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Morning Cents: June 18, 2020

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June 18, 2020 – Aunt Jemima’s retirement, massive American loan forbearance and the Bank of England’s plan to step up.

Today’s newsletter is 1134 words, a 6-minute read. Let’s get to it:

Aunt Jemima and Uncle Ben’s, Rooted in Racist Imagery, to Change

It’s rebranding season. The PepsiCo unit in charge of Aunt Jemima products announced the brand’s retirement because of “its origins in racist imagery of Black people,” according to The Wall Street Journal. Mars Inc. followed shortly after, saying it would change the Uncle Ben’s brand. B&G Foods Inc. and Pinnacle Foods didn’t issue any changes, but both stated, “they would review the packaging long used by Cream of Wheat and Mrs. Butterworth’s products.

“We recognize Aunt Jemima’s origins are based on a racial stereotype,” said Kristin Kroepfl, vice president and chief marketing officer of Quaker Foods North America, according to NBC News. “As we work to make progress toward racial equality through several initiatives, we also must take a hard look at our portfolio of brands and ensure they reflect our values and meet our consumers’ expectations.”

Why It Matters

It’s an effort by each company to disassociate itself with systemic racism and prevent its future spread. The protests spurred by the killing of George Floyd by police have reignited public discourse, resulting in many companies rethinking their products and marketing. Nascar has banned the Confederate battle flag. More companies are declaring Juneteenth as an observable holiday. HBO MAX pulled “Gone With the Wind” off its platform, and the Paramount Network canceled “Cops,” both because of the inappropriate ideas each property conveys. While Mars, B&G and Pinnacle haven’t committed to firm dates, PepsiCo says packaging changes would appear throughout the fourth quarter.

Numbers to Consider

  • 1889 – The origin of the Aunt Jemima Brand – it was inspired by a popular song called “Old Aunt Jemima,” and performed in minstrel shows by a white man in blackface.
  • $131.76 – PepsiCo’s share price this morning, which bounced back after hitting its worst level in a month last week.
  • $5 Million – The minimum amount promised by Quaker Oats, a subsidiary of PepsiCo, will donate “to create meaningful, ongoing support and engagement in the Black community.”

Read More: (NBC NEWS) (WALL STREET JOURNAL)

Americans Skip Millions of Loan Payments as Coronavirus Takes Economic Toll

A massive chunk of Americans is skipping out on paying student loans, auto loans and other forms of debt in the wake of the coronavirus pandemic. The number of accounts in deferment, forbearance, or relief since March reached more than 100 million in May, with the most significant increase among the student loan population.

Why It Matters

People avoid paying their bills when times are tough. The surge in missed payments is a reliable indicator that many Americans are losing their jobs and are unable to pay down debt. Unemployment remains at historic levels, and the economic consequences of the pandemic will be felt for years to come.

The good thing is the government is providing some forms of relief. Stimulus checks and unemployment benefits offset parts of lost paychecks, while the stimulus package gave borrowers the chance to stop making monthly payments and catch their breath. The degree to which these measures solve people’s problems vary from case to case, but its indeed an effort to protect Americans during these tumultuous times.

Numbers to Consider

  • 106 Million – The peak number of accounts enrolled in deferment, forbearance or other relief measured in May.
  • 79 Million – The amount of student loan accounts in delay, an 18 million rise from a month earlier.
  • 7.3 Million – The number of auto loans undergoing some form of relief, double the previous number.

Full Story: (WALL STREET JOURNAL)

Bank of England Steps Up Virus Fight with Bond-Buying Boost

The Bank of England is stepping up, expanding its bond-buying program to try and lift its economy out of the worst recession in “centuries,” according to Bloomberg. After policymakers voted 8-1 to approve the measure, the BOE says the purchases of 100 billion pounds in bonds would be completed by year-end. 

Why It Matters

Government relief is needed to save jobs and keep businesses afloat, but it has to be done responsibly. Approving additional funds at a time like this, where there are record-low interest rates, puts a cap on how messy the government’s spending can get.

Even though the economic downturn has proven to less severe than England policymakers were expecting, this is likely not the last of BOE measure to fight the plunge.

Numbers to Consider

  • 0.1 Percent – The Bank of England’s record-low interest rate.
  • $125 million – The U.S. dollar equivalent of the number of bonds the BOE plans to purchase.
  • 11 Percent – The OECD predicted the nation could experience one of the developed world’s worst contractions in 2020, the most significant slump in more than 300 years.

Full Story: (BLOOMBERG)

A Quick Look

Unemployment Claims Are Still High but Have Eased Substantially

  1. According to the U.S. Department of Labor, jobless claims fell below 2 million in recent weeks after a peak of 6.9 million in March. Last week, 1.5 million claims were filed.
  2. As a whole, the number of Americans receiving benefits has held steady near 20 million. It peaked at nearly 25 million in May. This unemployment trend continues to remain at “historically high levels.” The previous high in a single week was 6.6 million in 2009.

Full Story: (WALL STREET JOURNAL)

Worth Your Time

It’s Wait and See for the FCC: While President Trump is actively trying to reform the legal protections afforded to social media companies, the FCC has made its position clear – it is staying out of it. FCC Commissioner Geoffrey Spark publicly said he doesn’t think the law is perfect, but this isn’t the right way to change things. (LINK – TECH CRUNCH)

Apple Doubles Down: Apple was already in hot water with emerging antitrust troubles in both the European Union and the United States. Instead of pivoting away, the company decided to steer into the skid. When Basecamp tried to release an update to its “Hey” iOS app, Apple doubled down, demanding a 15 to 30 percent cut of the revenue. The result has been a PR nightmare. (LINK – TECH CRUNCH)

Hey, Look Over Here: Speaking of Hey, what the email simplification app is doing is actually pretty impressive. Basecamp is trying to simplify the email experience for those buried under messy inboxes. It’s interesting to see if this app can derive any success considering the email market is dominated by giants – Google, Apple, Yahoo and Microsoft. (LINK – NEW YORK TIMES)

A Couple Cents Content

Don’t miss a slew of Tik Toks from Justin Oh:

  • Dave Portnoy and the rise of the Robinhood Day Trader (TIK TOK)
  • Should Portnoy be careful about the stock buyers he’s influencing? (TIK TOK)
  • The tragic story of Alexander Kearns taking his own life after a massive stock loss (TIK TOK)

Read Austin Hankwitz’s intro to index funds (POST)

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See you tomorrow!

— Justin Birnbaum

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Responses

  1. It’s interesting seeing the persistent high numbers around unemployment and missed loan payments. Yet, the stock market still appears to hold strong, regardless. I guess time will tell.
    P.S. I can’t help but do a little dance when I see someone use the correct form of ‘its’. 😀

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