“We’ve had an amazing run” — Xbox Chief Phil Spencer. Yesterday, Microsoft announced it will cease making Xbox 360 consoles. The 360 hit store shelves in 2005—11 years ago. In other words, it’s about time to move on.
MARKET SNAPSHOT
Big Picture
- With another positive day yesterday, the S&P 500 is now just 30 points away from its all-time peak from last May. Thank a combo of a weakening dollar (which helps U.S. companies with international exposure), not-terrible earnings reports and data showing a rise in home resales
- China was unable to have its cake and eat it too, as markets took a tumble after positive growth lowered the chances of the government adding more stimulus to the economy
Alternatives to Watch
- Oil hit a five-month high as U.S. crude data fell below expectations, and as Iraq stated that production freeze talks would be revived after the Doha talks failed over the weekend
Market Movers
- Lexmark shares shot upward 13% after the printing and software company reached an agreement to be acquired by a Chinese private equity firm for $3.6 billion
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CORPORATE PRIMER
Coke Changes with the Times
Perhaps you’ve noticed: people drink less soda these days. As Americans focus more on healthy eating, that can of Coke is getting pushed further and further into the back of the fridge. How does Coca-Cola feel about this? As expected, beverage sales dropped last quarter, but profits still slightly surpassed expectations. What’s the secret ingredient? As sodas lose popularity, Coca-Cola’s “still beverage” sales (an incredibly fancy term for bottled water) are steadily increasing. And Coke won’t give up so easily on its soft drinks: in an effort to build up the market once again, Coca-Cola has been working to unify the brand and bring its products back to the iconic red packaging that Americans used to love so much.
“Oops”—Google Accidentally Dominates Again
“Googling” is an officially recognized word in Webster’s Dictionary. When was the last time you “Yahooed” or “Binged” something? When you were too lazy to change your homepage? Bottom line: Google is king, and with great power comes plenty of scrutiny. Yesterday, the European Union officially charged Google with “abuse of dominance.” Translation: Google utilized the Android mobile operating system to force phone manufacturers to preinstall Google’s apps by default (like YouTube and Google Maps). How far did Google go? Try a dominant 90% market share in mobile internet searches, which has the EU calling foul on what it sees as an anti-competitive practice.
Not So Fast
Mitsubishi just pulled a Volkswagen. One would think that all the scrutiny from the VW emissions-cheating scandal would make car manufacturers a bit more honest, but nope: yesterday, it was revealed that over 600,000 Mitsubishi vehicles sold in Japan had falsified economy tests to overstate gas mileage. This sent shares down 15%, aka the worst drop for Mitsubishi in about 12 years…and to an all-time low (but as Volkswagen shareholders know all too well, it gets worse). Who outed the wrongdoing? Interestingly enough, it was another car manufacturer, Nissan, that called foul. Clearly, Nissan doesn’t abide by “snitches get stitches.”
American Express Impresses
Driven by an increase in consumer spending, American Express beat both earnings and revenue expectations. The company added three million new cardholders last quarter (a fun tidbit: two thirds of transactions were conducted online). There’s more: American Express’ loans grew by 11%, and the credit-card issuer raised its earnings guidance for the year for good measure. Even with all the positives, analysts are wary that the company has not yet felt the impact of its lost contracts with Fidelity and Costco (yeah, that happened). For the time being, however, investors are happy, with shares trading up 4% after hours.
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OTHER STORIES
- Target says transgender people can use bathroom of their choice
- General Mills bets on Pumpkin Spice Cheerios to boost brand
- Snapchat’s new Bob Marley lens sparks “blackface” outrage
- AOL acquires 360-degree video company Ryot for VR news empire
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ECONOMIC CALENDAR
- Monday: Netflix (+/-), Pepsi (+), IBM (+/-), Morgan Stanley (+/-), Hasbro (+) Earnings; Housing Market Index
- Tuesday: Johnson & Johnson (+), Intel (+/-), Goldman Sachs (+/-), Yahoo (+/-), Philip Morris (-), UnitedHealth (+), Harley-Davidson (+/-) Earnings; Housing Starts (-)
- Wednesday: Coca-Cola (-), Dish Network (-), Qualcomm (+/-), American Express (+), Las Vegas Sands (-), Yum! Brands (+), Mattel (-) Earnings; Existing Home Sales (+)
- Thursday: Alphabet, Microsoft, Verizon, Visa, Starbucks, Schlumberger, General Motors, Under Armour, Southwest Airlines, D.R. Horton, Novartis Earnings; Weekly Jobless Claims
- Friday: General Electric, McDonald’s, Honeywell, Kimberly-Clark, Caterpillar, American Airlines Earnings; PMI Manufacturing Index
TUBMAN JOINS THE CLUB
If you didn’t know, now you know: women are about to have their day on American paper money. Of course, in order for a female American hero to be placed on a bill, a founding father must be cut. On the chopping block at first was Alexander Hamilton, but thanks to the Broadway hit “Hamilton” (yes, seriously), it’s now Andrew Jackson who will be replaced on the $20 bill—by the famous abolitionist Harriet Tubman. Here’s the story:
- One of Hamilton’s supporters is former Fed chief Ben Bernanke, who believes Hamilton was one of the best American economic policy makers of all time.
- Andrew Jackson, on the other hand, recently ran into some bad press when an NPR special examined his role in forcing Native Americans from their homelands. Oh, and he was a slave-owner—which makes the case for an abolitionist to take his place even more fitting.
- The move to add a woman has roots in the movement for gender diversity—it has been over a century since a woman has appeared on U.S. currency. Which women, you ask? Martha Washington, Susan B. Anthony, Pocahontas and Sacajawea have seen limited runs, but it’s finally time for a female American hero to rock an American currency—and stay there.
INTERVIEW QUESTION OF THE DAY
In a country where everyone wants a boy, each family continues having babies until they have a boy. After some time, what is the proportion of boys to girls in the country, assuming the probability of having a boy or a girl is the same? (Answer)
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BUSINESS PERSON OF THE DAY
Jeremy Fiance is a recent 24-year-old Berkeley graduate who isn’t taking the traditional path in the venture capital industry. Fiance has started his own venture capital firm, which has already received $6 million in funding, and is utilizing what he believes to be Berkeley’s overlooked alumni base to push his VC into superstardom. Best of luck!
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FOOD FOR THOUGHT
$27,500: the maximum fine an individual can face for flying an unregistered aircraft. Donald Trump might need to worry considering he currently flies a private jet whose registration expired earlier this year.
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Congrats to Zach Wilner, a student at Boston College studying information systems and business analytics, for winning last Friday’s weekly quiz prize! Check out tomorrow’s issue for this week’s quiz and another chance to win!
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