__Golfers, scratched…__ A huge controversy just teed off in pro golf. Yesterday the __PGA Tour__ [suspended](https://www.cnbc.com/2022/06/09/pga-suspends-phil-mickelson-others-for-involvement-in-saudi-backed-liv-event.html) 17 golfers, including major champs Phil Mickelson and Dustin Johnson, for competing in rival __LIV Golf’s__ first tournament (now underway in London). The PGA also told remaining members they’d get booted if they left, driving a sand wedge between the sport’s most bankable stars:

- __Out of the club:__ LIV [paid](https://www.cnbc.com/2022/06/09/pga-suspends-phil-mickelson-others-for-involvement-in-saudi-backed-liv-event.html) Mickelson and Johnson (the second- and third-highest earning PGA golfers ever) $200M and $125M, respectively, to join. That’s more than top-earning Tiger Woods has made playing golf in his *career*. 
- __Loyalists:__ Tiger reportedly declined a nearly *$1B* offer to join LIV, while top pros Rory McIlroy and reigning PGA champ Justin Thomas have committed to stay with the PGA.

__Money talks…__ Saudi Arabia’s government funded the LIV with $400M, which led to accusations that the country is “sportswashing,” or using golf to boost its global image, despite a dismal human-rights record. With that kind of cash in play, the nonprofit PGA Tour could have trouble competing:

- __Bigger prizes:__ LIV’s offering more prize money than the PGA Championship (which happens once a year) for each of its 10 scheduled tourneys this year. 
- __Guaranteed payouts:__ Unlike PGA tournaments, where dozens of golfers return home empty-handed, every LIV golfer gets prize $$.

Who said golf was boring? (Steven Paston/PA Images via Getty Images)

Bogey

__You can’t just buy superstars…__ You also need buy-in from their fans. Unlike other upstart sports leagues (think: the __XFL__), LIV has essentially bottomless financial resources. But so far it’s spending more cash on golfers than fans: the only places to watch Mickelson tee off today is online, since LIV hasn’t found a TV network partner yet. If LIV doesn’t make it easier for fans to follow, it could fail, despite its huge pile of cash and long list of stars.

The PGA Tour tees off against its new Saudi-funded rival by suspending top golfers, and throwing the game into chaos

__“Call of Duty” tourney…__ from the cloud. Gamers will soon be able to play __[Microsoft's](https://robinhood.com/stocks/MSFT)__ hottest console games *without* the console. Later this month, video-game lovers in 27 countries can play hits like “Halo” and “Minecraft” through Microsoft’s new Xbox smart-TV app. Samsung's newest line of connected TVs will be the first to offer the app, with other TV makers to follow.

- __The setup:__ easy. Users only need a “Game Pass” membership and a certain controller to connect and play.
- __The pay-off:__ Microsoft wants to focus on gaming efforts that allow them to “deliver Xbox Cloud Gaming to more players” worldwide.

__Sold out everywhere...__ Xbox sales are trailing rivals like __[Sony’s](https://robinhood.com/stocks/SONY)__ PS5 and __[Nintendo’s](https://robinhood.com/stocks/NTDOY)__ Switch, despite Microsoft’s growing share of the gaming-console pie. Last year Xbox sales jumped 92% from 2020, on the back of its new Series X model release. The problem: supply-chain snags have made it harder (and more expensive) to buy nearly any popular gaming console. Now Microsoft’s betting its extensive video-game library (cue: [$70B](https://snacks.robinhood.com/newsletters/4eOJialeY3vTs2AHV0FkZt/articles/5Tuqimhcf73WVRvJ5YTv5C/) Activision acquisition) will attract players with or without the hardware.

__Ready, player one:__ In 2019 __[Google](https://robinhood.com/stocks/GOOGL)__ tried to enter the cloud-gaming market with its Stadia streaming service, but a lack of well-known [content](https://www.lifewire.com/why-google-stadia-failed-to-load-5104780) has made it a commercial flop and its multiplayer games a virtual desert.

Play

__Don’t count out cloud gaming just yet…__ Microsoft’s spending a record $69B for Activision because it knows the power of popular titles. If it can convince hardcore gamers that “Call of Duty” plays as well on the cloud as it does on a console, the Xbox’s days could be numbered. Not that Microsoft would necessarily mind: last year [execs](https://hypebeast.com/2021/5/microsoft-xbox-consoles-dont-make-profit-response) said that all Xboxes are sold at a loss.

Microsoft will let gamers stream without a console, raising questions about the future of Xbox

The PGA Tour tees off against a new Saudi-funded rival by suspending top golfers

Dow Jones

S&P 500

Nasdaq

Bitcoin

The average price of a gallon of gas in the US is now $5

🏌️ Golf feud

__Things just got really real…__ Yet another CEO has stepped down to help their company step up: this week Julie Wainwright, founder of luxury resale marketplace __[The RealReal](https://robinhood.com/stocks/REAL)__, unexpectedly [resigned](https://www.retaildive.com/news/the-realreal-founder-ceo-resigns/625017/). Wainwright said she’s leaving on good terms so that TRR can find its “next generation” of leaders to achieve profitability. Her replacement faces a tough challenge:

- __Real struggles:__ Last quarter TRR [reported](https://investor.therealreal.com/static-files/c25a20aa-bb70-4aa3-b83c-677328b471b7) a bigger loss than during the same period last year. TRR’s stock has also suffered: shares are down about 90% since its 2019 IPO.

__Out with the new, in with the seasoned...__ Fast-growing tech companies, which dominated the stock market for a decade, are now [underperforming](https://www.wsj.com/articles/techs-decade-of-stock-market-dominance-ends-for-now-11654650890?mod=business_minor_pos7) the overall market by the widest margin since 2000 (aka: the dot-com bubble). With growth stalled at many techies, founders are turning to corporate execs who have experience generating cash flow:

- __Freshening up:__ Makeup and skincare dynamo __Glossier__ recently [replaced](https://www.nytimes.com/2022/05/26/style/glossier-emily-weiss.html) its founding CEO with a long-time __[Nike](https://robinhood.com/stocks/NKE)__ exec. Glossier went through a round of layoffs earlier this year as sales slumped.
- __Industry veterans > visionary founders:__ Profitable startups like supply-chain-software company __Flexport__ are turning to veterans for help. Yesterday, the logistics biz [announced](https://twitter.com/typesfast/status/1534537016506867714) plans to replace its founding CEO with a long-time __[Amazon](https://robinhood.com/stocks/AMZN)__ operations exec.

The RealReal’s founder heads for the exit (Michael Kovac/Getty Images for Vanity Fair)

Consign

__Growing up can be hard…__ and sometimes the best thing founders can do for their companies is to fire themselves. CEOs of public firms — and even midsize startups with dreams of an IPO — are responsible for maximizing profits. But the skills required to run a profitable public company aren’t always the same as the skills needed to launch a successful startup.

