Enjoy your March 6th hand-crafted Brew!
QUOTE OF THE DAY
“There is almost no economic indicator that has come in badly in the last three months” — Fed Vice Chairman Stanley Fischer, weighing in on the chances of a Fed rate hike this month. Long story short, the U.S. economy would have to choke more than the Cleveland Indians for the Fed not to raise rates
Market Snapshot
- U.S. stocks finished higher on Friday to erase Thursday’s losses as the Fed provided more clarity on its inflation target, leaving the updated chances of a March rate hike at 90%
- Cryptocurrency bitcoin reached all-time highs as investors eagerly await approval of the Winklevoss ETF (you may remember these twins from The Social Network), which would be the first bitcoin ETF ever: A decision on its approval is expected March 11
- China made a bold decision to cut its growth expectations to 6.5% in 2017 as top leaders work to rein in government debt and cool a booming housing market
One Million Mercedes
…All at risk of catching on fire. On Friday, Mercedes-Benz manufacturer Daimler (+0.13%) announced a worldwide recall of newer models after 51 reports of fires. According to the German automaker, the fires are likely the result of faulty fuses that overheat (shoutout to Samsung). The good news? Vehicles on dealer lots will be fixed before they’re even sold and current owners can check their vehicle status online to see if they’re at risk. The bad news? For owners in the United States, no fixes will start until parts become available in July. Time to call an Uber.
And Another L For Germany
…As Deutsche Bank (-4.26%) shares slid over the weekend. Since 2012, the German bank has been slapped with hefty legal fees for numerous scandals, including its involvement in the good ol’ 2008 financial crisis. Classic stuff. The result? Lots of struggling. But, in the latest turnaround attempt, the board made moves to help revive the floundering bank. The plans include raising $8.5 billion to beef up its capital and listing its asset management arm for some extra cash. On top of that, the board ordered another round of internal restructuring. Better luck this time, Deutsche.
One Man’s Trash
…You know the saying. Opel, GM’s (1.24%) European unit, has been bleeding money for 16 years running. Time for a change? Yep—over the weekend, management pulled the plug and announced a sale to French auto giant PSA (2.89%). This decision is a clear indicator that GM values financial stability over market share. On the flip side, PSA will be opportunistically using this acquisition to become the second largest automaker in Europe. Hell of a bet in this politically uncertain climate, that’s for sure.
Is Answers Corp Broke?
…Yes, yes they are. The company most famous for owning website Answers.com officially filed for bankruptcy in a plan to reduce its debt load by $471 million, and to transfer ownership to its creditors. Answers was recently acquired by a European private equity firm in 2014 for $900 million dollars…we’re no PE experts, but it’s safe to say that investment has been a swing and miss so far.
NBC Bets Big
…On Snapchat, of course. Who else? NBCUniversal—which is owned by Comcast (-0.61%)—just invested $500 million in Snapchat’s IPO. The $500 million investment’s value skyrocketed after the stock surged 44% on the first day. Not a bad move. On top of that, NBC has agreed to hold the shares for a minimum of one year. Although, the investment with Snapchat is only the tip of the iceberg for NBC: it has plans to invest $1.5 billion in digital businesses in the near future. Steve Burke, CEO of NBC, says the company will be “aggressive” toward digital content in the future.
Other Stories
- Dave Chapelle makes Netflix debut on March 21st
- With introduction of Model 3 on the horizon, Tesla loses key employees at pivotal time
- Shares of WPP, the world’s largest advertising firm, slid on sluggish 2017 revenue projections
- Amazon expands private-label brand, Elements, into invite-only vitamins and supplements
Economic Calendar
- Monday: Plug Power, TheStreet; Factory Orders
- Tuesday: Boingo Wireless, Dick’s Sporting Goods, H & R Block, Urban Outfitters; Consumer Credit
- Wednesday: Adidas, Vera Bradley; ADP Employment Report
- Thursday: Domino’s, El Pollo Loco, Signet Jewelers; Bloomberg Consumer Comfort Index, Money Supply
- Friday: Vail Resorts; Employment Situation, Treasury Budget
Investors Bet on Commodities to Continue Hot Streak
2016 was a great year for commodities, and investors have fingers crossed that the good times keep rollin’. Status report? Rising global demand and inflation are causing the market to continue flocking into commodities, and investors are hoping that Trump’s financial deregulation will keep the growth coming. Here’s the scoop on the commodity commotion:
- The S&P GSCI Index, which tracks commodity futures, grew 28% in 2016—its highest growth since 2009. Why? A 50% increase in oil and natural-gas prices did the trick.
- Investors aren’t expecting the trend to end anytime soon: commodity assets under management grew to $391 billion in January—a 7% increase from December and over 50% from January 2016.
- One of the main drivers of the continued optimism are signs of inflation. The US CPI increased by 0.6% in January, the largest gain in four years.
- So how have commodities done so far this year? Great, but they could be cooling off; the Materials Price Index, which tracks commodities, ended its record streak in the last week of February after 17 weeks of growth. Keep it up, commodities.
Interview Question of the Day
What risks do you face when investing in the insurance sector? (Answer)
Business Term of the Day
MVP – A minimum viable product refers to the base features needed to test your product or service in the target market. It’s also often called Minimum Viable Proof as a successful test can prove to an investor that your idea has legs.
From speaking with many of you, it is clear that entrepreneurship is in a Brewer’s DNA. We want to give you the keys to bring that “crazy idea” to fruition. With our friends at edX.org, we went out and found the best (and free!) online course, Becoming an Entrepreneur from MIT. CHECK IT OUT.
Food for Thought
Lightspeed Venture Partners’ Jeremy Liew, the first outside investor in Snapchat, believes that the next huge consumer tech hit will be the replacement for “ambient” TV-watching (ie: when your TV is on, but you’re not really watching). And currently, the closest stand-in replacement is intelligent assistants like Amazon’s Alexa. Why? Interactivity makes TV harder to ignore, and easier to engage with.
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