Tag Archives: Marketing

Technology

Two Huge Video Game Bundles Raise Over $12 Million For Ukraine

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Image: Humble Bundle / Kotaku

Indie digital storefront Itch.io has raised over $6 million via its recently ended Bundle for Ukraine charity package. Meanwhile, Humble Bundle’s similarly large collection of games and comics has already raised over $6 million as well, with six days left before it ends. That’s a massive amount of money, all of it going to support folks suffering during the horrific Russian invasion of Ukraine.

The first bundle to go live was created by Necrosoft Games director Brandon Sheffield. This package was available on Itch.io starting on March 7 and collected nearly 1,000 games into a single, massive package. And folks could get all of those games—worth an estimated value of approximately $6,500—for just $10. A pretty damn good deal and for a good cause, as all funds raised via the Bundle for Ukraine go towards supporting two groups: The International Medical Corps and Voices of Children.

Originally the bundle had a comparatively small goal of $100,000. That goal was smashed quickly and after only 24 hours the indie bundle had already raised just over $1.5 million. It ended yesterday, reaching a grand total of $6,370,557.

Meanwhile, another bundle, this one from Humble Bundle, has also been organized and launched to help provide much-needed support for Ukraine during the ongoing and deadly invasion. Like the Itch bundle, it contains a massive amount of games—nearly 100—including titles like Back 4 Blood, Fable, Metro Exodus, Quantum Break, PGA Tour 2K21, Kerbal Space Progam, and Amnesia.

As I’m writing this now, the bundle has already passed $6 million. Considering the incredible selection of games on offer and the fact that the whole thing only costs $40, I suspect that by the time this bundle wraps up in a week it will end up raising considerably more than $6 million.

Add both up and that’s over $12 million in charity! (And like I just mentioned, the Humble Bundle will likely raise that number up even more by next week.)

The ongoing, illegal invasion of Ukraine by Russia has led to thousands of deaths, with many fleeing the country as their homes and towns are bombed by missiles. As a result, multiple countries, including the United States, have placed pressure on Russia and Putin via economic sanctions. And as the invasion continues, many private companies are also pulling their business from Russia.

These huge, discounted charity bundles have quickly become a popular way for folks to band together and help support others on a massive scale. Back in 2020, a similarly large package of games was offered online as part of Itch’s Racial Justice And Equality bundle. That charity collection ended up raising an impressive $8,149,814 for two organizations: the NAACP Legal Defense and Educational Fund and Community Bail Fund.

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Technology

iPhone 14 with A15 Bionic chip? It’s all about marketing

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Every year, Apple announces a new generation iPhone. Sometimes it comes with a brand new design, sometimes not. But the only thing we know for sure is that the new iPhone will feature a new chip – at least that was the case until now. Recent rumors suggest that some iPhone 14 models will keep the A15 Bionic chip from this year’s models. But why would Apple do that?

What the rumors are saying

The well-known analyst Ming-Chi Kuo reported this month that only the high-end iPhone 14 Pro and iPhone 14 Pro Max models will have the new “A16” chip, while the mid-range iPhone 14 and iPhone 14 Max models (the mini model is expected to be replaced by a new 6.7-inch phone) will be equipped with the A15 Bionic chip.

9to5Mac corroborated Kuo’s report with independent sources, which also suggest that two of this year’s four new iPhone models will be powered by the A15 Bionic chip, while the other two will have the next generation Apple Silicon chip. Both Kuo and 9to5Mac’s sources also suggest that all new iPhones will have 6GB of RAM, while currently the cheapest models come with 4GB of RAM.

So this is what the iPhone 14 lineup will look like:

  • 6.1-inch iPhone 14 with A15 chip
  • 6.7-inch iPhone 14 Max with A15 chip
  • 6.1-inch iPhone 14 Pro with A16 chip
  • 6.7-inch iPhone 14 Pro with A16 chip

But would Apple release a new flagship device with an old chip? It turns out that the company has done this before, and it’s all about marketing.

The strategy behind Apple’s chip names

Since the iPhone 4 was introduced in 2010 with the first Apple-custom chip called “A4,” the new chips that came after have always followed the same nomenclature. We have had A5, A6, A7, and the list goes on.

However, in 2012, Apple had to create an even more powerful chip for the new third-generation iPad, which was the first to have a high-resolution Retina display. This chip was based entirely on the A5 chip from the iPhone 4s and iPad 2, but the new version had a quad-core GPU while the original had a dual-core GPU.

To differentiate the new chip and make it sound like something more powerful, Apple named it A5X. Since then, all new chips created specifically for the iPad have had the “X” in their name as a way to indicate that they are faster due to the more powerful GPU and more RAM. This strategy was used until 2018, when Apple released the third generation iPad Pro with the A12X chip.

