March 13, 2023

Today's Topics

Good morning! Welcome to one of the two times of the year when you wish that every appliance was as smart as your phone. Good luck to anyone trying to change the time on their microwave. Today we’re exploring:

  • Silicon spread: How the bank to America's tech sector blew up, almost overnight.
  • Critics vs. audiences: Fan favorites don't often win at the Academy Awards.
  • Aramco: The state-owned Saudi company had a record-breaking year.
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Silicon spread

In Friday’s newsletter we included a “quick cut” chart of Silicon Valley Bank’s share price — which was cratering amidst a rumor that the bank was insolvent. Within an hour of our newsletter being sent it was already out of date. The stream of withdrawals quickly turned into a flood, as depositors tried to retrieve $42bn from their accounts — nearly a quarter of the bank’s total — in a single day.

SVB’s collapse is the second-largest bank failure in American history, and the speed of the bank run left regulators scrambling over the weekend to limit any possible contagion. Yesterday, the US Treasury, Federal Reserve and FDIC stepped in to ensure all deposits at the failing bank would be backstopped and quickly accessible, as another major bank (Signature) also collapsed.

Part of the furniture

Formed in 1983, SVB had long been a partner to some of the most innovative companies in the world, providing banking services to half of all venture-backed tech and life sciences companies in the US. Deposits at SVB swelled to nearly $200bn during the pandemic, as venture funding hit record highs and startups had to put their cash somewhere. SVB’s critical error was to take much of that cash and buy mortgage bonds that offered a slightly higher rate of return — but locked the money up for much longer — a departure from its previous strategy that turned into a major problem when liquidity dried up.

Go deeper: Great analysis of what happened to SVB from Ben Thompson.

Winning everything

Everything Everywhere All At Once (EEAAO) was a big winner at last night’s 95th Academy Awards, taking home a total of 7 Oscars including best picture, best director, best actress, best original screenplay, and more.

The movie, the second best picture winner from indie studio A24, was a standout favorite in some categories. Despite a relatively limited budget, EEAAO managed a solid showing in cinemas — grossing over $100 million worldwide — but also won gushing critical response too.

Agree to disagreeObviously being popular with both reviewers and audiences is a winning formula, but the Academy often gives the gong to movies that win more relative favor with critics, rather than big box office blockbusters.

That trend can be seen in data from Rotten Tomatoes, a website that aggregates movie reviews from everyday users and professional critics. Since 1990, just 8 best picture winners have been favored more by fans than critics, compared to 23 in the opposite direction, including EEAAO. Forrest Gump is the most extreme split between audiences and critics, with a 95% audience approval and only a 71% critic approval rating. 2018’s The Shape of Water was the opposite, with a 92% fresh rating amongst critics, but just 72% from viewers.

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Yesterday, Saudi Aramco announced record profits of $161bn for 2022, up 46% on the year prior.

That's the best year on record for the oil giant, which is ~95% state-owned, and the company remains second only to Apple on the list of the world's most valuable companies with a market cap of $1.9 trillion. Despite pressure to fund green projects, Aramco is planning to spend $45-55bn on capital expenditures this year, having warned of “persistent underinvestment” in the oil and gas sector.

Shopping spree

Aramco’s CEO, Amin Nasser, said that “this is probably the highest net income ever recorded in the corporate world”.

It’s hard to wrap your head around what one billion can buy, let alone $161bn, but one exercise to give context is to think about the companies Aramco could (very theoretically) acquire. A combination of 10 that we came up with was: Campbell's, Coinbase, Etsy, eBay, Kellogg’s, Crocs, Zoom, Snap, Pinterest and Ralph Lauren. At current market prices that shopping list would come to ~$153bn, leaving Saudi Aramco with some change left over (remember this is just one year's profit).

Aramco’s record year is also good news for the Public Investment Fund (PIF) — Saudi Arabia's sovereign wealth fund, which is investing heavily to try and diversify the national portfolio away from oil. The most high-profile investments have come in the world of sport, with PIF funding the breakaway LIV Golf tour, purchasing Premier League soccer club Newcastle United and signing various deals in the world of Formula One.

More Data

Adidas doesn't know what to do with its stock of unsold Yeezys, having fielded 500+ offers to buy the stock of unsold shoes.

Allbirds’ share price plunged more than 47% after a disappointing report in which it recorded a $101m annual loss and a 13% fall in quarterly sales.

Blonde, Tom Hanks and Jared Leto are amongst the winners (or losers) at the 2023 Razzies, an alternative to the Oscars that honors the worst work in Hollywood this year.


• Eternally grateful: “thank”, “you” and “academy” are the three most common words in Oscars acceptance speeches.

Off the charts: During the pandemic every social media company rushed to clone a buzzy new app. What was it, which we charted about back in 2021? Hint: Reddit announced it is shutting down its clone of the app this week.

Answer here.

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