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Barbie & Oppenheimer. Two huge blockbusters absolutely raking it in at the box office. Why? Saturation.
The 'Barbenheimer' weekend is reportedly on track to be the fourth biggest box office weekend of all time with a take of $300 million.
Great. But... Who cares?
Knew you'd ask that. See, there's a load of things at play here. First up, the Barbie marketing team will probably win an Ogilvy award (if there is one).
Beyond that though, it's the content backdrop. More accurately, the saturation of content for contents sake, fuelled by the Streaming Wars™.
Netflix, Disney, Paramount, HBO, Paramount, Amazon, Apple, Peacock, Hulu, Roku, (and plenty more) have been ramming content down our throats for years now, trying to establish themselves as THE dominant streaming/content service.
But they overdid it...
Disney CEO Bob Iger announced that they'd be cutting back on spend, and admitted that things had gone too far.
“You pull back not just to focus, but also as part of our cost containment initiative. Spending less on what we make, and making less,”
“Marvel is a great example of that. It had not been in the television business at any significant level, and not only did they increase their movie output, but they ended up making a number of TV series. Frankly, it diluted focus and attention.”
Just too many sequels, too much similarity. It's hard to be original when everything follows the same characters and the same formula. And we get bored...
As the marketplace changes, creators adapt. Tastes change.
In some sense, the marketplace becomes more efficient. Like how shorter songs became more common as streaming developed into the dominant medium (Pay per play...? More plays = more pay)
These dynamics are a constant feature of business and markets.
It's why a back-tested edge is unlikely to persist indefinitely.
It's why financial models break... Why businesses fail or end up being acquired.
At some point, a good idea is milked to the point of saturation, then returns start to diminish, before they eventually turn negative. 👇
Something shiny and new comes along, grabs our interest simply by being different at the right time, and a new trend is born.
Tarantino talked about Reservoir Dogs building a bridge from the "they won't let you do that 80's" to the ground-breaking cinema of the '90's.
And I wonder if that's where we are now.
After a hundred Mission Impossible sequels, Indiana Jones Fifty. Marvel's infinite spinoff universe. Fast & Furious WWE Superbowl Raw XVI...
We've decided that they're less appealing than films about a toy doll & the inventor of the atomic bomb.
Quick tangent. It's not just financial gurus that are useless at predicting the future... 👇
The box-office gurus over at The Numbers have their 2023 box-office market preview up and their early projections for the July-released “Barbie” have it opening at around $31 million on opening weekend.
Narrator: It did over $150 million
The law of diminishing returns applies more broadly across markets too, and especially applies to the cycle of human attention.
We've had China on the watchlist for the past month 👇
Coverage has been relentlessly negative.
China's economy is falling into deflation, no property market = no economy, GDP downgrades from major banks, youth unemployment above 20% (or nearer 50% if you believe everything you read).
None of which is especially contentious (OK, maybe the last point). China's economy has plenty of well-publicised problems.
More importantly, Chinese stocks had (generally) stopped falling. The negative headlines had 'diminishing returns' on stock prices, and stimulus expectations were on the floor...
A few well-structured comments from Chinese officials yesterday and we're doing the China stimulus trade all over again...
None of this is about predicting the future. It's opportunistic. Betting on the power of novelty.
If a market refuses to go down amid a saturating shower of negative headlines, there's a good chance it's about to bounce...
On that note, this caught my eye. 👇
Cramer on AT&T: “Walk away from it. That company is as poorly managed as any company I’ve ever seen in my lifetime”
Now, I'm not in the camp of blindly fading everything Cramer says.
There's actually a beautiful irony in the underperformance of the Inverse Cramer ETF since launch. 👇
The problem with fading Jim is that he simply has too many opinions. That's literally his job. Professional opinion haver on the telly.
So there's a bit of an art to interpreting what he says and when he says it.
AT&T has plenty of problems, including potential expense to clean up old lead-clad cables...
Analysts at TD Cowen helpfully tell us that the costs for cleaning up the lead-clad cables could "range from near-zero to tens-of-billions of dollars in liability"
Meanwhile, the share price has fallen to three decade lows...
It certainly looks as if the bad news has reached that point of saturation and/or diminishing returns, and AT&T is scheduled to report earnings tomorrow (Wednesday) before the open...