Founders are showing themselves the door, handing the reins to corporate vets in hopes of a pivot from growth to profitability

__Savoring the last Buffalo wing...__ because chicken prices have flown the coop. The latest poultry headline: private-equity firm __Atlas__ is taking over __Foster Farms__, America's 10th largest chicken producer with $3B in annual sales (you've probably seen its ground meat at grocery stores). Atlas will install the ex-CEO of nugget giant __[Tyson](https://robinhood.com/stocks/TSN)__ to lead Foster. The deal comes as US chicken prices have surged, up a #flated 16% in April from a year before.

__No one's a winner...__ with this chicken dinner. Chicken is the world's most popular meat by far, followed by pork and beef. But a series of events have combined to send chicken prices soaring — and worker shortages are just the tip of the iceberg.

- __An avian flu__ has spread through major producing regions, wiping out 38M chickens in the US alone — where the price of boneless skinless breast is up *68%* this year.
- __A dire drought__ and Russia's war on Ukraine have strained global grain supplies (think: corn, wheat) and ballooned prices, making it hard to feed and fatten the birds.
- __Pork-pocalypse:__ Price-sensitive consumers might swap chicken for cheaper pork, but now an African swine fever is sweeping through global pig herds.

Nuggies

__Some markets are less price sensitive...__ when it comes to nutritional staples. In the US and other wealthy countries, where food represents ~1/10th of household spending, chicken demand has held steady from consumers and restaurants (think: fried-chicken-sandwich frenzy) — that’s a positive for the poultry industry. But in developing countries, where food typically accounts for a third of budgets, people are starting to have to cut out meat altogether, and some are at risk of undernourishment if they can’t swap for more affordable proteins.

Chicken prices have gone berserk on an unfortunate combo of disasters — but Americans are still splurging on the #1 meat

Founders hand the reins to corporate vets in hopes of a pivot from growth to profitability

There are more ways to arrange a deck of cards than there are atoms on Earth

🚪 Founders see themselves out

__The [Apple](https://robinhood.com/stocks/AAPL)-verse is already here…__ even if the iHeadset isn’t. Tim Cook did not unveil a mixed-reality headset at Apple’s annual developer conference this week, as some had been hoping. But he did [launch](https://www.wsj.com/articles/apple-is-set-to-return-software-to-forefront-at-annual-developer-conference-11654451208?mod=business_lead_pos6) several features that’ll make Apple’s devices even more central to consumers’ actual reality:

- __All the upgrades:__ iPhone, Mac, Watch, and iPad are all getting software updates. Highlights include editable iMessages and a biometric-authentication tool dubbed “Passkeys.” 
- __BNPL, meet APL:__ A service called Apple Pay Later lets users pay for things in four interest-free installments spread over six weeks.
- __Apple Car teaser:__ Apple’s teamed up with Ford and Honda to expand its CarPlay integration. Think: cars with Apple dashboard widgets that control A/C and radio.

__An OS for everything…__ Increasingly the iPhone’s becoming a hardware portal to Apple’s expanding suite of services. Though the iPhone’s still Apple’s most profitable biz line, sales of services (think: iCloud, Apple Card, TV+) are growing much faster. This year Apple’s services revenue is expected to hit $80B+ (more than Mac and iPad sales combined). Some of the features announced this week compete with entire business sectors:

- iChallenger: Apple Pay Later challenges buy now, pay later giants like __[Affirm](https://robinhood.com/stocks/AFRM)__, while Passkeys threaten startups like __LastPass__. Apple has a unique ability to pose an instant threat to big companies and startups alike, thanks to its base of nearly 2B active devices.

Apple tends to its walled garden (Tayfun CoÅkun/Anadolu Agency via Getty Images)

__Apple wants you to buy now, pay forever…__ New Apple services don’t just threaten competitors — they also make it harder for consumers to ditch Apple products. If you rely on the Apple ecosystem to stay in touch with friends (iMessage), make big purchases (Apple Pay Later), and drive your car (CarPlay), you’re more likely to keep buying Apple devices for life.

Apple rolls out CarPlay and Pay Later features as its walled garden gets harder to escape

__Techier than an Apple store...__ Taco Bell's newest outpost [looks](https://www.businessinsider.com/taco-bell-opens-four-lane-two-story-drive-thru-photos-2022-6) like a server rack, but the chips inside are edible. The Crunchwrap Supreme icon just [opened](https://www.cnn.com/2022/06/07/business-food/taco-bell-defy-drive-thru/index.html) a restaurant concept called "Taco Bell Defy" outside Minneapolis. The table-free location features tablets, QR codes, and “vertical lifts.”

- __2 stories:__ All the meal prep happens out of sight on the second floor, where employees stick your Gordita Crunch in a “Jetsons”-like glass elevator that delivers it down to you.
- __4 lanes:__ Three drive-thru lanes are dedicated to delivery drivers and app orders. But even the traditional lane is techified with two-way video for OG ordering.
- __2 minutes:__ Defy is designed to deliver your grub in 120 seconds or less — among the fastest times in the industry, and less than half the time of an average Bell order.
- __Zero gravity?...__ TB says its contactless delivery system "defies gravity" as food is transported down to ground level. (How that defies gravity defies our understanding of gravity.)

__Less fry cook, more Tim Cook...__ fast-food’s new mantra. Digital orders and drive-thrus surged for chains like __[Chipotle](https://robinhood.com/stocks/CMG)__, __[McD's](https://robinhood.com/stocks/MCD)__, and __[Starbucks](https://robinhood.com/stocks/SBUX)__. Taco Bell parent __[Yum Brands](https://robinhood.com/stocks/YUM)__ (which also owns KFC and Pizza Hut) saw its digital sales grow 15% last quarter to a record $6B. With Defy, it’ll be able to handle twice the order volume of a typical Taco Bell.

__Driver’s seat > booth:__ Pre-pandemic, less than [70%](https://www.qsrmagazine.com/reports/future-fast-food-drive-thru-arrives-early) of fast-food sales came from drive-thrus. Now it’s more than 90%, even though IRL dining is back.

Gravity

__Form follows function...__ and the function of quick-serve restaurants has shifted. Consumers have changed the way they order food; now restaurants are transforming the way they *serve* food. Cue: more “Defy” locations getting [planned](https://www.axios.com/local/twin-cities/2022/06/07/minnesota-taco-bell-of-the-future). As chains ditch dining rooms for faster food, vertical lifts and [Chipotlanes](https://www.qsrmagazine.com/fast-casual/inside-rise-game-changing-chipotlane) could be the future.

Taco Bell opens a futuristic restaurant (feat. taco elevators) as fast-food chains transform for the digi-order revolution

The “Hollywood” sign in Los Angeles was created as a real-estate advertisement — and once read “Hollywoodland”

🍎 Apple’s next frontier

__Well, this is awkward…__ Elon’s stint as __[Twitter’s](https://robinhood.com/stocks/TWTR)__ new would-be owner could end before it begins. The Technoking’s [threatening](https://www.nytimes.com/2022/06/06/business/elon-musk-twitter.html) to back out of his $44B deal to buy the social-media company if it doesn’t give him more detailed data about how many of its users are bots. But Twitter’s standing pat, saying it plans to “enforce” the merger as is. 

