“It’s basically a supercomputer in a car” — Elon Musk, during Tesla’s new product reveal last night: all Tesla vehicles will now come equipped with fully self-driving hardware. Too much, too soon? Musk don’t care.
Market Snapshot
- U.S. markets rallied for the second consecutive day on the backs an oil jump and better-than-expected earnings from both Morgan Stanley (+1.89%) and Haliburton (+4.25%), showing strength in two sectors that have both dragged down the S&P so far this year
To the Record Books We Go
….Saudi Arabia raises hella cash. The Kingdom amassed an easy $17.5 billion yesterday, marking the largest bond sale ever from an emerging market nation. Why? The giant bond sale is part of an effort by Saudi Arabia to boost its cash flow to weather slumping oil prices. It’s also an integral piece of the nation’s “Vision 2030” economic reform plan, which seeks to diversify Saudi Arabia’s economy away from oil—a tall order indeed. Coincidently, oil prices rose yesterday to a 15-month high in part thanks to the Saudi energy minister’s warning of an impending oil shortage that could lead to a spike in oil prices. Looks like OPEC is finally making some progress. Good news for Saudi Arabia, bad news for your commute.
Facebook Continues Taking Over Your Life
…Yesterday, the social network launched a slew of new features. First up: food ordering. Oh, and booking movie tickets. And appointments. Yes, all this and more can now be done directly through Facebook (+1.20%) thanks to some all-new partnerships. What’s the play here? Well, you’re already using Facebook to look up restaurants, RSVP to events, talk to your friends and more, and Facebook likes it that way. The goal: to keep you locked into its ever-growing ecosystem—because for advertisers, time is money. Make no mistake: it’s an ambitious move, as Facebook is now competing against industry mainstays like Seamless, Yelp and Fandango—but Zuckerberg’s never met a challenge he didn’t like.
Traditional TV is Out
…Because Google (+0.79%) is one step closer to entering the Web TV game. Yesterday, Google reportedly reached an agreement with CBS to carry its content on Google’s soon-to-be-launched online TV bundle, dubbed “Unplugged.” A cute name, at a price: Unplugged is expected to cost between $25-$40 per month and aims to target so-called “cord-cutters,” the increasingly large percentage of the population that doesn’t subscribe to traditional pay TV. Google’s not the first to do this, and it’s definitely not the last, either—Dish Network and Sony have already launched similar offerings, and Hulu is planning to launch one early next year. Watch out, TV.
Morgan Stanley is In
….Crushing Q3 earnings just like all its big bank buddies. MS posted earnings of 81 cents per share, a healthy amount higher than analyst estimates of 63 cents. CEO James Gorman cited record revenues in wealth management and strong performance in sales and trading, most notably fixed income. Why’s that important? Until this quarter, bond trading had been dragging MS down bigtime, most recently suffering through a 25% headcount reduction in December of 2015. Glad we’re past that mess, but it ain’t over until it’s over: firm management still has its eye on that long run return on equity target of 10% (current: 8.7%) by the end of next year.
High Fives All Around
…American Express (+5.47% after hours) beats on earnings too. The credit card issuer not only reported Q3 earnings of $1.20 (beating analyst estimates of 97 cents) on $7.7 billion in revenue, but it also raised its 2016 earnings forecast as a result of successful cost cutting initiatives (down 3% this quarter) and digital marketing strategies. Solid numbers all around, but digital marketing? So what? Well, the company added a whopping 1.7 million new members in the U.S. this quarter because of it. That’s what.
Other Stories
- Glassdoor’s new tool tells you if you’re underpaid
- Apple is working on e-ink keyboard for future MacBooks
- China’s Q3 GDP grows 6.7% as expected as construction booms, debt rises
- Airbnb bans multi-listing hosts in New York and San Francisco
Economic Calendar
- Monday: Netflix (+), Bank of America (+), IBM (+/-), United (-), Hasbro (+) Earnings; Industrial Production (+)
- Tuesday: Johnson & Johnson (+/-), Intel (-), Goldman Sachs (+), Philip Morris (+), BlackRock (+), UnitedHealth (+), Domino’s (+), Harley-Davidson (+/-) Earnings; Consumer Price Index (+); Housing Market Index (-)
- Wednesday: Morgan Stanley (+), American Express (+), Halliburton (+), eBay (-); Housing Starts (-)
- Thursday: Microsoft, Verizon, Walgreens, Schlumberger, PayPal, American Airlines, Dunkin’ Brands, Skechers Earnings; Weekly Jobless Claims; Existing Home Sales
- Friday: General Electric, McDonald’s, Honeywell Earnings
The Rent Is Too Damn High (Part 2)
Rent in Silicon Valley has continued to skyrocket, and the people are fighting back. Their preferred method for curbing rent growth? Rent controls (think price ceilings from Econ 101). On November 8, Bay Area voters will decide on whether to enact regulations that would basically keep rent increases for existing tenants capped to the rate of inflation. Here are the details:
- Supporters of rent control have raised nearly $200,000 to campaign for rent controls. On the other hand, the opponents of the regulation (landlords) have raised over $1.8 million. Advantage: landlords—but then again, it kind of proves the point.
- Supporters of rent control might have an argument: in the last five years, rents in San Jose increased 37% and rents in Oakland and San Francisco shot up over 40%. Ouch.
- What spurred this outrageous rent growth? It all comes down to supply and demand. From 2008 to 2015, the Bay Area added 400,000 jobs but only issued permits for 86,000 new housing units. That’s not good.
- And by the way, in case you were wondering (and we know you were), the average price of a one bedroom apartment in San Fran is hovering around $3,400 a month. We’d rather live at home.
Interview Question of the Day
What’s the unique property of the following words? Revive, banana, grammar, voodoo, assess, potato, dresser, uneven (Answer)
Business Person of the Day
We at the Brew loved Leonardo DiCaprio’s performance in The Wolf of Wall Street, but the U.S. government has made recent claims that the movie was financed using money embezzled from a Malaysian government fund. So crazy it has to be true? No verdict yet, but Leo’s cooperating with the government Good luck, Leo.
Food for Thought
Starbucks has opened an average of one new store in China every day…for the past five years running. That’s right—in the last five years, Starbucks has grown from 400 stores to 2,300 stores in China. By 2021, the company plans to have 5,000 locations in the country. That’s a lot of brew.
[protected-iframe id=”cf83698fd562c54ecd7c3f3b9864da36-97886205-61771510″ info=”//s3.amazonaws.com/downloads.mailchimp.com/js/mc-validate.js” ]