Morning Brew - ☕️ Tables have turned

The billionaires are losing their fortunes...
May 13, 2022 View Online | Sign Up | Shop

Morning Brew

The Motley Fool

Good morning. It’s Friday the 13th, a completely regular day that, for some reason, we are really afraid of.

Still, superstitions are fun…and of course very real…so we asked around the Brew office to learn about our colleagues’ weirdest rituals. Feel free to adopt any that sync with your worldview.

  • Manny: “Friday the 13th is the only day I pour milk before cereal.”
  • Elizabeth: “I close my eyes during airplane takeoff until I hear the first ‘ding’ sound, which is my personal sign that we’re in the clear.”
  • Max: “Whenever I put clean dishes away, I need to put the most recently used dish on the bottom so all the dishes get the same amount of turns and nobody feels left out.”

Neal Freyman, Matty Merritt, Max Knoblauch

MARKETS

Nasdaq

11,370.96

S&P

3,930.08

Dow

31,730.30

10-Year

2.852%

Bitcoin

$28,342.30

Robinhood

$10.60

*Stock data as of market close, cryptocurrency data as of 12:00am ET. Here's what these numbers mean.

  • Markets: The Dow fell for a sixth straight day and the S&P is this close to a bear market, which would mean a 20% drawdown from its recent peak. Robinhood shares soared after-hours when a new filing revealed that Sam Bankman-Fried, the billionaire CEO of crypto exchange FTX, had taken a 7.6% stake in the company.
  • Economy: The Fed chair is keeping his chair. Jerome Powell was confirmed by the Senate for a second four-year term, where he’ll be tasked with bringing inflation down from 8.3%.

WEALTH

Billionaires start flying commercial

BIllionaires flying commercial Dianna “Mick” McDougall, Photos: Getty Images

The world’s richest 500 people have lost more than $1 trillion in net worth this year, according to Bloomberg data.

What happened: Because the ultrawealthy stash their riches in financial assets like stocks, their wealth is correlated with the market’s performance. And while stocks usually go up…right now they’re crashing. The fortunes of Elon Musk, Jeff Bezos, and Mark Zuckerberg have each dropped by more than $50 billion as Big Tech shrinks to Medium Tech.

Crypto moguls are also cutting butler staff on the heels of an epic wipeout across their industry.

  • Coinbase CEO Brian Armstrong’s net worth has plummeted 84% to $2.2 billion.
  • Changpeng Zhao, the CEO of Binance, has watched his bank account dwindle from $96 billion to less than $12 billion.

The post-Covid hangover

During the first two years of the pandemic, the worst thing that could happen to a billionaire was a storm delaying their hydrofoil sesh. As asset prices soared, billionaires added more than $5 trillion to their net worth between March 2020 and November 2021, a bigger increase than in the previous 14 years combined, according to Oxfam.

  • The richest 10 people got $1.3 billion wealthier each day.
  • At the same time, nearly 100 million people were pushed into extreme poverty by the pandemic, according to the World Bank.

But now, with stock and crypto prices tanking, it’s been beneficial not to be tied up in the market. During this historic labor shortage, lower-wage employees have received bigger salary increases than their middle- or high-income peers. And that’s translated to more bullishness from them around the economy overall.

  • In April, consumer confidence for higher income groups plummeted below that of lower income groups, which has remained relatively stable, according to BofA.

Do billionaires losing money…matter? Well, one spillover effect is that Elon Musk is still searching for partners to help him alleviate some of the financial risk from buying Twitter for $44 billion. Tesla, of which Musk owns 15.6%, has fallen more than 25% since he agreed to buy the bird app.—NF

        

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WORLD

Tour de headlines

Baby formula shelf that's empty Paul Hennessy/SOPA Images/LightRocket via Getty Images

The baby formula shortage is getting worse. Hampered by product recalls and supply chain disruptions, the average out-of-stock rate for baby formula was 43% during the week that ended May 8, up from 31% in early April. Yesterday, the Biden administration unveiled a slew of measures to get more formula onto shelves, but experts say this shortage could still last months.

Twitter makes changes ahead of Elon Musk’s takeover. The company fired two senior executives, paused most hiring, and may rescind some job offers, all reportedly at the direction of CEO Parag Agrawal. One of the execs leaving, Kayvon Beykpour, had been with the company for seven years. He said Agrawal asked him to leave because the boss wanted “to take the team in a different direction.”