- __Still on hold:__ Last month Elon [said](https://www.cnn.com/2022/05/13/tech/twitter-deal-on-hold-elon-musk/index.html#:~:text=Elon%20Musk%20said%20he%20is,%2C%E2%80%9D%20Musk%20tweeted%20on%20Friday.) the (legally binding) deal is on “hold” until Twitter proves its claim that fewer than 5% of daily users are bots. 
- __Thwarts and all:__ In yesterday’s letter to the SEC, Elon’s lawyers said Twitter broke the deal first by “thwarting” Elon’s right to info, which they say gives him the right to bail. 

__Bots are getting all the blame…__ but they’re just part of the story. Twitter *really does* have a bot problem: experts [estimate](https://www.bloomberg.com/news/articles/2022-06-06/musk-says-twitter-s-lack-of-info-on-bots-breeches-merger-deal) 10% of users are fake. But Elon has another big reason to back out of the deal: the price.

- __Clipped wings:__ Twitter’s stock has fallen 23% since the takeover was signed, which means Elon’s on the hook for $14B more than the company’s current market value. Analysts suspect his real goal is to pressure Twitter into renegotiating at a lower price.

And I think it’s gonna be Elon, ’Lon time  (Theo Wargo/WireImage/Getty Images)

Birdcage

__The law is on Twitter’s side…__ but *time* may be on Elon's side, if he’s willing to sit through a lawsuit. M&A experts say Elon has little legal ground to stand on, since he waived his right to inspect Twitter’s finances *and* signed a contract that forces him to follow through. Yet if Elon takes it to court, Twitter could get stuck in a pricey, drawn-out lawsuit that scares off employees, users, and investors. Twitter might decide to sell at a discount to avoid a legal battle with the world’s richest meme-lord.

Elon’s threatening to ditch his Twitter deal: it might be about buyer’s remorse, not bots

__Hit ’em with a DPA...__ President Biden is shining light on the solar industry with his latest executive actions. The White House has [authorized](https://www.cnn.com/2022/06/06/politics/biden-executive-action-solar-clean-energy-development/index.html) the Defense Production Act to rev up US manufacturing of solar panels and other clean-energy components. Refresher: the DPA lets presidents order companies to produce critical things in short supply (think: masks, baby formula). In this case, it’s energy: oil and gas supplies have been strained since Russia's invasion of Ukraine, so boosting renewables might help.

- __The White House also announced__ a two-year suspension of tariffs on solar panels imported from Cambodia, Malaysia, Thailand, and Vietnam — which together supply ~80% of America's solar products.
- __Why those tariffs were sweat-inducing:__ An ongoing federal investigation into whether those countries are using materials from China has stalled much of the US solar industry, which is worried about having to pay hefty retroactive tariffs. Hundreds of US solar projects have been scrapped since the probe began in March.

__Just add "sun"...__ Solar stocks like __[Sunrun](https://robinhood.com/stocks/RUN)__, __[SunPower](https://robinhood.com/stocks/SPWR)__, __[SolarEdge](https://robinhood.com/stocks/SEDG)__, and __[Enphase Energy](https://robinhood.com/stocks/ENPH)__ [spiked](https://www.cnbc.com/2022/06/06/solar-stocks-jump-after-report-that-biden-administration-will-suspend-tariffs.html) yesterday as investors welcomed the tariff suspension, which the solar industry had been lobbying for. But not everyone’s thrilled: US manufacturer First Solar and others that *weren't* directly threatened by the investigation said the suspension was a loss for American manufacturing. First Solar sank 4%.

Heated

__Solar needs an energy injection…__ After Biden got elected, there was optimism that the Dems would incentivize federal and private solar spending. That sunny vision died last year when Biden’s Build Back Better bill, which [featured](https://snacks.robinhood.com/newsletters/6j2M9rRr7dWfX9iVqkya8A/articles/1Kmj7ETjLUMKRDf8Mof4pD/) $500B+ in climate-related spending, stalled in Congress. Fewer than 5% of US homes use solar energy, and installation prices have [risen](https://www.solarpowerworldonline.com/2021/12/latest-research-shows-1-out-of-every-600-homes-in-america-is-installing-solar-panels-each-quarter/) as trade policies caused uncertainty and supply constraints. Cutting tariffs is a roundabout way to revive renewables.

Biden moves to boost solar-panel production during an industry slowdown, but the outlook for his larger clean-energy plan isn’t sunny

Of all the living mammals on Earth — including humans — about 60% are livestock

🐦 Elon threatens to walk

__More hyped than “Stranger Things”...__ at least by economists. Friday's monthly jobs report, aka: America's “Labor 101” report card, came at a critical time for the economy. The results: the booming job market cooled slightly in May. Key word: *slightly*.

- __Job growth__ was stronger than expected, but eased. The US [added](https://www.cnbc.com/2022/06/03/jobs-report-may-2022-.html) 390K payrolls, the lowest since April 2021. Usually this number is enough to indicate the labor market's health. This time, not so much, since the problem [isn’t](https://www.nytimes.com/2022/06/02/business/economy/jobs-wages-inflation-powell.html) demand for workers — it’s *supply*.
- __Labor-force participation,__ perhaps more telling, nudged up to 62.3% — a sign Americans are slowly returning to work. Even though job openings dropped by 455K in April, there’s still 5M+ more open roles than available workers. 
- __Wage growth__ ticked down, rising 5.2% from a year earlier but still twice the rate that earnings were rising pre-pandemic, as companies bump pay to compete.

__A tale of two markets...__ Unemployment stayed at a pandemic low of 3.6%, and rebounding sectors like hospitality can't hire fast enough. The paradox: sectors that thrived mid-pandemic are slowing hiring and cutting jobs to shave costs.

- __We're hiring:__ Airlines, restaurants, hotels, and retailers are scrambling to boost headcount to meet demand — and have [cut](https://www.cnbc.com/2022/04/10/jetblue-is-cutting-its-summer-schedule-to-avoid-further-flight-disruptions.html) growth plans because they *can’t*. __[American Airlines](https://robinhood.com/stocks/AAL)__ has hired 16K employees this year and is *still* struggling to fill positions. Small businesses have been forced to [slash](https://www.businessinsider.com/labor-shortage-small-businesses-cutting-opening-hours-losing-revenues-employment-2021-10) hours and services. 
- __We're un-hiring:__ As inflation and slowing demand hit tech profits, __[Peloton](https://robinhood.com/stocks/PTON)__, __[Netflix](https://robinhood.com/stocks/NFLX)__, __[Carvana](https://robinhood.com/stocks/CVNA)__, and others have laid off workers (__[Tesla](https://robinhood.com/stocks/TSLA)__ [reportedly](https://www.reuters.com/technology/exclusive-musk-says-tesla-needs-cut-staff-by-10-pauses-all-hiring-2022-06-03/) plans to as well). Meanwhile: __[Microsoft](https://robinhood.com/stocks/MSFT)__, __[Meta](https://robinhood.com/stocks/FB)__, __[Salesforce](https://robinhood.com/stocks/CRM)__, __[Twitter](https://robinhood.com/stocks/TWTR)__, __[Uber](https://robinhood.com/stocks/UBER)__, __[Wayfair](https://robinhood.com/stocks/W)__, and __[Snap](https://robinhood.com/stocks/SNAP)__ say they’ll rein in hiring.