In 2020, instead of creating a more powerful version of the A13 chip for the new iPad Pro, Apple simply reused the same A12X chip from the 2018 iPad Pro, but this time with an extra GPU core enabled. That change was enough for Apple to rebrand the chip as “A12Z Bionic.”

The M1 and a new era for Apple Silicon

When Apple finally decided to migrate Macs from Intel processors to their own silicon, they once again needed a strong name to emphasize that these chips are even more powerful and different from anything the company has done before – so they came up with the M1 chip.

However, on the inside, M1 is basically what Apple would name A14X in the past, as the chip found inside the latest iMac and MacBook Air is essentially the iPhone 12’s A14 chip with more CPU and GPU cores. Apple then created more powerful M1 Pro, M1 Max, and M1 Ultra variants, all based on the same A14 chip.

The “M1” name has become extremely appealing, or don’t you think that having an iPad Air with the M1 chip sounds more amazing than something with an A14X chip? My point is, Apple uses marketing in its favor to make even the smallest changes into something bigger, and it can easily do that with iPhone chips.

Which chip will be in the iPhone 14?

As I recently noted in another article, Apple currently has two different versions of the A15 Bionic chip, although they don’t advertise them using different names. The regular A15 Bionic chip used in the iPhone 13 and iPad mini 6 models has a six-core CPU and a five-core GPU with 4GB of RAM. However, iPhone 13 Pro models have an enhanced A15 Bionic chip with a six-core GPU and 6GB of RAM.

This extra GPU core gives the iPhone 13 Pro about 34% more graphics power when compared to the iPhone 13, while the 6GB of RAM ensures that more apps can remain in the background for longer.

We don’t know why Apple would use the A15 chip in the next generation iPhone. This could be related to component shortages or the company simply realized that most average consumers would not even notice the difference between a brand new A16 chip and the current A15.

However, when we say that some models of the iPhone 14 will have the A15 chip, it doesn’t mean that it will have the same A15 chip as the iPhone 13. Apple might use the high-end version of its chip with a better GPU and 6GB of RAM and call it A15X, just like it did with the A12Z chip in the 2020 iPad Pro.

Apple could even call it the A16 chip and create a new chip with a different architecture named A16 Pro, as it has been doing with Mac chips. The Apple Watch Series 7 has the same CPU as the Apple Watch Series 6, but the chips are named “Apple S6” and “Apple S7” due to minor internal changes that have been made to the SoC.

Whatever the chip inside the iPhone 14 is, Apple’s marketing team certainly has something in mind to make it sound like a brand new thing.

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US

Why Your Electric Bill Is Soaring—and Likely to Go Higher

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U.S. electricity customers are facing some of the largest bills in years because of volatile natural-gas prices, which are being driven higher by winter demand and a global supply shortage being made worse by Russia’s war against Ukraine.

Already, the natural-gas supply crunch has made it substantially more expensive for utilities to purchase or produce electricity. As a result, some customers have seen winter power bills increase by 20% or more compared with the year before, in addition to seeing higher home-heating bills.

Now, with sanctions against Russia threatening to further constrain global natural-gas supplies, higher prices are likely to persist, executives and analysts say, especially in regions heavily reliant on the fuel for power generation.

Domestic natural-gas prices reached the highest levels in years ahead of winter as exporters shipped record amounts of it overseas, and prices have lately risen again on fears of another global shortage.

“It will have an impact on customers’ bills,” said

Nick Akins,

chief executive of

American Electric Power Co.

AEP -0.58%

, a utility company that serves more than five million customers in 11 states.

U.S. Henry Hub gas prices on Friday reached about $4.73 per million British thermal units. That is up from about $2.66 per million British thermal units a year ago.

Utilities across the country recover gas and electricity supply costs by charging them to customers, driving prices sharply higher this winter after a year of steady increases. Average retail electricity prices for residential customers rose 4.3% last year to 13.72 cents per kilowatt-hour, the largest annual increase since 2008, according to the Energy Information Administration. The increase, which generally matched inflation overall, was spurred in part by the cost of natural gas delivered to power plants, which more than doubled from 2020.

SHARE YOUR THOUGHTS

What has your electricity bill been like lately? Join the conversation below.

Utilities must receive regulatory approval to raise rates, but it is generally standard practice for regulators to allow for them to recoup higher fuel and supply costs through customers.

The recent surge in electricity prices has been especially acute in New York.

