split into 3 companies to unleash the power of its snack biz — and reinvigorate its cereal

__Camping out at the airport [Starbucks](https://robinhood.com/stocks/SBUX)...__ Your plane might not arrive, but at least there are cake pops. A new federal holiday + Father's Day + national labor shortage = the perfect recipe for a travel-pocalypse. US airlines have canceled or delayed [35K+](https://ca.finance.yahoo.com/news/us-airlines-canceled-delayed-more-234356100.html) flights since Thursday, a #fail that’s becoming a theme as travel rebounds.

- __Nearly a third of scheduled flights__ on Thursday and Friday were delayed (and 3K+ were canceled). __[Delta](https://robinhood.com/stocks/DAL)__, __[American](https://robinhood.com/stocks/AAL)__, and __[Southwest](https://robinhood.com/stocks/LUV)__ experienced the most disruption.
- __Airlines mostly blamed staffing shortages.__ After offering pilots and flight attendants buyouts or early retirements mid-pandemic, they're struggling to staff up again.
- __Meanwhile: TSA traveler volumes__ are [cruising](https://www.tsa.gov/coronavirus/passenger-throughput) near pre-pandemic levels, and notched a pandemic high over the weekend.

__Postponed till next summer...__ Yesterday was the first day of summer, but airlines have been feeling the heat for a while. Back in April 2020, airlines got [$25B](https://snacks.robinhood.com/newsletters/XFl10uA56LUjXq5vweRtc/articles/5B4WtFBkJTYQdMwixAwHFk/) in bailouts from the US gov't so they could continue paying their hundreds of thousands of employees. Under the terms, airlines couldn't make any job cuts until October 2020. Cue October, and tens of thousands were [furloughed](https://www.axios.com/2022/06/19/airlines-flights-staff-shortages-delays-summer-vacation) or cut.

- __Many are frustrated__ that after nearly three years and billions in government aid, airlines can't get their shifts together to serve returning travelers.
- __Transportation Secretary__ Pete Buttigieg is [considering](https://www.businessinsider.com/us-may-punish-airlines-for-flight-delays-cancellations-buttigieg-2022-6?inline-endstory-related-recommendations=&utm_medium=referral&utm_source=yahoo.com) punishments (think: fines) for airlines that don't stick to their summer flight schedules.

Late

__Ramping up’s harder than ramping down…__ When demand was corona-crushed, airlines skimmed their workforces too much. Now they’re offering incentives to get people back: American has [offered](https://www.dallasnews.com/business/airlines/2022/06/15/american-airlines-gives-raises-bonuses-to-regional-flight-attendants-too/) rounds of raises and bonuses to regional employees, while __[Alaska](https://robinhood.com/stocks/ALK)__ and __[United](https://robinhood.com/stocks/UAL)__ are offering aspiring pilots financial aid at newly opened flight-training schools. But it could be too little too late: airline staff shortages could [last](https://www.axios.com/2022/06/19/airlines-flights-staff-shortages-delays-summer-vacation) well into next year.

Travel-pocalypse 2022 reaches a fresh boiling points as airlines struggle to bring workers back

Cereal icon Kellogg plans to split into 3 companies to unleash its snack power

Marilynn “Lynn” Malerba is set to become the first Native American US Treasurer

🥣 Kellogg splits up

__The sun also rises...__ the stocks, not so much. The S&P 500 is down 23% this year after stocks slipped deeper into a bear market last week. ICYMI: the Fed went off script and hiked interest rates by three-quarters of a percentage point (higher than the half point originally expected). Fed Chair Powell (#JPow) [said](https://www.cnbc.com/2022/06/15/powell-says-the-fed-could-hike-rates-by-0point75-percentage-point-again-in-july.html) we could get another big hike in July.

- __Inflation__ was up a worse-than-expected 8.6% in May from last year. Now JPow's leaning further into higher interest rates, which discourage borrowing/spending (think: high credit-card interest) and encourage saving (think: higher yields).
- __Higher rates__ cool consumer demand, which should cool prices. But they also lower companies’ earnings-growth expectations, which lowers corporate valuations (see: slumping stocks).
- __The 10-year Treasury yield__ [topped](https://www.cnbc.com/2022/06/14/us-bonds-10-year-treasury-yield-in-focus-ahead-of-fed-meeting.html) its highest level in over a decade last week as investors anticipate more inflation + higher rates. When yields rise, US gov’t bonds become more attractive relative to riskier investments like stocks.

__The market looks forward...__ We know the economy isn't the stock market. Prime example: mid-2020, the market was sipping prosecco on a Hamptons yacht (records on records) while the economy was eating __Safeway__ frozen peas in bed (record GDP shrinkage). Cue: trillions in stimmy $$, disappearing interest rates, and a big econ rebound. Now:

- __Yay area:__ The tight labor market is looking strong with ultralow unemployment, and manufacturing [ramped up](https://www.dailyfx.com/forex/fundamental/article/special_report/2022/06/01/SP-500-Sags-as-Strong-US-Manufacturing-Data-Sparks-Surge-in-Treasury-Yields.html) last month despite supply snags. 
- __Gray area:__ We're starting to see more layoffs as the Fed tightens its belt, and consumer spending surprisingly [fell](https://www.cnbc.com/2022/06/15/retail-sales-may-2022-unexpected-0point3percent-decline-hammered-by-inflation.html) in May as inflation strained savings.
- __Nay area:__ The Fed slashed its outlook for 2022 economic growth (to 1.7% from 2.8%), and the risk of a recession has [soared](https://www.bloomberg.com/news/articles/2022-06-15/fed-s-inflation-fight-spells-pain-ahead-for-tight-labor-market).

