Elon Believes Blue Bird Can Fly

Plus: Luxury coronation merchandise, so hot right now. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

March 27, 2023

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Good morning.

The blue bloods are bleeding out. This year’s bracket-busting raving-mad March NCAA tournament is down to its Final Four, and only one remaining school — the University of Connecticut — can be fairly described as a basketball powerhouse.

None of the other three schools left standing — Florida Atlantic University, San Diego State, and the University of Miami — have ever made the Final Four before. That’s a lot of Cinderella teams, meaning more than a few glass sneakers will sadly shatter.

Morning Brief

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Musk has high hopes for Twitter, but why?

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All that money flowing out of banks is going somewhere.

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Luxury brands are royally welcoming England’s new king.

Corporate News

Musk Values Twitter at Less Than Half Original Purchase Price, Remains Optimistic

Elon Musk purchased Twitter for $44 billion in what was one of the biggest tech acquisitions in history. Today it’s worth less than half of that — $20 billion to be exact, according to The Wall Street Journal — and the world’s sometimes richest man sounds pleased as punch.

Seemingly channeling Monty Python’s Black Knight, Musk told Twitter employees the company’s harsh downturn is barely a scratch. He said he’s optimistic the company would eventually be worth — get this — more than $250 billion, and their private stock grants would increase tenfold. Already facing major headwinds, Musk and Twitter have a long flight ahead of them if they’re going to reach that goal.

The Rebootquel

Twitter 2: Elon’s Electric Boogaloo hasn’t been entirely well-received by users, investors, or advertisers. Musk went into the acquisition believing the social media platform used by roughly 450 million people monthly had become too quick to silence different opinions and viewed himself as the one to unchain Twitter (and possibly the world) from cancel culture. But it sometimes seemed like the business model was an afterthought.

It’s true that advertising revenue is down for online platforms, but Twitter has seen some of the worst of it. Musk took over in October, and in just one month, the site lost 50 of its top 100 advertisers. Companies like Coca-Cola and Kellogg employed that funny new-age tactic of “quiet quitting,” while groups like Jeep, Chevrolet, and Ford — all competition of Musk’s Telsa — released short statements saying they want to better “understand the direction of the platform” before continuing ad spending. The Information reported that Twitter’s fourth-quarter revenue fell about 35% year over year to just over $1 billion.

But that’s not the end of it:

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As part of the transaction, Musk strapped on $13 billion in debt financing, which is likely to remain a problem as the Fed continues to raise interest rates. To reduce costs, he took a chainsaw to the company. In November, Musk cut Twitter’s roughly 7,500-employee staff in half, which included everyone from product managers and engineers to content moderators and janitors. Just last month, Twitter let go of another 200 workers.

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And those cuts have likely led to some technical problems, not to mention employees now bringing their own toilet paper to the office. Since the Musk takeover, Twitter has experienced more frequent outages, bugs, and glitches. Internet watchdog NetBlocks reported that Twitter had at least four widespread outages in February alone. To put that in perspective, in all of 2022 there were nine outages.

No Comment At This Time: So what exactly has Musk feeling like Mr. Brightside? Well, that’s difficult to say as Musk would rather be cheeky than straight with questions. In an email to employees, Musk said he sees a “a clear, but difficult, path to a >$250B valuation,” and when the WSJ reached out to Twitter for further comment, the paper simply received a poop emoji, which is now the auto response to any media inquiry, Musk tweeted.

– Griffin Kelly

Investing

Investors Pour into Money Market Funds Amid Bank Crisis

Look at it this way: at least they’re not stashing cash under the mattress or in ceiling tiles.

Following the collapse of Silicon Valley Bank and subsequent whack-a-mole banking crisis, people have poured $286 billion into money market funds so far this month, according to data provider EPFR. That’s the most since the Covid crisis turned the world upside-down.

From Big to Bigger

To be clear, there have been no real winners from SVB’s implosion — and that includes the Wall Street giants whose money market funds are ballooning. Banking’s shaky ground has put any hopes of a potential IPO revival completely on ice. Meanwhile, similarly-sized regional banks like First Republic have teetered on the brink of insolvency, and Big Banks would rather perform financial gymnastics to keep them alive than relive their 2008 nightmares and buy them outright. Investors rushing into money market funds — mostly easily bought-and-sold low-risk assets that benefit from high interest rates — are specifically targeting ones that hold US government debt, according to Financial Times reporting citing Investment Company Institute data.

The funds are a mainstay of Wall Street’s biggest banks and investment houses:

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Since March 9, the day before SVB got sucked into a black hole created by panicking VCs, Goldman’s domestic money funds have seen nearly $52 billion in flows, while JPMorgan has taken in almost $46 billion, and Fidelity nearly $37 billion, according to iMoneyNet data.

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Overall, more than $286 billion has entered money market funds, pushing the value of their assets to an all-time high of $5.1 trillion, Bank of America said on Wednesday. Meanwhile, Fed data shows bank deposits declined from $17.6 trillion to $17.5 trillion in the week through March 15 (decimals schmecimals, except when trillions are involved).

“We are seeing shifts into money market funds by every segment of investor,” Ashish Shah, Goldman Sachs Asset Management’s chief investment officer for public investing, told the Financial Times.

Born in the USA: The money market trend has not, so far, reached our friends abroad (even though the banking crisis definitely has). Since March 9, Blackrock’s international funds have only seen $16 billion in inflows while GSAM’s has only seen $6 billion, according to iMoneyNet.

– Brian Boyle

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Luxury Goods

Luxury Brands Prepare to Cash Out During King’s Coronation

Photo credit: Jimmy Harris/Flickr

It’s succession season, but we’re not talking about our close pals at Waystar Royco.

Over in England, there’s a new monarch-in-waiting who could give the fictional Logan Roy a run for his money. And ahead of King Charles III’s coronation at Westminster Abbey in early May, the world’s biggest luxury brands are gearing up for a particularly stately spring shopping season.

A $2,000 Wristwatch Fit for a King

Nothing says “I’m going to splurge on a $1,500 handbag” like watching a septuagenarian don a goofy bejeweled hat that officially makes him the latest in a long line of purely ceremonial (and formerly tyrannical) figureheads of an empire long past its prime. At least, that’s what Fflur Roberts, head of luxury goods market research at Euromonitor International, told the Financial Times this weekend.

And there’s historical evidence to support her claim. Way back when Queen Elizabeth II assumed the throne in 1953, British-made luxury goods experienced a boom in sales. Now, they’re preparing for another season of sales fit for a king:

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Deakin & Francis is using the King’s coronation emblem on sterling commemorative cufflinks, Annoushka is creating 100 limited-edition 18-carat gold charms inspired by the crown, while David Morris is creating two one-of-a-kind rings.

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Between April 21 and May 4 (the coronation is May 6), Sotheby’s will host a cross-category online sale on items from the past and present of England’s monarchy. Overall, local regulations about the commercial use of royal insignias are being relaxed for the event. That’s so chill and classy.

Why Can’t We Quit You: Interest is not limited to just the UK. “[Americans] really appreciate being able to purchase a brand that has British quintessential heritage,” says Jonny Garrett, founder of William Wood Watches which is releasing a commemorative line, told the FT. “And, when the royal family is layered into it as well, and there’s only 30 pieces available, that definitely helps.” So much for Common Sense, at least according to Thomas Paine’s definition.

– Brian Boyle

Extra Upside

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Not just ChatGPT and cheating on homework: Watch the winners of the first AI Film Festival.

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That’s a lot of coriander: Pizza Hut Japan released a new pie that even they’re saying is “too much.”

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Just For Fun

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Disclaimer

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