Today's Markets: Netflix, Tesla, THG and more

It has probably received due comment, but surely one aspect of Netflix’s (US: NLFX) woes is linked to the ability of its viewers to simply turn off the taps whenever they feel they have had their fill of what’s on offer. Those who binged on content during the lockdowns would have quickly exhausted their options on the streaming service. So, a monthly subscription model is hardly desirable, especially in terms of revenue visibility. And unlike, say, Disney (US: DIS), it could be argued that Netflix’s service offering isn’t complementary and/or supplementary to its core business, to say nothing of the former’s back catalogue. It’s thought a move towards providing a cheaper, ad-funded service may be inevitable, but such a change may be viewed as a sign of desperation rather than a genuine strategic pivot. Pershing Square (PSH) founder Bill Ackman agreed, selling his holding for a $400mn loss this week following the disastrous March quarter update. 

It’s not difficult to appreciate why America’s adversaries would like to see the US dollar replaced as the world’s default reserve currency. The Credit Derivatives Determinations Committee, which is tasked with overseeing the global credit-default swaps market, has voted in a majority that Mother Russia is already at risk of potential default after sanctions forced it to make interest payments in roubles on two dollar-denominated bonds earlier this month. 

Russian access to global financial markets has been steadily eroded since it invaded Ukraine, while tightening sanctions mean that around half of the country’s foreign reserves have now been frozen. It’s a shame that Europe is still forced to meet its energy needs through Russian exports, otherwise we might have witnessed a speedier resolution to the crisis. It’s somewhat galling to note that in the 1980s, European policymakers ignored a warning by the Reagan administration that a proposed 3,500-mile gas pipeline from Siberia to Germany was a direct threat to the future of Western Europe. It is also posing direct and indirect threats to shareholder value, unless, of course, you’re long on the defence sector.

It’s worthwhile noting a recent viewpoint expressed by analysts at Evercore, an independent investment banking advisory firm. Ergo, shareholders have also had to contend with rising bond yields through 2022, but there are signs that their ascent might be slowing, thereby switching the focus of investors from the risk-free rate of return to stock fundamentals as the chief driver of share prices.