The Dow Jones Futures Yo-Yoed With The Election Of Donald Trump, Plus Valeant Pharmaceuticals Is STRUGGLING

by 1 year ago

morning-brew-new
“An important tenet of our mission is to offer best-in-class safety and quality. Recently, we fell short on this promise” — Samsung, in an open letter to customers apologizing for the Galaxy Note 7 debacle. Guess you gotta do what you gotta do when your products start exploding.

Market Snapshot

Donald Trump will be the next president of the United States. We’ll have oh so much more on this historic event in the days, weeks and months to come. For now, let’s quickly run through the instant market reactions:

  • In the U.S., Dow Jones futures fell as much as 800 points, but rebounded to 500 points down in the wee hours of the morning. The S&P and Nasdaq futures were down 5% before trading was halted.
  • The Mexican peso has closely followed the election: when Trump’s chances went up, the peso fell, and when his chances faltered, the peso rallied. No surprise then that the peso crashed 11% to reach an all-time low. Meanwhile, the dollar also fell around 3.3%.
  • Japan’s Nikkei index fell 5%, while Chinese stocks were down only moderately (under a percent).
  • In classic rush-to-safety moves, gold surged 5% and U.S. 10 year treasury yields fell to 1.75% while oil fell 4% from the prior day’s close.

Feeling Sick

…CVS (-11.82%) misses sales and lowers its outlook for this year and next. Thought your week was going poorly? The drugstore giant warned investors that it will likely lose more than 40 million prescriptions next year. So who’s to blame? Point the finger at rival Walgreens (-1.67%), which has shut out CVS by offering lower prices to pharmacy-benefit managers. To add insult to injury, CVS is also experiencing slowing prescription growth and retail prescriptions are choosing to leave the company. The grim numbers could spell trouble for other companies that depend on drug sales, as the overall prescription market may be slowing. CVS can at least be thankful it’s not Valeant (#burned).

The Drugs Aren’t Working

…The pain keeps coming for Valeant (-21.69%), the pharmaceutical company that was once known asthe darling of Wall Street.” Need we remind you how we got here? Accounting problems, a potential debt default, conflict with regulatory agencies and increased competition, among a myriad of other reasons. Valeant received a beacon of hope when it announced last week that it would sell off its drug-making arm to raise some much-needed cash, but the optimism was short-lived: this is now the second time in 2016 that Valeant has had to cut its earnings forecast, and the stock has lost more than 85% of its value this year. Yep, 85%.

Never a Dull Day at Tesla

…Not even election day. Tesla (+0.90%) has already been making major strides towards autonomous vehicles, and now it’s taking things one step further by automating the production process too. Yesterday, Elon Musk’s notorious car company confirmed plans to buy Grohmann Engineering, which specializes in manufacturing batteries through an automated process. Ultimately, buying Grohmann means Tesla can ramp up its fuel cell production, putting the company on track for its monstrous goal of increasing production sixfold by 2018. Musk sure does love a challenge, and he likes his chances with this one.

Good News for Orcas

…And investors, too. Think back to 2013, when a documentary called Blackfish highlighted the abuse of Orcas at SeaWorld (+8.14%) and sunk the brand’s reputation. Not only were activists riled up, but so were shareholders, who recently watched helplessly as dividends were cut and net income dropped off 33%. Wait, what’s this…redemption? Maybe: investors and animal activists may be willing to give SeaWorld another chance after it unveiled an aggressive cost-cutting strategy and a plan to scale down its controversial Orca exhibit, sending shares up over 8%.

Other Stories

  • GoPro is recalling the Karma drone after just 16 days on the market
  • Smith & Wesson to change name To reflect diverse holdings
  • Samsung HQ raided by prosecutors as South Korean political scandal deepens
  • Ireland to formally submit appeal on Apple case this week

Economic Calendar

China’s Cybersecurity Crackdown

China’s online restrictions ain’t getting any looser. On Monday, the Chinese government passed a new cybersecurity law—to the alarm of both international business groups and the Human Rights Watch. Just what kind of law is this? While China claims these rules will prevent acts of terrorism and cyber attacks, critics argue they’ll further restrict Internet freedom. Here’s the deal:

  • The law introduces new security checks on companies across industries. It even includes mandatory in-country data storage. The Chinese claim these measures will strengthen security, while foreign business leaders worry it will raise expenses on operations and slow crucial data sharing. Sounds fun.
  • The Human Rights Watch is concerned about the stipulation requiring individual users to register with their real names. In a statement Sunday, the group wrote: “The already heavily censored internet in China needs more freedom, not less.”
  • By increasing restrictions in both economic and personal spheres, the chairman of the American Chamber of Commerce in China believes that China is further isolating itself from the rest of the world. The good news? We’ve got until next summer to brace ourselves for the law to take effect.

Interview Question of the Day

There are 10 stacks of 10 coins each. Each coin weighs 10 grams. However, one stack of coins is defective and each coin in that stack weighs only nine grams. What’s the minimum number of coins you need to take to find which stack is defective? (Answer)

Startup of the Day

Lufax is one of China’s biggest peer-to-peer lending platforms, arranging more than 200,000 loans worth an estimated $2.5 billion since it was founded in 2011. Peer-to-peer lenders link lenders and borrowers directly—bypassing the banks that have traditionally had a near-monopoly on loans.

Food for Thought

Wait, spending in this presidential race decreased from four years ago? Yes says a new estimate from the nonpartisan Center for Responsive Politics, which is predicting a final price tag of $2.65 billion for this year’s race for the White House. This represents a dip from the $2.76 billion dropped on the 2012 contest.


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