Sunday Finds + 3 Thoughts From Last Week

Monster Beverage + a Latin American Fast Food Operator

Apr 16, 2023

This Is Not For Tears | Succession Wiki | Fandom

Welcome to Chit Chat Money’s Sunday Finds + 3 Thoughts From Last Week. In this newsletter you will find three topics I thought about last week, links to shows we’ve recently released, and links to some interesting articles, podcasts, and tweets. Check out the archive here.

Chit Chat Money Podcasts From Last Week

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1. Substack Notes v. Twitter

A lot of takes on this in the past week, but it has been on the top of my mind since Twitter and Substack are so important for the small group of online finance writers/podcasters like ourselves.

It will also be interesting to see if Twitter will ever get displaced as the number-one source for news dissemination. The company might not make much money but is vital to many organizations and individuals around the globe, making it one of the most important companies in the world.

I think the new Substack Notes have a clean interface, and unlike the current version of Twitter, it doesn’t feel incredibly buggy. The UX is not intuitive at the moment but that is something Substack can quickly fix. Generally, keeping track of interactions and connecting to different parts of Substack is confusing, at least in my opinion. Twitter, for all of its warts, is really good at making it easy to navigate the main services on the platform.

However…it is pretty clear this is not going to kill Twitter anytime soon. Today, Notes seem to only be for writers, with no good way of bringing on what you might call “lurkers” from other social media platforms (i.e. the 95% of accounts that look but don’t tweet).

My thinking is that Substack needs to separate “follows” on Notes from subscribing to someone’s newsletter if they actually want to dethrone Twitter. That way, casual users will come onto the platform and start following writers. Right now, it is just writers interacting with other writers. This is fine and I think will be fun for the fintwit content creators, but not going to ever be a mainstream platform in its current state.

Given how well Substack has executed building products, I would not count them out in greatly improving the Notes feature over time.

2. Rents rolling over. Bullwhip? Deflation?

It’s finally happening…

I’ve linked to the Redfin economist’s Twitter thread below if you want to see the blog post which has more context.

As the chart explains, the median asking rent from landlords in the United States has officially fallen from 12 months ago after going into a huge inflationary upswing in late 2021 and early 2022.

And this is with around 1 million units currently under construction around the country — a national record. What happens when even more rental supply hits the market over the next few quarters? I think prices — especially in tech/Zoom markets like Seattle, San Fran, Boise, Utah, etc. are headed for huge declines in rental prices. A landlord, especially the big apartment owners, would rather have someone locked into a lease at $1,000 for a full 12 months than have an empty unit that keeps asking for $1,500.

Oh, and don’t forget all the commercial real estate that is sitting empty. Over the next few years, owners of these buildings are going to have to figure out a way to make some money once their current corporate tenants don’t re-up on their contracts. I think a lot will be forced to repurpose the buildings for residential purposes.

Anyone who regularly reads this knows that I am very bearish on home prices. If rents continue to fall, that would increase my conviction that home prices will continue to fall as well. Wouldn’t falling rental prices and even more supply coming onto the market cause single-family home prices to take a huge cut as well?

3. Google the TV Operating System?

Google/YouTube seem to be increasingly ambitious with their TV plans:

Today, we’re introducing a new live TV experience that lets you browse more than 800 free TV channels across multiple providers, organized in one easy-to-use guide right in the Live tab.

This is another step in convincing people to move their viewing habits from traditional TV providers to internet-connected services like YouTube and YouTube TV.

There are a ton of moving parts in connected TVs. Even within Google they have Chromecast, YouTube, YouTube TV, NFL Sunday Ticket, streaming subscriptions, paid downloads, and now all of these ad-supported channels.

I think YouTube/Google can win in multiple ways here, but the most obvious is advertising. There are still tens of billions in TV advertising dollars spent on traditional cable channels. If/when all these viewing hours move over to CTV and if/when the consumers choose a YouTube service to watch them, the ad dollars will move over to Google.

Like other Google products, it looks like YouTube wants every piece of video content in the world accessible through its platform that can be accessed on any internet-connected device. However they monetize this (again, pretty obvious it will be ads), I think investors are severely underestimating the growth runway still left at YouTube.

See you next week,

Brett

***Our fund, Arch Capital, may own securities discussed in this newsletter. Check our holdings page and read our full disclosure to learn more.***

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3 Good Reads

The Dangerous Rise of Frontyard Politics - Derek Thompson

Several days later, my pride curdled into bitterness. As part of some reporting on housing policy, I found a State Department page offering advice to Afghans and Iraqis resettling in the U.S. The upshot: Stay away from D.C. “The Washington, D.C., metro area including northern Virginia and some cities in California are very expensive places to live, and it can be difficult to find reasonable housing,” the website warns. “Any resettlement benefits you receive may not comfortably cover the cost of living in these areas.”

2023 Is When the Empire Strikes Back - Noahpinion

Americans need to realize that Cold War 2 is fundamentally unlike Cold War 1 or World War 2. Those 20th century contests were ideological battles, where people fought died for communism, fascism, and liberal democracy. But China is not an ideological, proselytizing power; its ideology, basically is just “China”. Xi Jinping doesn’t care whether you have elections and protect civil rights or send minorities to the death camps, as long as you support Chinese hegemony abroad.

Arrest Made in SF Killing of Bob Lee - Mission Local

Today’s arrest would appear to undermine the premise that Lee’s violent death was due to street conditions in San Francisco. If the police do have their man, this was not a robbery gone bad nor a motiveless assault by some random attacker, but an alleged grievance between men who knew one another, which the suspect purportedly escalated into a lethal conflict