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Jan 14, 2022

Axios Closer

Hello! Nathan's week was made last night when he spotted the snowy owl that's temporarily made its home near Union Station in D.C. Maybe D.C.'s rat problem is finally solved.

🚨 Situational awareness: Netflix is raising prices again.

Today's newsletter is 683 words, a 2½-minute read.

🔔 The dashboard: The S&P closed higher 0.1%, following an afternoon rally.

  • Biggest gainer? Las Vegas Sands Corp (+14.2%) and other casino stocks rose after Macao released new guidance that would limit the number of casino licenses.
  • Biggest decliner? JPMorgan Chase (-6.2%) warned it would likely miss long-term profitability targets.
1 big thing: Losing steam
Data: FRED; Chart: Thomas Oide/Axios

Record levels of consumer demand are petering out as high prices cut into wages and add to household worries, Hope writes.

Why it matters: Shoppers will hold off on buying if goods get too expensive — a trend that if big enough could slow down economic growth.

  • Fresh tallies today on retail, holiday shopping and consumer sentiment paint a different picture of what demand looks like now and where it’s going compared to a year ago.

By the numbers: The 2021 holiday shopping season grew 14.1% from 2020 to a new record high of $886.7 billion, according to the National Retail Federation.

  • Yes, but: Sales declined November to December, the NRF says — a trend that was backed up by data from the Census Bureau, which showed a decline of 1.9% in those two months. 

The big picture: Consumer sentiment has been falling over recent months and downshifted to its second-lowest level in 10 years in the early part of the month.

  • It's down 12.9% since last year, as more people begin to worry about the effect of higher prices on their personal finances and the government's ability to bring those prices down.

What they’re saying: “Consumer sentiment is typically a forward-looking indicator, versus retail sales, [which is] a lagging indicator,” CFRA senior equity analyst Arun Sundaram tells Axios.

  • The two measurements are starting to converge, which could mean weaker spending and retail sales in the coming months, he adds.

What to watch: Personal savings. 

  • The absence of financial padding in the form of enhanced unemployment benefits and child tax credits has caused the personal saving rate to plummet to a new pandemic low of 6.9% as of November.
2. Charted: Tesla dips into doge 🤑
Data: CoinMarketCap; Chart: Will Chase/Axios

Tesla followed through on its December promise to accept dogecoin, writes Hope.

  • The company added the meme-inspired cryptocurrency as a payment option for some merchandise today — sending the price up about 20% to some $0.20, per Reuters

Flashback: Tesla briefly accepted bitcoin for car purchases last year when Elon Musk also started accepting dogecoin as a payment form for an upcoming SpaceX mission.

3. What's happening

👁️ Eye care products company Bausch + Lomb files for an IPO. The contacts maker could raise up to $3 billion. (Axios)

💊 A federal judge ordered "Pharma bro" Martin Shkreli to return $64.6 million in profits. He was also barred from the drug industry for life. (AP)

4. Even banks can't outrun inflation

Photo: Victor J. Blue/Bloomberg via Getty Images

For the nation’s largest banks, inflation may be too much of a good (for them) thing, Nathan writes.

Driving the news: JPMorgan Chase and Citigroup shares fell today — despite delivering solid quarterly revenue and profit — amid concerns that the banks won’t be able to outrun inflation.

Be smart: Inflation in moderation is typically a good thing for banks as it often triggers higher interest rates, leading to better revenue and earnings.

  • But with the Consumer Price Index reaching a 40-year high of 7%, JPMorgan warned it may get singed.
  • “Elevated inflationary pressures on expenses could more than offset the rates benefit,” JPMorgan CFO Jeremy Barnum said on a conference call.

But, but, but: Bank execs otherwise painted an optimistic economic picture.

  • Citigroup, JPMorgan and Wells Fargo said outstanding loans increased from the previous quarter.
  • "The consumer is very strong," JPMorgan CEO Jamie Dimon told investors.
5. NFL wild-card bonanza

Aïda Amer/Axios

NFL wild-card weekend is here... 19½ hours of pure ecstasy for NFL fans — and unmitigated hell for non-fans who live with them, Axios' Pete Gannon writes.

State of play: This weekend kicks off the second year of the NFL’s expanded playoff format — with the sixth and final game overflowing into Monday night.

By the numbers: The NFL last year estimated it would pocket $150 million in extra revenue from the two extra games.

The bottom line: Enjoy!

Go deeper: The NFL has an extraordinary grip on America’s media diet

6. What they're saying
“We must commemorate this day … by focusing more attention on the things that are critical to our nation and our democracy, which is voting rights.”
— Bernice King, daughter of the Rev. Martin Luther King Jr., to CNN’s Don Lemon about Monday’s MLK Day

Programming note: Axios Closer will be off on Monday in observance of the Martin Luther King Jr. holiday. We will see you Tuesday!