The market walking ahead of the economy (Owen Smith/Getty Images)

Grizzly

__It’s the econ-flation paradox…__ Inflation hurts the economy, but so does *fighting* inflation. To tame enemy #1, central banks need to *slow* the economy (which is sinking stocks). The sweet spot: cooling the economy *without* causing a recession and igniting a market meltdown. The best news could be if prices (especially oil and gas) show significant signs of easing.

As the Fed tries to tame enemy #1, stocks are in the red — but the economy’s stuck in a gray zone

__Falling far from the tree...__ __[Apple’s](https://robinhood.com/stocks/AAPL)__ supply chain. The Fruit’s sleek gadgets are nearly all manufactured in China. But China's work-stopping zero-Covid policy [could](https://www.wsj.com/articles/apple-aapl-q2-earnings-report-2022-11651115203) cost Apple $8B in sales this quarter. Now some businesses are fleeing the country: __Foxconn__, the company that assembles most iPhones, is moving more of its production to nearby Vietnam and Taiwan. A wider manufacturing exodus could hurt China’s economy, which is already on pace for its slowest annual growth in decades.

__The biggest pro sports matchup…__ is happening *off* the field. Streamers are seeing live sports as a key to turn fickle viewers into loyal fans. Last week Apple [signed](https://www.wsj.com/articles/apple-major-league-soccer-strike-10-year-streaming-deal-for-all-mls-games-11655222431) an exclusive $2.5B deal to stream all Major League Soccer for 10 years, the first time a full US pro season will be streamable in one place (+ cable). This year __[Amazon](https://robinhood.com/stocks/AMZN)__ and Apple will stream some NFL and MLB games. __[Disney](https://robinhood.com/stocks/DIS)__ and __[Sony](https://robinhood.com/stocks/SONY)__ fought to stream India’s pro cricket league (but lost their bids). And __[Netflix](https://robinhood.com/stocks/NFLX)__, which is losing subs, is racing Amazon and NBC for Formula One rights.

Stories we’re watching...

__Movin’ back in with Mom…__ Millions of Americans raced to buy their dream homes last year — now that dream is impossible for many. Soaring mortgage rates, low inventory, and sky-high prices are finally cooling the hot housing market. Mortgage applications fell to a 22-year low last month, and online brokers __[Compass](https://robinhood.com/stocks/COMP)__ and __[Redfin](https://robinhood.com/stocks/RDFN)__ did mass layoffs last week. Homebuilding giants __[Lennar](https://robinhood.com/stocks/LEN)__ and __[KB Home](https://robinhood.com/stocks/KBH)__ saw sales dip from records last quarter (we’ll get fresh earnings this week). Still, experts say it could take years for home prices to really cool.

__Need Thrifty-er ice cream…__ __[Rite Aid’s](https://robinhood.com/stocks/RAD)__ losses deepened last quarter after it took on [debt](https://fortune.com/2022/06/14/rite-aid-turnaround-plan-cvs-walgreens-pharmacy-industry/) to build more pharmacies, while its drugstore rivals invested in profitable ventures (think: wellness clinics, insurance partnerships). Earnings jumped at __[CVS](https://robinhood.com/stocks/CVS)__ and __[Walgreens](https://robinhood.com/stocks/WBA)__ as Covid tests and vaxxes continued (though fewer), and __[Pfizer’s](https://robinhood.com/stocks/PFE)__ Covid pill boosted sales. While CVS and Walgreens boosted their earnings forecasts for this year, Rite Aid — which reports Thursday — expects sales to dip despite rising store visits as it cut costs.

Events

Coming up this week...

- __[Billions](https://www.forbes.com/self-made-women/):__ The names topping Forbes’ list of richest self-made women may surprise you. It’s not celeb-preneurs like Rihanna or tech execs like Sheryl Sandberg — it’s roofing, trucking, and pizza magnates. 
- __[OOO](https://www.nytimes.com/2022/06/13/business/covid-sick-days.html):__ Covid ran roughshod over the sick day as WFH became WWS (Work While Sick). The Zoom-from-couch life exacerbated an American attitude — the insistence to work through it, even when it’s Covid. 
- __[Land](https://blog.chainalysis.com/reports/how-terrausd-collapsed/):__ __TerraUSD's__ collapse caused crypto chaos, but data suggests the stablecoin wasn't responsible for “crypto winter.” Instead, __[bitcoin](https://robinhood.com/crypto/BTC/)__ may’ve followed stocks — dashing hopes that the crypto would be a safe haven.

ICYMI

Last week's highlights...

