🇨🇳 China’s meh rebound

Wednesday, May 17, 2023 by Snacks
A half-and-half recovery (CFOTO/Getty Images)

A half-and-half recovery (CFOTO/Getty Images)

A half-and-half recovery (CFOTO/Getty Images)

A half-and-half recovery (CFOTO/Getty Images)

Yesterday’s Market Moves
Dow Jones
33,012 (-1.01%)
S&P 500
4,110 (-0.64%)
12,343 (-0.18%)
$27,014 (-0.58%)

Hey Snackers,

Luxury's gone to the dogs: the travel industry is catering to pooch parents, offering pet-menities like in-room kibble menus, lush bedding, and spa treatments. Meanwhile, we’re scared to crack open a bottle of water from the minibar.

Stocks fell as investors waited for updates on the debt-ceiling impasse and President Biden met with leaders of Congress. House Speaker McCarthy said it was “possible” to reach an agreement by the end of the week, but added that major differences remain.

P.S. We’d love to learn more about you! Help us improve Snacks by taking our 10-minute survey and get $5 as a thank-you.


1. China’s reopening boosts sales for US companies, but not nearly as fast as hoped

Cold Brew spring in Beijing… After years of strict zero-Covid policies and lockdowns, China is again open for business. Last quarter consumers returned to spots like China's 6.2K Starbucks and Shanghai Disney Resort, boosting sales for US corporations. Lots of companies — including MGM Resorts, Procter & Gamble, KFC parent Yum Brands, Starbucks, and Disneysaid that the China rebound lifted their latest earnings. But it didn’t help everyone:

  • iDidn’t benefit: Apple's China sales shrank last quarter from a year earlier, foiling hopes that demand would bounce back after restrictions were lifted.

  • Mascara tears: Estée Lauder stock plunged this month after the beauty behemoth gave a weak outlook, saying Asia demand didn’t come back as strong as expected.

  • Travel light: Though international Chinese tourism is back, it’s still much lower than prepandemic levels. Many are traveling closer to home (think: MGM’s Macau casinos).

Not so snappy… So far China’s recovery has been meh. April economic data released this week disappointed, with industrial production and retail sales growing less than forecast. Meanwhile, the youth-unemployment rate last month surpassed 20% for the first time. That’s far from inspiring, since younger consumers are key to fueling spending. Five months into the reopening, most companies are still waiting to reach prepandemic sales levels.


The Chinese consumer is key… As the second-most-populous country with a growing middle class, China holds a lot of weight for multinational corps. Spending there is even more important to US companies now that Americans are tightening their budgets. The highly anticipated rebound has underwhelmed so far, yet some analysts predict a summer of “revenge spending.”


2. CEO pay fell for the first time in a decade as shareholders size up top execs’ comp

“Succession”-size problems… Last year the median pay for S&P 500 CEOs dropped for the first time in a decade, falling to $14.5M, The Wall Street Journal reported. Chief execs are mostly paid in company stock, and the S&P 500 shed nearly 20% last year (womp). By the end of 2022, two-thirds of executives got smaller pay packages than originally awarded.

  • New rule: Traditionally packages were revealed only when they were awarded. As of last year, the SEC started requiring reporting of compensation “actually paid” by the end of the year.

  • Expectation vs. reality: The change forces a direct comparison between how much executives were initially awarded and how their companies performed.

Started from the top… Some execs who were initially awarded the biggest packages saw the value of their equity plunge, while others rose through the ranks:

  • Wipe-out: The top-paid corporate leader, Alphabet's Sundar Pichai, was awarded a package valued at $226M, but that fell to $116M after a year of battered tech stocks.

  • Gains: The big bosses of Exxon and Chevron saw the value of their payouts more than double by the end of the year as oil stocks surged, pushing them from the No. 15 and No. 62 best-paid CEOs into the top 5.


When times are tough, scrutiny gets tougher… Last year, a record # of companies didn’t receive majority support from shareholders for CEO pay packages. Recently, entertainment execs’ pay has been put under a microscope as the Writers Guild of America strikes. Nearly half of Warner Bros. shareholders voted on Monday against CEO David Zaslav’s pay. At the same time, record buybacks are drawing side-eye from investors who worry they’re merely pumping execs’ bonuses.

What else we’re Snackin’

  • Roof: Home Depot logged its worst revenue miss in decades, and lowered its annual forecast. With the pandemic winding down, folks are cutting back on DIY projects and stay-at-home splurges like $400 grills.

  • Again: At Tesla's annual meeting yesterday, Elon Musk said his EV company would deliver its first Cybertrucks this year, and up to 500K/year once production starts. The much-hyped truck has been much delayed.

  • Zuck’d: You can slide into the DMs with a verified badge — for a price. Meta rolled out $10/month Facebook and Instagram verification in the UK, following the same revenue-boosting bid by Twitter.

  • WFA: The return to the office is stalling with half of US office buildings still unoccupied. But while some of the biggest cities struggle to lure workers, suburbs are thriving (cue: the “donut effect”).

  • Flag: OpenAI's CEO warned Congress that AI “can go quite wrong,” after discussing the emerging tech’s risks on the Hill. Lawmakers are scrambling to create regulations as bots’ popularity surges.

Snack Fact of the Day

Nearly 8 in 10 Americans say it's a bad time to buy a house — a 45-year high


  • Earnings expected from Jack in the Box, Wix.com, TJX, Tencent, Cisco Systems, Siemens, and Target

Authors of this Snacks own shares of: Alphabet, Apple, Disney, Exxon, Starbucks, Tesla, and Yum Brands

Subscribe to Snacks