The Substack vs Twitter Showdown

Plus: A closer look at food inflation

April 11, 2023

Good Morning!

Today’s article is brought to you by: 100% human and 0% AI 

Market Update

📊 Stocks were mostly flat to start the week as investors await the March inflation report on Wednesday and Bank earnings starting Friday.

Investors are starting to price in another 0.25% rate hike following Friday’s payroll report. The jobs report showed payroll growth in line with expectations and unemployment ticking down to 3.5%.

What to watch for: The inflation report drops Wednesday & Q1 Earnings season kicks off Thursday. We’ll break it all down for you here.

Daily Movers:

🟢 Chipmaker Western Digital finished up 8.2% after its competitor Samsung said it plans to cut chip production.

🔴 Software giant Oracle fell 2.25%, along with the broader tech industry trading down

Banger Tweet of the Day

Twitter vs Substack Showdown

Twitter was fun this weekend as Substack, the self-proclaimed “new economic engine for culture”, released Substack Notes - a newsfeed where users can share short-form text & images. So, basically a direct Twitter competitor.

On the release, Substack’s CoFounder Chris Best commented that, “The age of the social network is ending. Online media is going to bifurcate, and every platform is either going to have to turn into TikTok, or turn into Substack.

Twitter (Elon) responded by throttling anything on their app related to Substack - basically, users couldn’t like or retweet any tweets that contained a Substack link.

Elon eventually rolled back the decision, but not before Chaos ensued on the bird app. Substack writers feared that their best distribution channel was being shut down & onlookers commented on the free speech hypocrisy, abuse of power, and overall distaste of the decision.

Right or Wrong: Was the decision by Elon to effectively ban Substack the right one? It seems doubtful.

From a business perspective, Elon is (mostly) free to do what he thinks is best for the health of his company. If Substack is building a competitive product, I guess one option for Elon is to reduce their relevance on Twitter to zero.

However, while performing a show of force to his competition, he also:

  1. Pissed a lot of loyal Twitter users off

  2. Made content creators fearful of being reliant on Twitter for distribution

  3. Drummed up a ton of free press for Substack.

  4. Potentially aggravated regulators who might see this behavior as platform abuse.

Anyways, right or wrong, I’m excited about Substack Notes. I joined Twitter to converse with thoughtful people, but the app has become filled with clickbaity discovery content that I didn’t ask for. It’s possible that Substack can fill an important niche that Twitter is seemingly trying its best to kill.

Business Bytes

🚗 Tesla to Build New Battery Factory in Shanghai, China (WSJ)

  • In a time of heightened tension between the US & China, Tesla is becoming increasingly reliant on the company for manufacturing and distribution. China is the second largest market for Tesla behind the US, and the company already has a car plant located in Shanghai.

  • The company plans to break ground on its Megapack battery factory in Q3 of this year and start production in the summer of 2024.

 👮 FBI Says you Shouldn’t Use Public Phone Charging Stations (CNBC Tech)

  • I guess some folks are hacking public charging stations and infecting devices with malware. Pro tip: use your own chargers.

💻️ Global PC Shipments Slide in Q1, Apple Takes Biggest Hit (Reuters)

  • PC Shipments fell by 29% in Q1 2023 amidst a broader slowdown in consumer spending.

  • Shipments for Apple fell more than 40%, followed by Dell at -31%.

Higher Prices, Lower Costs for Food Businesses

As energy prices abate from their highs post Russia’s invasion of Ukraine, Food prices remain a tougher beast for cooling inflation.

Make it Make Sense: US consumer food prices were up 10.2% year-over-year at the end of March; however, in commodity markets (which set the price received by farmers) food prices have been declining for the last 11 months.

While raw commodity prices are just one piece of the puzzle - there are still things like packaging and logistics that go into food costs- the widening gap between input costs and consumer prices is a little suspect.

Fat Pockets: If costs are going down and prices are still high, the logical conclusion is that food businesses are taking home more profit.

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According to economists at ING Bank, margins in Germany’s agricultural sector (which excludes manufacturers of packaged food and retailers) rose by 63% between the end of 2019 and the end of 2022, almost entirely because of higher profits rather than higher wages.

The WSJ

The issue has been especially stark in Europe, where food has overtaken energy as the leading driver of inflation & continues to rise. The US has experienced similar food inflation but the growth has been declining in recent months.

French President Emmanuel Macron recently formed an agreement with retailers to keep food prices low (relatively), directly impacting the profit margins for food suppliers.

Cooling food inflation is on Central Bankers’ minds as its most apparent in their citizen’s daily lives, not only negatively impacting their wallets but also their current perceptions of inflation

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