As the Fed tries to tame enemy #1, stocks are in the red — but the economy’s in a gray zone

June 21 (aka: summer solstice) is the longest day of the year in the Northern Hemisphere

🎈 #flated problems

__So many rainbow logos…__ This [Pride Month](https://www.them.us/story/the-complete-history-of-pride), a lot of companies are showing support through [cheeky ad campaigns](https://www.out.com/pride/2022/6/03/burger-kings-pride-whoppers-come-two-tops-or-two-bottoms), social posts, and logos (think: __[Uber’s](https://robinhood.com/stocks/UBER)__ rainbow cars in its app). On Wednesday, President Biden signed an [executive order](https://www.whitehouse.gov/briefing-room/presidential-actions/2022/06/15/executive-order-on-advancing-equality-for-lesbian-gay-bisexual-transgender-queer-and-intersex-individuals/) geared toward protecting the record-breaking [7%](https://news.gallup.com/poll/389792/lgbt-identification-ticks-up.aspx) of American adults — and 21% of Gen Z adults — who identify as LGBTQ+. But the community’s weathering a harsh climate: 

- __State legislators__ have proposed an unprecedented ~300 [anti-LGBTQ+ bills](https://www.hrc.org/campaigns/the-state-legislative-attack-on-lgbtq-people#state-legislative-tracker-map) this year — many targeting transgender people and their access to healthcare. 
- __Meanwhile:__ The leaked Supreme Court [draft opinion](https://www.reuters.com/world/us/gay-marriage-other-rights-risk-after-us-supreme-court-abortion-move-2022-05-04/) that could overturn Roe v. Wade has [raised concerns](https://apnews.com/article/abortion-biden-us-supreme-court-right-to-privacy-6e1d7ee2a6d26bef09392971fd4948b5) over the future of same-sex marriage.

__Pride for sale...__ Corporate Pride participation [has surged](https://www.bcg.com/publications/2020/inclusive-cultures-must-follow-new-lgbtq-workforce) as companies seek to promote inclusive images. But many of the companies sponsoring parade floats also fund lawmakers who support anti-LGBTQ+ legislation. Powerhouses like __[Amazon](https://robinhood.com/stocks/AMZN)__, __[AT&T](https://robinhood.com/stocks/T)__, and __[Comcast](https://robinhood.com/stocks/CMCSA)__ have [collectively donated](https://www.dataforprogress.org/accountable-allies) ~$3M to anti-LGBTQ+ causes in recent years. Meanwhile, companies that’ve spoken out against anti-LGBTQ+ bills have done so inconsistently:

- __[Apple](https://robinhood.com/stocks/AAPL)__ [quietly](https://www.politico.com/news/2022/04/01/apple-lobbying-anti-lgbtq-laws-00022127) lobbies against anti-LGBTQ+ legislation under the leadership of Tim Cook, America’s most prominent publicly gay CEO. It’s the only company that [lobbied](https://www.legis.iowa.gov/lobbyist/reports/declarations?ga=89&ba=HF2416) against an Iowa bill that bars trans girls and women from participating in K-12 and collegiate sports.
- __[Disney](https://robinhood.com/stocks/DIS)__ chose not to take a public stance on Florida’s [“Don’t Say Gay”](https://time.com/6176224/florida-dont-say-gay-history-lgbtq-rights/) bill until it [passed](https://www.npr.org/2022/03/08/1085130633/disney-response-florida-bill-dont-say-gay). When employees protested, Disney announced it would donate $5M to LGBTQ+ orgs like the Human Rights Campaign. But the HRC [rejected](https://www.hrc.org/press-releases/human-rights-campaign-refuses-money-from-disney-until-meaningful-action-is-taken-to-combat-floridas-dont-say-gay-or-trans-bill) the funds, and Gov. Ron DeSantis [revoked](https://www.politico.com/news/2022/04/22/desantis-disney-special-status-dont-say-gay-00027302) Disney’s special tax status.

A Pride protest near NYC’s Stonewall Inn (Bryan R. Smith/AFP via Getty Images)

Pride

__Rainbow capitalism is a tough sell…__ and logos aren’t enough. An overwhelming [93%](https://news.gallup.com/poll/1651/gay-lesbian-rights.aspx#:~:text=May%2015%2D30-,93,-5) of Americans believe LGBTQ+ people should have equal work opportunities, but [nearly half](https://williamsinstitute.law.ucla.edu/press/workplace-discrim-press-release/) of LGBTQ+ workers have experienced unfair treatment at work — including being fired, not hired, or harassed because of their identity. Now a growing number of workers and consumers expect employers to prevent anti-LGBTQ legislation and provide an equitable workplace.

Rainbow capitalism is all the rage this Pride Month, but the workforce of tomorrow expects more activism

__Should’ve gone with waterproof mascara…__ for the Chapter 11 tears. Cosmetics giant __[Revlon](https://robinhood.com/stocks/REV)__ officially [filed](https://www.cnbc.com/2022/06/16/cosmetics-giant-revlon-files-for-chapter-11-bankruptcy-protection.html) for bankruptcy protection yesterday. Decades ago, Revlon was the second-largest beauty company and the first to feature a Black model. But when people ditched matte lipstick for masks in 2020, the 90-year-old biz barely avoided bankruptcy. Even though cosmetic sales are nearly back to pre-pandemic levels, things have gotten worse at Revlon:

- __Difficulty level = winged eyeliner:__ Revlon can’t fill a third of its orders (#supply-probs) and has $3.3B in debt to boot. Sales ticked up last quarter, but it’s still losing $$.
- __Kiss and makeup:__ Now Revlon expects $575M from lenders to save its brand, which it says is still in demand.

