…and the Biden admin tries to slash overdraft fees
| Traffic on the earnings tarmac (Charly Triballeau/Getty Images) | |
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Yesterday's Market Moves | | Dow Jones
37,469 (+0.54%) | S&P 500
4,781 (+0.88%) | Nasdaq
15,056 (+1.35%) | Bitcoin
$41,290 (-3.39%) |
| Dow Jones
37,469 (+0.54%) | S&P 500
4,781 (+0.88%) | Nasdaq
15,056 (+1.35%) | Bitcoin
$41,290 (-3.39%) |
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Hey Snackers, Don't worry about wiping this dressing off your lips: Burt's Bees teamed up with Hidden Valley Ranch on new lip-balm flavors like ranch and Buffalo. They said the collab had "never been done before." Wonder why… Stocks gained yesterday and the techy Nasdaq 100 hit a record high. Meanwhile, oil prices wobbled as traders side-eyed the ongoing shipping turmoil in the Red Sea. 🍪 Happy quiz day! The workweek is stale, but the Snacks Seven Quiz is fresh outta the oven. Here's a taste: | |
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Airlines have soared to new heights, but storm clouds are shading investors' optimism | The business of economy class… 2024 is gearing up to be another banner year for travel. A record 4.7B passengers are expected to take to the skies, with airline revenue forecast to climb to a fresh high of $964B. In a November IATA survey, a third of travelers said they were flying more than prepandemic, and nearly half said they'd travel even more this year. Last week: Delta reported a record $54.7B in annual revenue. Still, its stock sank 8% after the Biscoff biggie trimmed its profit guidance for the year, citing higher costs. Next week: United, Alaska, and Southwest are set to unload their quarterly #s. While demand's been strong, headwinds are rising…
Houston, we've had a problem… and it's not the guy snoring on your shoulder. In September, American, Southwest, and Spirit slashed their profit outlooks for the summer quarter as pricey fuel and new pilot-pay deals squeezed margins. Meantime, pandemic-era supply-chain snags (think: parts shortages, delays) are still pressuring profits. Boeing's recent midair blowout on an Alaska flight could make meeting demand even harder. Alaska and United — the two US carriers that use Boeing's 737 Max 9s — have canceled thousands of flights. |  | THE TAKEAWAY |
| Investors care about the destination… Delta's record annual revenue is a positive sign for the industry, but investors plunged the stock on a cloudier outlook for this year. Investors also worry that officials will discover more 737 Max probs during their investigation. Despite lively demand, global airline capacity is expected to be constrained until at least 2025. | |
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US regulators want to vastly limit banks' multibillion-dollar overdraft-fee biz | It's a bit drafty in here… so the Biden admin wants to close a window. The Consumer Financial Protection Bureau this week proposed a cap on bank overdraft fees — the charges triggered when a customer's transaction exceeds their balance. The rule would see overdraft fees ($35 is the standard) drop to as low as $3, saving US households ~$3.5B/year, and wiping out billions in bank revenue from what the CFPB calls a "junk fee harvesting machine." What's being proposed? That banks only charge a fee equal to their actual cost to cover overdrawn accounts, or charge a benchmark fee of between $3 and $14. Who benefits? Folks with lower incomes. 23M US households overdraft every year (paying $150, on average). Just 8% of bank customers account for ~75% of banks' overdraft revenue. Who gets hurt? Big banks, which rake in ~$9B/year from these charges (~$280B over the past two decades). JPMorgan Chase, which collected an industry-topping $840M in overdraft fees in the first three quarters of last year, recently reported a historic profit.
There's always money in the junk stand… The CFPB's overdraft proposal squeezes neatly into the Biden admin's goal of cracking down on junk fees. Americans spend $65B/year on fees like overdraft charges, resort fees, and internet-bill tack-ons. Biden's fight against such fees has led to a barrage of lobbying from industries looking to maintain a massive chunk of revenue they've come to rely on. Also: US household debt is at a record high. | | THE TAKEAWAY |
| It gets hot in the hot seat… Scrutiny and hefty regulator penalties have already caused some big banks to slash their overdraft fees. Bank of America cut its charges from $35 to $10, and Capital One eliminated them altogether. More banks could opt for the low- or no-fee life before the proposed rule would take effect in late 2025. | |
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| 🌶️ Spicy… GameStop said it'll shut down its NFT marketplace after its digital-asset revenue fell off a cliff. While the overall NFT market's seeing signs of life thanks to ordinals (bitcoin NFTs) and solana-based tokens, it's still down from its 2022 highs. 🤹♀️ Quirky… For (at least) the second time, Coinbase's lawyers put forth the legal argument that purchasing crypto is similar to buying Beanie Babies. The exchange is pushing a judge to dismiss an SEC lawsuit alleging it sells unregistered securities. 🪙 Coins… The trueUSD stablecoin lost its $1 peg, falling to 97 cents yesterday. Traders began dumping the token after reports of problems with the publishing of real-time snapshots of the coin's backing (aka: "attestations"). | |
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What else we're Snackin' | Bite: The DOJ is said to be prepping an antitrust lawsuit against Apple, which could get served in March. The biz has been accused of using both its hardware and its software to stifle competition. Depart: Macy's is cutting 2.3K+ jobs (3.5% of its workforce) as layoff season drags on. The Bloomingdale's owner will also close five stores as it looks to cut costs and revive sales. Priced: Novo Nordisk and Eli Lilly upped the prices of hundreds of drugs, including diabetes meds Ozempic and Mounjaro. Pharma cos cited inflation, and more increases could be coming. HomeSweet: Mortgage rates fell to their lowest in nearly eight months, hitting 6.6% for a 30-year fixed. That's welcome news for would-be buyers ahead of what's typically the market's busiest season. Safety: Sheryl Sandberg said she's leaving Meta's board of directors. Meanwhile, internal docs released as part of a New Mexico DOJ lawsuit allege that the company intentionally marketed its messaging apps to kids.
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Snack Fact Of the Day | The first Haribo gummy bears, introduced in 1922, were originally called Dancing Bears | | |
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Friday | Consumer sentiment and existing-home sales Earnings expected from Ally Financial, Fifth Third Bank, Huntington Bank, and State Street
Authors of this Snacks own bitcoin and shares of: Alaska Airlines, Apple, Delta, and Eli Lilly | |
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Sherwood Media, LLC produces fresh and unique perspectives on topical financial news and is a fully owned subsidiary of Robinhood Markets, Inc., and any views expressed here do not necessarily reflect the views of any other Robinhood affiliate... See more | |
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