Consolidated Edison Inc.,

ED 0.20%

which provides electricity to about 3.3 million customers in the New York City region, said city residents using about 300 kilowatt-hours a month saw their January bills increase by roughly 23%. Most of that increase resulted from higher supply costs.

ConEd said it is working to hedge against price volatility and adjusting its billing processes to benefit customers.

Hector Ruiz, 44 years old, a fiber-optic engineer who has lived in his house in Clifton Springs in upstate New York for the past eight years, said he had never paid more than about $500 a month for gas and electricity. His bill last month was just shy of $1,000, he said, scrambling the budget for his family of four and prompting him to tap into funds set aside for other purposes.

Hector Ruiz said his latest bill for gas and electricity was just under $1,000, which is double what he was paying.



Photo:

Malik Rainey for The Wall Street Journal

“My utility bill literally doubled overnight,” Mr. Ruiz said. “Has it been a punch to the gut? Yes.”

Gabriel Thompson, 40, a photographer who lives with his wife in Westchester County just north of New York City, saw his electricity bill rise sharply alongside his gas bill in January. His cost of electricity supply reached 18 cents a kilowatt-hour that month, up from about 6 cents a kilowatt-hour the prior month. Including delivery charges, he paid more than $200 for electricity and about $585 for natural gas.

“It makes me glad I don’t have an electric car, which I’d love to have,” Mr. Thompson said. “People don’t have infinitely expendable income.”

The increases come amid broader concerns about high inflation. The consumer-price index surged 7.9% in February, the highest rate in 40 years.

Gabriel Thompson says higher utility costs make him glad he doesn’t have an electric car.



Photo:

Clark Hodgin for The Wall Street Journal

Eversource Energy,

ES -0.53%

a utility that serves 3.6 million electric and natural-gas customers in Connecticut, Massachusetts and New Hampshire, raised electricity rates at the start of January to account for higher wholesale prices. The company said an average residential customer could see bills increase by as much as 25% through the end of June.

James Daly,

Eversource’s vice president of energy supply, said regional pipeline constraints exacerbated a gas-supply shortage resulting from higher seasonal demand and relatively flat domestic production. The company also saw a surge in prices for liquefied natural gas as exporters shipped more of it abroad, though it doesn’t rely heavily on that type of fuel.

“We can see prices run up faster than in other parts of the country if there’s a supply-demand imbalance,” Mr. Daly said.

Commodity prices are hot right now. But the prices investors are paying in the open market for commodities like coffee, copper or corn can have little to do with the price customers pay at the store. WSJ’s Dion Rabouin explains. Illustration: Adele Morgan

In California, wholesale power prices have risen as the state’s largest utilities plan to invest billions of dollars to reduce the risk of their power lines igniting wildfires. San Diego Gas & Electric, a unit of

Sempra

that serves about 1.5 million electric customers and 900,000 natural-gas customers, raised rates at the start of the year to account for higher supply costs. Average residential bills increased by 11.4%.

Guggenheim analyst Shahriar Pourreza said utilities have long counted on low gas prices to keep supply costs down, giving them greater leeway to invest in their systems without major rate increases. Now, with gas prices likely to remain elevated, companies will face more pressure from regulators to keep spending in check and consumers’ bills lower, Mr. Pourreza said.

“You haven’t seen the same level of inflation in utility bills like you’ve seen in other industries and other products,” he said. “It’s been a subsidy for them, and that subsidy is likely going away.”

The recent surge in electricity prices has been especially acute in New York. A street in Mount Vernon.



Photo:

Clark Hodgin for The Wall Street Journal

Write to Katherine Blunt at Katherine.Blunt@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

A Peloton Bike and Subscription for One Monthly Fee? Company to Test New Price Plans

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Peloton Interactive Co.

PTON -5.33%

’s new chief executive is looking to overhaul the stationary-bike maker’s pricing strategy in a bid to turn around the company.

The company on Friday will start testing a new pricing system in which customers pay a single monthly fee that covers both the namesake stationary bike and a monthly subscription to workout courses. If a customer cancels, Peloton would take back the bike with no charge.

Select Peloton stores in Texas, Florida, Minnesota and Denver will for a limited period offer a bike and subscription for between $60 and $100 a month, an experiment that aims to find a price proposition that will help return Peloton to profitability without crippling growth.

If adopted, the model would be a major shift for Peloton, which built a business around selling high-price, screen-equipped stationary bikes alongside $39-per-month subscriptions to its connected workout classes. The idea: sell Peloton as a fitness service that can be canceled anytime rather than as a major purchase with a subscription attached.

“There is no value in sitting around negotiating what the outcome will be,”

Barry McCarthy,

who last month replaced co-founder

John Foley

as CEO, said in an interview. “Let’s get in the market and let the customer tell us what works.”