__Killed by Kylie…__ For decades, Revlon has sold most of its makeup in drugstores and malls. But the new generation discovers products on __TikTok__, not at __[CVS](https://robinhood.com/stocks/CVS)__. Now Revlon is losing customers to glossier names: the “tap to buy” trend has helped online-first brands like __Kylie Cosmetics__, __Glossier__, and Rihanna’s __Fenty Beauty__. Gen Z favorite __[E.L.F.](https://robinhood.com/stocks/ELF)__ crushed sales expectations last quarter thanks to social collabs with brands like Dunkin’.

__Even fellow legacy brand__ __[Estée Lauder](https://robinhood.com/stocks/EL)__ is faring better than Revlon (and is profitable), partly thanks to ecomm investments like viral skincare brand The Ordinary.

Smoky

__You can’t conceal billions in debt…__ Revlon was the first major brand to file for bankruptcy this year, but likely won’t be the last. Last year, nonfinancial US companies took on a record $1.7T of debt when interest rates were near zero. Now soaring interest will make it pricier for cash-strapped companies like __[Peloton](https://robinhood.com/stocks/PTON)__, __[Affirm](https://robinhood.com/stocks/AFRM)__, and __Just Eat__ to pay back IOUs.

Makeup mainstay Revlon files for bankruptcy protection — and other debt-plagued darlings could follow

Rainbow capitalism is rising, but the workforce of tomorrow expects more corporate activism

Pride Month was chosen to commemorate the Stonewall Riots, which took place in NYC on June 28, 1969

🏳️‍🌈 Rainbow capitalism

__Drill, baby, drill…__ President Biden wants oil giants to pump more oil and extract fewer profits. This week he [urged](https://www.nytimes.com/2022/06/15/business/biden-oil-companies-gas-prices.html) __[Chevron](https://robinhood.com/stocks/CVX)__, __[Exxon](https://robinhood.com/stocks/XOM)__, __[Shell](https://robinhood.com/stocks/SHEL)__, __[BP](https://robinhood.com/stocks/BP)__, and other oil biggies to ramp up supply and boost refining capacity — which is at its lowest in years. After imposing restrictions on fossil-fuel [development](https://www.reuters.com/business/energy/us-oil-lobby-pushes-biden-roll-back-fossil-fuel-curbs-2022-06-14/), Biden appears to be backtracking from his clean-energy image. It may be necessary:

- __Prices. Are. Wild.__ In the US the average gas price hit $5/gallon, partly because Russia’s war on Ukraine has strained supply. But oil giants also crunched it by cutting production when demand sank mid-pandemic. Spoiler: they haven’t revived supply yet.
- __Profits are gushing,__ oil *isn't*. Profits at BP, Exxon, Shell, and Chevron more than [doubled](https://snacks.robinhood.com/newsletters/7drI8vLSEid0YZLml7w2fH/articles/1AU09CPkzGr6mozVj7Kn3x/) from 2021 last quarter. And oil companies plan to spend billions on buybacks and dividends for shareholders. Biden said the soaring profits are “not acceptable.”

__#PumpAnxiety intensifies…__ High gas and utility bills hurt wallets. They also hurt public support for the president, who’s tried and failed to ease prices (think: [releasing](https://www.cnbc.com/2022/03/31/us-to-release-1-million-barrels-of-oil-per-day-from-reserves-to-help-cut-gas-prices.html) record strategic oil reserves). Now Biden’s shifting the blame to oil companies, but Americans are divided: 

- __Dems__ blame oil corporations for the high prices: some [want](https://www.cnn.com/2022/06/15/politics/joe-biden-oil-companies/index.html) a 21% “windfall” tax on oil profit. 
- __Republicans__ blame Biden and [want](https://www.theguardian.com/us-news/2022/apr/16/public-lands-reopen-oil-gas-drilling-joe-biden-government) to reopen refineries that were closed for polluting.

Where Biden wants oil production to go (Chip Somodevilla/Getty Images)

Slick

__Pump pleas may be symbolic…__ Biden’s approval ratings have tanked ahead of midterms, and gas prices play a huge part in that. It’s unlikely Biden will get approval to impose taxes on oil profits (because: gridlocked Senate). But there may be petroleum-scented relief on the horizon: experts [expect](https://www.bulktransporter.com/news/article/21242526/eia-expects-us-crude-oil-production-to-increase) US oil production to ramp up to pre-pandemic levels by next year.

Biden tells oil giants to stop pumping profits and to start pumping more oil — but he may be talking to voters

__Billion-dollar Lego factory…__ some assembly required. __Lego__ [plans](https://www.washingtonpost.com/business/danish-toymaker-lego-expands-amid-sale-surge/2022/06/15/ee85e6b0-ecbe-11ec-9f90-79df1fb28296_story.html) to drop $1B on its first US factory (in Virginia) as demand for its colorful blocks stacks up in one of its biggest markets. The family-owned Danish toy giant plans to spread the investment over the next decade, creating nearly 2K new American jobs. 

- __Building blocks:__ Construction of the new carbon-neutral factory [begins](https://www.washingtonpost.com/business/danish-toymaker-lego-expands-amid-sale-surge/2022/06/15/ee85e6b0-ecbe-11ec-9f90-79df1fb28296_story.html) this fall, with the digs expected to be operational in 2025.
- __Supply stacks:__ Lego says the factory will help simplify its US supply chain, which has mainly been served by its Mexico factory.