The job market diverges (Joe Raedle/Getty Images)

Wanted

__A slowdown could be good…__ if done right. While rising wage growth is usually positive, at the current pace it’s [nearly impossible](https://www.nytimes.com/2022/06/02/business/economy/jobs-wages-inflation-powell.html) to tame inflation (aka: econ enemy #1). Wages and purchasing power are actually falling when adjusted for inflation — read: not keeping up with rising prices. The Fed’s big challenge: cool the labor market *without* undoing the progress made during the rebound. But it could be hard to distinguish between a healthy cooling and a [recession](https://learn.robinhood.com/articles/53OOO3JQFf0Sqo5g0t4O5F/what-is-a-recession/) — which experts [see](https://www.washingtonpost.com/business/2022/05/19/recession-economy-markets/) as increasingly likely.

The May jobs report reveals a super-tight labor market for boomerang companies and a slowing one for others — and that might not be bad

__Open for biz…__ China’s biggest city is opening back up after strict Covid lockdowns rattled residents and global supply chains. Last week Shanghai officials lifted restrictions for most people after two months of isolation. Now Shanghai's main port (aka the world's [largest](https://www.shipafreight.com/knowledge-series/largest-ports-in-the-world/#:~:text=1.,Port%20Of%20Shanghai%2C%20China&text=Shanghai%20has%20been%20the%20largest,million%20tonnes%20of%20cargo%20annually.)) is working through thousands of backlogged containers chock-full of everything from diapers to dishwashers. With 26M residents returning to daily routines, oil demand could spike, translating to even higher pump prices worldwide.

__Tightening time…__ The Fed’s busting out a new-ish tool in the inflation fight. Early in the pandemic, the US’s central bank used quantitative easing (QE) — aka “printing money” — to stimulate the economy. Now it’s [switching to](https://www.thestreet.com/dictionary/q/quantitative-tightening) quantitative tightening (QT), basically destroying the $$ it printed by letting bonds and other securities it purchased mature, which reduces its cash balance and the money supply. There’s a risk the Fed could tighten too quickly (it’s [selling](https://www.investopedia.com/quantitative-tightening-is-here-5270749) 10X faster than its last QT in 2017), which might mean more volatility for stocks.

Zoom Out

Stories we’re watching...

__Tim Cook’s cookin’ up…__ __[Apple’s](https://robinhood.com/stocks/AAPL)__ version of VR. Apple’s annual developer conference kicks off today. Analysts expect a new iPhone OS and a MacBook Air refresh. We may also see a long-awaited mixed-reality headset. Apple reportedly [showed](https://www.bloomberg.com/news/articles/2022-05-19/apple-shows-headset-to-board-in-sign-it-s-reached-advanced-stage) its board a prototype last month, a sign it could soon launch its first new hardware since its 2015 Watch. But the Fruit’s entering a market with heavy hitters: Meta’s Quest 2 has 78% market share, and __[Sony](https://robinhood.com/stocks/SONY)__ and Microsoft are also players. One analyst [thinks](https://www.streetinsider.com/Analyst+Comments/TFIs+Kuo+Sees+Apples+%28AAPL%29+ARVR+Headsets+2-3+Years+Ahead+of+Competitors+in+Computing+Power%2C+Says+Company+Could+Ship+3M+Units+in+2023/19444804.html) Apple could ship __[3M](https://robinhood.com/stocks/MMM)__ headsets next year.

__Weddings, prom, and a grad party…__ not enough closet space. A packed season of IRL events is fueling demand for formal fits. Last quarter, __[Rent the Runway’s](https://robinhood.com/stocks/RENT)__ [revenue](https://www.globenewswire.com/en/news-release/2022/04/13/2422285/0/en/Rent-the-Runway-Inc-Announces-Fourth-Quarter-and-Full-Year-2021-Results.html) doubled from the start of the pandemic in 2020, thanks partly to its return-from-home option. It’s a different story for rival clothing service __[Stitch Fix](https://robinhood.com/stocks/SFIX)__, which is struggling to lure new customers as lax office dress codes (think: elastic waistbands) cut [demand](https://www.cnbc.com/2022/03/08/stitch-fix-shares-plummet-after-company-cuts-guidance.html) for everyday outfits. We'll find out whether the uptick in summer soirees has affected orders when both report Thursday.

Events

Coming up this week...

- __[Lightning](https://snacks.robinhood.com/newsletters/7ECLDsT8Ibe5XYojQ1M6zm/articles/2oN1ooBIRkWYjX6rAgJjrK/):__ __[Ford’s](https://robinhood.com/stocks/F)__ throwing billions more at three US EV plants, even as the industry struggles with production delays. Meanwhile, EV makers are building home charging stations and batteries. 
- __[Washed](https://snacks.robinhood.com/newsletters/34FDmnLHYiY52nfOf5RPi2/articles/1xeNLcA6O6rx5dxUJRCDcL/):__ Authorities raided __[Deutsche Bank](https://robinhood.com/stocks/DB)__ to investigate allegations it was “greenwashing” some sustainable-investment funds. The move comes at a time when ESG standards are facing greater scrutiny. 
- __[Embargo](https://snacks.robinhood.com/newsletters/71oOBinwjs2uPx02aEH9Xz/articles/36w5PISc3Scb2xRJu9r2Rr/):__ The EU is banning Russian oil that comes by sea, or about 90% of all EU oil imports. China and India are still buying Russia’s crude, but Europe could block Moscow from insuring Russian tankers.

ICYMI

Last week's highlights...

