You just can’t snuff out Juul. The popular e-cigarette company nearly went bankrupt last year, but it’s still alive and puffing — and now looking to raise roughly $1 billion, sources told Bloomberg on Thursday. A history lesson for potential investors: Altria, the tobacco company formerly known as Phillip Morris, once invested $12.8 billion for a 35% stake in the vape-maker — only to sell its entire stake earlier this year for just $235 million. Investors may be wary about watching an additional billion go up in smoke.
Morning Brief
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US workers have not been slacking off.
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Elon Musk gets dragged into the platform-publisher wars.
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Americans are stepping out.
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Labor
US Productivity Jumps to Highest Level in Years
So much for “quiet quitting.” The dog days of summer have turned into a greyhound race.
In the three months ended June 30, US worker productivity on a per-hour basis rose at a 3.7% annual rate, according to the US Department of Labor.
Working Hard or Hardly Working
Consider the latest labor data as just the next step in the inflation-wages-productivity dance. In June, private sector hourly wages grew 4% year-over-year, compared to just a 3% jump in consumer prices — marking the first time in two years that wage growth outpaced prices. But that wage boost has now effectively been largely offset by the boost in productivity. That’s good for employers and tempers wageflation’s impact on overall inflation. And that, we hope, is taken as good news by Jerome Powell and his Fed’s fight to bring the inflation rate down to 2%.
The data comes just ahead of another jobs report on Friday, in which most economists expect some 200,000 jobs to have been created in July, with the historically low 3.6% unemployment rate to hold steady. Perhaps more notably, last quarter’s rise in productivity brings an end to a sour streak of declining productivity:
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Worker productivity had declined by 1.2% year-over-year in the first quarter of 2023, which had marked the fifth straight quarter of slumping output.
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The uptick in productivity, which outpaced the 2% rate most economists expected, likely dovetails with the unexpected acceleration in the US’ Q2 GDP.
One factor likely contributing to the downturn in productivity in prior recent quarters, Reuters hypothesized, was the business practice of worker hoarding — or employers holding on to more workers than necessary, likely due to a fear of having to hire again in a tight labor market.
Remote Control: The productivity uptick also may be linked to overall employee happiness. As the old logic goes, happy workers are productive workers. In May, The Conference Board reported a jump in worker satisfaction from 2021 to 2022, reaching the highest point since the survey began in 1987. Meanwhile, employees are taking more vacation time this summer than in the prior two years, according to data from HR technology firm Gusto. What more evidence do you need? Take that Summer Friday off!
– Brian Boyle
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Tech
French News Agency Wants Twitter to Pay Up
Liberté, Égalité, Procès d’entreprise!
French news agency Agence France-Presse brought legal action against Twitter on Wednesday, accusing it of flouting French copyright laws. Specifically, it says Twitter (since renamed X) has refused to enter into talks about compensating AFP for sharing its news on the platform. Twitter owner Elon Musk’s initial reaction was pretty incredulous, tweeting: “This is bizarre. They want us to pay *them* for traffic to their site where they make advertising revenue and we don’t!?” Somewhere Zuckerberg is smiling and mumbling: “First time?”
Into the Fray
France adopted a new EU copyright law into its legislature in 2019 called the “neighboring rights law.” It essentially says French news publishers are owed some remuneration by platforms if their content — i.e. text, videos, photos — are reproduced. The law doesn’t apply to hyperlinks or very short snippets of text, and publishers have to negotiate with the platform rather than being owed a set amount.
Musk’s chafing against forking over Twitter’s cash (which is a very small pile at the moment) mirrors broader legislative fights between platforms and publishers around the world:
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This week, Meta started blocking news links on its platforms in Canada, in reaction to a law which would force it to obtain licenses with publishers so users can post links to their articles.
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While Canadian lawmakers argue that publishers benefit little from the value they bring to social media sites and are owed some compensation, Meta has asserted its users really don’t even care that much about news.
A New Player: Having Elon Musk enter the publishers-versus-platforms debate could be seen as a net positive for other tech companies — he’s no stranger to confrontation. However, Musk’s berserker-like outbursts aren’t always long-term indicators. In November, Musk attacked Apple, saying it had “threatened to withhold” Twitter from the App Store and lashed out at Apple’s policy of imposing a 30% tax on in-app purchases.
For a moment, it looked like Musk would join Spotify CEO Daniel Ek and Epic Games CEO Tim Sweeney, who have long fought against Apple’s levy. He quickly cooled off, though, and this week he returned to the subject with a much more conciliatory tone, saying he would talk with Apple CEO Tim Cook about tweaking the tax to minimize the sum that gets shaved off creators’ incomings by Apple. Musk, ever the gentleman.
– Isobel Asher Hamilton
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Amber waves of grain, purple mountain majesties, fruited plain — been there, done that.
Americans are booking overseas vacations en masse, which is great for international-serving airlines and hotels, but not so much for their forlorn domestic counterparts.
Americans Abroad
Around the end of 2022, when much of the world declared a victory of sorts over the pandemic, Americans started planning their next trip. But instead of the Jersey Shore, or Disney World, or Discount Lion Safari, they were targeting the UK, Europe, and Asia.
That surging demand meant airlines and hotel chains could charge more. CNBC reported that international flights are averaging $962, up 10% from last year, and European hotel room rates are up nearly 14%, averaging $150 per night. Groups catering to overseas travel are reaping the benefits:
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For the second quarter, Marriott reported revenue per available room rose nearly 40% in its international markets. Meanwhile, Europe’s biggest hotel chain, Accor, announced plans to open 1,200 more hotels across multiple regions in the next five years to keep up with international demand.
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Delta Air Lines and United Airlines have expanded their international services in recent months. In July, United posted record quarterly earnings with international flights accounting for 41% of its revenue.
“Our international system is just performing outstandingly,” Andrew Nocella, United’s chief commercial officer, said on an earnings call. “There’s not, like, a single part of the globe, a single part of the network that’s not working.”
It’s Quiet, Too Quiet: While Marriott is thrilled about its international success, in the US and Canada, Q2 revenue per available room rose just 6% year-over-year. And average domestic flight costs have actually fallen: round-trips are down 11% from last year, and 12% from 2019, CNBC reported. Airlines like Jetblue and Southwest, which mostly service the US, Latin America, and the Caribbean, saw minimal revenue growth in their latest earnings. But if you still haven’t seen Mount Rushmore or Old Faithful, you might find a relatively cheap deal.
