Somewhere Michael Eisner is happily humming that old schoolyard song: Bubble gum, bubble gum in a dish, how many pieces do you wish? His answer: About $700 million worth. On Monday, the former Disney CEO agreed to sell Bazooka Candy Brands — parent company of the namesake bubble-gum as well as candies like Ring Pops and Push Pops, and formerly known as Topps Chewing Gum — to buyout firm Apax Partners in a deal that valued the company at that lofty sum.
Eisner, in partnership with private equity firm Madison Dearborn Partners, bought the company in 2007 for $385 million, and in 2021 the group sold off its baseball trading card business for $500 million. Say what you will about Eisner, he’s really good at Baseball Card War.
Morning Brief
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More Americans are ending up homeless.
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Could US Steel sell it all?
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Honey, I shrunk the Panama Canal.
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Housing
US Homelessness Sees a Dramatic Uptick
The US economy is in much better shape than just about anyone could have imagined. So why is the homelessness crisis worsening?
The US homelessness rate has jumped by roughly 11% this year from a year ago, according to an analysis of data from 300 local and regional organizations published Monday by the Wall Street Journal. The alarming stat marks the largest single-year jump since the government started tracking comparable numbers in 2007.
A Growing Problem
In cold, hard figures, the WSJ found that more than 577,000 people are currently homeless in the US. That’s up from a decade-low of just under 550,000 in 2015, according to Department of Housing and Urban Development point-in-time estimates. To put it in perspective: HUD estimated that roughly 643,000 people were homeless on any given night in 2009, following the financial crisis. That figure slowly declined until 2015, after which homelessness again began to steadily climb. In 2019, homelessness increased by 2.7%, the largest year-over-year increase before this year.
Still, the striking jump in abject poverty stands in contrast to positively trending economic sentiments. In a recent survey of consumer expectations conducted by the New York Federal Reserve, perceptions “about households’ financial situations improved in July with more respondents reporting being better off than a year ago and fewer respondents reporting being worse off.” Forward-looking attitudes were similarly optimistic. In effect, more Americans believe they’ve weathered the worst of inflation and associated pandemic-era fallout. But for the least fortunate, rising housing costs and the end of pandemic-era protections such as eviction moratoriums have worsened their plight:
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According to data from the Eviction Lab, a Princeton University research group that tracks more than 30 US cities, most cities have reported more eviction filings this year through June than pre-pandemic averages.
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Advocates say rising housing costs bear the most blame. In nearly every major US metro area, according to another recent WSJanalysis, a rise in housing costs far exceeded overall CPI increases; in Phoenix and Tampa Bay, median rent jumped roughly 25% year-over-year in February.
“The Covid-relief funds provided a buffer,” Donald Whitehead Jr., executive director of the National Coalition for the Homeless, told the WSJ. “We’re seeing what happens when those resources aren’t available.”
Supply and Demand: A simple lack of housing stock is a big culprit. The US is short roughly 3.8 million units of housing, including both for-rent and for-sale, according to recent estimates from Freddie Mac (others estimate this figure to be far higher). Meanwhile, the median home price is roughly $419,000, according to Redfin, or about 40% higher than the pre-pandemic January 2020, with nearly 40% fewer homes for sale compared to just five years ago, Redfin also found.
– Brian Boyle
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Commodities
US Steel Rejects Cleveland-Cliffs Deal, Investors Keep the Faith
It’s still sounding like there’ll be a metal marriage.
Cleveland-Cliffs, America’s second-largest steel maker, announced Sunday that it offered to purchase US Steel, valuing the company at more than $7 billion. While the unsolicited proposal was rejected, US Steel’s share price skyrocketed on the offer, in the hopes that some type of deal could still be on the table.
Metal Heads
US Steel, founded in 1901 by financial icons including JP Morgan and Andrew Carnegie, played an important role in industrializing America. Its steel helped build countless bridges and rail lines as well as New York’s Flatiron building, Willis Tower in Chicago, and even the New Orleans Superdome.
Though no longer the biggest domestic player — Nucor holds the top spot, producing 21 million tons of steel last year — US Steel nevertheless made a combined 16 million tons in 2022. That said, a combination of the two still wouldn’t crack the global top 5 in annual production.
US Steel’s share price closed nearly 37% higher on Monday, but negotiations have been far from perfect:
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Cleveland-Cliffs offered to pay US Steel $17.50 a share in cash and 1.023 shares of Cliffs stock for each US Steel share. The proposition valued each US Steel share at $32.53, a 43% premium to its closing price last Friday. On Monday, privately held Esmark announced an all-cash $35/share offer for the company, possibly setting up a bidding war.
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US Steel asked for a nondisclosure agreement that would allow it to examine Cleveland-Cliffs’ books to analyze the deal. When Cleveland-Cliffs denied access, US Steel rejected the deal, reportedly calling it “unreasonable.”
Is Steel OK? Steel prices bounced back as the pandemic progressed but began to slide in tandem with the declining economy in China, the planet’s top steel producer and all-around manufacturer. However, prices may stabilize for the foreseeable future. Trading Economics estimated that steel rebar futures prices will only decline 4.5% from their current level. And US demand is likely to go up to help build out green-energy infrastructure and manufacturing projects supported by the Biden administration’s Inflation Reduction Act.
How? The secret is cutting-edge German technology, engineered to separate noise and speech to produce unheard of levels of clarity.
Experts say it’s the biggest upgrade in sound the industry has ever seen. And the best part is, these medical-grade devices are nearly invisible, so your friends and family will barely notice.
This time it’s the Panama Canal’s chance to play global supply chain bad boy.
This year, a severe drought in Panama has led the local water authority to impose progressively more onerous restrictions on ships using its famous canal. While the situation isn’t quite as dramatic — or as memeable — as when the Ever Given wedged itself across the Suez, it’s potentially more sinister as extreme weather conditions track with climate change.
Panamenacing
Countries around the world have seen record temperatures this year, and Panama got off to a bad start rainfall-wise. From February to April, the region near the canal experienced monthly rainfall up to 75% lower than normal, and the year has remained stubbornly dry even as Panama entered its usual rainy season in May.
The ACP, the government organization that governs the canal, has been imposing increasing restrictions most of the year and has now limited both the size of the ships using the canal and the number of crossings:
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According to the Financial Times, that queue was 264 ships long on Friday, which is 16% longer than the line was this time last year — and those are just the ones that are still light enough to go through.
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Delays could have a big impact on shipments of fruit and vegetables from the west coast of South America to Europe, which data provider MDS Transmodal told the FT accounts for 77% of trade between those two regions. A consultant at MDS Transmodal told the FT that longer, costlier routes for fruits and vegetables “definitely doesn’t help food inflation.”
While some European countries have seen their inflation rates cool, the UK’s food inflation is still in double digits, sitting at 12.7% in July.
New Abnormal: Jonathan Roach, an analyst at ship broker Braemar, said the shipping industry will have to learn to accept a less capacious canal. “Engineering-wise, I don’t know if there is a solution,” he said, adding: “It’s likely to be a continuing problem. It’s going to happen again and again.”
– Isobel Asher Hamilton
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Extra Upside
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Buy this, not that: Amazon unveils AI-generated summaries of user product reviews.
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Primetime players: CNN overhauls its programming schedule.
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