Along with a pricing overhaul, Mr. McCarthy, the 68-year-old former finance chief of

Netflix Inc.

and

Spotify Technology SA,

said he plans to reshape his executive team, consider manufacturing simpler bikes, and upend the company’s capital spending strategy. Rather than investing primarily in bikes, treadmills and other equipment, he said, Peloton will spend most of its money improving its digital interface and content options.

He said inventors that control 70% of voting shares of Peloton, including Mr. Foley, have agreed to put off any discussions around selling the company while he executes his turnaround plan. Mr. Foley still controls around 35% of voting power even after selling about $150 million worth of his shares in the company since the start of 2021, said Ben Silverman, director of research at InsiderScore. That voting power is because of his holdings of Class B shares, which entitle holders to 20 votes a share.

Initially one the pandemic’s biggest success stories, New York-based Peloton has lowered its revenue forecasts for several quarters in a row and has said it would cut roughly 20% of its corporate positions to help cope with widening losses as demand cools.

The $39-a-month subscription price has existed essentially since Peloton’s inception. In recent years, the company has lowered the cost of its bikes and treadmills, either by cutting prices or offering cheaper options. A Peloton bike in 2020 cost $2,495; now the cheapest model is $1,495, not including a delivery charge.

CEO Barry McCarthy said a different pricing system could draw new customers and make the business more profitable.



Photo:

brendan mcdermid/Reuters

Under the test program, people get a Peloton and a membership that includes access to all its courses for a single monthly fee, with the ability to cancel anytime. The offers would be available through Peloton stores, or studios, and not online. Subscribers would pay a nonrefundable delivery fee.

Mr. McCarthy said a different pricing system could draw new customers and make the business more profitable.

His predecessor, Mr. Foley, argued that Covid was only the beginning of Americans’ shift to online, connected fitness. Based on that assumption, Mr. Foley dramatically increased the company’s capacity, which proved to be well in excess of demand as legions of people returned to gyms and Peloton’s growth sputtered

That misstep, Mr. McCarthy said, led to Peloton’s current woes.

Now, he said, Peloton has to figure out how to tap new customers and make more money on each subscription, while reducing its reliance on bikes and treadmills to deliver profits.

Given Peloton’s ability to retain subscribers, Mr. McCarthy said, higher subscription rates carry big profit potential over time. Even at $39, Peloton subscriptions are hugely profitable, he said. He said he wants to employ models that succeeded at Spotify and Netflix and that Peloton has far higher retention rates than either of those companies.

“I’m a huge proponent of them charging more for subscriptions,” said BMO Capital Markets analyst Simeon Siegel. “But they need to internalize that that will hurt their brand and lower demand,” while making the company more profitable.

He said the fact that Peloton’s growth has slowed dramatically despite cutting the price of equipment casts doubt on whether any changes to the pricing model will win converts.

A Peloton spokeswoman said the ability of customers to cancel anytime differentiates the potential new model from previous price cuts.

Peloton has been on a wild ride, announcing its CEO was stepping down and thousands of jobs would be cut, despite seeing a surge in sales early in the pandemic. Here’s why Peloton became a viral success, and why it’s spinning out now. Photo illustration: Jacob Reynolds

Profitability of Peloton’s exercise equipment is sharply lower than it was before the pandemic, as the company struggles with higher production and logistics costs and excess capacity.

Equipment sales have been vital because the physical machines, while more costly to make, generate more than twice as much revenue as subscriptions, UBS analyst Arpiné Kocharyan said.

Equipment sales have funded Peloton’s ballooning marketing spending up until now, Ms. Kocharyan said. “If you are going to get out of the product business, who is going to pay for that sales and marketing?” she said.

Mr. McCarthy said it isn’t yet clear the role Peloton machines will play in the company’s future. He said roughly 80% of capital spending goes toward equipment, with the rest spent on software. That should be reversed, he said.

Among potential offerings he thinks Peloton should look at developing: its own social-media platform, more seamless ways for members to interact and compete with each other during classes, and partnerships that could land Peloton classes on other devices, or allow outside content to stream on Peloton’s screens.

At the moment, Mr. McCarthy said, Peloton will fervently market test, a strategy more reliable than focus groups and consumer surveys. Netflix also did market tests to see what caused subscribers to ditch the service or keep it, he said.

There isn’t much middle ground between success and failure, he said.

“Either I’m going to leave here successfully,” he said, “or I’m going to leave with a greatly diminished reputation.”