__“Go play with Lego, Elsa”…__ Despite inflation and the no-stimmy era, parents are still [splurging](https://www.npd.com/news/press-releases/2022/the-npd-group-u-s-toy-industry-sales-experience-1-increase-in-the-first-four-months-of-2022/#:~:text=Port%20Washington%2C%20NY%2C%20June%2014,increased%207%25%20during%20the%20period.) on new playthings — an extension of the pandemic toy frenzy. Last year, Lego’s revenue [jumped](https://www.cnbc.com/2022/03/08/lego-revenue-jumped-27percent-in-2021-as-kids-and-adults-continue-to-build.html) 27% to $8B as parents WFH’d with kids. Rivals __[Mattel](https://robinhood.com/stocks/MAT)__ and __[Hasbro](https://robinhood.com/stocks/HAS)__ also saw double-digit growth thanks to demand for iconic franchises like Hot Wheels and Barbie. Now:

- __Brick-flation:__ Lego plans to [hike](https://hypebeast.com/2022/6/lego-sets-25-percent-price-increase-august-announcement-info) prices on some toy sets by up to 25% starting in August and warned its growth boom might slow.
- __Fine print:__ US toy sales ticked up this year after a period of unprecedented growth. But pricier playthings could force parents to trade down or wait for discounts.

Stacked

__Playing wide is a hedge…__ While Mattel and Hasbro have focused on their target customer (kids), Lego has expanded its portfolio to appeal to consumers of all ages. That’s helped it grow faster than rivals. From intricate builds like the “Star Wars” Death Star (4K pieces) to [nostalgic faves](https://www.esquire.com/lifestyle/g34039580/best-lego-sets-for-adults/) like the set of “Seinfeld” and James Bond’s Aston Martin, Lego’s adult offerings could help protect its biz — even if parents ditch kids’ sets.

Lego’s splurgin’ $1B on its first US factory to keep up with toy demand from America’s kids — and adults

Biden urges oil giants to pump fewer profits and more oil as gas prices soar ahead of midterms

YouTube’s TikTok knockoff, dubbed “Shorts,” has 1.5B+ monthly viewers

🛢️ Biden gets pumped up

__Everyone's tuning in at 2 p.m. ET today...__ but not for the NBA Finals or “The Bachelor” finale — it's for Fed Chair Jerome Powell. All eyes are on the Fed's interest-rate hike decision, which could be #spicy. After May's concerning inflation numbers, many on Wall Street are [forecasting](https://www.wsj.com/articles/bad-inflation-reports-raise-odds-of-surprise-0-75-percentage-point-rate-rise-this-week-11655147927) that the central bank will raise rates by three-quarters of a percentage point — something it hasn't done since 1994. Based on Monday's stock plunge and surging [bond yields](https://www.cnbc.com/2022/06/14/us-bonds-10-year-treasury-yield-in-focus-ahead-of-fed-meeting.html), it seems as if investors are also awaiting aggressive price-taming action.

- __A month ago:__ Powell [said](https://www.cnn.com/2022/06/13/investing/federal-reserve-rate-hikes/index.html) his Fed was not "actively considering" raising rates by three-quarters of a percentage point. Fed officials [signaled](https://www.wsj.com/articles/bad-inflation-reports-raise-odds-of-surprise-0-75-percentage-point-rate-rise-this-week-11655147927) they’d bump rates by a half percentage point this week (same as last month) and again in July.
- __But that was *before*__ May's sky-high consumer-price numbers revealed that inflation had not peaked. The Fed has said that its decisions depend on the economy progressing as expected — and #flation rose *faster*-than-anticipated.
- __Now:__ Expectations for a 0.75-point hike have soared from 3% a week ago to [40%](https://www.cnn.com/2022/06/13/investing/federal-reserve-rate-hikes/index.html). But Wall Street's divided: traders are still pricing in a 60% chance of a status-quo half-point hike.

__Cloudy with a chance of flation…__ Consumers’ expectations of long-term inflation have [spiked](https://www.wsj.com/articles/bad-inflation-reports-raise-odds-of-surprise-0-75-percentage-point-rate-rise-this-week-11655147927), with a key survey hitting its highest level since ’08. That’s concerning to the Fed, since inflation *expectations* can make inflation worse (aka: a self-flating prophecy).

Jerome gets ready for his closeup (Mark Wilson/Getty Images)

Feddy

__No one wants an inflation spiral…__ If people expect higher prices, they're more likely to demand higher wages and accept inflated costs. Powell has [said](https://www.nytimes.com/2022/06/02/business/economy/jobs-wages-inflation-powell.html) that this “wage-price spiral” is “a risk we simply can’t run,” since it can be hard to break. The Fed’ll likely respond aggressively to signs that inflation’s spiraling, and investors might even welcome a price-taming power move.

All eyes are on the Fed’s rate-hike decision, which could be more aggressive than anticipated to tame sticky #flation

__Delivering dividends…__ and some packages. __[FedEx](https://robinhood.com/stocks/FDX)__ sales [soared](https://snacks.robinhood.com/newsletters/1hYpHIVc5P8AlsMMvgrYCo/articles/3kklCkbkhfqFOccErMDrNn/) last year as the online shopping boom stuck post-lockdown. But since then shipping volumes have slipped as you buy that bathing suit IRL. Now FedEx faces a double whammy of rising gas and labor costs — plus stiff competition from __[UPS](https://robinhood.com/stocks/UPS)__ and __[Amazon](https://robinhood.com/stocks/AMZN)__. Yesterday, some good news landed on investors’ doorsteps: 

- __FedEx boosted quarterly dividend payouts__ to investors by 50% and added two board members. Shares surged 14% yesterday, their biggest one-day jump in 29 years. 
- __New direction:__ The surge is a sign investors believe FedEx’s new CEO (who started this month) can trim spending and prioritize returns.
- __Case in box:__ FedEx has [accelerated](https://www.marketwatch.com/story/fedex-stock-rallies-on-earnings-beat-outlook-hike-5-billion-share-buyback-plan-11639690138) plans to buy back $5B of shares, and *decelerated* plans to upgrade its fleet.

