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Netflix Knows Your Gateway Drug, Plus Apple Looking To Buy British Automaker McLaren

#Morning Brew
by Last Updated

“The largest correction since the 2008 crisis” — What “tiger cub” (aka all-star hedge fund guy) Robert Citrone is predicting we will see over the next 3-4 months in the U.S. stock market. Place your bets.

Market Snapshot

  • U.S. markets rallied after both the Federal Reserve and Bank of Japan sentdovish signals, causing energy stocks to soar
  • Gold has an inverse relationship with interest rates, so the news that rates are staying low for now sent gold up sharply

Consumers Get Picky

…And General Mills gets skipped over. The Minnesota-based food giant saw itssales plunge by 7% in the last quarter. The reason behind this lackluster performance? Yoplait, its famous yogurt brand, is struggling to keep up with rapidly changing consumer appetites. While low-calorie used to be all the rage, natural, protein-heavy foods are now trendier, and customers are being snapped up by Greek yogurt-toting competitors. Recently, the company revamped its cereal brands in the face of similar issues, cutting artificial color and gluten. The result: sales rise 3%. CEO Jeff Harmening is confident that Yoplait can pull off the same successful turnaround—we at the Brew are just hoping Go-Gurt comes back in style.

In the Market For a New Car?

…To go with your new Apple Watch? If the rumors are true, you may be able to buy an Apple car—but from famed British automaker McLaren. While McLaren has adamantly denied being in talks with Apple about a possible buyout, if it materialized, the deal could play well with Apple’s strengths, namely supply chain management, manufacturing and, of course, design. McLaren would also bring expertise in racing, advanced data analysis and a slew of patents to boot. While we at the Brew cannot speak for Apple, the deal may make some sense, especially considering Apple recently scrapped its secretive driverless car project. With Wall Street and Silicon Valley abuzz with M&A activity as of late, anything could happen.

Interest Rates Are Finally Going Up

…In December…we think. Another Federal Reserve meeting has come and gone. What of it? Well, despite citing an improved U.S. economy and labor market, seven of the ten FOMC members voted to keep interest rates steady. Nonetheless, analysts are still confident that the next seemingly mythical interest rate hike is still coming in December. And while we can’t promise anything, the odds of a December rate hike dwarf the chances of one now, with 14 of 17 Fed officials expecting to raise rates at least once in 2016—and December. We’ll see if they’re singing the same tune come December.

The Bank of Japan Does It Again

…#ShockTheWorld. Investors were in for a big surprise…and so were the Japanese people. The Bank of Japan took its already-extreme monetary policy into new territory early yesterday morning, introducing new stimulus measures. The central bank is eliminating its focus on monetary-base goals and incorporating what’s being called a “yield-curve control” (an attempt to keep the yield on Japanese ten-year bonds at zero). It’s also purposely trying to “overshoot” its 2% inflation target—a target that it has so far failed to get close to. It’s all pretty radical. Why do all this? The BOJ is attempting to create a steeper yield curve, giving banks incentive to make loans, customers to borrow money and the economy to get stronger.

Other Stories

Economic Calendar

Netflix Knows Your Gateway Drug

Netflix already knows pretty much everything about us, and now it knows exactly which episode of a show hooks us for the long haul. The newly released data found which episode in a season caused 70% of those who watched it went on to finish the show’s season. In other words, Netflix found the episode in which addiction usually sets in. Here are some of the findings:

  • Perhaps unsurprisingly, the new hit show “Stranger Things” has the quickest addiction point, with over 70% of the audience finishing the first season after episode two.
  • The longest time in the sample was seven episodes for both “Gilmore Girls” and “Gotham.” Netflix explains that these shows are character-driven, and it takes longer for viewers to befriend their characters. Interesting.
  • Other popular shows’ hooked episodes were three for “Narcos” and “How To Get Away With Murder,” and four for “Fuller House” and “Making a Murderer.”
  • It should be noted that Netflix said there is no correlation between how early the hooked episode was and the total size of a show’s audience. Guess we’ll have to wait longer for Nielsen’s ratings data for Netflix shows.

Interview Question of the Day

In order to make their content more relevant, Facebook, Google and Yahoo have established a new policy. Jenna’s website will be accepted while Janet’s site will be suppressed. Rhonda’s site will be deleted though Rebecca’s blog will be spared. Russell’s blog is still online and Rupert’s will be axed. How are they making this decision? (Answer)

Business Person of the Day

For you *Billion*s fans out there, this one’s for you: 73-year-old billionaire hedge fund manager Leon Cooperman, along with his fund Omega Advisors, was charged by the SEC yesterday with insider trading. The alleged crime? Generating illegal profits on Atlas Pipeline Partners after Cooperman learned of an upcoming transaction. In case you didn’t know, that’s a big no-no.

Food for Thought

Ever wonder how much the iPhone actually costs to make? Well, now we know: the total cost of manufacturing an iPhone 7 is…(drumroll)…$224.80. That makes the 7 the most costly iPhone ever. If you’re feeling sorry for Apple, don’t be: remember, the full retail price for the iPhone 7 is still $649.

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