Write to Sharon Terlep at sharon.terlep@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Mortgage rates fall amid geopolitical uncertainty. How the Russia-Ukraine crisis could impact home buyers — and interest rates

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Home buyers are seeing temporary relief from rising interest rates as markets react to Russia’s invasion of Ukraine. But in the longer term, inflation remains a serious concern.

The 30-year fixed-rate mortgage averaged 3.89% for the week ending Feb. 24, down three basis points from the previous week, Freddie Mac 
FMCC,
+1.59%
reported Thursday. The slight decline marks a retreat from the highest benchmark mortgage rates in years.

And there’s a chance rates will move even higher. As the U.S. and other countries move to impose sanctions on Russia over its invasion of Ukraine, gas prices are likely to surge due to Russia’s position as a major producer of oil and natural gas.

“An extended war in Eastern Europe could lead to higher global energy prices and higher U.S. inflation, forcing the Federal Reserve to tighten monetary policy aggressively, and higher interest rates could become a larger headwind for the U.S. economy,” said PNC chief economist Gus Faucher.

“Even with this week’s decline, mortgage rates have increased more than a full percent over the last six months,” Sam Khater, Freddie Mac’s chief economist, said in the report.

“‘An extended war in Eastern Europe could lead to higher global energy prices and higher U.S. inflation, forcing the Federal Reserve to tighten monetary policy aggressively.’”


— PNC chief economist Gus Faucher

The 15-year fixed-rate mortgage fell one basis point over the past week to an average of 3.14%. The 5-year Treasury-indexed adjustable-rate mortgage averaged 2.98%, unchanged from the previous week.

The decline in mortgage rates roughly tracks movements in long-term bond yields. The 10-year Treasury note’s yield
TMUBMUSD10Y,
1.968%
has slid in recent days as tensions in Eastern Europe exploded into armed conflict.

“As the world reacts to developments in Ukraine, the uncertainty will likely mean a pause in the recent pace of increases,” said Danielle Hale, chief economist at Realtor.com.

But even with this momentary pause, mortgage rates remain significantly higher than in recent months. According to Hale, only two previous events compare with this recent surge in rates. Following the 2016 presidential election, mortgage rates soared 85 basis points over 10 weeks, and in 2013 during the “taper tantrum” when the Federal Reserve scaled back its stimulus activities interest rates increased by more than 1% over 11 weeks’ time.

“In both cases, home sales momentum slowed in the following year due to the impact on affordability, since rising rates mean higher homeownership costs even if home prices are unchanged,” Hale said, noting the effects were more pronounced for those who had less money to put toward a down payment.

It remains to be seen whether a similar string of events will occur in 2022, though signs point in that direction. Recent mortgage-application data from the Mortgage Bankers Association suggests that home-buying demand has ebbed in the face of rising rates.

Bruce Kasman, JPMorgan’s chief economist, told CNBC that the Russian invasion of the Ukraine makes the Federal Reserve’s position more complicated. “There is a scenario where the growth hit starts to get more substantial. There’s also scenarios where the price increases are not as damaging to growth and it’s feeding inflation.”

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Technology

Some Of Steam’s Biggest (And Smallest) Discounts Are Going Away

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Image: Valve

At the end of March, Valve is making changes to the way studios and publishers can offer their games at a discount on Steam, which sounds like a minor administrative thing is also something the more financially-savvy Steam game purchasers among you might want to keep an eye on.

Published earlier this month, a backend blog post called Discount Rule Changes says that as of March 28, Valve will be “changing some rules for discounts”, with the main ones being a revised “discount cooldown” period and the removal of the ability for developers and publishers to “discount a product by more than 90% or less than 10%.”

While it’s easy to look at a move like the latter and feel like it’s a little unfair for users, every change being made is clearly being done to stop those responsible for a game’s pricing—and we’re talking everyone from the dodgiest little scam game to the biggest AAA publishers—from not only gaming Steam’s algorithm to make their releases more prominent, but also trick users into thinking a sale is bigger than it actually is by artificially inflating the original, pre-discount price.

The specifics of the changes are:

– You can run a launch discount, but once your launch discount ends, you cannot run any other discounts for 28 days.

– It is not possible to discount your product for 28 days following a price increase in any currency.

– Discounts cannot be run within 28 days of your prior discount, with the exception of Steam-wide seasonal events.

– Discounts for seasonal sale events cannot be run within 28 days of releasing your title, within 28 days from when your launch discount ends, or within 28 days of a price increase in any currency.

– You may not change your price while a promotion is live now or scheduled for the future.

– It is not possible to discount a product by more than 90% or less than 10%.

– Custom discounts cannot last longer than two weeks, or run for shorter than 1 day.

Will this actually work? Who knows! But it sure looks more robust on paper, at least.

