“Pink + Purple = Fuchsia (a new Operating System)” — GitHub description of Google’s new planned operating system—which will have nothing to do with Android. No official announcement from Google yet, but that hasn’t stopped millions of computer geeks from speculating on Fuchsia’s true purpose.
MARKET SNAPSHOT
Big Picture
- The record-breaking run for U.S. stocks continued Monday: all three major indexes closed at all-time highs for the second time in less than a week
- Chinese stocks jumped to seven-month highs following the announcement of aHong Kong-Shenzhen trading link, which will help increase foreign investment
Alternatives to Watch
- The recent rally in oil continued yesterday: U.S. crude has now jumped 10% in the last three sessions of trading, this time fueled by Russia stating it would be open to talks of collaboration with OPEC to decrease supply
CORPORATE PRIMER
If Twitter’s Going Down
…It’s not going down without a fight. Twitter is reportedly in talks with Apple to bring a Twitter app to Apple TV. And this isn’t about reading tweets on the big screen: it’s all about Twitter’s recent push into livestreaming video to offset lagging user growth—most notably, its deal with the NFL to stream 10 games this upcoming season. Ideally, the partnership would expose Twitter’s increasingly-common livestreams to a broader audience, while Apple would gain some much-needed differentiated content. Investors seemed on board with the idea, with Twitter shares rising over 7% yesterday.
Dropbox is Dabbling
…With the idea of going public. The pioneering file-storage company has reportedly met with advisors to discuss the possibility of an IPO as soon as 2017. Dropbox’s CEO said last year the company didn’t feel the need to go public, but there’s no shame in inquiring, right? The San Francisco-based startup was last valued at $10 billion during a funding round in 2014, but many investors have written down its value amidst increased competition and a continued lack of profitability—but hey, at least it’s now cashflow positive.
Stop Us If You’ve Heard This Before
…Volkswagen’s in some trouble. The German automaker has had a nightmarish 2016 after it admitted last fall to installing illegal emissions-cheating software in 600,000 vehicles. Yesterday, the Justice Department came to an unsurprising conclusion: Volkswagen engaged in criminal wrongdoing. Remember, VW already agreed to a $15 billion settlement in a separate civil case in June, and the decision from the Justice Department means (you guessed it) more financial penalties are on the way. It’s looking pretty bad: these criminal fines could dwarf Toyota’s $1.2 billion criminal penalty it suffered in 2014, a record amount for an automaker. Not the kind of record Volkswagen wants to be breaking.
WORLD MACRO
Abenomics Comes Up Short
…Yet again. Yesterday, Japan released its Q2 GDP, revealing woeful growth of just 0.2%. How’d we get here? Japan’s economy has been in a slump for years now. You can thank a nasty mix of a declining workforce, a recent rise in the yen (which hurts export-heavy Japanese companies) and weakening competitiveness in the tech industry. Earlier this month, Japan’s government announced another stimulus plan, but previous policy actions have failed to pull Japan out of its ditch. Fingers crossed for the next round.
OTHER STORIES
- Audi adding a traffic light timer so you know how long you can text
- Hedge fund exec faces DUI charges in Hamptons car crash
- Larry Wilmore’s ‘Nightly Show’ cancelled at Comedy Central
- Tesla says removal of ‘Autopilot’ from Chinese site a mistake
ECONOMIC CALENDAR
- Monday: Housing Market Index (+/-)
- Tuesday: Home Depot, TJX, Advance Auto Parts, Dick’s Sporting Goods, Urban Outfitters Earnings; Consumer Price Index; Housing Starts; Industrial Production
- Wednesday: Cisco, Lowe’s, Target, L Brands, Staples, American Eagle Earnings; Fed Meeting Minutes
- Thursday: Walmart, Ross Stores, Gap Earnings; Weekly Jobless Claims
- Friday: Foot Locker, Deere, Estee Lauder Earnings
OLYMPIC CONVERSION RATES
Winning an Olympic medal, standing up on that podium with tears streaming down your face, your heart overflowing with patriotism, your adoring fans screaming in joy…sound good enough? Apparently, it’s not. American medal winners also get some sweet prize money from the U.S. Olympic committee. There’s a catch, though: like all prize money, the cash is taxed by Uncle Sam:
- So here’s how much winning Olympians get: $25,000 for each gold medal, $15,000 for silver and $10,000 for bronze.
- Not too bad, right? But if you’re in the top tax bracket (looking at you, Michael Phelps) you’ll get taxed on those winnings at a rate of 39.6%.
- So to do the math for you, this means Michael Phelps may incur a tax bill of $55,000 for his five golds and one silver. That said, with $85,000 left over in winnings, you probably won’t hear him complaining.
- And don’t forget: all Olympic training expenses are still tax deductible, so Phelps and his reported $55 million net worth won’t be hit too hard.
INTERVIEW QUESTION OF THE DAY
On a deserted road, the probability of seeing a car during a thirty minute period is 95%. What’s the chance of seeing a car in a ten minute period? (Answer)
BUSINESS TERM OF THE DAY
Put Option — A put option is an option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time. This is the opposite of a call option, which gives the holder the right to buy shares. Basically, a “put” option is betting that a stock, index, etc., will decline in value.
FOOD FOR THOUGHT
While everyone has been enjoying the market rally, one man isn’t so sure. Who’s the mystery man? None other than billionaire George Soros. His hedge fund increasedits bet against the S&P 500 by increasing its “put” option count to four million shares on June 30. Keep in mind, he did successfully predict the 2007 crash.
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