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Apr 18, 2022

The Weekly Scan April 18, 2022

By Stash Team

Find out what’s happening in the world of business this week

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Prices march upward. Inflation increased at an annualized 8.5% rate in March, the biggest increase since 1981, according to data from the latest Consumer Price Index (CPI). Inflation has increased steadily since 2021. The CPI is a cost of living index that measures the value of goods and services consumed by people in the U.S. It is produced by the U.S. Department of Labor each month. For comparison, inflation for December 2021 was 7%.

  • The takeaway: Pandemic-era supply chain issues and Russia’s war in Ukraine have caused shortages and price spikes that threaten the global economy. The good news is that inflation may have peaked, according to some experts. The core CPI, which strips out more volatile grocery and energy prices, actually decreased compared to February. Prices for used cars and apparel reportedly either moderated or decreased.

NYT

I will own you. Tesla CEO Elon Musk made an unsolicited $43 billion cash offer last week to acquire Twitter and take the company private, reportedly in an effort to unlock “its extraordinary potential.” Musk would buy the social media company for $54.20 per share, 38% higher than the closing price at the beginning of April, when it was disclosed that Musk had purchased a 9.2% stake in Twitter, with 73.4 million shares worth $2.89 billion, making him one of the company’s largest shareholders. Musk initially said he would join Twitter’s board, but backed out. 

  • The takeaway: Some analysts consider Musk’s offer an attempted hostile takeover. Musk said the cash proposition is his “best and final offer” and that he would likely sell shares should Twitter refuse his offer. He also said that he doesn’t believe that Twitter’s current management can successfully lead the company and that he doesn’t think he can effectively drive change at the company while it’s publicly traded. Musk, who has 80 million Twitter followers, has a complicated history with Twitter.  In 2018 his tweets figured prominently in a complaint brought by the Securities and Exchange Commission (SEC), which said Musk made fraudulent claims about taking Tesla private.

Reuters and Gizmodo

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Live a little. Consumers continued to flood restaurants and retailers in March, spending $655 billion, an increase of 0.5% over the previous month. Core sales, which excluded cars and car parts, increased 1.1% over the same period. The biggest areas for purchases reportedly include gas and general merchandise stores, such as game and sports retailers.

  • The takeaway: Spending remains strong despite record inflation of 8.5% that’s taken a bite out of consumer paychecks. Nevertheless, the March report is the second consecutive month showing increases in consumer spending have cooled off since the end of 2021. Consumer spending accounts for nearly three quarters of all economic activity.  

Business Insider

Piano lessons. The 169-year-old piano manufacturer Steinway Musical Instruments Holdings Inc. has filed papers with the Securities and Exchange Commission (SEC) to go public. Based in New York’s Astoria, Queens, the company was founded by a German immigrant in 1853, and today sells luxury pianos with prices ranging from $60,000 to $340,000.

  • The takeaway: Billionaire John Paulson acquired Steinway through his investment firm in 2013. He reportedly plans to use proceeds from the initial public offering (IPO) to exit his position in the company. Steinway reportedly had $538 million in net sales in 2021, a 30% increase from the prior year. Its profit increased 14% to $59 million over the same period. The company plans to list on the New York Stock Exchange. 

Other stories we’re following:

Wedding bell$: Two years after the pandemic hammered the wedding industry, a record number of people are tying the knot, and having costlier celebrations than ever before. A reported 2.6 million people in the U.S. will wed in 2022, up from 2.2 million in 2019. The average cost of a wedding is expected to exceed $34,000 this year, when accounting for extra inflation costs.

Fill ‘er up: Doughnut chain Krispy Kreme is offering customers an inflation special:  a dozen donuts for the price of a gallon of gas, currently around $4.11 as a national average. A dozen donuts from the national chain typically costs about $20. Limit: two dozen.

 Here’s what we covered last week in the Scan: 

  • Tesla CEO Elon Musk purchased a 9.2% stake in Twitter last week, making him the largest shareholder. 
  • Russia may be close to defaulting on $650 million worth of sovereign bonds, following new sanctions imposed by the U.S.
  • JetBlue Airways made an unsolicited bid to purchase low-fare competitor Spirit Airlines for $3.6 billion in cash.
  • Workers at an Amazon warehouse in Staten Island, New York City became the first to successfully vote for unionization at the world’s largest retailer.

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