Blinding Success

Hi, today we explore: (1) The Fed's in the red, (2) Twitch is cutting staff, (3) The Weeknd's latest Spotify record. TOGETHER WITH Today's Topics Hello, and Happy Martin Luther King Jr. Day! Today, we celebrate the remarkable legacy of the [civil rights leader]( — who started college at just 15 and won the Nobel Peace Prize only 20 years later. Today we're exploring: - I O U: The Federal Reserve is in the red. - Slipping streams: Twitch is wildly popular, but remains unprofitable. - Blinding success: The Weeknd breaks the 4 billion mark on Spotify. Have feedback for us? Just hit reply — we'd love to hear from you! [Read this on the web instead]( In its 110-year history, the Federal Reserve, America’s central bank, has been an almost constant source of funding for the US Treasury, sending billions of dollars of profits every year to bolster government spending. That all changed last year when the Fed began to operate at an unprecedented loss — the magnitude of which is becoming increasingly clear, with the [central bank reporting]( a whopping $117 billion deficit, taking total losses since Sep 2022 to $133 billion. What changed? The Fed owns trillions of dollars of securities — many of which were purchased during the crisis of 2008/09 and the pandemic to stimulate the economy — and receives interest on those securities. That interest, combined with other fees for services to financial institutions, used to handsomely exceed the running costs and interest paid out to banks for parking their cash with the Fed… hence the many decades of profits sent to the Treasury. However, in the pursuit of lowering inflation, the Fed hiked rates aggressively, sending its own interest expense soaring from $102 billion last year to an eye-watering $281 billion in its latest report. The obvious question is: do the Fed losses really matter? There’s no-one at the Treasury chasing Fed members down for the $133 billion loss, with the Fed simply creating an IOU (technically a “deferred asset”), which, once profitable, will need to be paid down to zero, before it can get back to sending returns to the Treasury. Put bluntly Last week, online streaming platform Twitch announced it would be laying off over 500 workers, or some 35% of its workforce, with CEO Dan Clancy conceding in a [post-announcement stream]( “I’ll be blunt, we’re not profitable”. While the cutbacks come amidst a [raft of layoffs]( at Twitch’s parent company Amazon, the platform has struggled to turn its pandemic-era boom into a profitable business. Indeed, when combined with a similar round of cuts last year (the streamer slashed 400 jobs in March), this latest round of layoffs leaves Twitch with roughly [half of the staff]( that it had 12 months ago, at a time when viewership on the platform appears to be falling. Data from TwitchTracker reveals that the total number of hours watched is down ~25% from its 2021 peak, presumably translating into lower advertising revenue. Watch this space While much of the talk about the economics of Twitch has focused on the content creators on the platform, of whom only ~0.1% [reportedly]( make above the minimum wage, the company itself has had trouble making ends meet since starting life as Justin.tv in 2007. Indeed, according [to Forbes]( rival YouTube can only prop up its live streaming platform thanks to its much more lucrative video arm — a safety net that Twitch doesn’t have to fall back on. [Sponsored by 10 East]( Open for business: Private markets Why are savvy investors looking beyond public companies? The market isn’t what it was. Since 1996, the number of public stocks listed in the US has dwindled. But it’s not just a numbers game — savvy investors also know that private markets can offer appealing investment opportunities. Introducing [10 East](. It’s a platform where qualified individuals can invest in vetted private credit, real estate, niche venture/private equity, and other one-off investments that aren’t typically available through traditional channels. [10 East]( principals have a 12+ year track record of strong performance across 355+ transactions. And the best part? 10 East offers flexibility to participate on a deal-by-deal basis, while co-investing alongside [industry veterans]( who have skin-in-the-game. [10 East]( is where founders, executives, and portfolio managers from leading firms are diversifying their personal wealth. [Join 10 East with complimentary access here]( Starboy Just as the singing-acting-producing artist [teases]( his 6th — and possibly final — album, The Weeknd (real name Abel Tesfaye) has earned another career-defining accolade: his 2019 smash-hit Blinding Lights has become the first song to surpass 4 billion streams on Spotify. Having spawned countless [TikToks]( as a pandemic-era dance challenge, the track overtook Ed Sheeran’s Shape of You (2017) to become the most-played song ever on Spotify in 2022, and has only furthered its lead since. Fans are anticipating the final installment of the artist's 3-part album series, but Tesfaye has expressed a desire to “close The Weeknd chapter” with its release… though not ruling out releasing music under his real name. Save your tears Despite being over 4 years old, Blinding Lights still garners ~2m daily listens on Spotify, which — even under the oft-criticized music streaming payout structures — works out to roughly $6-8k in royalties every day… for one song, on one streaming platform. Indeed, [Variety]( estimates that the track's 4 billion streams would have netted a total ~$20m just from Spotify alone since its release. And, if the Canadian-Ethiopian star does continue to make music, there’s likely to be more megahits on the way: of the 566 songs to break 1 billion streams on Spotify, 10 are from The Weeknd’s discography. More Data • The IMF estimates that up to 60% of all jobs in [advanced economies]( could be impacted by AI. • Memorabilia from TV show Succession sold for a total of $627,825 across 236 lots at auction — including a conspicuous "white powder" for $2,000 and a “ludicrously capacious bag” for [$18,750](. • Investor access to private markets is widening. That makes it harder to know where to invest your time — but [10 East]( principals have skin-in-the-game and a 12-year track record of performance across 355+ transactions. Join 10 East with [complimentary access here]( • Peacock's exclusive Dolphins vs. Chiefs game streamed to a peak audience of 24.6 million, crowning it as “the biggest live-streamed event in US history”... how many of those were Swifties, though, is [unknown](. • Tesla's stock has stalled in the first 2 weeks of 2024, erasing $94 billion from the company's market cap, after more than doubling [last year](. **This is sponsored content. Hi-Viz • Mapping the popularity of Mexican cuisine across [the nation](. Off the charts: Which American bank posted record-breaking profits for 2023 on Friday, despite sales taking a hit in the fourth quarter? [Answer below]. [Answer here](. Thanks for reading. See you on Wednesday! Have some [feedback](mailto:daily@chartr.co?subject=Feedback&body=Hi%2C%0A%0AI%20like%20the%20newsletters%2C%20but%20I%20had%20a%20thought%20for%20you...) or want to [sponsor]( this newsletter? Not a subscriber? Sign up for free below. [Subscribe]( Copyright © 2024 CHARTR LIMITED, All rights reserved. You are receiving this email because you opted in via our website. Our mailing address is: CHARTR LIMITED 231 Vauxhall Bridge RoadLondon, SW1V 1AD United Kingdom [Add us to your address book]( Don't want charts in your inbox anymore? Break our hearts and [unsubscribe](.