__Squeeze-onomics…__ FedEx started cost-slashing early this year to boost margins. It cut spending on customer perks (think: [fewer](https://bestlifeonline.com/fedex-change-deliveries-news/) package-tracking options) and trimmed labor costs (think: slower hiring) — months before companies started doing involuntary layoffs. But cost-cutting wasn’t the end of the profit push: FedEx also boosted earnings by charging customers extra during busy times and bumped its fuel surcharge for all services.

Squeeze

__Cost-cutting is a double-edged sword…__ Done cleverly, it can make investors happy, but done too aggressively, it can frustrate customers and burden workers. FedEx’s slow-and-steady approach could help it satisfy investors during the market downturn while protecting its biz. But if companies cut too much too fast, they could have a hard time switching from “squeeze mode” back to “growth mode” when prices normalize.

FedEx shares jump the most in decades after a dividend boost and a cost “squeeze”

The Fed's rate decision today could signal how aggressive it'll be to tame prices (and avoid a spiral)

Americans owe $22B in late utility bills as soaring energy prices make electricity and A/C harder to afford

⬆️ The Fed’s big decision

__McDowell’s vibes…__ but this isn’t a “Coming to America” tale of Big Macs vs. Big Micks. Former __[McDonald’s](https://robinhood.com/stocks/MCD)__ locations in Russia are [reopening](https://www.reuters.com/world/europe/mcdonalds-russia-reopens-under-new-ownership-renamed-vkusno-tochka-2022-06-12/) under different owners — with the same ketchup packets. Quick refresher: McDonald’s [closed](https://snacks.robinhood.com/newsletters/5vfIOlOV4U5lL9HBIaeiOu/articles/xduVS4tKoldDPPu0KAPLB/) its 840 Russian restaurants in May in response to Russia’s war on Ukraine, and later sold them to a Siberian oil mogul. Last weekend, after a quick-and-dirty rebrand, they began reopening: 

- __15 ex-McD’s opened in Moscow.__ New name: "Tasty & That's It.” The other 800+ are expected to reopen by summer’s end.
- __Scrap the McBranding:__ The restaurants sell burgers and fries, but workers reportedly scribbled out McD’s logos on old ketchup packets to avoid violating trademarks.

__The Calorie Curtain has some holes…__ American food behemoths like McDonald’s and __[Starbucks](https://robinhood.com/stocks/SBUX)__ stopped selling Big Macs and Venti Lattes in Russia months ago (the #[CalorieCurtain](https://snacks.robinhood.com/newsletters/5vfIOlOV4U5lL9HBIaeiOu/articles/xduVS4tKoldDPPu0KAPLB/)), joining Western [peers](https://snacks.robinhood.com/newsletters/26ExOA8voyJw5UxqnvZgrl/) like __[Disney](https://robinhood.com/stocks/DIS)__, __[Apple](https://robinhood.com/stocks/AAPL)__, and [Shell](https://robinhood.com/stocks/SHEL). But Russia’s economy hasn’t been crushed by the corporate exodus:

- __Russian shelves have stayed stocked__ thanks to Putin’s efforts to reduce reliance on trade. Case in point: Tasty & That’s It gets 98% of ingredients from Russia. 
- __Russia’s ruble recovered__ from an early crash thanks to aggressive central-bank policy, and manufacturing’s on the rebound too.
- __But DIY’s hard:__ Russia is now manufacturing cars without airbags since auto partner __Renault__ exited, and many juice boxes might be white soon since ink imports dried up.

Not the Golden Arches (Kirill Kudryavtsev/AFP via Getty Images)

Tasty

__A knockoff economy is emerging…__ but it’s easier to replace burgers than computer chips. Corporate departures and sanctions haven’t caused Russia’s economy to shut down. Yet they’re forcing Russia to rebuild itself with fewer trade partners and many missing pieces. Long term, sanctions could have a more dire effect: Putin still hasn’t found replacements for key components, like microchips, and Europe’s looming oil ban will likely hit Russia’s coffers.

Rebranded McDonald’s locations reopen in Russia, as a knockoff economy emerges to adapt to sanctions

__Extra-rough Monday…__ __[Bitcoin](https://robinhood.com/crypto/BTC)__ dropped below $24K for the first time [since](https://www.coindesk.com/markets/2022/06/13/bitcoin-plunges-below-25k-lowest-level-since-december-2020/) 2020 yesterday, sending ripples through the industry. __Celsius__, one of the biggest crypto lenders, halted transactions for its [nearly](https://celsius.network/) 2M customers, citing “extreme market conditions.” Celsius manages ~$12B in assets, and it’s TBD when (and if) customers will get their $$ back. 

