Today's Topics

Good morning! Media mogul Tyler Perry has put an $800m expansion of his production studio on hold after seeing what OpenAI's new video generator Sora can do:

• Bag receivers: The NFL salary cap is going up.
• Buffett's rising sun: The oracle of Omaha's latest investments are paying off.
• Top Dollars: There's more $100 bills in circulation than ever.

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Bag receivers

The NFL is allowing teams to boost their already bumper wage bills next season, raising the salary cap by more than $30 million to take it north of $255 million, the league announced on Friday.

That 13.6% leap is the largest on record since the NFL first introduced the salary cap 30 years ago, when the most each team could pay out in wages was “just” $34.6 million. In the '24 season, franchises can also dish out a further $74 million on player benefits (think performance bonuses or retirement packages for former stars), taking the total top spend to $329 million per team, or a whopping $10.5 billion across the whole league.

‍More money ball

As you may expect for the most valuable sports division in the world, where TV deals alone could reportedly be worth over $126 billion by 2033, the NFL’s cap towers over other leagues, and the size of the increase underscores just how healthy the financials are for America’s most popular sport. Even the ascendant NBA is only projected to reach a $141 million salary cap — a figure that the NFL passed nearly a decade ago.

While salaries for every position on the gridiron have increased in recent decades, it’s interesting to note that there wasn’t a single football player in Forbes’ 10 highest-paid athletes of 2023. This is perhaps owing to the fact that the ranking also takes off-the-field earnings into account, an area where other sports have encouraged their players to command higher sponsorship and endorsement deals.

Note: stalling NFL collective bargaining agreement negotiations meant that the 2010 season was uncapped — though that didn’t lead to teams splashing the cash as much as you might imagine.

The architect and the contractor

At 93 years young, Warren Buffett has penned his annual letter to Berkshire Hathaway shareholders. A plain-spoken update on the company’s results, filled with his usual folksy investment musings, the letter reads like many of the 58 that came before it, with one exception — a tribute to his business partner Charlie Munger, who passed away in November at 99, in which Buffett credits Munger as the true architect of Berkshire Hathaway.

Elsewhere in the letter, it's business as usual, with Buffett eschewing much discussion of the “bottom line” (net income) his company has to report, instead focusing, as always, on the underlying operating earnings of the collection of businesses, which were up 21% on the prior year.

The billionaire businessman also spends a considerable amount of time explaining the company’s investments in 5 Japanese trading firms that have recently soared in value, as the Japanese stock market makes headlines for finally getting back to the record high it achieved back in 1989.

Buffett revealed that Berkshire first started investing in these firms — which themselves have sprawling interests in “unglamorous” industries such as mining and energy — back in 2019, when Japan’s stock market was far from being attractive to global investors. That bet didn’t pay off initially, but, like so many of Berkshire’s investments over the years, it's since come to bear fruit.

Indeed, since August 2019, the share prices of those 5 trading houses are now up 216% on average. Buffett has always bet on America, but now the company’s largest ever aggregate investment outside of the US is paying off handsomely, too.

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Benjamax

America's national wallet is stuffed with $100 bills. That’s the conclusion from Fed data reported by the WSJ, which reveals that the number of $100 bills in circulation has more than doubled between 2012 and 2022, making the Benjamin Franklin-bearing notes the most common US paper currency. As of 2022, there were 18.5 billion in circulation — 26% more than the number of $1 bills floating around — with plans to print up to another 1.6 billion $100 bills this year.

So, where are all these extra hundreds going?

‍Note taking

Aside from the Fed’s money-printing splurge in 2020, which saw the number of $20 notes go up by ~23% in a single year to support the Covid-stricken economy, much of the rise in the number of $100 notes has seen Americans increasingly use them as a means of storing cash, rather than spending it.

One explanation why denominations like the $100 bill tend to get saved is that larger bills enter circulation much faster than they leave, as consumers are more hesitant to part with them. Studies have shown that if people are given twenty $1 bills, they are much more likely to spend them than if they are given one$20 bill — a fascinating phenomenon known as the denomination effect. Another is that demand for US currency overseas has surged since the pandemic alongside mounting geopolitical instability in multiple countries, with more than half of all $100 bills estimated to be held abroad.

Regardless of the rise in hundreds, cards are still king: 60% of all payments are made with debit or credit cards, and, despite a greater volume being circulated, cash ranks behind those as the 3rd most-used payment method by number of transactions in the US... possibly because everyone’s storing it under their bed.

More Data

• Reddit is reportedly planning to offer 75,000 of its most prolific users the opportunity to buy shares at the IPO price when the company goes public next month.

• Women account for 55% of fans for pro sports, including baseball and basketball, in South Korea — compared to under half in the US and 25% or less in both Britain and Australia.

• Our friends at Sherwood Media investigate how Microsoft’s Copilot AI search can surface quotes from world leaders such as Vladimir Putin... even if they never said them.

• Quacking up: Universal’s new animated comedy Migration, about a family of ducks, has managed to quietly accrue $268 million globally over the past 10 weeks.

Hi-Viz

• Hold the phony: See if you can spot which audio clips of Trump & Biden are fakes in this AI call quiz.

‍Off the charts: Which quickly-climbing carmaker unveiled a new EV supercar worth over $230k at an event in Shanghai yesterday? [Answer below].

Answer here.

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