The jobs report highlights a hot labor market for boomerang companies, and a slowing one for others

A lifeguard shortage could prevent a third of the US’s public pools from opening this summer

💼 A fork in the job market

__Sparks are (still) flying…__ Despite production delays, EV investment isn’t going anywhere. This week __[Ford](https://robinhood.com/stocks/F)__ [doubled down](https://www.cnbc.com/2022/06/02/ford-to-add-over-6000-us-jobs-as-it-boosts-electric-vehicle-production.html) on its electrification plans. Supply shortages (think: chips, lithium) have eaten into sales across the industry, but Ford has fared better than its rivals: 

- __Lightning strikes again:__ Ford plans to invest $3.7B and add over 6K union jobs at three US plants to boost electric F-150 Lightning production. FYI: last week Ford [delivered](https://www.bloomberg.com/news/articles/2022-05-26/ford-f-150-lightning-first-sale-goes-to-would-be-tesla-cybertruck-buyer) its first Lightning — to a buyer who reportedly got tired of waiting for his __[Tesla](https://robinhood.com/stocks/TSLA)__ Cybertruck.
- __Savvy strategy:__ Industry-wide, car sales slipped 30% in May from last year. But Ford sales [fell](https://www.cnbc.com/2022/06/02/fords-us-sales-decline-narrows-in-may-amid-tight-supplies.html) just 5% after it shifted resources to its F-Series and Mustang Mach-E (whose sales both jumped).

__Your e-truck’s on back order…__ but you can still buy a charger. EV sales [hit](https://www.iea.org/commentaries/electric-cars-fend-off-supply-challenges-to-more-than-double-global-sales) nearly 7M last year, *tripling* their market share from two years ago. Because automakers can’t crank out EVs fast enough, they’ve found other ways to invest in an electric future:

- __Big battery:__ This week __[Toyota](https://robinhood.com/stocks/TM)__ [debuted](https://electrek.co/2022/06/02/toyota-home-battery-pack-compete-tesla-powerwall/) a home battery that can charge hybrids, EVs, and even houses — benefiting current Prius drivers and (the idea goes) future EV buyers. 
- __Priming the plug:__ Earlier this year, Ford, __[BMW](https://robinhood.com/stocks/BMWYY)__, __[VW](https://robinhood.com/stocks/VWAGY)__, __[Daimler](https://robinhood.com/stocks/DMLRY)__, and __Hyundai__ [pooled](https://www.bloomberg.com/news/articles/2022-01-18/automakers-develop-charging-networks-for-greater-ev-cred#:~:text=Ionity%2C%20a%20joint%20venture%20with,chargers%20in%20Europe%20by%202025.) $800M to build 7K European charging stations.

If you build it, they will come (Bill Pugliano/Getty Images)

Plug

__The electric revolution is underway…__ but the road ahead is long (and probably won’t have enough charging stations). Although demand for electric cars is growing faster than expected — $6 gas will do that — EV production could lag behind for years on prolonged chip and material shortages, plus slow infrastructure development (think: few chargers). Since automakers can’t manufacture EVs any faster, they’ve shifted their focus to manufacturing future EV customers, by creating convenient charging stations and battery options.

Ford doubles down on its EV plans as electric carmakers race to meet electrified demand any way they can

__Looks like a mega-mall...__ actually __[Amazon’s](https://robinhood.com/stocks/AMZN)__ biggest warehouse ever. The five-story, 4M-square-foot [facility](https://www.dailybulletin.com/2022/05/31/4-1-million-square-foot-warehouse-in-ontario-will-be-amazons-biggest-ever/) has been under construction in Southern California since last summer — eons ago in the world of ecommerce. The distribution center is about to come online at a time when Amazon finds itself with *too much* warehouse space.

- __Glut:__ After doubling its portfolio of warehouse space to 387M square feet since 2020, the Zon recently said it would [sublease](https://www.wsj.com/articles/amazon-slowdown-sends-shivers-through-red-hot-warehouse-sector-11653998400) at least 10M square feet after posting its slowest growth in two decades. 

__(Ware)house hunters…__ At the height of the pandemic, retailers like Amazon, __[Costco](https://robinhood.com/stocks/COST)__, and __[Walmart](https://robinhood.com/stocks/WMT)__ snapped up record amounts of storage and fulfillment space to keep up with demand. Their belief was that Covid would accelerate the transition to ecommerce and they’d have the square footage to keep the boom going. But two years later, online shopping has cooled and consumer retail habits are [roughly](https://www.wsj.com/articles/the-pandemic-was-supposed-to-push-all-shopping-online-it-didnt-11650081652?mod=article_inline) back to where they were pre-pandemic. That’s causing online-only retailers like Amazon to offload extra space to cut costs — and it’s leading to a real-estate ripple effect.

- __For retailers:__ The Zon shouldn’t have trouble finding tenants for its subleases, because many smaller competitors still don't have enough space to pick up inventory from container ports.
- __For industrial-property owners:__ The red-hot growth in the warehouse space could slow now that Amazon is dumping millions of square feet onto the market.

Storage

__Amazon bit off more than it could chew…__ and its decision to cut back on its industrial footprint could signal trouble for other ecommerce players who took on too much too soon — not to mention the warehouse industry that supports them. Commercial real-estate giant __[CBRE](https://robinhood.com/stocks/CBRE)__ is expecting industrial leasing volume to fall 15% this year from 2021’s [record](https://www.wsj.com/articles/amazon-slowdown-sends-shivers-through-red-hot-warehouse-sector-11653998400) highs.

Amazon’s building its biggest warehouse yet, even though it already has more industrial space than it knows what to do with

Ford doubles down on its EV plans as carmakers race to meet electrified demand

🔌 The EV outlook

__Green-washed up…__ More trouble at Germany’s biggest bank: for the second time in a month, authorities [raided](https://www.wsj.com/articles/deutsche-bank-dws-offices-in-frankfurt-searched-over-greenwashing-claims-11654004574?mod=article_inline) scandal-[plagued](https://www.ft.com/content/9fd8a476-d023-4cc7-9598-32b3b4654162) __[Deutsche Bank’s](https://robinhood.com/stocks/DB)__ Frankfurt HQ. This time it was to investigate allegations that DWS, an asset-management subsidiary of DB, has been “greenwashing” (aka: misleading investors about its environmental, social, and corporate governance — or ESG). In the fall-out, the CEO of DWS [said](https://www.wsj.com/articles/dws-group-ceo-resigns-after-german-police-raid-on-offices-11654073889?mod=hp_lead_pos4) he’d step down. 

- __ESG, meet SEC:__ The Securities and Exchange Commission began investigating DWS last year after an ex-employee said it fudged ESG info to woo investors (last week the SEC fined __[BNY Mellon](https://robinhood.com/stocks/BK)__ $1.5M for misleading ESG claims).

__Sustainable investment, unsustainable pace...__ ESG investing has exploded as investors demand socially responsible investment options. But ESG claims are unregulated and have been [criticized](https://fortune.com/2022/05/18/tesla-sp-esg-index-exxon-elon-musk/) as arbitrary. One example: the S&P’s ESG index includes oil giant __[Exxon](https://robinhood.com/stocks/XOM)__, but not EV pioneer __[Tesla](https://robinhood.com/stocks/TSLA)__. Some have [dismissed](https://www.bloomberg.com/opinion/articles/2022-05-31/the-esg-bubble-is-about-to-burst-good-riddance?srnd=premium&sref=px9VEDa6) ESG investing as a “virtue bubble.” Now it may be bursting:

- __Going (less) green:__ __[BlackRock](https://robinhood.com/stocks/BLK)__, an ESG pioneer (and the world’s biggest money manager), backtracked and [said](https://www.blackrock.com/corporate/literature/publication/commentary-bis-approach-shareholder-proposals.pdf) it would support fewer “constraining” climate proposals.
- __The rise of “anti-ESG”:__ Billionaires Peter Thiel and Bill Ackman recently backed __Strive__, an asset management firm that specifically avoids politics.