- __Status quo:__ Users deposit crypto into Celsius with the promise of earning up to 18% in interest payouts. Celsius then reinvests the assets into crypto-related projects (like: crypto-[mining](https://www.barrons.com/articles/celsius-mining-to-go-public-51652736901)). 
- __Problem quo:__ The value of Celsius' holdings has plunged along with crypto prices. Yesterday, crypto market cap dipped below $1T for the first time since January ’21. Now analysts think Celsius could run out of funds within [five](https://www.barrons.com/articles/bitcoin-crypto-bank-celsius-market-51655135690) weeks.
- Even if it can repay customers, it would have to pull its money from other crypto investments — which could affect the entire market.

__Moving like the market…__ Some thought crypto could be a hedge against inflation and stock-market moves. That hasn’t panned out so far this year. While stocks tumbled, the crypto market lost $200B in value over the past week — and *$2T+* in the past eight months. Celsius isn’t the only crypto company feeling the heat: 

- __In the past month,__ crypto lender __BlockFi__ and exchanges like __Crypto.com__, __[Coinbase](https://robinhood.com/stocks/COIN)__, and __Gemini__ have cut headcount.
- __Binance,__ the world's largest crypto exchange, temporarily [halted](https://www.forbes.com/sites/rosemariemiller/2022/06/13/binance-and-celsius-native-tokens-are-in-freefall-after-freezing-customer-withdrawals/?sh=5fc0459f73da) bitcoin withdrawals (it blamed technical reasons).

Coined

__Crypto’s getting a reality check…__ It’s not just prices: from __Stablegains__ to the __Anchor Protocol__, promises of big returns have lured investors to the high-flying world of crypto lending. But some of those investments have crashed and burned. Celsius’ freeze puts the spotlight on lawmakers and regulators, who could face more pressure to step in. Meanwhile, a [bipartisan bill](https://www.reuters.com/markets/us/us-senators-unveil-bill-regulate-cryptocurrency-2022-06-07/) to regulate digital assets is already in the works.

Crypto lender Celsius pauses withdrawals on billions’ worth of customer assets as coins plunge, turning up the regulatory heat

Rebranded McDonald’s locations reopen in Russia as a knockoff economy emerges

The world’s shortest commercial flight, connecting two islands near Scotland, lasts less than a minute

🍟 Russia’s McRebrand

__So many Tok clones...__ No one’s safe from vertical videos. US social giants have desperately tried to replicate the success of __TikTok__, the short-video app that’s captured Gen Z's consciousness (call it "GenT"). One of the biggest threats to __[Meta](https://robinhood.com/stocks/META)__, __[Google](https://robinhood.com/stocks/GOOGL)__, __[Snap](https://robinhood.com/stocks/SNAP)__, and __[Twitter](https://robinhood.com/stocks/TWTR)__ isn't slowing social usership in general — it’s slowing usership *because* of TikTok.

- __44 mins/day:__ Last year people spent more time on TikTok than on Facebook. The Tok may’ve even [surpassed](https://www.businessinsider.com/tiktok-fastest-growing-social-media-company-2022-5#:~:text=TikTok%20shot%20past%20Facebook's%20time,in%20the%20US%20this%20year.) time spent on Insta and YouTube worldwide.
- __1.6B brains:__ TikTok has more monthly users than Twitter, Snap, and LinkedIn *combined*.
- __The news:__ TikTok just [added](https://www.theguardian.com/technology/2022/jun/09/tiktok-addicts-to-benefit-from-in-app-screen-time-controls) new screentime controls to make its app seem less intensely addictive (think: break reminders).
- __The reality:__ It likely won't help. The app’s already shortened kids’ attention spans to where many [can't](https://www.wsj.com/articles/tiktok-brain-explained-why-some-kids-seem-hooked-on-social-video-feeds-11648866192?page=4) even sit through a movie or a class.

__Dancing to the (algo)rhythm...__ To curate your feed, TikTok's mysterious algorithm figures out what engages you. And while that’s mostly lip-syncs, cat pranks, and makeup hacks, there's a dark side to TikTok, which is owned by Chinese tech giant __ByteDance__ — which China’s gov’t owns a [stake](https://gamerant.com/tiktok-chinese-government-acquires-bytedance-stake/#:~:text=The%20Chinese%20government%20now%20controls,internet's%20most%20visited%20website%20domain.) in.

- __Dangerous content:__ In addition to life-threatening viral challenges (like holding your breath until you faint or OD'ing on Benadryl), TikTok's algo has sent teens down [rabbit holes](https://www.wsj.com/articles/how-tiktok-inundates-teens-with-eating-disorder-videos-11639754848?utm_content=article-8131&utm_source=sg&utm_medium=email&utm_campaign=article_email) promoting eating disorders, [porn sites](https://www.wsj.com/articles/tiktok-algorithm-sex-drugs-minors-11631052944), and [gun violence](https://www.youtube.com/watch?v=ZAFdcvMvfhQ).
- __Misinfo:__ Many get their news on TikTok, but no one really knows how info (and misinfo) spreads there. Recently TikTok’s been [flooded](https://www.nytimes.com/2022/05/08/opinion/tiktok-twitter-china-bytedance.html) with videos pushing Russia's narrative on the Ukraine war — which China [supports](https://www.newsweek.com/us-alarmed-chinas-support-putins-war-ukraine-1710516).
- __Censorship:__ TikTok has [cracked down](https://www.theguardian.com/technology/2019/sep/25/revealed-how-tiktok-censors-videos-that-do-not-please-beijing) on topics at China’s behest (think: the [Uyghur crisis](https://www.businessinsider.com/tiktok-censor-china-critical-content-uighur-uighurs-2020-11)). Any interference from the Chinese government could wreak havoc on US elections and an already divided American democracy.