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Business

What to expect from markets in the next six weeks, before the Federal Reserve revamps its easy-money stance

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Federal Reserve Chairman Jerome Powell fired a warning shot across Wall Street last week, telling investors the time has come for financial markets to stand on their own feet, while he works to tame inflation.

The policy update last Wednesday laid the ground work for the first benchmark interest rate hike since 2018, probably in mid-March, and the eventual end of the central bank’s easy-money stance two years since the onset of the pandemic.

The problem is that the Fed strategy also gave investors about six weeks to brood over how sharply interest rates could climb in 2022, and how dramatically its balance sheet might shrink, as the Fed pulls levers to cool inflation which is at levels last seen in the early 1980s.

Instead of soothing market jitters, the wait-and-see approach has Wall Street’s “fear gauge,” the Cboe Volatility Index
VIX,
-9.28%,
up a record 73% in the first 19 trading days of the year, according to Dow Jones Market Data Average, based on all available data going back to 1990.

“What investors don’t like is uncertainty,” said Jason Draho, head of asset allocation Americas at UBS Global Wealth Management, in a phone interview, pointing to a selloff that’s left few corners of financial markets unscathed in January.

Even with a sharp rally late Friday, the interest rate-sensitive Nasdaq Composite Index
COMP,
+3.13%
remained in correction territory, defined as a fall of at least 10% from its most recent record close. Worse, the Russell 2000 index of small-capitalization stocks
RUT,
+1.93%
is in a bear market, down at least 20% from its Nov. 8 peak.

“Valuations across all asset classes were stretched,” said John McClain, portfolio manager for high yield and corporate credit strategies at Brandywine Global Investment Management. “That’s why there has been nowhere to hide.”

McClain pointed to negative performance nipping away at U.S. investment-grade corporate bonds
LQD,
+0.11%,
their high-yield
HYG,
+0.28%
counterparts and fixed-income
AGG,
+0.07%
generally to begin the year, but also the deeper rout in growth and value stocks, and losses in international
EEM,
+0.49%
investments.

“Every one is in the red.”

Wait-and-see

Powell said Wednesday the central bank “is of a mind” to raise interest rates in March. Decisions on how to significantly reduce its near $9 trillion balance sheet will come later, and hinge on economic data.

“We believe that by April, we are going to start to see a rollover on inflation,” McClain said by phone, pointing to base effects, or price distortions common during the pandemic that make yearly comparison tricky. “That will provide ground cover for the Fed to take a data-dependent approach.”

“But from now until then, it’s going to be a lot of volatility.”

‘Peak panic’ about hikes

Because Powell didn’t outright reject the idea of hiking rates in 50-basis-point increments, or a series of increases at successive meetings, Wall Street has skewed toward pricing in a more aggressive monetary policy path than many expected only a few weeks ago.

The CME Group’s FedWatch Tool on Friday put a near 33% chance on the fed-funds rate target climbing to the 1.25% to 1.50% range by the Fed’s December meeting, through the ultimate path above near- zero isn’t set in stone.

Read: Fed seen as hiking interest rates seven times in 2022, or once at every meeting, BofA says

“It’s a bidding war for who can predict the most rate hikes,” Kathy Jones, chief fixed income strategist at Schwab Center for Financial Research, told MarketWatch. “I think we are reaching peak panic about Fed rate hikes.”

“We have three rate hikes penciled in, then it depends on how quickly they decide to use the balance sheet to tighten,” Jones said. The Schwab team pegged July as a starting point for a roughly $500 billion yearly draw down of the Fed’s holdings in 2022, with a $1 trillion reduction an outside possibility.

“There’s a lot of short-term paper on the Fed’s balance sheet, so they could roll off a lot really quickly, if they wanted to,” Jones said.

Time to play safe?

““You have the largest provider of liquidity to markets letting up on the gas, and quickly moving to tapping the brakes. Why increase risk right now?””


— Dominic Nolan, chief executive officer at Pacific Asset Management

It’s easy to see why some beaten down assets finally might end up on shopping lists. Although, tighter policy hasn’t even fully kicked in, some sectors that ascended to dizzying heights helped by extreme Fed support during the pandemic haven’t been holding up well.

“It has to run its course,” Jones said, noting that it often takes “ringing out the last pockets” of froth before markets find the bottom.

Cryptocurrencies
BTCUSD,
-0.78%
have been a notable casualty in January, along with giddiness around “blank-check,” or special-purpose acquisition corporations (SPACs), with at least three planned IPOs shelved this week.

