Daily Update: April 21, 2022

Start each business day with our analyzes of the most pressing developments affecting markets today, along with a curated selection of our latest and most important news on the global economy.

What Netflix’s struggles may mean for the market

Because Netflix has struggled to sustain growththe company’s first-quarter subscription performance indicated a change in the scale of Netflix of the massive number of subscribers amassed during the pandemic – and raises questions about how other tech and streaming giants can navigate complex current conditions.

The number of paid Netflix global streaming subscriptions fell to 221.64 million in the first quarter from 221.84 million in the previous quarter, marking the first time Netflix lost subscribers. In its first-quarter results on April 19, Netflix said the end of its operations in Russia led to the loss of 700,000 paid subscriptions in the country, citing headwinds to revenue growth. of increased competition and account sharing between households, and warned that the second quarter could see another 2 million subscriber losses.

“I know it’s disappointing for investors, and it sure is,” CEO Reed Hastings said in an April 19 earnings interview, according to S&P Global Market Intelligence. “That’s when it all counts, and we’re very focused on … getting back into the good graces of our investors.”

Netflix had added 18.2 million new subscribers last year, about half of the 36.6 million net new subscribers added in 2020, and mainly from new memberships in Europethe Middle East and Africa and Asia-Pacific economiesaccording to Kagan, a media research group within S&P Global Market Intelligence.

Economic conditions in major markets are changing as the geopolitical shock of the war in Ukraine and associated inflationary pressures weigh on global growth. In the United States, the region that accounts for the largest Netflix market share, the business services and technology sector is expected to witness the positive operating momentum from last year slowed in 2022 alongside lagging U.S. GDP growth, persistently high inflation, a tight labor market and rising borrowing costs, according to S&P Global Ratings.

Still, streaming war between Apple TV+, Amazon Prime, Disney+ and Netflix, as well as other industry players like HBOMax, Hulu, NBCUniversal’s Peacock and Warner Bros. Discovery’s Discovery+ and CNN+, are escalating at a breakneck pace. In the crowded market, streaming providers compete with different prices, original content offeringsand the possibility that advertisements maintain their market share, subscribers and operations. S&P Global Ratings expects major US media companies spend over $100 billion on content in 2022 alone as media and technology companies struggle to fuel the growth of their video streaming services.

“You hit a ceiling because people have limited attention, and they start shifting their attention to other platforms, so pricing becomes less viable,” said Alejandro Rojas, the company’s vice president. Parrot Analytics streaming media analysis, at S&P Global Market Intelligence. “The whole industry is going to get bigger than where we are right now, and that’s what we’re seeing… The big question for Netflix: can they reach 900 million or 1 billion subscriptions? they get 5x where they are today?”

The implications of the exodus of international companies from the Russian market following its attack on Ukraine and international sanctions have brought additional stress to Netflix and other tech companies. Analysts polled by S&P Global Market Intelligence believe that the decline in the number of Russian members and Netflix’s inability to add new members in the country can cause problems moving forward because the company aims to offer a model of strong growth. Netflix was estimated to have 1.1 million subscribers in Russia at the end of 2021 – and Russia had recently been the fastest growing country in Netflix’s European segment, with subscribers up 177.5% d year-over-year in the fourth quarter of 2021, according to Kagan, a media research group at S&P Global Market Intelligence.

After reporting the loss of approximately 200,000 subscribers for the first three months of this year, Netflix shares are down 62.5% year-to-date as of April 20, which equates to a loss of about $166 billion in market capital in less than four months, according to S&P Global Market Intelligence.

“The S&P 500 ended nearly unchanged yesterday as strength in real estate and consumer staples – both up 2% – were offset by a slump in communication services, down 4% on the day. following a 35% collapse of Netflix,” said Benedek Vörös, director. of the index investing strategy at S&P Dow Jones Indices, said in a note today. “Including Netflix’s recent fall, the S&P 500 communications services sector is now down 18% year-to-date, making it responsible for 2% of the 6% year-to-date loss. of the year for the S&P 500.”

Today is Thursday, April 21, 2022and here is today’s essential intelligence.

Written by Molly Mintz.