Finland to NATO: “We want in.” Leaders of the Nordic country, which had traditionally maintained a “nonaligned” military posture, said they will apply for membership in the alliance “without delay.” Why? Russia’s invasion of Ukraine showed Europeans how precarious their security situation is. Six months ago, 20% of the Finnish public wanted to join NATO. Nearly 80% do now.

FOOD

Meat guys didn’t want to stop meat-ing

Tyson processing plant in North Carolina J. Michael Jones/Getty Images

Remember when we all thought we’d never get our hands on another pork loin in spring of 2020? Well, a new House subcommittee report concluded that meatpacking companies exaggerated product shortages during the height of the pandemic to keep plants open and skirt Covid health guidelines.

The report names Tyson, Smithfield, JBS, National Beef, Hormel, and other large meat producers that account for the majority of the US’ beef and pork industry. And it’s sausage-stuffed full of damning claims that, despite Covid spreading rapidly through plants and killing 269 employees during the first year of the pandemic, companies lobbied hard on Capitol Hill to prevent factory shutdowns.

  • According to the report, Tyson even drafted the executive order issued by former President Trump in April 2020 to keep plants open.

Big picture: An estimated 334,000 Covid cases across the country can be linked to meatpacking plants, and per capita infection rates doubled in counties with beef and pork facilities, according to research from the University of California at Davis.

Meat producers shot back that they did their best to protect workers. The North American Meat Institute said the report “cherry picks data to support a narrative that is completely unrepresentative of the early days of an unprecedented national emergency.”—MM

        

SPACE

Nice pic thank you for sharing

An image of the supermassive black hole at the center of the Milky Way EHT Collaboration

For all the visual thinkers who can’t picture what a black hole 4 million times more massive than the sun and 26,000 light-years away from Earth would look like without a photo: This should help!

Released yesterday by Event Horizon Telescope’s research team, this is the first photograph captured of the supermassive black hole at the center of the Milky Way. The black hole, named Sagittarius A*, has proven trickier to photograph than mom on a family vacation. To get the image, eight synchronized telescopes around the world had to coordinate “in a process similar to everyone shaking hands with everyone else in the room,” according to an MIT astronomer.

No need to fear, by the way: This black hole comes in peace. Apparently, Sagittarius A* is a gentle giant on a near-starvation diet of galactic material, equivalent to a human eating a single grain of rice over millions of years. Basically, it won’t swallow everything we’ve ever known for a very long time.

Zoom out: Aside from the photo making a very cool album cover for any indie band that claims it, this project also confirms Albert Einstein’s general theory of relativity. The black hole is exactly the size Einstein’s equations dictate.—MK

        

GRAB BAG

Key performance indicators

Key performance indicators

Stat: On Tuesday, the Washington Nationals tweeted a video promoting their partnership with terra, the crypto project whose algorithmic stablecoin collapsed in recent days. If you invested $10,000 in terra’s sister crypto, luna, at the time of the tweet, you’d be left with about $3 yesterday.

Quote: “When it rains, you open an umbrella.”

SoftBank CEO Masayoshi Son, an investor known for his big bets on fast-growing but unprofitable tech companies, said it’s time to start playing defense “since the world is in chaos.” His company’s vaunted Vision Fund posted a record $27 billion loss for the full year.

Read: The esoteric social movement behind this cycle’s most expensive House race. (Politico)

Ask: Will the S&P 500 finish the year higher or lower than its current level?

Higher

Lower

QUIZ

Friday the quizteenth

Weekly news quiz

The feeling of getting a 5/5 on the Brew’s Weekly News Quiz has been compared to someone saying ​​“nice haircut” instead of asking, “Did you get a haircut?”

It’s that satisfying. Ace the quiz.

BREW'S BETS

Viral video roundup:

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*This is sponsored advertising content.

WHAT ELSE IS BREWING

  • Rich Strike, the longshot Kentucky Derby winner, is passing on the Preakness Stakes.
  • Congressional Democrats asked social media companies to preserve content depicting alleged war crimes posted on their platforms.
  • North Korea reported its first Covid outbreak since the beginning of the pandemic. It’s one of two countries that hasn’t vaccinated any of its citizens.
  • Manhattan apartment rents hit a record high for the third straight month in April.

GAMES

Friday puzzle

Name a part of the human body. Insert the name of another part of the human body in the middle of that word. You’ll get a famous household goods brand. What is it?

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ANSWER

Ch(arm)in

✢ A Note From The Motley Fool

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Written by Neal Freyman, Max Knoblauch, and Matty Merritt

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