“You have the largest provider of liquidity to markets letting up on the gas, and quickly moving to tapping the brakes,” said Dominic Nolan, chief executive officer at Pacific Asset Management. “Why increase risk right now?”

Once the Fed is able to provide investors will a more clear road map of tightening, markets should be able to digest constructively relative to today, he said, adding that the 10-year Treasury yield
TMUBMUSD10Y,
1.771%
remains an important indicator. “If the curve flattens substantially as the Fed raises rates, it could push the Fed to more aggressive [tightening] in an effort to steepen the curve.”

Climbing Treasury yields have pushed rates in the U.S. investment-grade corporate bond market near 3%, and the energy-heavy high-yield component closer to 5%.

“High yield at 5%, to me, that’s better for the world than 4%,” Nolan said, adding that corporate earnings still look strong, even if peak levels in the pandemic have passed, and if economic growth moderates from 40-year highs.

Draho at UBS, like others interviewed for this story, views the risk of a recession in the next 12 months as low. He added that while inflation is at 1980s highs, consumer debt levels also are near 40-year lows. “The consumer is in strong shape, and can handle higher interest rates.”

U.S. economic data to watch Monday is the Chicago PMI, which caps the wild month. February kicks off with the Labor Department’s job openings and quits on Tuesday. Then its ADP private sector employment report and homeownership rate Wednesday, following by the big one Friday: the January jobs report.

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Business

Bank of America to Cut Overdraft Fees to $10 From $35

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Bank of America Corp. said Tuesday it would cut overdraft fees to $10 from $35 beginning in May, following other big banks that have rolled back or ditched such charges.

Overdraft fees, which are charged when customers don’t have enough cash in their accounts to cover their purchases, are under scrutiny by regulators and politicians who say they unfairly exploit cash-strapped families. Under the Biden administration, the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency have pressed banks to scale them back. In a December report, the CFPB flagged Bank of America, JPMorgan Chase & Co. and Wells Fargo & Co. on their overdraft fees.

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Business

AT&T Shed Media Assets in 2021. This Year It Wants to Add Investors.

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AT&T Inc.

T 0.83%

faces a busy year as it tries to complete a divorce with its entertainment business, ease investor concerns about its dividend and show that it can continue to woo new wireless customers.

The Dallas conglomerate spent much of 2021 on what amounted to a gut remodel. It kicked off a series of big divestitures spanning pay TV, media production and advertising, moves aimed at refocusing AT&T on more predictable growth opportunities from profit centers such as wireless and broadband service.

Wall Street analysts broadly welcomed the changes. The stock price didn’t reflect a similar embrace by investors.

AT&T’s shares slumped 14% in 2021 and briefly touched 12-year lows in December before recovering. The selloff has pushed its dividend yield—a ratio reflecting the cash a company pays its shareholders divided by its stock price—above 8%. The S&P 500 gained 27% in 2021.

Chief Executive Officer

John Stankey

in June called the period “a hard year that’s been full of anxiety.” By December, he said he hoped that within another year “our attention will be entirely on the future and not on what we needed to do to reposition or restructure the business.”

On Wednesday, AT&T said its core wireless unit added about 880,000 postpaid phones in the fourth quarter, topping the 800,000-phone gain in the same period of 2020. The company’s WarnerMedia unit ended 2021 with 73.8 million global HBO subscribers, ahead of its 70 million to 73 million target.

AT&T in May announced plans to spin off WarnerMedia, the entertainment empire it acquired in 2018, into a new joint venture with Discovery Inc. The transaction secured European competition authorities’ approval in December but is still under review in the U.S. and other countries.

AT&T shareholders will keep a 71% stake in the new media creation, so the company’s stock price partly reflects how the market values that future media business, which will be called Warner Bros. Discovery.

The telecom company that remains is expected to pay shareholders a lower annual dividend. Executives have said the yearly payout will fall from about $15 billion to between $8 billion and $9 billion after the media spinoff closes. An AT&T spokesman pointed to executives who have said that amount will still make it one of the top-yielding companies among dividend payers.

David Jeffress,

portfolio manager at Laffer Tengler Investments, said his firm had owned AT&T shares but sold them in early 2021. He cited the dividend reduction among his concerns.

“Once you’ve cut your dividend, and that level of uncertainty is incorporated, it’s really hard to kind of regain the confidence of a dividend investor,” he said. “We may re-enter it at some point in the future, but really we’d want to see the dust settle.”

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A second factor depressing AT&T’s shares has also punished its close rivals. Shares of

T-Mobile US Inc.

and

Verizon Communications Inc.

sank nearly as much as AT&T’s in 2021, as all three carriers offered deep discounts to keep and attract customers.

