The media shakeout has begun
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Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Thursday, June 12th, and I'm your host, Kim Kahn. Our top story so far. Netflix co-CEO Greg Peters believes Warner Bros. Discovery's decision to split into two is an indicator of a broader shakeout happening in the U.S. media landscape, where streaming and on-demand platforms are currently prevailing over traditional TV.

In an interview with Bloomberg, Peters said, Everything is moving to streaming. Everything is moving to on-demand. There's going to be a period of shakeout and transition associated with that. They have to rationalize their business for that reality of streaming demand, he added. We're definitely seeing the results of that. When asked whether legacy players in the market will merge, he said, there is an inevitable logic to that.

On the economic front, the producer price index rose 0.1% in July, less than the 0.2% increase expected, and stronger than the prior month's 0.2% decrease, which was revised from down 0.5%.

That translates to an annual gain of 2.6%, which matched the consensus and accelerated from 2.5% in April. Excluding volatile food and energy prices, core PPI ticked up 0.1% from a month earlier compared with the 0.3% consensus, and April's 0.2% drop revised from a drop of 0.4%. On a year-on-year basis, the core measure gained 3% versus 3.1% expected and 3.2% prior.

Pantheon Macro says the CPI and PPI data imply the core PCE deflator rose by a mere 0.12% in May. Admittedly, an even smaller 0.08% increase a year ago implies that core PCE inflation probably edged up to 2.6% from 2.5% in April. Nonetheless, the near-term trend remains favorable, enabling the FOMC to signal next week that it still intends to begin easing policy again later this year.

But they also warned the deflator will rise at a much faster pace over the coming months. On the labor market front, weekly initial jobless claims stayed steady at 248,000, but the four-week moving average hit 240-250, the highest level since August 2023, and continuing claims increased to 1.956 million

Guy Labar, who's a strategist at Jani, noted the continued creep in high-frequency jobless data and says while the total labor market numbers are still decent, it's a bridge built on toothpicks. Don't sneeze.

Among active stocks, get ready for AI Joe. Mattel will start using artificial intelligence to design the next generation of toys and even movies through a deal with OpenAI, Bloomberg reports. Mattel's chief franchise officer Josh Silverman says, "...leveraging this incredible technology is going to allow us to really reimagine the future of play."

The company will continue to retain all intellectual property and remains in full control of the products it creates through AI, Silverman added. The first release won't be announced until later this year. GameStop is down sharply again after the company disclosed that it intends to offer $1.75 billion aggregate principal amount of 0% convertible senior notes due 2032 in a private offering. Wedbush Securities analyst Michael Pachter weighed in on the stock after the earnings report, saying...

It is difficult to understand why an investor would be willing to pay more than two times cash value for the possibility of GameStop converting more of its cash into Bitcoin, especially since these investors could invest in Bitcoin or a Bitcoin ETF themselves. Pactor thinks GameStop's foray into the trading card business is the only recent business venture to see modest success at the moment. And Oracle is rallying post-earnings as it appears to be taking advantage of the artificial intelligence build-out.

Cloud revenue is expected to surge 40% year-over-year in fiscal 2026, which doesn't even include its role in the Stargate project.

B of A analysts said, In other news of note, BlackRock, the largest asset manager in the world, is seeking to become the largest crypto asset manager globally as well as boost its private markets business. The company targets at least $50 billion in crypto assets under management in the next 15 years, according to its Investor Day presentation.

It seeks to leverage its experience in the U.S. to expand digital assets exchange-traded products into Europe and Canada. Private markets also form an important part of its overall growth strategy. In the private markets to insurance channel, BlackRock seeks to become the largest third-party manager in balance sheet insurance assets with $700 billion in assets under management in 2030. And it targets $400 billion of cumulative fundraising in private markets by 2030.

And in the Wall Street Research Corner, J.P. Morgan says real estate investment trusts are expected to see returns of about 10% in 2025, but growth and opportunities will vary among the property types. Analyst Anthony Paglioni said, "...we believe a combination of 4% dividend yields, low-to-mid-single-digit FFO growth, and some room for valuation to expand could result in approximately a 10% total return."

REITs started 2025 on a strong note, but the recent turbulence in equity markets makes it difficult to say where this will met out. Historically, we have seen more sustained interest in the space when downside risks to the economy move beyond just concerns to showing up more tangibly in corporate earnings, Paglioni said.

That's all for today's Wall Street Lunch. Look for links for stories in the show notes section. Don't forget, these episodes will be up with transcriptions at SeekingAlpha.com slash WSB. And join the highest level discussion of any stock or ETF with our community of serious investors like you. Find us at SeekingAlpha.com slash subscriptions.