Interview: Historically high food prices are here to stay, says FAO economist

Historically high prices for food and agricultural products are expected to continue for several seasons to come, due to various factors such as the Russian-Ukrainian conflict and high prices for agricultural inputs, said Monika Tothova, an economist at the United Nations. United Food and Agriculture Organization, in an interview with S&P Global Commodity Insights. “Food prices are very likely to remain high, given the supply and demand shock, but also the higher cost of agricultural inputs,” Tothova said.

—Read the full article from S&P Global Commodities Outlook

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Capital markets

The influence of corporate ESG factors in our analysis of European CLO credit ratings

The influence of ESG factors in the analysis of the credit rating of European CLOs by S&P Global Ratings depends mainly on the influence of ESG factors in its analysis of the underlying obligors. This influence is reflected in its ESG credit indicators for underlying debtors, when available. The S&P Global Ratings ESG Credit Indicator for each underlying obligor is not an S&P Global Ratings ESG sustainability rating or assessment. On the contrary, it isolates its opinion on the influence of ESG factors in its analysis of the credit rating of this debtor. In order to provide additional information and transparency on the influence of ESG factors for the CLO asset pool as a whole, S&P Global Ratings has calculated the weighted average and distributions of its ESG credit indicators for the underlying obligors .

—Read the full report of S&P Global Ratings

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International trade

India could export 1m tonnes of wheat to Egypt in 2022-23 season, below target: sources

India may only be able to export 1 million tonnes of wheat to Egypt in the 2022-23 marketing year (July-June) due to quality and logistics issues, trade sources told Reuters. S&P Global Commodity Insights. This comes after the Indian government announced plans to increase exports to Egypt to around 3 million tonnes in the 2022-23 marketing year after securing the Middle Eastern country’s approval to be a source of supply in the week of April 15. India has planned to take advantage of the shortage of Black Sea supplies following Russia’s invasion of Ukraine and increase its exports to major importers.

—Read the full article from S&P Global Commodities Outlook

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Listen: Renewable energy certificates play a role in decarbonization, but do they have real economic value?

US states are reinforcing their decarbonization targets in legislation and companies are pledging to power their operations with renewable energy. Enter renewable energy certificates. What role do RECs play in the energy transition, and do they bring more clarity or challenges to the decarbonization race? Amy Gasca, Global Power Manager, leads the discussion with power pricing analyst Nicole Baquerizo and senior director of North American Power Analytics Morris Greenberg.

—Listen and subscribe to Commodities Focus, a podcast from S&P Global Commodities Outlook

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Energy and raw materials

Ukrainian steelmaker at center of war switches to making tank traps and aid

A week before Russia invaded Ukraine, the country’s largest private employer and steelmaker presented plans to modernize its Ukrainian facilities and continue construction of its new private technical university in the city of Mariupol. But the war upended the plans of the mining and metallurgical company, causing it to become a key source of defense equipment and humanitarian aid in the beleaguered country. Mariupol, where nearly a third of Metinvest Holding LLC’s 97,000 employees are located, has quickly become one of the hardest hit regions in the country, and Metinvest executives have taken a close look at the devastation unfolding there. . Ukrainian authorities said at least 1,000 civilians were hiding in underground shelters at Metinvest’s Azovstal steel plant as Russian troops dropped bombs on the facility, Reuters reported on April 19.

—Read the full article from S&P Global Market Intelligence

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Technology and media

Comedies, dramas and documentaries are the top entertainment genres for US consumers

It’s no surprise that Americans enjoy watching comedies and dramas, but a range of genres – spanning anime, documentaries, horror/suspense and reality TV – also resonate with different groups of viewers. age and ethnicity. Kagan’s Consumer Insights survey of 2,529 US adult Internet users conducted in September 2021 showed that 70% of households enjoyed watching dramas and comedy, documentaries (55%), horror/thriller (40%) and reality (39%) rounding out the top five. popular genres. Segmenting respondents by age bracket highlights various generational differences in genres enjoyed – important factors for traditional TV programmers and streamers when looking to engage audiences and attract new viewers. While comedies were popular across all age brackets, older viewers preferred dramas, although 50% of Gen Z respondents said they enjoyed dramas.

—Read the full article from S&P Global Market Intelligence

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