Bitcoin Has Jumped Over 70% In The Last Month, Plus Tesla Has Annoyingly Good Fortune

by 2 years ago

morning-brew

“I am going to lose.” — Oscar Pistorius’s lawyer, Barry Roux, at an appeal hearing yesterday calling for the South African paralympian’s five-year culpable homicide sentence to be changed to murder. While that’s never something you want to hear your lawyer say in any context, it should be noted that the context of the statement (whether in relation to the whole appeal, a piece of it or something else entirely) is not clear.

MARKET SNAPSHOT 

Bitcoin Bonanza

  • U.S. stocks closed in the positive again, this time reinforced by gains in both oil (which jumped 4 percent) and tech stocks. The tech-heavy Nasdaq 100 managed to close at its highest level ever, a record previously set in March 2000 during the infamous dot-com bubble.
  • A perfect storm of events had Asian markets soaring yesterday, including Chinese stocks, which were up over 4 percent. The key factors: China’s services sector expanded at its fastest pace in three months, President Xi Jinping said growth would not fall below 6.5 percent through 2020 and new comments provided more evidence that China will continue to make its markets friendlier to foreign investors.
  • Though seen as shadier and more mysterious, the digital currency Bitcoin has jumped over 70% in the last month. Investments from financial firms such as Bain and MasterCard, not to mention the Winklevoss twins (from The Social Network) launching their own exchange, have added to Bitcoin’s credibility, and thus the value of the currency.
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U.S. MACRO 

Automobile Companies Breathe a Sigh of Relief

First, the good news: U.S. auto sales for October amounted to 18.2 million cars, a 10% increase over last October and also the first time since 2000 that sales have hit 18 million vehicles in back-to-back months. The bad news: some economic indicators show that the celebration might be short lived. Consumer spending and personal income growth has slowed recently, and an interest rate hike could have consumers opting to lease rather than buy in the future. A celebration is in order, but U.S. automobile companies still have their work cut out for them.

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CORPORATE PRIMER

Trouble with Takata (Once Again)

Takata’s been all over the headlines lately—and for all the wrong reasons. The National Highway Traffic Safety Administration laid down the law, slapping the Japanese airbag supplier with a $70 million fine. This marks the culmination of a long-running investigation, which found that the company failed to disclose potential issues in its airbags to officials. The culprit: ammonium nitrate, which was used in many of Takata’s products and has been linked to destabilization in airbags…and explosions.
Sprint Falls Short
Yesterday was a sad day for Sprint, as Q3 earnings fell short of forecasts and shares slid 7% as a result. Despite Sprint’s $1 iPhone leasing plan and the addition of 237,000 customers, the company saw quarterly revenue decline 6 percent and posted a loss per share of $0.15, nearly twice the loss that Wall Street was expecting. So what’s next for the wireless carrier? $2 billion in cuts by the end of 2016, if Sprint’s CFO gets his way.

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TODAY IN TECH

Tesla’s Annoyingly Good Fortune

For Tesla, all news is good news, even when posting negative earnings that misses Wall Street estimates. Yesterday, Tesla reported earnings of negative 58 cents, which sent the electronic car giant’s shares skyrocketing by 8%. Confused? Turns out earnings don’t matter as much to investors as stability. Following an economic meltdown in China, analysts expected car deliveries to tumble, but Tesla has been able to maintain production and further accelerate capital investments to drive investor expectations of greater future cash flows. In other words, Tesla seems to be set for the foreseeable future.

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OTHER STORIES

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ECONOMIC CALENDAR

  • Monday: Allstate, AIG, Fitbit, Visa Earnings; ISM Manufacturing Index
  • Tuesday: Tesla, Sprint, Groupon, Herbalife, Zynga, Kellogg, Papa John’s, Denny’s Earnings
  • Wednesday: Facebook, Qualcomm, Time Warner, Twenty-First Century Fox, GoDaddy, Michael Kors, Whole Foods, Wendy’s Earnings; U.S. Trade Deficit
  • Thursday: Walt Disney, Shake Shack, Monster Beverage, TripAdvisor, NVIDIA, AMC Networks, SeaWorld, Ralph Lauren, Celgene Earnings; Weekly Jobless Claims
  • Friday: Cigna Earnings; Unemployment Report

FUNDING A SYMBOL

In an effort to build an American symbol, the World Trade Center’s developer is turning to aspiring immigrants to fund the final office tower—in exchange for green cards. That’s right, foreigners who invest in the symbol of freedom can make theirs a reality. Sound too perfect? Let’s take a look:

  • Silverstein Properties has initiated a marketing push in China to raise the $500 million in low-cost financing it needs—$500,000 per investor in exchange for a green card.
  • It sounds like cheating the immigration system, but it’s actually leveraging the existing federal EB-5 visa program, which gives green cards to foreigners who invest in American job creation.
  • Overall, the program is a win-win, rewarding immigrants for investing in job-creating businesses. But it’s not without its critics: after all, the investments from the EB-5 program are meant to aid rural and economically ailing areas—categories for which Manhattan office space hardly applies.
  • Silverstein Properties disagrees, citing trickle-down benefits across the income spectrum. The means look suspect, but the end sure looks beautiful.

INTERVIEW QUESTION OF THE DAY

Mac’s new house number has three digits. When she challenged her friends to guess it, they tried 135, 780, 785 and 732.
“That’s amazing,” Mac said. “You’ve each guessed exactly one digit correctly and in its right place!”
What is Mac’s house number? (Answer)

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BUSINESS TERM OF THE DAY

Managed Futures — An alternative investment strategy in which professional portfolio managers use futures contracts as part of their overall investment strategy. Managed futures provide portfolio diversification among various types of investment styles and asset classes to help mitigate portfolio risk in a way that is not possible in direct equity investments.

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FOOD FOR THOUGHT
Nine: the number of states where gas is under $2 per gallon, with South Carolina being the cheapest of them all.

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