Markets will watch Meta Platforms’s strategy, as the firm seeks ways to reignite the growth of its Facebook app. At 20 years old, Facebook is not as popular as Instagram. Teens are more likely to use the latter app instead.
Fortunately, the U.S. seeks to ban TikTok. This should drive usage for both Facebook and Instagram.
In the fast-food market, beware of McDonald’s (MCD). A meme circulating that the price of Big Macs at $18 is hurting its brand. The company claims that the meme is recycled from previously. Economist Paul Krugman said that Big Mac prices increased by 21% since 2019, below that of inflation and food inflation rates. The economist may not have accounted for product shrinkflation.
The damage is done. Other than Cava Group (CAVA) and Chipotle (CMG) having strong pricing power, McDonald’s does not. More customers will start to question the quality, not the price, of the restaurant’s food offering.
Last week, the U.S. posted annual PCE inflation rising by 2.7% Y/Y. Stock markets shook off the stuck inflation rates. As long as the PCE inflation target is above the Fed’s 2% target, interest rates will not change. Markets are decoupling the importance of high inflation rates on stock valuations. This should limit any risk of a sustained stock market correction.
Related Stories
