Enjoy your December 27th hand-crafted Brew!
QUOTE OF THE DAY
“Of course” — Martin Shkreli, the infamous “pharma bro” who raised the price of a lifesaving drug by 5,000%, responding to the question of whether he would still raise the price of Daraprim if he could go back and do it all over again. He would. The full interview with Bloomberg is a must-watch.
Market Snapshot
- U.S. markets went into the long weekend on a quiet note, and the Dow was unable to reach 20,000 yet again. Trading volume was predictably light, with a large number of investors presumably off for the holidays
Prepping For That IPO
…Snap (parent of Snapchat) is buying Israeli startup Cimagine for $30-$40 million. You know Snapchat, but the four-year-old Cimagine has largely flown under the radar. The gist of the startup: it develops augmented reality tech that can, for example, allow users to virtually place furniture in their home with the click of a button. Nifty. The deal marks Snap’s first Israeli acquisition and is seen by many as a “talent grab,” since Cimagine’s founders are specialists in both computer visioning and imaging processing. And if that wasn’t enough, Snapchat also launched filter games on Friday, allowing you to “play with your face.” It all adds up to Snap preparing for its long-awaited IPO, which could come as early as March. Hold tight.
Uncle Sam’s On a Roll
…And he ain’t slowing down. We’ve got lots of economic goodies for you Econ 101 studs: first, you might recall that early last week, U.S. third quarter GDP was revised up to the highest growth rate in two years—not too shabby. And there’s more where that came from: new home sales and consumer sentiment also both rose in November. Since The Donald’s election, mortgage rates have been on the rise, giving potential home buyers an incentive to hit the housing market ASAP. The result = lots of new homes finding buyers, with sales up 16.5% compared to last year. And people aren’t just spending like they’re happy, they’re feeling happy too: Consumer sentiment in November hit a 12-year peak, signaling that consumers have a whole lot of faith in the economy’s future. Now that’s what we call ending 2016 with a bang.
China Isn’t Opposed to Cutting Off the Leg
…To save the body. Over the holiday weekend, China’s President Xi Jinping said he was down to distance his country from its annual 6.5% growth rate target in order to help deflate the giant debt bubble overhanging the Chinese economy. With total debt now at 270% of China’s GDP, even the IMF is saying it might be time to take the pedal off the metal. And in other Chinese news, the country slapped General Motors (+0.78%) with a $29 million fine in a good old-fashioned price-fixing scandal. GM, through its partnership with Chinese carmaker SAIC, allegedly colluded with Chinese dealerships to fix the prices of GM cars. Cue pissed-off Chinese regulators and a worried GM, since the automaker sells more cars in China than it does in the U.S. The U.S.-China trade relationship has deteriorated since Trump was elected, and this sure isn’t going to help.
And You Thought 2008 Was Over
…Subprime never ends. Remember the 2008 financial crisis that nearly destroyed the global economy? Well ever since, the U.S. government has been eyeing (and fining) those involved. Deutsche Bank and Credit Suisse are the latest to get slapped—they reached separate agreements to pay a combined $12.5 billion to resolve investigations. It’s been a while, so let’s take a quick trip down memory lane. Basically, the banks piled up your average Joe’s loans and mortgages (among other things) into these neat ornaments called subprime mortgage bonds, and then deceived the public into thinking they were solid investments. Which, as The Big Short surely taught you, they very much weren’t—Joe took out a bunch of loans he couldn’t pay, defaulted on them and people lost their money. But wait, there’s more to come. The Obama administration is hustling for more resolutions amongst uncertainty on how Trump will handle the remaining banks. Barclays, you’re next…
Other Stories
- Elon Musk says Tesla’s upgraded Autopilot might arrive next week
- Valve has been ordered to pay $3 million for violating Australia’s consumer laws
- Sony Twitter account hacked, claimed Britney Spears died
- Starbucks to offer free drinks for 10 days at certain stores
Economic Calendar
- Monday: Markets Closed (Christmas Observed)
- Tuesday: Consumer Confidence; Case-Shiller Home Price Index
- Wednesday: Pending Home Sales
- Thursday: Weekly Jobless Claims; International Trade
- Friday: Chicago PMI
2016: The Year of Record Highs
This past year has been a roller coaster in almost every regard. But we here at the Brew like to focus on the positives. So let’s take a quick look at some of the records that were set in 2016:
- The Dow Jones broke its own all-time high 43 times in 2016, thanks in large part to a post-election surge.
- November 9 was the heaviest trading day for gold…ever. Wonder what caused that? #ThanksTrump
- As of December 15, U.S. companies made up 38% of the world’s total market cap, the highest percentage in a decade.
- It wasn’t all sunshine and rainbows, of course. Student loan balances increased $76 billion to total over $1.2 trillion. Ouch.
Interview Question of the Day
What’s the difference between an interest rate and an annual percentage rate (APR)? (Answer)
Chart of the Day
It’s no surprise that millennials love using social media. And now, social media is being used by companies to reach their millennial audiences. So, when an A-List celebrity rocks that new watch or drinks that new drink, how much exactly are they being paid to promote these products? Take a look at Follow the Money.
Food for Thought
A few months ago, Apple unveiled its long-awaited refresh of the MacBook Pro line. And as any savvy consumer would appreciate, a Consumer Reports’ recommendation is compulsory. Not this time. The tech magazine found too much battery life uncertainty for its liking. The result? Abysmal ratings and no recommendation. 2016: not a good year for batteries.
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