Welcome to the Weekly Scan. Here’s what we’re following for the week of April 26, 2021.
Capital gains changes could be coming. President Biden is expected to introduce legislation that would increase the capital gains tax for Americans who earn more than $1 million. If passed by Congress, the tax rate for capital gains—or income earned from a sale of an investment that increased in value—would almost double to 39.6% from 20%. Those taxes would reportedly be used to fund Biden’s $1 trillion American Families Plan, which would attempt to make community college free, provide support for workers to learn new skills, and expand subsidies for childcare.
- The takeaway: The capital gains tax rate is important for investors who profit from sales of those investments. However, if passed, the increase would only affect top earners. The increase would bring the capital gains tax rate close to the ordinary income tax rate for those who make $518,401 or more, which currently stands at 37%.
Tesla’s latest crash test. Last week, two men died in a crash of Tesla’s 2019 Model S in Spring, Texas, prompting concerns about Tesla’s Autopilot feature. The men, who were found in the passenger and back seats of the car, are thought to have enabled the car’s $10,000 tool known as Full Self-Driving Capability, or FSD. Autopilot is a feature of FSD that allows the car to drive automatically on the highway, provided that someone is behind the wheel. However, on YouTube and TikTok, some Tesla drivers have demonstrated how to “trick” Autopilot into driving without an alert driver in the front seat. On Twitter, Tesla CEO Elon Musk denied that the men had enabled FSD. Still, the crash is being investigated by the National Highway Traffic Administration and the National Transportation Safety Board.
- The takeaway: Tesla’s Autopilot has a complicated history. While the Autopilot feature will alert a driver without their hands on the wheel every 30 seconds and stop if it does not sense hands after a minute, Musk has suggested that Autopilot is almost working well enough that drivers could use it to drive most of the time. Tesla, meanwhile, is expected to deliver record first-quarter sales Monday evening, estimated at $10.5 billion and a net income of $509 million. Keep in mind when you’re investing that past performance does not guarantee future gains.
Netflix big Oscar’s night. Netflix movies won seven Academy Awards on Sunday, more than any other studio this year. The streaming service also led the pack in overall nominations, racking up 36. Its film “Mank” was nominated for ten awards, the most nominations for any movie this year. Netflix’s Oscar wins included those for makeup and hairstyling and costume design for “Ma Rainey’s Black Bottom.” Netflix didn’t take any awards home in the three biggest categories: Best Picture, Best Actress, or Best Actor. Disney and Warner Brothers followed Netflix with five and three Oscar wins, respectively.
- The takeaway: Increasingly, Netflix and other streaming services have had strong showings at awards shows, as they compete more with the major motion picture studios for rights to content. In the last year, especially, streaming has become more important as movie theaters temporarily closed because of the pandemic. At the 2020 Oscars, Netflix was nominated for 24 Academy Awards and won only two. Netflix joined the Motion Picture Association of America in 2019, officially making it a studio only two years ago.
Back to the air. Despite an ongoing pandemic health crisis, many Americans are planning to take to the skies again, as major airlines report a surge in leisure bookings for the summer months, not seen since 2019. All four major airlines—American, United, Delta, and Southwest—say they expect a return to between 80% and 90% capacity for the summer months, according to reports.
- The takeaway. Major U.S. airlines received billions of dollars in bailout money as their bookings crumbled during the pandemic. Although the money was meant to forestall job losses, the airline industry lost approximately 100,000 jobs due to furloughs and layoffs starting in March, 2020. The fast pace of inoculations in the U.S., where more than half of adults have received at least one dose of a Covid-19 vaccine, may be driving bookings. Forecasts for the industry say flight travel could fully recover by 2023 or sooner. Remember that industry growth is unpredictable, and forecasts are only educated guesses.
Stop tracking me. Apple plans to launch a much-anticipated update to its operating system for iPhones and iPads this week, which will allow users to opt out of tracking software on many popular apps. Dubbed iOS 14.5, it reportedly has a function called App Tracking Transparency, which tells users when an app is tracking their data, and gives them the opportunity to disable the monitoring.
- The takeaway: The tech industry has been at the center of multiple regulatory challenges about privacy, stemming from the amount of consumer data it collects for advertising purposes. Congress is currently examining legislation similar to the regulatory framework currently in place in the European Union, which regulates how companies collect and manage consumer data. Facebook, which has digital advertising revenue of $70 billion generated from tracking its users’ movements on the internet and on various apps, reportedly could stand to lose substantial amounts of money if consumers switch off its ability to monitor them. It’s important to note that estimates about gains or losses are not guaranteed.
Find out what we covered in last week’s Scan.