“I was there for the bit with his like nine bodyguards and three limos. It was really intense” — Actor Chris Pine, who plays Captain Kirk in the new Star Trek movie, describing when Jeff Bezos appeared on set. The Amazon CEO just happens to be a huge Star Trek fan—and managed to score a role as an alien in the upcoming film.
MARKET SNAPSHOT
Big Picture
- The Dow closed Friday in record-high fashion for the third time this week, but the S&P couldn’t keep the streak alive and lost strength ahead of the weekend
Alternatives to Watch
- The Turkish Lira dropped to eight-year lows after the Turkish military coup frightened many investors and left stock futures trading in the negative
Market Movers
- Airline stocks were hit hard Friday afternoon after details on the terrorist attack in Nice emerged. That eurotrip is starting to sound much less appealing and investors know it
CORPORATE PRIMER
Herbalife Says
…Don’t bet against me. We’ve seen some pretty epic shorts on Wall Street, but here’s one that went wrong. Need a refresher? In layman’s terms, a short is essentially when an investor bets on something to fail. Renowned hedge fund manager Bill Ackman placed a billion dollar short on Herbalife—and it seemed like a no-brainer at the time. The maker of weight management products settled its case for $200 million last Friday, after deceiving participants about how much they could make selling Herbalife products. The FTC stopped short of labeling the business model a pyramid scheme (effectively keeping the company alive), which actually sent shares up. Tough luck, Bill.
You Win Some
…You lose some. Earnings season is in full swing and the financial sector kicked off everyone’s favorite time of the quarter. Wells Fargo matched earnings expectations but missed revenue forecasts. Shucks, maybe next time. Wells Fargo is a little different than your regular Wall Street investment bank. With no trading arm to juice returns, it’s more exposed to the consumer and commercial lending environment. On the other hand, Citigroup handily beat analyst estimates, highlighting increased returns on assets and equity. Don’t worry, there’s plenty more earnings reports due this week.
Apple Just Declared War
…On Spotify. Last Friday, Apple proposed simplifying the often criticized way (think: T-Swift) that royalties are paid out to artists. Apple believes streaming services should pay 9.1 cents per 100 streams. The change would result in higher royalty rates (and thus, costs) for Apple Music’s rivals like Spotify, but likely not for Apple itself. How could this be? Apple Music already has a deal with record labels, which would likely allow the company to avoid following the rules of the proposal. Pretty tricky. Remember it’s just a proposal, but Cook and Co. have some serious clout. Stay tuned.
WORLD MACRO
Same Old, Same Old
…For China’s GDP. Last Friday, the Chinese government reported GDP growth of 6.7% in the second quarter. This figure narrowly beat analysts’ expectations, and is identical to first quarter GDP growth. It’s no secret that the Chinese economy has slowed as of late, as the decrease in demand from the manufacturing sector has led to rising corporate debt. Believe it or not, some economists hoped for a lower GDP figure, which would have been an indication that the government was acknowledging a need to restructure. There goes that plan.
OTHER STORIES
- World Bank names Paul Romer as chief economist
- Microsoft says Windows 10 user goal won’t be met
- Pokémon Go crashes and hackers claim responsibility
- Google Search to offer state-specific voter registration guide
ECONOMIC CALENDAR
- Monday: Bank of America, IBM, Netflix, Yahoo Earnings
- Tuesday: Goldman Sachs, Johnson & Johnson, Microsoft Earnings; Housing Starts
- Wednesday: eBay, Morgan Stanley, American Express Earnings
- Thursday: AT&T, Chipotle, General Motors, Starbucks, Visa Earnings; Weekly Jobless Claims; Existing Home Sales
- Friday: General Electric, American Airlines Earnings
CLEVELAND IS HAVING A HECK OF A YEAR
Today is the day. Whether you’ve been looking forward to it, dreading it, or don’t know what the heck we’re talking about, it’s happening just the same. The Republican National Convention is kicking off in Cleveland today, and for those not watching from the relative safety of their couches, security for the event is a serious concern. Though there have been no direct threats to the convention, recent attacks across the globe have everyone on high alert. In other words, security is going to be “yuge”:
- The federal government is stepping in with $93 million in funding for security. To be fair, some of this goes to the Democratic National Convention, which starts next week.
- Cleveland got $49.9 million from the federal government to help pay for equipment and cops’ overtime. Lebron doesn’t even make that much.
- There will be over 1,500 police officers, $5 million dedicated to bomb squads and over 3,000 federal agents on the ground.
- But even with all this prep, Cleveland knows things could still go wrong—the city bumped up its protest insurance policy to $50 million. Better safe than sorry.
INTERVIEW QUESTION OF THE DAY
You have a birthday cake and have exactly three cuts to cut it into eight equal pieces. How do you do it? (Answer)
BUSINESS TERM OF THE DAY
Royalty — A royalty is a payment to an owner for the use of property, especially patents, copyrighted works or franchises. They are legally binding agreements designed to compensate the owner for the asset’s use.
FOOD FOR THOUGHT
Ever thought of making an unconventional career change? Twenty five-year-old Kris Sanchez makes $500,000 annually off of his Twitter account @Uberfacts. That’s the dream.
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