by Shane Ormond
On May 10, 2019
Earlier this month, it seemed like the Chinese trade negotiations would come to an amicable end any day now. But after some unexpected pushback from Beijing, the U.S. is ratcheting up the pressure with tariffs of 25% on more than $200 billion of Chinese goods.
- Choo! Choo! All Aboard the Trendy Train to Fake Meat Town
- The Biggest Cash Prize in the History of the Sport?
- Trump Takes First Step to Lower Drug Costs
- China Reforges the Silk Road… But at What Cost?
Choo! Choo! All Aboard the Trendy Train to Fake Meat Town
For years, Big Meat has thumbed its nose at the prospect of meatless “burgers” and vegetable substitutes.
But since the start of the year, we’ve seen a seismic shift in corporate attitudes to frankenburgers and I-can’t-believe-it’s-not-sausages.
Part of this shift is due to the rapidly advancing science of making veggie protein taste like meat. Modern maybe meat, like the Impossible Burger and Beyond Burger, emulates the texture, smell, and even bleeds like a real burger.
But the real driving force behind this sudden change of heart is consumer demand. Early pioneers of not-quite meat have successfully shifted the perception of lab-grown alternatives from “weird and gross” to “healthy alternative.”
Every quarter, more and more customers are opting for the veggie alternative. And Big Meat is not going to let that cut into their bottom line. (Big Meat as in the meat industry. Not your friend from college who put beer in his fruit loops.)
Flipping Like Burgers on a Grill
Tyson Foods Inc. (TSN) is the largest producer of meat in the U.S. And until last week they owned a 6.5% “steak” in Beyond Meat.
Tyson unloaded all its shares ahead of Beyond Meat’s (BYND) IPO last week, only to announce that it was getting into the bleeding veggie game itself.
Tyson sold its stake so there wouldn’t be a conflict of interest when it started making its own lab-grown monstrosities. But if Tyson had waited until Tuesday to sell, the company could have banked itself a tidy windfall on its investment, as Beyond’s share price rose 227% since trading began.
Beyond’s shares have since pulled back from its post-IPO tear, falling 8.47% yesterday and continuing to fall about 7% in this morning’s trading.
Tyson plans to drop its faux meat on a limited basis just in time for summer grilling and to scale up before the end of the year.
Where’s the beef?
Everybody and their dog wants a piece of this meatless pie.
Burger King’s Impossible Whopper is set to roll out nationwide before the end of the year. And its rival McDonald is beta-testing a meatless burger in its German restaurants. (Entschuldigung, Deutschland!)
Even Chanticleer Holdings, owner of American institution Hooters and the excellent stock ticker (BURG), want in.
Chanticleer announced a partnership with Beyond Meat, to bring its meatless monstrosities to 50 of Chanticleer’s burger joints.
There’s no news on whether or not Chanticleer plans to bring no-burger burgers to its owls-and-boobs-themed flagship restaurant just yet. But if it sees strong numbers from this test phase, you can count on seeing a couple of fake patties in your local Hooters.
(ED NOTE: At time of writing, Chanticleer’s stock had dropped a whopping 15% following the announcement.)
The folks over at Bloomberg Intelligence are predicting that this is the start of major industry disruption… but what do you think?
Are these fake burgers just warming their buns until the next foodie trend comes along? Or are we looking at the end of meat as we know it?
The Biggest Cash Prize in the History of the Sport?
Strap in folks. This one’s about to get wild.
Let’s talk eSports.
Wait! Before you start scrolling, let’s get one thing out of the way.
Yes, eSports is nerdy as hell. Yes, its barely a sport. Yes, your nephew should be doing anything with his life other than playing Fortnite all day.
But, oh boy, is there a metric buttload of money flooding into this industry.
Newzoo projects $152 billion in revenues this year alone. And the upcoming Dota 2 video game championship, The International 2019, is on track to have the biggest prize pool in eSports history. (You don’t need to know what Dota 2 is to appreciate the significance of this story. It’s like elves beating up orcs and wizards and crap. Not important.)
The event’s host, Valve Corp., contributes about $1.6 million to the prize pool. But the lion’s share of prize money is generated by the game itself.
Like your worst relative’s favorite game, Fortnite, Dota 2 is “free-to-play.” But players can pay for “Battle Passes” that unlock extra content in their games like weapons and hats for their characters. (Hats are pretty much the bitcoin of the gaming world.)
Twenty-five percent of the sales of Dota 2’s battle passes go to the prize money of The International 2019. Last year, the tournament had a $25.5 million prize pool, the largest in eSports history.
The winning team took home more than $11.2 million, folks. (Yes, for playing the clicky wizard game.)
The battle passes for The International 2019 have only been out for a few days and records are being smashed.
In just two days, Dota 2 secured $8.2 million for the prize money, compared to just $6.1 million in the same time frame last year, and more than the entire prize pool for The International 2019.
The Fortnite World Cup (I can’t believe that’s a series of words I have to type) has announced a prize pool of $30 million. But if the Dota 2 pile continues to grow at this speed, it should blow past that and end up somewhere in the low 30s (of millions of dollars).
The big question is: With all this money flying around the place, who’s getting rich?
I asked our tech trends expert James Altucher and he says there are a handful of tiny publicly traded stocks that could skyrocket in price… but there’s one investment opportunity that could bank you a retirement fortune within a single year.
“This obscure, little-known company is investing in the backdoors of eSports venues in ways I believe will lock it into explosive growth in the coming months,” says James. “Today its stock price has been hovering around $8 a share… but it won’t be for long.”
Trump Takes First Step to Lower Drug Costs
The Trump administration passed a law yesterday forcing drugmakers to include the list pricing of prescription drugs on their TV advertisements. (Hint: it’s always going to be more than it should be.)