Green, washed (Mike Kemp/Getty Images)

__This could be a Great Green Reset…__ the ESG strategy seems to be falling out of favor: after outperforming the S&P 500 in last year’s bull market, ESG funds are underperforming the S&P in this year’s downturn. But sustainable investment as a *concept* isn’t going anywhere: investors have already parked $41T in ESG funds. Instead, future ESG investors might seek more realistic forecasts — and play by stricter rules. Meanwhile, the SEC plans to keep cracking down on misleading ESG claims, though it still hasn’t standardized ESG criteria.

Deutsche Bank’s under investigation over greenwashing allegations as the ESG investing boom implodes

__Sounds like a sci-fi thriller...__ actually a vacuum company. __[iRobot](https://robinhood.com/stocks/IRBT)__ is the publicly traded consumer robot biz famous for Roomba (aka: the popular self-driving vacuum). Its sales soared for a while during the pandemic as homebound and hygiene-conscious adults ordered smart vacuums to clean up after their kids. But iRobot's US revenue growth has been slowing. Now:
- __New brain:__ iRobot just [revamped](https://www.theverge.com/2022/5/31/23147761/irobot-os-intelligent-software-robot-vacuums) its robo-vacuum operating system to lay the foundation for a more sophisticated understanding of your home life. iRobot Genius, its AI platform for smart vacuums and mops, is now iRobot OS.
- __Features__ include the ability to identify and dodge phone chargers, stray T-shirts, and dog poop. With computer vision iRobot’s newest vac can also understand specific commands like "clean under kitchen table." Also: preferences like extra sweeps during pet-shedding season and fewer sweeps for the guest room.

__Competing for Fluffy's approval...__ Roomba isn't the only one: last year __[Amazon](https://robinhood.com/stocks/AMZN)__ [rolled out](https://snacks.robinhood.com/newsletters/1DfKxi5kotgkyukmnj4HRF/articles/5wV96zy5PvyOoje0tkL7wC/) a $1K Alexa-powered robot named Astro (aka: a 10-inch tablet on wheels). Smart-device adoption has [surged](https://www.hippo.com/blog/smart-home-statistics) thanks to speakers from Amazon and __[Google](https://robinhood.com/stocks/GOOGL)__, along with thermostats, security cams, and light dimmers. iRobot's vacuums work with Alexa, Google Assistant, and Siri voice commands — but it may not be enough to win in the increasingly crowded market.

Room-bot

__Intelligence is useless without context…__ at least in the smart-home space. iRobot’s CEO told The Verge that the primary differentiator of a home robot is intelligence (aka: software brain vs. hardware body). Key to that is *context* — a deep understanding of your home and habits. Think: air purifiers understanding when a room is empty before going into noisy turbo mode (iRobot’s working on it). In the future, we’re picturing showers that turn on at your preferred temp when you wake.

iRobot updates the Roomba’s “brain,” betting its OS can be a differentiator in the crowded smart-home space

Deutsche Bank is under investigation over greenwashing allegations as the ESG boom implodes

A third of Americans who earn $250K+/year live paycheck to paycheck — and many are millennials

🌎 The ESG reset

__Crude crackdown…__ The EU’s planning its toughest restrictions on Russia yet, as Moscow enters its fourth month of fighting in Ukraine. Today EU officials are expected to greenlight their sixth sanctions package, which includes an embargo of Russian oil. Energy prices surged on the news, with Brent crude (aka: the international benchmark) hitting $120/barrel.

- __What’s included:__ A ban on Russian oil that comes into the EU by sea, which would be 90% of all oil imports by the end of the year.
- __What’s not:__ There’s an exemption for oil coming in by pipeline (the remaining 10%), a concession made for the landlocked Hungary, Slovakia, and Czech Republic.

__A trifecta of oil problems…__ could be about to spill over. While Russia’s war on Ukraine is already aggravating the global oil crunch, experts say an embargo could spur an even bigger ripple effect for insatiable energy markets. 

- __In the US:__ The [release](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) of 1M barrels of oil a day from the strategic reserve hasn't been enough to temper soaring pump prices as summer travel szn kicks off. 
- __In China:__ The loosening of Covid lockdowns in cities like Shanghai could supercharge demand as the world's second-largest oil consumer prepares to reopen.
- __Everywhere else:__ Refineries are already running at full capacity — and still struggling to meet demand.

Russia’s in for a crude awakening (Michael Siluk/UCG/Universal Images Group via Getty Images)

Embargoed

__Europe has another sanction up its sleeve…__ Russia’s still exporting oil to willing buyers like China and India (at discounted prices). One thing that could make that harder: cutting off the ability to insure tankers carrying Russian crude. The UK and EU — which control much of the maritime-insurance industry — are [reportedly](https://www.ft.com/content/10372dd3-be3c-42b9-982b-241a38efcc88) about to do just that. If Moscow can't insure its tankers, it’ll be effectively cut off from exporting oil by sea. Less oil on the market = even higher prices for the world.

The EU bans most Russian oil, but an insurance ban could hit Moscow where it really hurts

__Tom Cruise to the rescue…__ 36 years after the original “Top Gun” premiered, “Mav” is back in the cockpit — and not a moment too soon for the movie biz. “Top Gun: Maverick” [opened to](https://www.wsj.com/articles/top-gun-maverick-grabs-memorial-day-weekend-box-office-record-11653934939) $156M at the US box office, a new Memorial Day-weekend record. After being postponed several times because of the pandemic, “Top Gun” may signal a summer movie rebound:

- __Takeoff:__ Shares of __[Paramount](https://robinhood.com/stocks/PARA)__, which produced the film, rose more than 1% yesterday, and shares of theater giants __[AMC](https://robinhood.com/stocks/AMC)__ and __[IMAX](https://robinhood.com/stocks/IMAX)__ also jumped (before flattening out later).
- __Dad-nip:__ Most “Top Gun” watchers were older than 35 (and male), a shift from recent flicks like “The Batman” that were hotter with younger audiences.

__It’s a big win for the big screen…__ The theater industry has come a long way since its 40-year sales low in 2020, but it will never again look like it did pre-pandemic. The reason: Hollywood studios have branched out their strategies beyond the theater.

