02-27-2023 A Day In My Life (in progress...)

11:30: Decent first writing session of the day (on the new novel). The new novel, the second in the series, is a high octane mystery thriller featuring former Marine turned Hollywood stuntman, Eddie Ankin, who in book one is accused of murder after he is the last person to see an actress who is later killed in fornt of a live audience on her YouTube channel. The only way to clear his name is to find the real killer. Book 2 movies the action from Los Angeles to New York City, where a friend of Eddie’s turns up dead. Eddie suspects there is a connection between his friend’s death and members of a crew of professional thieves who are planning a massive heist at the Empire State Building.

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MEDIA MONEY: INFLATION STILL A PROBLEM AS PRICES CONTINUE TO RISE.

CPI Increased .3% again that beat expectations. Almost all the forecast were for either .4 or .5. This is one of the lowest increases in CPI in recent months but obviously still an increase. To get a number like 8.3% only slightly lower than last month’s unbelievably high inflation numbers, is not exactly something to write home about.

Which means settle in for some more 50 BP rate hikes.

Looking a little closer at the numbers the real problem is this slight drop in the number is largely due to the lower gas prices we got last month. To quote a popular movie, “information that would have been useful to me yesterday. That’s because gas prices (as an impact on inflation) is based on where prices were a few weeks ago when gas prices dipped slightly. Since then gas prices have risen again and now sit at their highest price. This means inflation has likely not peaked as some people have been speculating.

Why is this relevant?

Because when everything costs more due to inflation (because the purchasing power of each dollar doesn’t go as far) it means that businesses cannot invest in growth the way they might have otherwise.

This means less hiring. It means less expansion. And from a very Hollywood perspective, it means every film and tv production is now that much more expensive.

To quote the Dude, “that’s a bummer, man.”

For some additional context, along with falling (now rising) gas prices, air travel appears to be the driver of the bad 8.3% inflation number. Last summer was the original Covid peak and then we actually started seeing CPI go down briefly but now when we look at the number as a breakdown we see that are crazy increases in the cost of things.

(All of the numbers are weighted by the Fed according to the impact on the overall CPI.)

Food index increased .9% which is technically outside of core CPI but that’s a significant increase for families. It’s worth reminding everyone reading this that CPI or Core consumer prices, excludes volatile food and energy items. Of course, consumers don't eat or drive based on “core” prices, and food prices are up 9.4% over the last year.

Major grocery store groups increase in to see increase in this increase of the month

The price of eggs up 10.3% month over month. Margarine up 7.1%. Those are some high numbers for goods outside of core CPI.

Men’s and boys apparel down slightly. Women’s apparel down slightly. Toddler apparel down 2.74%. Sewing machines and fabric supplies down 4.6% Guess that’s good for the costume departments. In travel: Hotels are up 3.4%. Car and truck rental 2.4%. Airline fares went up 21.9% in a month! That’s a huge increase! I wonder if that’s due to the riding gas prices? I know airlines tend to lock in future prices on jet fuel futures months out, but I’m guessing that is part of the impact. Along with a return to travel by people around the world, and a desire to get out and go places after two years of lockdowns. The prices of air travel is starting to reflect some of that demand. That’s going to cost each out-of-town production (which most are) a pretty penny to the budget bottom line.

Perhaps had California’s Governor Gavin Newsom done more to increase the tax credits in his home state of California at the beginning of the pandemic it would have resulted in more shows and movies being filmed here in California. Which, given the recent call by the WGA to not have productions in states that have laws that the unions/guilds apparently disagree with (I must have missed the consensus votes), also create complications, considering over half the states in the union likely have laws that the Hollywood guilds and some of their more vocal members disagree with. But again, this is just one more example of the shortsightedness of the rhetoric that results in so many of these flawed policies which have a direct impact on so many of California’s core industries, and the people who work in them.

Polling data that inflation and rising prices is what people are most concerned with. Not a bad time for some Hollywood escapism. But looking at the Oscars this past year, you have to wonder if Hollywood is still in the escapism business.

Had there been a stronger focus on the fiscal integrity of the state, along with support for one of America’s most important industries based here in Cali from our Governor and elected leaders, then perhaps we’d be better situated than we are now on all fronts. Bringing film and television production closer to home which would’ve maybe made it easier to keep productions going at full steam during the pandemic, instead of having to endure on-and-off shut-downs (one or two at least prompted by mistaken PCR test results, according to one studio head and one producer I spoke with). But I guess all that would be asking too much of Newsom. Instead, all that good gov stimulus cash (which is what largely kept California from defaulting on its liabilities) went to all manner of frivolous expenditures led by Newsom’s wildly progressive policies, leaving one of California’s major homegrown industries out in the cold.

So, now what we’re looking at is yet another year of what amounts to an added “tax” on every single production that the past two years came in the form of the additional Covid safety measure costs, and now in the form of skyrocketing inflation.

Looking at these numbers I wonder about the old adage that show business is recession-proof.

For a while, at the start of the pandemic with the spike in streaming numbers and the increase in our spending on home entertainment, I thought it looked like that might still be the case albeit in a different form. Instead of going to the movies for escapism, people we’re staying home watching Netflix and chilling. However, since the release of Netflix’s 200,000 subscriber loss and the tanking of their share price (their earnings call was yesterday; more to come on that), I’m not so sure that we can still say that Hollywood is recession-proof.

But back to the rising inflation — what will it mean for an industry looking to recover from the past two years of Covid? Well, for one thing, it means that on top of the Covid “tax” on productions last two years in the form of safety measures, amounting to roughly a 20-25% increase in budgets, plus the dollars falling purchasing power due to rising inflation, this poses yet another challenge for Hollywood.

Media Money - Dow Tumbles 1100

Ouch.

Nothing like bad monetary policy and bad governance to send stocks into a nose dive.

Lots of blood in the streets.

We are heading into the sixth terrible month for the market.

The average retail stock portfolio is down 23%.

What does this mean for people going back to work? There is still a deficit between available jobs and people looking.
what about the older generation?. The baby boomers are the largest generation to hit the retirement age in American history…Will that still happen if they’re savings are eviscerated by a market where the mentality is now not how much can I make, but how can I lose less?

On top of which inflation does not appear to have peaked

Like I said, ouch.