Those discounts, coupled with a surge of federal government subsidies tied to the coronavirus pandemic, helped cellphone carriers post unusually strong growth. The top three operators gained nearly 5 million postpaid phone connections—a closely watched metric—over the nine months that ended in September.

The subscriber surge prompted some market watchers to question how long the good times can last.

Jeff Moore,

a wireless-industry analyst for Wave7 Research, likened such explosive growth to all 32 NFL teams winning the same Super Bowl.

“It just doesn’t make sense,” he said. “You would think that someone is losing and someone else is gaining.”

“‘Once you’ve cut your dividend, and that level of uncertainty is incorporated, it’s really hard to kind of regain the confidence of a dividend investor.’”


— David Jeffress, portfolio manager at Laffer Tengler Investments

AT&T’s rivals have pointed the finger at its now year-old marketing blitz, which offered deep smartphone discounts for new and existing customers, as the start of a race to the bottom that could eventually hurt industry profitability.

AT&T’s leaders have said their wireless customer growth is durable. They have cited smarter marketing and improving traction in the public-safety market, as well as discounts, among the factors helping their results.

Mr. Moore agreed and said Verizon is the most vulnerable to slumping customer growth this year because its retail marketing operation has lost ground to more aggressive rivals. A Verizon spokesman declined to comment.

“There’s too much skepticism about AT&T,” the analyst said. “They’ve really turned around their results.”

Some shareholders weren’t willing to wait.

Jerry Braakman,

chief investment officer at First American Trust, said his firm held AT&T shares in client portfolios for several years before selling them in December 2020. He said the pandemic’s reordering of the winners and losers in the film industry kept AT&T’s WarnerMedia unit from delivering on its promise.

“AT&T looked like their strategy was struggling, so we decided not to continue to ride something down,” he said. “Sometimes you have to cut your losses and move on.”

John Stankey talks about AT&T’s future as a streaming service and how its theatrical distribution has been affected by the pandemic with WSJ editor in chief Matt Murray at the WSJ Tech Live 2020. Photo: John Lamparski/Getty Images (Video from 10/19/2020)

Other investors are looking to profit from the pessimism.

Ryan Kelley,

chief investment officer and portfolio manager at Hennessy Funds, said his firm still owns AT&T shares in a value-style fund that focuses on stocks with high dividend yields.

“With the dividend being what it is and with analysts becoming more comfortable with where they are now, we’re hoping for better returns here forward,” he said. “Hopefully most of the downside has already been priced into the stock.”

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Karen Langley at karen.langley@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Technology

Official Google Pixel Watch marketing images leak

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For example, Prosser mentioned the bezeless design of the timepiece (which you can see in the leaked images) and passed along the word that the device was codenamed “Rohan.” The controversial Prosser also said back in April that the device would be introduced in Q1 2022 which Business Insider also mentioned last week.

Tipster puts himself in Ming-Chi Kuo territory with impressive Pixel Watch leak

If the watch does indeed get unveiled in Q1, his tip about the device could have a lead time of 10-11 months which would put him in Ming-Chi Kuo territory. Still, the best tip of all time belongs to Kuo’s February 2017 report detailing the new look of the iPhone X (then known as the iPhone 8). In that report, Kuo revealed (quite accurately) screen sizes for all three iPhones that Apple released that September, discussed the True Depth Camera, and called the latter “Revolutionary.”
So now let’s return to the present discussion about the future. Prosser revealed some official marketing images for the Pixel Watch that he says come right from sources inside Google. It’s brave of him to say that on YouTube considering that he is apparently facing some type of legal action started by Samsung for disseminating images of the Galaxy S22 Ultra a month ago.

No disappointments expected this time for Pixel fans

At this point, we don’t expect another disappointment for Pixel fans who have been waiting a long time for this watch. Google’s lack of confidence in Wear OS supposedly held it back from releasing a watch as recently as 2019. Samsung’s decision to replace its homegrown Tizen with Wear OS for the Galaxy Watch 4 line might have supplied Google with all the confidence it needed.

Google plans on including certain features that will made available to the Pixel Watch only, similar to how it offers special Android features to Pixel phone users. The main goal is to show off what Wear OS can be, exactly what the Pixel handsets do for Android.

Pick up the Google Pixel 6 and Pixel 6 Pro

A Pixel Watch would surely strengthen the Google ecosystem which got a huge shot in the arm this year with the release of the Pixel 6 and Pixel 6 Pro. Despite the typical issues that seem to affect newly released Pixel handsets each and every year, the phones have been selling well and Google is taking care of business by issuing software fixes for some of the early bugs including those related to ghost dialing, and the lagging fingerprint scanner.

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