- __“Day-and-date” is dead:__ Studios like __[Warner Bros.](https://robinhood.com/stocks/WBD)__ and __[Comcast’s](https://robinhood.com/stocks/CMCSA)__ Universal have [released](https://variety.com/2022/film/news/cinemacon-theater-owners-hbo-max-day-and-date-releases-piracy-1235240934/) movies simultaneously in theaters and to stream during the pandemic. But the strategy angered talent and flopped at the box office.
- __The future’s mixed:__ Universal [plans](https://www.nytimes.com/2022/05/02/business/media/peacock-streaming-movies.html) to release mass-market films in theaters (think: “Jurassic World”) and more niche flicks straight to streaming (think: a LeBron biopic that appeals to younger viewers).

Speed

__The theatrical bar has been raised…__ Hollywood may push sequels and sure-fire hits to big screens, since iconic characters (Batman) and huge stars (Tom Cruise) are more likely to deliver returns on investment than new, unproven stories. But Paramount, __[Disney](https://robinhood.com/stocks/DIS)__, and Universal also compete for streaming subscribers, not just theatergoers. So they may test out riskier films on their streaming platforms first, since a surprise streaming hit could yield subscriptions, or even a big-screen sequel.

“Top Gun” soars to a box-office record, proving the big screen’s back — for big franchises anyway

The US Navy reportedly saw a 6X increase in enrollments in the year after the original “Top Gun” was released

🛢️ Russia gets embargoed

__Moodier than a 13-year-old...__ the stock market right now. The S&P 500 went from flirting with a [bear market](https://learn.robinhood.com/articles/3i6hIwhY75uWjZUZiLFTFT/what-are-bull-and-bear-markets/) (down nearly 20% from its record) to closing the week up 7%. After the plunge of March 2020 (FYI: the shortest bear market ever) stocks went full bull: the S&P doubled in value between March 2020 and January 2022. *Then the plunge began.*

- __Bad-news bear:__ The S&P is down 13% this year, while the techy Nasdaq is in a bear market, down 23%. 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 bear markets were accompanied by recessions. 
- __Driving it:__ Stubborn inflation and rising interest rates are leading to slower econ and earnings growth. Russia's war on Ukraine and China's Covid policy compound the situation.
- __But:__ Stocks rebounded after some strong retail earnings and [consumer-spending](https://www.wsj.com/articles/consumer-spending-personal-income-april-2022-11653597309?mod=article_inline) data, plus less-aggro-than-feared rate-hike indications from the Fed.

__The market ≠ the economy...__ yet the economy affects the market. Company valuations are tied to growth expectations. Those have fallen, both for companies and the economy. After lockdowns began, trillions in gov’t stimulus $$ boosted spending and record-low interest rates made borrowing cheaper. Now:

- __Stimmy withdrawal:__ The artificial demand boost is gone. High rates are making earnings expectations get “corrected” down. Many companies are [reporting](https://www.wsj.com/articles/global-stocks-markets-dow-update-05-26-2022-11653550227?mod=hp_lead_pos1) lower (but still relatively high) forecasts as inflation hits demand and profits.
- __Negativity intensifies:__ GDP [shrank](https://www.wsj.com/articles/us-economy-gdp-growth-q1-11651108351) last quarter, and while the labor market is very strong, we’re seeing more layoffs and cost-cutting as corporate growth slows. The probability of a recession appears to be growing, while economic confidence is [sagging](https://www.wsj.com/articles/small-businesses-lose-confidence-in-u-s-economy-11653211803?mod=business_major_pos4).

Money printer stopped going “brrr” (Matthias Kulka/The Image Bank via Getty Images)

Bears

__Recessions are hard to predict…__ even as they’re happening. The big Q is how severe the slowdown will be. That largely depends on whether the Fed can tame inflation without slamming the brakes on growth (raising rates too aggressively). On the plus side, there are signs inflation could be [peaking](https://www.wsj.com/articles/inflation-eased-slightly-in-april-according-to-feds-preferred-measure-11653658035). How long it’ll take to return to “normal” is another question.

As volatile stocks flirt with bear territory, investors wonder if the US economy is in recession territory — and how long it’ll last

__$7 of gas to commute…__ and tack on a $17 salad to the “return to work” bill. Restaurant food prices are up 7% from last year, but go-tos like Chipotle and __[Starbucks](https://robinhood.com/stocks/SBUX)__ saw strong sales last quarter as Americans proved willing to splurge. Sack lunches aren’t much better: prices on staples from eggs to Cheerios have soared, driving revenue for grocers like __[Kroger](https://robinhood.com/stocks/KR)__ and __[Costco](https://robinhood.com/stocks/COST)__. Yet consumers may be growing resistant: grocery leader __[Walmart](https://robinhood.com/stocks/WMT)__ [said](https://edition.cnn.com/2022/05/26/business/macys-nordstrom-department-stores/index.html) some are switching from gallons of milk to half-gallons and trading name brands for cheaper private labels.

__Sunny with a chance of blackouts…__ Summer forecast: hot and unstable. Fuel shortages, supply snags, and the climate crisis could prevent the US power grid from squeezing out enough juice during an [extra-hot](https://www.nytimes.com/2022/05/21/climate/us-summer-forecast-hot.html) summer. Much of the country could be in for rolling [blackouts](https://www.bloomberg.com/news/features/2022-05-22/summer-blackouts-bring-deadly-risk-as-heatwaves-grip-the-globe). Think: brief power outages that make it hard to work *and* kill the A/C. Blackouts might also hit Asia, Africa, and Europe, hurting people and productivity. India’s economy may [lose](https://www.bloomberg.com/news/features/2022-05-22/summer-blackouts-bring-deadly-risk-as-heatwaves-grip-the-globe) $100B this year from lost output during outages.

__Slam-dunk szn…__ is coming to a head this week as the Boston Celtics prepare to face the Golden State Warriors in the NBA Finals. The second-most-watched US sports league sold out 59 consecutive games last month, rebounding after the number of paid fans at arenas had dropped 7% during the regular season. Postseason viewership is up 14% from last year — even without LeBron. That’s promising for the league’s bottom line: the NBA wants [$75B](https://www.cnbc.com/2021/03/22/nba-is-next-up-for-a-big-rights-increase-and-75-billion-is-the-price.html) (triple the current deal amount) from __[Disney](https://robinhood.com/stocks/DIS)__ (ABC, ESPN) and __[WarnerBrosDisco](https://robinhood.com/stocks/WBD)__ (Turner) to renew media rights in 2025.

__It’s wine o’clock somewhere…__ Booze sales at restaurants have surpassed pre-pandemic levels, as __[Netflix](https://robinhood.com/stocks/NFLX)__-and-sip loses favor to neighborhood happy hour. It doesn’t mean people aren’t uncorking at home: online and D2C alcohol sales have maintained their lockdown-era gains. Last quarter, winemaker __[Duckhorn](https://robinhood.com/stocks/NAPA)__ saw sales [jump](https://www.businesswire.com/news/home/20220310005860/en/The-Duckhorn-Portfolio-Announces-Second-Quarter-2022-Financial-Results#:~:text=%2D%2D(BUSINESS%20WIRE)%2D%2DThe,months%20ended%20January%2031%2C%202022.&text=Net%20sales%20were%20%2498.7%20million,versus%20the%20prior%20year%20period.) 18% as consumers bought budget bottles in stores *and* winery visitors spent twice as much as last year. We’ll see if the good times are still flowing despite inflated costs when Duckhorn reports Thursday.

