Pod-cash-ing

Podcasters are still making so much money it makes me actually want to tax the rich. $125mn to talk into a microphone about whatever pops into your mind sounds pretty good. Find out whose raking it in below.

September 18, 2024

Silver banana goes to…

In this issue of the peel:

  • The August Retail Sales report is in, and the numbers are upsetting bulls and bears alike. Monthly growth was higher than expected but remains anemic, putting the Fed in a tough spot later today. 

  • Betting on better is going damn well in global markets while investors are fired up about early success with Intel’s turnaround plan. Summit Therapeutics got punished for daring to try to cure cancer, and Accenture can’t even plan promotion how it wants to without a beatdown from Mr. Market.

  • Podcasters are still making so much money that it makes me want to tax the rich. $125mn to talk into a microphone about whatever pops into your mind sounds pretty good. Find out who's raking it in below.

Market Snapshot

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Macro Monkey Says

Uncle Sam Needs You

It turns out there is a force in the world that is even stronger than the American military—American consumerism.

A bomb might level a city, but if Americans ever stop spending on random stuff, the global economy could crash faster than a stock market on Black Monday.

Luckily, the August Retail Sales report shows a strong performance from American wallets last month. However, markets weren’t too happy about it.

Let’s get into it.

What Happened?

In August, U.S. Retail Sales increased by 0.1% on a monthly basis, barely even visible in the chart below.

Economists, being the bunch of haters that they are, were guesstimating a 0.2% decrease for the month. However, wage gains, credit growth, and strong savings rates allowed spending to remain resilient.

However, that wasn’t great news for markets looking for a last-minute excuse to jack up today’s inevitable rate cut from 25bps to 50bps.

Yesterday’s report was the last major economic data with the potential to impact the Fed’s decision later today. Had retail sales gone badly, there’s a chance the FOMC could’ve bumped up the amount of cutting.

But, see again—American consumerism is (apparently) just way too strong.

Total Retail Sales increased 2.1% against August of last year. 

Because Retail Sales tend to be a more volatile metric, observing trends alongside that of a more holistic measure of consumer spending, like Personal Consumption Expenditures (PCE), can elucidate a more clear picture of consumer trends.

One of the factors that makes retail sales more volatile is increased exposure to auto sales. In August, vehicle sales decreased 4.4%, compared to July, and fell 1.3% annually despite a round of price cuts across nearly the entire industry.

That decline may very well be due to consumer awareness of a pending rate cut, putting car purchases on hold until rates come down.

Digging deeper, we find that an even more discretionary spending item—retail sales at goofily named “food service and drinking places”—continues to trend lower.

Consumer spending to get fat and drunk increased just 2.7% annually last month, rookie numbers and far from our most impressive performances.

The continued decline in this highly discretionary spending category brings concern that Americans continue to spend more frugally, which is not the vibe our GDP growth figures need in an economy that’s more than 2/3rds driven by consumers.

However, the question again becomes an inquiry many have started to wonder more and more in recent months—is the American economy “weakening” or just “normalizing”?

Coming out of 2021, almost any “normalization” is also a “weakening.” However, when discretionary spending categories slow as dramatically as the above chart implies, a lack of concern is borderline negligent.

With that said. 2.7% growth does seem closer to a “weakening” than just pure “normalization.”

August’s 2.7% increase is exactly half the average annual growth in spending at bars and restaurants seen in any given month for the 10-years leading up to the pandemic.

For those of you who want to serve your country without the possibility of getting shot in a foreign combat zone, Uncle Sam is begging you to go drinking and out to eat more. Please answer the call to arms.

The Takeaway?

Overall, consumer U.S. spending remains strong, but there are growing reasons for concern.

Retail Sales, PCE spending data, and the Bank of America Consumer Checkpoint all show spending levels entering dangerous territory—still growing but largely below average pre-pandemic annual increases.

This certainly gives the Fed more firepower for a 50bp cut, but likely not enough to get JPow and the FOMC gang fired up to pull the trigger on an extra 25bps.

This time, we don’t have to wait too long to find out. We’ll have our answer in T-8ish hours. Stay tuned.

What's Ripe

Flutter Entertainment (FLUT) 2.77%

  • Something about betting on betting fires me up in a way that cardiologists really don’t like. But Flutter Entertainment is taking that step further. 

  • The Dublin-based gambling company—which owns FanDuel— announced plans to acquire Snaitech, an Italian sports betting firm, from its parent company, Playtech.

  • The acquisition, which is worth $2.6 bn, will essentially propel Flutter to the top sports betting market share position in Italy. Playtech investors were also hyped (PYTCY, +7.42%).

