Deal or no deal

How shoppers are spending more dispute inflation sticking around for longer & Shari Redstone's exit plan from Paramount has been rocky

Nik Stojanovski
April 29, 2024

Good morning readers. Get this…a former athletic director at a Baltimore County high school landed in hot water after allegedly using AI voice cloning to frame the school's principal for making racist remarks. Dazhon Darien's scheme unraveled due to the recording's suspicious characteristics, such as a “flat tone, unusually clean background sounds, and lack of consistent breathing sounds or pauses”, according to experts who had examined the recording. It looks like the former athletic director released the the fake recording to retaliate against the principal because he was pursuing an investigation into Dazhon for the potential mishandling of school funds.

Talk about something backfiring against you.

Let’s jump into today’s storylines.

In today’s digest:

Thought we were done with inflation? Think again
Headline Hustle: Iranian rapper’s death sentence for supporting women’s rights sparks global outrage, Musk makes surprise visit to China, CEO’s of biggest tech firms join AI safety board
The queen of media’s plan to sell Paramount isn’t going so well
The Week Ahead: What to Expect
Pulse Points: What’s Trending

ECONOMY

Inflation might be sticking around, but it’s not scaring off shoppers

Photo by Jacek Dylag on Unsplash

Just when you thought you could finally afford a trip to Disney World without taking out a second mortgage, inflation rears its ugly head once again.

Inflation remained stubbornly high last month, but it hasn’t stopped Americans from whipping out their wallets like they’ve just won the lottery. The Personal Consumption Expenditures (PCE) price index, a gauge the Federal Reserve likes to keep an eye on, hit 2.7% for the year ending in March. While that number might not sound too scary, it’s a slight jump from the previous month’s 2.5%, raising a few concerns over at the Fed.

But before you start selling your belongings on eBay, let's look at why inflation’s holding steady

Blame it on housing costs and other services where price hikes are like that stubborn stain that refuses to come out. Despite the Fed's best efforts with 11 rate hikes in two years, inflation just won’t play nice. And while core inflation (which ignores volatile food and energy prices) held steady, it's still not where the Fed wants it to be—around 2%.

While we’d all like to believe that the Fed can work some magic and bring inflation down, it looks like it might take a while. As Nationwide's senior economist Ben Ayers said, “We’re moving in the wrong direction, again, on the inflation story.”

Despite this, Americans are still spending like it's 1999.

Consumer spending jumped 0.8% in March, way above what economists expected.
Even when adjusted for inflation, spending was up 0.5%.

The downside? A stronger labor market might be fueling this spending spree, but it could also be setting the stage for some households to overextend themselves.

And if you’ve noticed that your savings account is getting a little thin, you’re not alone. Savings as a percentage of disposable income dropped to 3.2%, the lowest since October 2022.

So, if you’ve been planning that big vacation, you might want to put a little extra cash aside—just in case that Disney trip turns into a staycation.

IN THE KNOW

Headline Hustle

Source: Boillot / Shutterstock

🇮🇷 Iranian rapper receives death sentence for supporting women’s rights, sparks global outrage. Iranian rapper Toomaj Salehi received a death sentence for supporting women's rights in Iran, sparking global outrage and calls for his release. Amidst mounting tensions and internal crackdowns, Salehi's case symbolizes Tehran's escalating suppression of dissent. International condemnation from country’s like the US, France, and Italy along with the ongoing protests highlight the gravity of Iran's human rights abuses, challenging the regime's efforts to deflect attention amidst regional conflicts.

🇨🇳 Elon Musk makes surprise visit to China as Tesla seeks self-driving technology rollout. Tesla CEO Elon Musk makes an unannounced visit to Beijing, sparking speculations about Full Self-Driving software rollout and data transfer approvals. Meeting Premier Li Qiang, Musk discusses Tesla's role in US-China cooperation. Amidst competitors' advancements in autonomous technology, Musk aims to expedite FSD availability in China and obtain data transfer permissions. The visit coincides with the Beijing Auto Show, highlighting Tesla's strategic focus on the world's largest EV market.

🤝 CEO’s of the biggest tech firms join an AI safety board. A new federal advisory board, including leaders from OpenAI, Nvidia, Microsoft, and Alphabet, aims to safeguard critical infrastructure from AI-related threats. Led by Homeland Security, the board will develop strategies to protect sectors like power grids and transportation while harnessing AI's potential. Despite concerns about technology's impact, the Biden administration prioritizes oversight without stifling innovation. With a diverse panel, including tech executives and public officials, the board seeks to balance progress with safety.

MEDIA

When the queen of media decides to cash out, drama ensues

Source: Reuters

Shari Redstone, ready to trade her media throne for a beach house and a cause, thought merging with Skydance Media would be her grand exit. But as Paramount's queen has learned, even empires built on blockbusters like “Titanic” and “The Godfather” don’t guarantee a smooth farewell.

The plan to sell

Last year, feeling the sting of a declining empire, Redstone eyed selling Paramount Global—home to CBS, MTV, and Nickelodeon. The timing seemed ripe; the Oct. 7 attacks sharpened her focus on fighting antisemitism, and a dwindling dividend had already tightened the family purse strings. Enter David Ellison, Skydance Media's CEO, who pitched a merger promising a lucrative way out for Redstone.

But the path to this media marriage has been anything but red carpet. The proposed union quickly became a boardroom blockbuster filled with shareholder rebellions and executive clashes. Paramount's CEO, Bob Bakish, might be on his way out, leaving an "Office of the CEO" in his wake—a band-aid fix for a company at a crossroads.

Amid this chaos, the fate of an American icon hangs. Shareholders worry that what’s good for the Redstone family might leave them holding the short end of the stick. And while Skydance's revised bid whispers promises of rescue, an Apollo Global Management offer dangles a more straightforward cash payout, albeit without the premium Redstone desires.

Big picture: Paramount's market value has nosedived by 80% under Redstone's watch, a stark reminder that not all stories in the entertainment world have happy endings. As the curtain rises on another week of negotiations and potential farewells, all eyes are on Redstone, waiting to see if she can script a finale worth the empire she inherited.

WEEK AHEAD

What to expect