“Mortgage bond sales could be structured by cows and we would rate it” — An S&P employee in 2007, which soon led to the DOJ slapping a $1.5 billion fine on the ratings agency for its financial crisis sins. Over the weekend, Moody’s announced that the DOJ might be at it again.
Market Snapshot
- U.S. markets finished lower on Friday thanks to a strengthening dollar, which investors feared would impact future earnings
- The Chinese yuan neared a record low last night after the Chinese government signaled it was ready to let the currency depreciate further to boost Chinese exports
- Twitter closed another topsy-turvy week up 7% after rumored interest from Japan’s Softbank—the saga continues
The Big Kahuna
Talk about a transformative purchase—AT&T is buying Time Warner in a whopping $85.4 billion deal, one of the biggest ever in the telecom-media sector.
Let’s take a step back
Isn’t AT&T primarily a wireless carrier? What’s it doing buying the media giant responsible for networks like CNN, TNT and HBO? Well, AT&T’s core business has been slowing down—wireless subscriber growth prospects have gotten rough as the market saturates (everyone and their mother has a cell and internet plan these days). Plus, AT&T can’t just buy another carrier due to antitrust (monopoly) concerns. So, if the company can’t increase its number of users, at least it can try increasing its value per user.
That’s where Time Warner comes in
Combine AT&T’s tens of millions of subscribers with Time Warner’s premium TV and movie content, and you’ve got a whole bigger than the sum of its parts (read: synergies!). Essentially, AT&T has the subscribers and the distribution network (remember, it also bought DirecTV last year)…now it wants the content itself. Not so fast, though. A deal this big has regulators and competitors breaking out those pesky anti-trust concerns, threatening to block the deal. AT&T is preparing for a fight and arguing that it’s actually vertically integrating, or buying a supplier, rather than eliminating competition. As they say, nothing good comes easy.
It Ain’t Easy Being an Investor
…When companies bury their guidance. The story behind GE’s Q3 wasn’t bad: the industrial giant beat earnings estimates despite missing on revenues amidst a sluggish economy. The storytelling? Not so great. Investors weren’t too pleased with the way GE reported earnings; in order to find the company’s guidance for the rest of the year, you had to scour through several links of dense documents. Like a squirrel burying an acorn for winter.
Nug-fest: The Aftermath
Speaking of leaving investors wary, McDonald’s beat sales estimates thanks to the oceans of nugs it sold (now without preservatives) and its popular two-for-$5 menu. But the strong results left many investors wondering if Mickey D’s can keep it up. Many analysts see continued sales growth, but ultimately softening customer traffic going forward. Tough to top 24/7 breakfast traffic, huh?
When Netflix Crashes on Date Night
…There’s hell to pay. You can blame your ruined Friday evening binge on a massive cyber attack that targeted web services provider Dyn early on Friday morning. Among the casualties? Amazon, Netflix, PayPal, Spotify and the like—ever heard of them? Dyn hasn’t figured out who was behind the attack, but it came partially from devices connected to the Internet of Things. U.S. authorities are also investigating, largely ruling out theories of another state-sponsored hackfest. Either way, one thing’s for sure: interrupting our Netflixing is a surefire way to become public enemy number one.
Other Stories
- Rockwell broadens its reach with $6.4 billion purchase of B/E Aerospace
- Instagram is testing Live videos
- Wall Street Journal employees get buyout offers from Dow Jones
- What we learned from Elon Musk’s SpaceX Reddit AMA
Economic Calendar
- Monday: Visa, Kimberly-Clark Earnings; PMI Manufacturing Index
- Tuesday: Apple, AT&T, General Motors, Sprint, Under Armour, Chipotle, Fiat Chrysler, Panera, Pandora, Procter & Gamble, Merck, 3M, Eli Lilly, Caterpillar Earnings; Consumer Confidence; Case-Shiller Home Price Index
- Wednesday: Coca-Cola, Tesla, Comcast, Boeing, Texas Instruments, Southwest Airlines, Hilton, GrubHub, Buffalo Wild Wings Earnings; New Home Sales
- Thursday: Alphabet, Amazon, Twitter, Baidu, Amgen, Altria, UPS, Celgene, Dow Chemical, Ford, Barclays, Nokia, Aflac, Blackstone, Deutsche Bank, Expedia Earnings; Weekly Jobless Claims; Durable Goods Orders; Pending Home Sales
- Friday: Exxon Mobil, Anheuser-Busch, Chevron, Mastercard, UBS, Phillips 66, Hershey, Xerox Earnings; U.S. Q3 GDP; Consumer Sentiment
Most Expensive World Series in History
The AT&T-Time Warner deal may have been the biggest news of the weekend, but don’t tell that to Chicago. On Saturday night, the Chicago Cubs clinched a spot in the World Series, where they will face the Cleveland Indians. Both teams are trying to end historic championship droughts, and it seems that both teams’ fans are willing to pay an arm and a leg to witness history. Here are the numbers:
- For the four games in Cleveland, the average price of a ticket is nearly $3,500, according to TicketIQ. For the three games in Chicago, the average is over $6,600. Good lord.
- The ticket prices aren’t only expensive for seats, either: the minimum price for standing room only tickets in Chicago is $2,600 and over $1,200 in Cleveland. Worth it?
- Why are the fans willing to pay so much? Cubs fans have been waiting 108 years to see a World Series title. For Indians fans, it’s been 68 years. Those just happen to be the two longest droughts in the MLB.
- When the Cubs last won a World Series in 1908, the ticket price of a World Series grandstand seat was $1.25 and a gallon of gas cost just two cents. Must’ve been nice.
Interview Question of the Day
What is the best measure of a stock’s volatility? (Answer)
Business Term of the Day
The Infinite Shelf — The virtually unlimited range of products available in e-commerce stores. In a physical store, there’s a finite amount of shelf space, which limits the number of products that a store can hold. So, with online retailers, consumers gain the added benefit of accessing a broader range of products from home, enabling online retailers to expand quickly, often outselling their physical competitors.
Food for Thought
Which country provides Apple the most revenue on the App Store? If you guessed the U.S., we’ve got a surprise for you: it’s actually China, which generated $1.7 billion in iOS app sales in the third quarter.
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