The move is the first step in Trump’s Blueprint for Lower Drug Costs. (The second step is to move to a country where the healthcare system isn’t fundamentally broken.)
Health & Human Services Secretary Alex Azar told reporters Wednesday: “Requiring the inclusion of drugs’ list prices in TV ads is the single most significant step any administration has taken toward a simple commitment: American patients deserve to know the prices of the healthcare they receive.”
The thrust behind the initiative is that transparency in pricing will better equip consumers to make informed choices and drive prices down.
Critics of the bill (see: drugmakers) have said that being forced to include the list price is unfair as customers with insurance will pay less.
But Azar clapped back, pointing out that even consumers with insurance pay the full price until they hit their deductible and after that their co-pays are based on the list price.
“Claiming list prices don’t matter is almost the same thing as claiming there’s no problem with high drug costs at all,” Azar said. “I don’t think many American seniors or patients with serious illnesses would say that’s the case.”
ONE LAST THING
China Reforges the Silk Road… But at What Cost?
Earlier this week, we started to discuss an ongoing humanitarian crisis in China.
For the past two years, the Chinese government has been targeting a single ethnic minority, rounding them up, and throwing them in “reeducation centers.” (That’s authoritarian-dictator speak for internment camps.)
What did these folks (known as the Uighurs) do to incur the wrath of the People’s Republic of What’s-a-Democracy?
The Uighurs happen to live in Xinjiang, an autonomous region in China’s northwest that borders Mongolia, Kazakhstan, and Kyrgyzstan. Xinjiang has been under Chinese control since 1949, but has a certain amount of “freedom” to govern itself.
Xinjiang isn’t exactly a tourist hub. Visiting one of its mountain region towns is like taking a trip back in time. Folks still live in old-fashioned mud-brick huts. There are no paved roads. Which is why cars and other vehicles are so sparse.
Despite all that, China wants Xinjiang.
You might have heard of the Belt and Road Initiative.
This is China’s trillion-dollar infrastructure project to rebuild the Silk Road and boost China’s economic and political influence.
Xinjiang sits right in the middle of the old Silk Road, which makes it a valuable logistics hub for China’s plan.
Too valuable for a self-governing autonomous region.
China has been quickly eroding Uighur control of Xinjiang with a number of measures.
First, China has been directing an enormous number of Han Chinese to move into the region in order to water down the Uighur population and culture and make the region more traditionally Chinese.
And second, as we discussed in yesterday’s One Last Thing, the abduction and imprisonment of more than a million Uighurs, without trial or sentencing.
The Chinese government has accomplished this feat using an Orwellian tech unlike anything we’ve seen before. And it has big implications for the future of the world.
More on that tomorrow.
Closing Data for 5/8/19
|S&P Index 500||$2,879.42||↓ 0.16%|
- Roku (ROKU) jumps 23% on increased demand for its streaming services.
- Industrial and semiconductor stocks hit especially hard amid U.S.-China trade standoff.
- Uber lowers value ahead of tomorrow’s IPO, employees continue to strike worldwide. Sounds uber-stressful to me.
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Oh boy. The energy in the comments section is high today. Yesterday I asked for your take on the alleged leak of Trump’s tax returns. And you guys came down hard on both sides of the issue. Here’s just a taste of the avalanche of emails I woke up to this morning (with some valuable insights from folks in the know):
Likely close to the truth. Trump is very dishonest. The sizes of the losses show not business smarts, but incompetence. This is not normal. No other real estate buyer/seller shows anything like these numbers. He is a fraud. — John R. S.
I have owned and leased two properties for over a 25 year period. I learned through experience that there are basically two ways to play your real estate.
1) You set it up to earn a positive cash flow (always the preferred method) and you pay it down and manage it for profit. However, you’re going to get a bigger bite out of your profits too – each and every year, some of which your tenants cannot help you pay.
2) Short term tenancies, such as vacation properties, won’t always be filled to capacity. You then have vacancies and sometimes losses. You have to be able to find your balance point where you hopefully make some positive cash flow (albeit small in sum compared to long term tenants) and can show paper losses so your tax bite is smaller. Carry forward tax/interest “losses” are useful in these situations going forward.
I learned these things by actively owning and managing both types of rentals. On a basic level, I understand what Trump did. It’s totally legal too. Carry forward can wipe out much, and sometimes all, of your tax liability. — Joe O.
I’m from Queens, NY like Trump. New Yorkers from that era all know that Trump is a con man and a grifter, unlike his father, who was actually a smart and ruthless business man and real estate mogul. Even his ghost writer on Art of the Deal says it’s fiction. If it’s not true about his losing more than a billion dollars in 10 years, why doesn’t he prove it and why doesn’t he release his tax returns? Come on, you can’t bull**** a bull*****er. — Walter F
And how do you know who your father is?? Cuz your mama told you so
The fact that anyone would even consider writing about this shows how desperate and scared the left is cuz they are about to be totally uncovered for the dozens of illegal, unethical and immoral things they havee been doing these past 10 or so years…
They are scared, scared, scared…so what do they do? What they always do, make outlandish and wild accusations and plant MORE misleading and untruthful things about their opponents because that’s all they can do…as they begin to circle the drain in the swamp they created and love to live in…
Maybe someone can leave a bunch of information about the affairs that you have had and we can all talk about that now…. Haaaaaaaaha ha ha haaaa. — Philip.
Ah yes, a maniacal laugh — the hallmark of a well-reasoned, clearheaded argument.
I could fill a book with the things my momma told me. One of my favorites was “don’t suffer fools gladly.”
Stay frosty, Philip. You’re a valued reader.
Editor, One Last Thing