- __[Bullwhip](https://snacks.robinhood.com/newsletters/rc13idDjpTPN9Vsn0nI0x/articles/2MGsjcWEcYWb35Xj9gGnq1/):__ After years of supply woes, retailers like Walmart, __[Target](https://robinhood.com/stocks/TGT)__, and __[Nordstrom](https://robinhood.com/stocks/JWN)__ now have too much inventory. Overflowing warehouses are bad for profits, but could mean inflation-cooling markdowns.
- __[Comp](https://snacks.robinhood.com/newsletters/rc13idDjpTPN9Vsn0nI0x/articles/6DbfsPplRMX5GfziSMplq7/):__ From __[Amazon](https://robinhood.com/stocks/AMZN)__ to __[Coke](https://robinhood.com/stocks/KO)__, shareholders of America’s largest companies are showing unprecedented backlash to meaty exec pay, part of a broader movement seeking progress on environmental and social issues.
- __[Ghost](https://snacks.robinhood.com/newsletters/1EzhZ46qpAaHVRxvK5GHKD/articles/4rTFcuUN3cezdd8ZYULeg1/):__ Discovery ads aren’t worth as much as they used to be: __[Snap](https://robinhood.com/stocks/SNAP)__ said it expected growth to slow as macro conditions “deteriorate.” Cue: investors ghosted Snap and other techies on ad-pocalypse fears.

As volatile stocks flirt with “bear” territory, investors wonder if the US is in recession territory

Homosexuality is still considered illegal in more than one-third of countries

🐻 Recession-omics

__Dialing it up to Eleven…__ Grab some popcorn: the fourth season of one of __[Netflix’s](https://robinhood.com/stocks/NFLX)__ OG hits, “Stranger Things,” drops today. But the premiere comes at a strange time for the streamer, which is trying to reverse its first subscriber [loss](https://snacks.robinhood.com/newsletters/1hJKveGEOmvpzuLtfVejiF/articles/43M2Oild3MGMPYMecA8Q7K/) in more than a decade.

- __Monster-sized marketing:__ Netflix [transformed](https://about.netflix.com/en/news/stranger-things-4-rifts-take-over-global-landmarks) 15 global landmarks — like the Empire State Building and a Polish castle — into giant “ST” ads.
- __Big budget:__ Each of the nine “ST” episodes this season reportedly cost $30M to produce — more than the combined annual salaries of all 150 employees Netflix laid off this month.

__It’s been 36 weeks since “Squid Game”…__ and Netflix is desperate for another huge hit. It’s lost nearly 70% of its market cap this year. To reverse its stock slide, Netflix has started cutting costs by laying off staff and telling employees to curb spending — and even [starting](https://snacks.robinhood.com/newsletters/1hJKveGEOmvpzuLtfVejiF/articles/43M2Oild3MGMPYMecA8Q7K/) work on a free ad-supported tier. But there’s one place Netflix still isn’t skimping: content.

- __Still king:__ Last year Netflix made 500 originals. This year it plans fewer, but still aims to spend $20B on content (an increase over ’21). Translation: hit shows get more $$, but you get fewer new shows to binge.

At $30M an ep, we’d be smiling too (Bryan Bedder/Getty Images for Netflix)

Ta-dum

__Cutting costs comes with a cost…__ Splurging on content is in Netflix’s DNA: it became the top streamer by bankrolling hits like “The Crown” ($520M and counting). But now it’s in a predicament: it needs to cut costs to compete with faster-growing rivals like __[HBO](https://robinhood.com/stocks/WBD)__ and __[Apple](https://robinhood.com/stocks/AAPL)__ — and it can’t afford to turn off its content firehose. Doubling down on existing shows could cost Netflix to miss out on its next surprise hit. “Squid Game,” Netflix’s most-watched show ever, cost 1/12th of one episode of “Stranger Things.”

Netflix quadrupled down on “Stranger Things,” which may make it harder to find its next “Squid Game”

__Mega-deal alert…__ Yesterday, chipmaker __[Broadcom](https://robinhood.com/stocks/AVGO)__ confirmed plans to buy software developer __[VMware](https://robinhood.com/stocks/VMW)__ for $61B — what would be the third-largest tech deal in history and one of the biggest overall deals of the year. Refresher: VMware was one of the pioneers of early cloud-computing tech for big biz (aka: the $672B enterprise market), and was spun off last year by its former owner, __[Dell](https://robinhood.com/stocks/DELL)__. What’s on the table:

- __Broadcom expands__ its mostly chip-based portfolio by [tripling](https://www.wsj.com/articles/broadcom-to-buy-vmware-for-61-billion-11653563847?mod=markets_lead_pos2) its software biz, which the company has been growing through smaller acquisitions. VMware also gives B’com a foothold in the boring-sounding but lucrative world of corporate data centers. 
- __VMware partners__ with all the big cloud providers, like __[Google](https://robinhood.com/stocks/GOOGL)__, __[Microsoft](https://robinhood.com/stocks/MSFT)__, and __[Amazon](https://robinhood.com/stocks/AMZN)__, meaning Broadcom becomes a more integral part of the “plumbing” of the modern internet. 

__Broadcom’s bag of chips…__ has a lot of variety. From WiFi and Bluetooth to powering appliances, Broadcom’s semiconductors play a crucial component in connecting most of your everyday gadgets. But in the past year the global chip shortage has forced the company to limit how many orders it can fill, sacrificing [sales](https://www.bloomberg.com/news/articles/2021-09-02/broadcom-delivers-upbeat-forecast-on-strong-demand-for-chips#:~:text=Broadcom's%20wireless%20connectivity%20chips%20are,com%20Inc.'s%20AWS.). Enterprise software is an attractive way for B’com to diversify because it’s a strong market filled with deep-pocketed customers that provide recurring revenue streams.

Cloudy

__Nothing’s done till it’s done…__ Broadcom tried to buy rival chipmaker __[Qualcomm](https://robinhood.com/stocks/QCOM)__ in 2018 but was blocked by the Trump administration on antitrust and national-security grounds. Even though VMware isn’t a direct rival, the Biden administration has been skeptical of big corporate tie-ups: it recently sued to block a different chip merger between __[Nvidia](https://robinhood.com/stocks/NVDA)__ and __Arm__, which led to the deal’s collapse.

Broadcom gets into the lucrative world of enterprise software with its VMware acquisition — if regulators don’t step in first

Netflix quadruples down on “Stranger Things,” making it harder to find the next “Squid Game”

The end of May was chosen for Memorial Day because there’d be enough flowers in bloom to decorate soldiers’ graves