Intel (INTC) 2.68%

  • Maybe the only brand to fall off harder than Bill Cosby since peaking in the 1990s, Intel’s decades-long turnaround plans are finally starting to work.

  • Markets loved Monday’s announcement that the firm’s foundry business will now run as a subsidiary, making the American chipmaker more competitive with Taiwan Semi and Samsung. 

  • And it didn’t take long to start inking new contracts. Amazon already signed a deal, and the company has even won grants from the Pentagon in the last—very busy—24hrs.

What's Rotten

Summit Therapeutics (SMMT) 11.06%

  • Like getting dumped for being “too nice,” Summit Therapeutics took an absolute beat down from markets on Tuesday for daring to literally try to cure cancer.

  • Those sick, twisted f*cks. How dare they try to cure cancer? Don’t they know how much money our other pharma stocks are making from lifelong patients?

  • Anyway, shares tanked on no news in what’s likely just a round of profit-taking. Shares are up almost 900% YTD and hit an all-time high on Friday. 

Accenture (ACN) 4.82%

  • George Orwell was right—Big Brother is always watching. In this case, the market is Big Brother as Accenture can’t even make slight changes to hiring without severe punishment.

  • The consulting firm announced plans Tuesday to delay promotions that are usually announced in December until June. 

  • The firm is waiting for “better visibility of our clients’ planning and demand.” In other words, Accenture faces too much of the market’s least favorite thing—uncertainty.

Thought Banana

Pod-cash-ing

Imagine telling a coal miner in the 19th century that, in a few decades, people would earn generational wealth annually by talking into a microphone.

You might have to first explain what a microphone is, but you should have plenty of time as he washes soot out of his nose hairs.

Podcasters are back to making everyone else extremely jealous. Let’s dive in.

What Happened?

After Spotify spent 2020 and 2021 shelling out 8 and 9-figure podcast exclusivity contracts to the likes of Joe Rogan, Alex Cooper, the Obamas, etc., others are now starting to copy the audio streamer’s strategy.

Ironically, Spotify very publicly ditched this strategy in 2023 due to underperforming ad sales, user growth, and disgruntled creators de-motivated by platform restrictions.

I guess one business’s trash is another’s treasure. If I was SiriusXM, I’d be swinging for the fences too after losing subscribers almost every quarter since late 2019.

But you know what gets people back listening to the radio? Podcasts that interview D-list celebrities and produce the audio version of hardcore p*rn.

That’s obviously why SiriusXM just paid Alex Cooper, host of “Call Her Daddy,” $125mn.

The deal, announced in August, will bring SiriusXM exclusive production and distribution rights for Cooper’s flagship show and her “Unwell” network of shows. 

Unfortunately for society, “Call Her Daddy” is often cited as the world’s second-most popular podcast, behind the Joe Rogan Experience. Cooper herself is often called the “Barabara Walters of Gen Z,” which really makes me pray for an asteroid.

Anyway, Copper is far from the only podcast star signing big deals in recent weeks. Others of note include:

  • Travis & Jason Kelce’s “New Heights” $100mn deal with Amazon’s Wondery

  • Dax Shepard’s “Armchair Expert” $80mn deal with Amazon’s Wondery

  • Will Arnett, Jason Bateman, and Sean Hayes’ “Smartless” $100mn deal with SiriusXM

  • Joe Rogan’s non-exclusive $250mn deal with Spotify, which we discussed here

The Takeaway?

Exclusivity deals can be a good way to bring first-time subscribers to a new audio streaming service, but based on Spotify’s history, the economics don’t usually work out long-term.

So, it makes sense that more nascent podcast platforms like Amazon and SiriusXM are pursuing this strategy.

It’ll be interesting to see if this audience land-grab strategy works and, even more interesting, to see if audiences stay long-term.

You know me—if SiriusXM is becoming the hotspot for all the world’s most, uh, ‘colorful’ conversations, count me in!

The Big Question: Will these deals pay off? Will fans of shows Like Call Her Daddy actually be pulled to SiriusXM? What other podcasters (besides me ofc) deserve these monster deals?

Banana Brain Teaser

Previous

David used part of $100,000 to purchase a house. Of the remaining portion, he invested 1/3 of it at $4 simple annual interest and 2/3 of it at 6% simple annual interest. If after a year the income from the two investments totaled $320, what was the purchase price of the house?

Answer: $94,000

Today

A positive integer n is a perfect number provided that the sum of all the positive factors of n, including 1 and n, is equal to 2n. What is the sum of the reciprocals of all the positive factors of the perfect number 28?

Send your guesses to [email protected]

❝

A lot of people have the brains and the ambition to be good investors, but they fall prey to a short-term focus

Bill Ackman

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Happy Investing,
David, Vyom, Ankit & Patrick