Down the rabbit hole (ArtistGNDphotography/E+ via GettyImages)

Toked

__Attention = influence…__ We’re not talking fitness gurus. Commanding attention means directing attention, and TikTok’s captured the mind of a generation. The concern of the (now dead) [Tik Tok-ban saga](https://snacks.robinhood.com/newsletters/4g29GVFWqYg9Au3nZOuWMT/articles/6FuurH1NYVCmbP9wjwzAme/) was that ByteDance could pass US data to China. But the real concern is likely TikTok’s influence to direct attention, and the obscurity around who’s really pulling the strings.

TikTok’s time bomb: how the app wields massive influence on America’s attention — and potentially its direction

__Gun giants in the spotlight…__ As US gun violence soars, weapons makers are being [sued](https://www.theguardian.com/us-news/2022/jun/07/gun-crime-victims-lawsuits-firearms-industry) more frequently. Families of Sandy Hook victims settled with __Remington__ for $73M earlier this year, and __Glock__ was recently sued over irresponsible marketing. Victims are [using](https://www.theguardian.com/us-news/2022/jun/07/gun-crime-victims-lawsuits-firearms-industry) a strategy that won settlements from tobacco giant [Philip Morris](https://robinhood.com/stocks/PM) and opioid maker __Purdue Pharma__. Meanwhile, Congress is debating bills that would make it harder to buy guns (including [raising](https://www.cnbc.com/2022/06/08/uvalde-school-shooting-us-house-votes-to-raise-age-to-buy-an-assault-rifle-to-21.html) the minimum purchase age), which could hit gun makers’ sales, though they’re unlikely to pass.

__BYOP...__ Bring your own peanuts. __[Spirit’s](https://robinhood.com/stocks/SAVE)__ takeover drama appears to be approaching its climax. Shareholders have 17 days to decide whether the budget carrier’s new home will be with __[Frontier](https://robinhood.com/stocks/ULCC)__ or [JetBlue](https://robinhood.com/stocks/JBLU) (or neither). Last week JB doubled the fee it would pay Spirit shareholders if the deal falls through for antitrust reasons — topping Frontier’s $250M offer by $100M. A pilot shortage and high fuel costs are making it harder for airlines to meet demand. A Spirit-quisition would give the new mega-carrier more seats, routes, and workers.

__Corporate’s got work to do…__ Monday’ll be the first time markets close for Juneteenth, the new federal holiday celebrating the end of US slavery. After George Floyd’s murder two years ago, 271 corporations [pledged](https://www.ft.com/content/f29449c1-aa80-40b3-9794-5b02bb557019) $67B to improve racial equity — but less than $1B had been distributed by the start of ’22. __[Procter & Gamble](https://robinhood.com/stocks/PG)__, __Sephora__, and others have fallen [short](https://www.marketplace.org/2021/05/24/a-year-later-how-are-corporations-doing-on-promises-they-made-to-fight-for-racial-justice/) of their targets to hire more Black workers and partner with more Black-owned brands. But others, like __[Yelp](https://robinhood.com/stocks/YELP)__ and __[Microsoft](https://robinhood.com/stocks/MSFT)__, hit their year-one goals of teaming up with Black-owned businesses.

__The view from above...__ not talking penthouses. Satellite imagery is a hot commodity as companies and governments track everything from [crop](https://www.planet.com/markets/monitoring-for-precision-agriculture/) growth to shipping patterns (because: supply crisis). __[Planet Labs](https://robinhood.com/stocks/PL)__, the largest owner of low Earth orbit satellites (LEOS), saw its revenue surge to a record $37M last quarter. (We’ll see its latest numbers when it reports Tuesday.) While Planet is worth just $1B, growing demand for satellite imagery and internet (think: __SpaceX’s__ StarLink) could help the LEO sector grow in the next decade.

- __[Fruit](https://snacks.robinhood.com/newsletters/1JKK93bHIpBW2K7HPn5R8r/articles/3bFhOG8cc45ZuIerRaunN6/):__ It’s getting harder to leave __[Apple’s](https://robinhood.com/stocks/AAPL)__ “walled garden”: it rolled out a buy now, pay later service and password authenticator at its annual conference, threatening companies like __[Affirm](https://robinhood.com/stocks/AFRM)__ and __LastPass__.
- __[Cluck](https://snacks.robinhood.com/newsletters/1g5IRGKGswG3edfaiJ1Ut2/articles/5OiE2KKWgGgiKAbl8Z0tXK/):__ Chicken prices have gone berserk after a combo of disasters, with boneless breast up *68%*). While Americans are still splurging on the #1 meat, some countries are being forced to cut back.
- __[Hole](https://snacks.robinhood.com/newsletters/2n1tfbP2sL0dLHd6d2tSbw/articles/2GU5O3zeoGJuW6L7ddBK6e/):__ The __PGA__ suspended 17 golfers, including Phil Mickelson, for competing in the Saudi-funded __LIV__ tournament. Some accused the country of using golf to boost its image, given its dismal human-rights record.

TikTok wields massive influence on America’s attention — and potentially its direction

Someone pretending to be a juror in the Depp v. Heard trial went viral on TikTok for his case “insights,” getting 2M+ views