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As inflation continues to soar nationwide, Amazon (NASDAQ:AMZN) is attempting to offset some of its newfound costs by passing fees on to sellers. Fuel and inflation surcharges will be tacked on to the existing ~5% fee currently leveled on U.S. third-party vendors who use the company's fulfillment services. The new costs will go into effect on April 2, adding $0.24 per unit to the services offered by FBA, or Fulfillment by Amazon.

Quote: "In 2022, we expected a return to normalcy as COVID-19 restrictions around the world eased, but fuel and inflation have presented further challenges," an Amazon spokesperson told CNBC. "It is still unclear if these inflationary costs will go up or down, or for how long they will persist, so rather than a permanent fee change, we will be employing a fuel and inflation surcharge for the first time - a mechanism broadly used across supply chain providers. The surcharge will apply to all product types, such as non-apparel, apparel, dangerous goods, and Small and Light items."

According to Jungle Scout, which creates market analytics for Amazon sellers, nearly 90% of the e-commerce giant's 2M+ sellers used Fulfillment by Amazon in 2021, which provides services like storing, packing and shipping products. Last year, sellers even shelled out a total of $103B in fees, making up around 22% of Amazon's revenue. "Costs inevitably have to be shared across the economy, customers included," said Jon Elder, CEO of consulting firm Black Label Advisor. "FBA sellers can only handle so much margin compression before customers are affected."

Go deeper: Amazon was quick to highlight that despite the addition of the surcharge, its fulfillment rates will remain lower than other carriers. As of March 21, UPS (UPS) implemented a fuel surcharge of $0.42 and FedEx (FDX) applied a fee of $0.49. Several other companies have announced surcharges in recent weeks, including ride-hailing giant Uber Technologies (UBER). (4 comments)

Musk wants Twitter

Tesla (TSLA) founder Elon Musk is offering to buy Twitter (NYSE:TWTR) for $54.20 per share in cash after a drama-filled two weeks. TWTR shares are moving on the latest news, up 12% to $51.30 in premarket trading. The deal would value the company at about $43B and is what Musk called his "best and final offer."

Quote: "Twitter has extraordinary potential. I will unlock it," the Tesla (TSLA) CEO said in an amended 13-D filing. "I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy. However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company."

Musk was expected to join the board of Twitter after disclosing a 9.2% stake in the company, but then turned down the offer, leading to speculation he could go hostile. The latest offer represents an 18% premium over Twitter's closing price on Thursday, or a 54% premium over the day before Musk began investing in the social media company.

Between the lines: The number $54.20 is notable as Musk likes to make reference to "420" - a well known time in cannabis culture. His infamous tweet to take Tesla private (which ran him afoul with the SEC) was for $420 per share. (155 comments)

Costly metaverse

Many have been critical about Apple's (AAPL) hefty 30% App Store fee, but things are looking even costlier in the metaverse. Sales of digital assets and experiences made inside Facebook parent Meta Platforms' (FB) Horizon Worlds will set sellers back around 47.5%. That's made up of the 30% fee for sales made through Meta Quest Store, and another 17.5% in Horizon platform fees.

Bigger picture: Earlier this week, the company said it was testing monetization tools for the metaverse, similar to competitors like Roblox (RBLX), which already allows creators to offer in-world purchases of virtual items. The initiative is beginning with a "handful" of creators, who can sell everything from access to a VIP section of their world to virtual items like jewelry or a special basketball. Compensation under a goal-oriented bonus program will also be available to creators that are "doing awesome work in setting up worlds," announced Vivek Sharma, Meta's VP of Horizon.

Horizon Worlds, developed for the Oculus Rift S and Oculus Quest 2 VR headsets, was released in the U.S. and Canada in December 2021. Two months ahead of the release, Meta announced the creation of a $10M Horizon Creators Fund, which included cash prizes and grants to encourage developers to build in the metaverse.

It's getting competitive: "Meta has repeatedly taken aim at Apple for charging developers a 30% commission for in-app purchases in the App Store - and have used small businesses and creators as a scapegoat at every turn," Apple spokesman Fred Sainz said in an email. "Now - Meta seeks to charge those same creators significantly more than any other platform. [Meta's] announcement lays bare Meta's hypocrisy. It goes to show that while they seek to use Apple’s platform for free, they happily take from the creators and small businesses that use their own." (48 comments)

JPMorgan leads off

Shares of JPMorgan Chase (JPM) slipped 3.2% on Wednesday as the bank kicked off the Q1 earnings season, which traditionally begins with the largest U.S. lenders. The results reflected increased downside risks, like widening losses from funding spreads, adjustments for commodities exposures and markdowns of derivatives receivables from Russia-associated counterparties. The results from America's largest bank are often looked at as a bellwether for the broader economy, as well as the financial health of the average U.S. consumer.

Quote: "We remain optimistic on the economy, at least for the short term - consumer and business balance sheets remain at healthy levels - but see significant geopolitical and economic challenges ahead due to high inflation supply chain issues and the war in Ukraine," Chairman and CEO Jamie Dimon said on a conference call. A recession is far from a sure thing, he added, but "is it possible? Absolutely."

In terms of the bank's numbers, profit for Q1 came in at $8.28B, down from $14.3B a year ago, while revenue fell 5% Y/Y to $30.7B. Both numbers missed analyst expectations. There were "A LOT of moving pieces" in the results, "but the credit reserve build is the standout (and a modest negative)," wrote Vital Knowledge's Adam Crisafulli. "JPM caused a lot of consternation back in January with its 2022 expense outlook, and the credit/provision news will likely cause a bit of anxiety for the whole group." On the positive side, net interest income/net interest margin performance was solid "thanks to a more favorable rate backdrop and healthy loan demand."

Outlook: Profits are expected to decline across the entire banking industry this season. According to FactSet, banks in the S&P 500 are expected to report Q1 earnings of around $27B, down 37% from a year ago. Citigroup (C), Goldman Sachs (GS), Morgan Stanley (MS) and Wells Fargo (WFC) will publish earnings this morning, while Bank of America (BAC) discloses its Q1 results on Monday. (22 comments)

Today's Markets

In Asia, Japan +1.2%. Hong Kong +0.7%. China +1.2%. India closed.
In Europe, at midday, London flat. Paris +0.6%. Frankfurt +0.5%.
Futures at 6:20, Dow +0.2%. S&P +0.1%. Nasdaq +0.1%. Crude -0.9% to $103.27. Gold -0.3% to $1978. Bitcoin +2.9% to $41,053.
Ten-year Treasury Yield unchanged at 2.69%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Retail Sales
8:30 Import/Export Prices
10:00 Business Inventories
10:00 Consumer Sentiment
10:30 EIA Natural Gas Inventory
1:00 PM Baker-Hughes Rig Count
2:30 PM Fed's Mester Speech
4:30 PM Fed Balance Sheet
6:00 PM Fed's Parker Speech

Companies reporting earnings today »

What else is happening...

Delta (DAL) earnings tip off potential boom in summer travel.

Federal mask mandate for public transit extended another two weeks.

Permian drilling permits hit record, signaling more production ahead.

Google (GOOGL) pledges $9.5B for U.S. offices and data centers.

Microsoft (MSFT) could face antitrust scrutiny over cloud practices.

GSK (GSK) acquires Sierra Oncology (SRRA) to bolster specialty meds.

Mastercard (MA) partners on 'world first' crypto-backed payment card.

IEA sees deficit oil market, tight refined product balances.

Biden announces $800M in additional U.S. military aid for Ukraine.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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