“I’m going to make sure it happens as late as possible” — Travis Kalanick, CEO of Uber. Much to the displeasure of investors, Kalanick is in no rush to take the $60 billion ride-hailing startup public—buckle up for a long wait.
MARKET SNAPSHOT
Big Picture
- Markets finished mixed on Monday in a low-volume day of trading as investors await a speech from Chairwoman of the Fed Janet Yellen later today
Alternatives to Watch
- Oil halted its two-day decline after data showed the U.S. rig count continued its downward descent, dropping by 15 to a seven-year low
Market Movers
- Virgin America’s shares were on the up-and-up (over 10%) after receiving buyout offers from fellow airline companies JetBlue and Alaska Air Group
- In what seems to be a never-ending downward spiral, Valeant Pharmaceuticals plummeted yet again, this time 7% after news surfaced that its CEO was subpoenaed by a congressional committee
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U.S. MACRO
Two Sides to Every Economy
You got the good news in yesterday’s Brew with U.S. GDP surpassing expectations. Naturally, the economy couldn’t just leave it at that. Here’s the bad news: yesterday, the Commerce Department released consumer spending and trade data, and both were disappointing. Consumer spending was essentially flat (increasing a lousy 0.1%) despite income growth, showing that Americans are simply pocketing their extra cash. As for trade, the U.S. trade deficit rose slightly for the fourth month in a row. Combined, these factors led economists to slash upcoming GDP predictions, cut down investor confidence and killed the Fed’s vibe.
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CORPORATE PRIMER
Starwood Hotels: Episode IV
Anbang Group doesn’t give up so easily. Refusing to fold, the Chinese insurance giant has upped the ante yet again, outbidding Marriott in the battle to acquire Starwood Hotels at a hefty $14 billion. Not many expected the bid, as Starwood has stated Marriott is its preferred purchaser, but let’s be honest: money does mean a thing or two in the business world, and Anbang is pulling out all the stops to enter the American market. Representatives at Marriott remain interested in acquiring Starwood, but one other thing about money: it doesn’t grow on trees, and Marriott doesn’t have much more to give. That being said, don’t be surprised if an Episode V is in the works—clearly, Starwood is just too good to pass up.
Pandora’s New Coach
Sad and true: as Spotify and Apple Music emerge as the key players in the music streaming industry, Pandora has quietly been relegated to the bench. With costs skyrocketing and shares falling, the company is desperately searching for a way to get back in the game. Leadership believes a new CEO may be the answer, and they took immediate action. And we mean immediate: unexpectedly, Brian McAndrews, the now-former CEO, handed off the reins to Pandora founder Tim Westergen—no warning, no explanation. Investors have never much liked surprises, and shares fell 12% on the news.
FBI Cracks iPhone
The Apple vs. FBI saga came to an anticlimactic end yesterday: after battling it out for weeks over whether Apple should be obligated to assist the FBI in unlocking the San Bernardino shooter’s iPhone, the FBI announced that it has found an alternative method of accessing the phone’s contents—and promptly dropped the case. The new development is concerning because it shows that the iPhone can in fact be cracked (although it seems only with a government’s resources), but hey, the case was dropped. A win for privacy? You decide.
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OTHER STORIES
- Opening day tickets for Shanghai Disney are already sold out
- Dell to sell Perot Systems unit to NTT Data at loss of $800 million
- Apple expected to launch 5.8-inch iPhone with curved OLED display in 2017
- Oculus Rift starts shipping today to more than 20 countries
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ECONOMIC CALENDAR
- Monday: Consumer Spending (-); Pending Home Sales (+)
- Tuesday: Dave & Buster’s Earnings; S&P Case-Schiller Home Price Index; Consumer Confidence
- Wednesday: Micron, Lululemon, Carnival Corp Earnings; ADP Private Employment Report
- Thursday: Weekly Jobless Claims
- Friday: BlackBerry Earnings; March Unemployment Report; ISM Manufacturing Index; Consumer Sentiment; Consumer Spending; Motor Vehicle Sales
WHERE SHOULD I LAUNDER MY MONEY?
Where else? In such a massive global economy, there’s plenty of places to hide. Yes, China’s been getting bigger in the aboveboard market, but apparently the same is true of the less legal financial services out there—what we’re getting at: China is emerging as a global hub for international money laundering. Unfortunately for said launderers, the U.S. and Europe have caught on. Here’s just a few examples:
- Scammers have swindled an estimated $1.8 billion through a fake CEO scam—the non-Chinese culprits use Chinese bank accounts to store their money.
- Israeli criminal networks use the country as a middleman, and three Colombians laundered $5 billion worth of drug cartel money through China.
- Unfortunately, the corruption goes all the way to the top: in February, Spain arrested six executives of China’s largest bank, accusing them of facilitating a money laundering operation for European crime syndicates.
INTERVIEW QUESTION OF THE DAY
Is there anything interesting about the following sequence of numbers? Hint: there is, or else we wouldn’t be asking you!
8, 11, 5, 4, 9, 1, 7, 6, 10, 3, 12, 2, 0 (Answer)
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BUSINESS PERSON OF THE DAY
Andrew Caspersen, a former managing director at PJT Partners’ Park Hill Group, was charged yesterday with allegedly defrauding investors of more than $95 million. It gets worse: $24.6 million of that total was money invested by a charitable organization.
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FOOD FOR THOUGHT
Periscope users now spend the equivalent of 110 years watching videos—each day. Quick reminder: Periscope is the live video streaming app now owned by Twitter. Add it all up, and the service has reached 200 million live broadcasts—quite astonishing for an app that just celebrated its first birthday.
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