Packages Late? It’s Probably Because UPS And FedEx Claim To Be Stretched To The Limit This Holiday Season

by 2 years ago

 

December 14, 2015

“A little bit of a maniac” — Donald Trump, describing fellow Republican presidential candidate Ted Cruz in a Fox News interview. At this point, we might as rename this section to “Trump Quote of the Day.”

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MARKET SNAPSHOT

Junk Bond Blockage

  • In a fitting end to a panic-filled week, U.S. stocks had an absolutely brutal Friday. The S&P 500 suffered its worst week since August as markets were plagued all week by heavy volatility—investors may be getting just a bit anxious over the Federal Reserve’s big Wednesday meeting. And as go stocks, so goes oil, which tanked yet again to finish down 10% on the week and remain near its seven year low.
  • The other big news came out of New York, after high-yield credit-based mutual fund Third Avenue Management unexpectedly shut down and blocked investors from withdrawing their funds. The stream of withdrawal requests comes as junk bonds (which sound like what they are—really risky bonds that are offset by super high yields) have tanked on concerns that those bonds aren’t as stable as once thought.
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U.S. MACRO

Retail Enjoys It While It Lasts

Good news, economic data followers: retail sales rose a seasonally adjusted 0.2% in November. The positive result came despite low gas prices and slowing automobile purchases, showing that consumers are merely shifting what they’re spending their hard-earned cash on, as opposed to stopping their spending altogether. Retailers are surely jumping for joy and crossing their fingers that this uptick is indicative of a promising holiday shopping season.

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CORPORATE PRIMER

DowDuPont: Officially Combined

There’s a new consolidated chemical giant in town, and its name is DowDuPont (very creative, we know). With the formation of a $130 billion industrial titan, DowDuPont won’t stay combined for long: it’s actually spinning off its agriculture, material sciences and specialty products segments to avoid antitrust regulation—oh, and did we mention it’s tax-free? Throw in a couple buzzwords like economies of scale and synergies, and analysts expect cost savings of over $3 billion in the first two years.

UPS, FedEx Stretched to the Limit

It’s the holiday season. Who’s grinding the most? Not Santa—your neighborhood delivery man. With drastically increased inventory buildup thanks to record-breaking online shopping this holiday season, big distributors like UPS and FedEx are having trouble delivering packages on time—forcing retailers to offer refunds on late shipments. With on-time delivery rates falling from 97% to 91%, more than just the naughty kids are going to be missing their presents this season.

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TODAY IN TECH

Digital Intelligence Do-Gooders

The big names of tech have just announced plans to establish a nonprofit artificial intelligence research center: OpenAI. Investors include Elon Musk (of Tesla fame), Peter Thiel (of PayPal fame) and Reid Hoffman (of LinkedIn fame), who have collectively pledged $1 billion towards the goal of creating human-like technology. The center’s overall goal is to keep an open flow of information on artificial intelligence despite the potential value of the findings, and it’s hoping to prevent those doomsday Dr. Evil-like scenarios—quite noble.

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OTHER STORIES

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ECONOMIC CALENDAR

  • Monday: VeriFone Earnings
  • Tuesday: Consumer Price Index; Housing Market Index
  • Wednesday: Federal Reserve Meeting; Housing Starts; Industrial Production; FedEx, Oracle Earnings
  • Thursday: Weekly Jobless Claims; General Mills, Accenture Earnings
  • Friday: BlackBerry, Carnival, Darden Restaurants, Carmax Earnings

 

 

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GREEN PLANET

On Saturday, almost every nation in the world (195 of them!) agreed on something. That something: a plan to reduce fossil fuel consumption. Overall, wealthier nations have agreed to finance a total of $100 billion each year to help developing countries move away from fossil fuels. But what does this mean for the business world? Here are some things to think about:

  • It turns out that renewable energy (things like solar and wind power) might not be so bad for business: GM said that its clean energy program has saved the company around $80 million.
  • We also haven’t invented all the possible types of renewable energy just yet: Atlantis Resources is currently building a project off the coast of Scotland meant to use tidal forces to create energy.
  • France also has plans in place to replace coal and gas powered plants with nuclear fusion energy.
  • Take note: in the U.S., 20% of electricity is already powered by nuclear fission, which is not quite the same as nuclear fusion. The fusion method is actually considered a bit safer and cleaner—and in the race for clean energy, all progress is good progress.

 

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INTERVIEW QUESTION OF THE DAY

What are working capital costs? (Answer)

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BUSINESS TERM OF THE DAY

Tariff — A tax imposed on imported goods and services. Tariffs are used to restrict trade, as they increase the price of imported goods and services, making them more expensive to consumers. A specific tariff is levied as a fixed fee based on the type of item (example: $1,000 on any car).

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FOOD FOR THOUGHT
$4: annual amount that Twitter expects to make per logged-in user. But not everyone who visits Twitter is logged in, and user growth has stagnated, so the company is looking to put ads in front of the non-logged-in passersby.

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