“Many participants … saw some likelihood that inflation might remain below 2 percent for longer than they currently expected, and several indicated that the risks to the inflation outlook could be tilted to the downside.” From the Fed Minutes. As you can see, inflation isn’t moving and the Fed has voted to keep rates unchanged.
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Market Snapshot
- U.S. indexes finished up, supported by retail.
- Gold ended higher after the FOMC minutes.
- Zinc prices hit a ten-year high.
- China’s holdings of U.S. government debt rose $44 billion to $1.15 trillion.
Cutting Ties
President Trump’s direct line to some of the most influential American businesses has come to an abrupt end.
The American Manufacturing Council and the Strategic Policy & Forum were formed for prominent CEOs to guide the President through key decision making surrounding America’s business landscape (think corporate taxes, infrastructure and manufacturing).
Remember, one of President Trump’s core agendas in office is to negotiate more favorable trade deals and bring manufacturing jobs back to the U.S. (the NAFTA talks kicked off yesterday).
But as of yesterday, a number of American CEOs pushed back against the President’s handling of the past weekend’s events in Charlottesville, driving a wedge between the councils and their objectives.
Now, President Trump has disbanded both councils and his once cozy relationship with American business leaders is up in the air.
Good News: More TV
Apple (-0.40%) set a budget of $1 billion to acquire and produce original TV content in 2018—because what else is there to do with over $261 billion in cash?
True, the television industry is crowded and typically requires a few original hits for a service to gain momentum, but Apple’s got a plan for that. Earlier this year it began rounding up an all-star team of media execs, including Sony’s Zack Van Amburg and Jamie Erlicht (the guys that reframed our notions of blue meth) and WGN’s President, Matt Cherniss.
And if Apple happens to stumble upon the next Orange is the New Black, it could resurrect a video service business that’s lost 15% movie rental market share since 2012.
All-in-all it’s shaping up to be a great day for the binge-watcher.
Play for Honor
Forget Texas—everything’s bigger in China.
Especially Tencent (+1.38%), China’s largest social media and gaming company. It flexed its muscles with impressive numbers in Q2, posting quarterly profits of $2.72 billion (beating expectations by 35%) and showing strong revenue growth among its mobile applications.
One of these platforms, the video game Honor of Kings, is so addictive that Tencent restricted the amount of time children could play the game. Apparently, the kids aren’t following instructions. Revenue from the highest grossing mobile game in the world boosted income for Tencent’s mobile gaming business by 54% to $2.2 billion.
And let’s not forget about Tencent’s other powerhouse, WeChat, a highly-integrated “super-app” where 963 million monthly users discuss Honor of Kings strategy and pay for…well…everything. Digital payment services through WeChat Pay processed $1.2 trillion last year.
AMC Passes on MoviePass
AMC Theatres (0.38%) watched the preview for MoviePass’s new, ultra-cheap subscription service…and it’s not interested in seeing the whole thing.
The world’s largest movie theater chain bashed MoviePass’ plan, writing that it’s “not in the best interest” of the film industry to charge users only $9.99/month for unlimited access to any movie (outside of 3D and IMAX). How drastic is the price cut? Well, a comparable unlimited subscription still goes for $50/month in the largest markets.
Like all of us, AMC is wondering how this could work as a sustainable business model, given that MoviePass pays theater companies sticker price (almost the equivalent of the monthly subscription).
To which MoviePass would reply: “yeah, we realize we are going to lose money in the short term, but wait until we can leverage the data from our massive new subscriber base!”
AMC shrugs, dials lawyers
What Else Is Happening…
- Benchmark is allegedly trying to push Arianna Huffington off Uber’s board.
- Another Game of Thrones episode has been leaked by HBO hackers.
- Alipay and Yelp are pairing up to win more business from tourists in China.
- Fiat Chrysler is teaming up with BMW to develop self-driving cars.
Economic Calendar
- Monday:
- Earnings: No Events Today
- Economic Events: No Events Today
- Tuesday:
- Earnings: Coach (+), Home Depot (+), Dicks Sporting Goods (-), Urban Outfitters (+), TJX (+)
- Economic Events: Retail Sales (+), Housing Market Index (+)
- Wednesday:
- Earnings: Cisco (+), Target (+)
- Economic Events: MBA Mortgage Applications (+), FOMC Minutes (+/-)
- Thursday:
- Earnings: Alibaba, Gap, Wal-Mart
- Economic Calendar: Jobless Claims, Industrial Production, E-commerce Retail Sales, Money Supply
- Friday:
- Earnings: Deere & Co, Estee Lauder, Foot Locker
- Economic Calendar: Consumer Sentiment, Baker-Hughes Rig Count
Water Cooler
The Backburner: You Bought WHAT on eBay??
You never know what might end up in your eBay shopping cart. It might be a cute garden gnome for your backyard. Or it could be a fake printer used to funnel $8,700 to ISIS.
Um…what?
It’s not a drill: yesterday, a U.S. citizen pleaded guilty to three counts of terrorism-related activities by pretending to sell printers on eBay as a covert way of financing Islamic State operations. The fake transaction opened a channel for ISIS financiers to provide funds to their U.S. agent via PayPal.
This scheme can’t be that surprising to investigators. Like any company, ISIS requires cash flow to fund its various business divisions: payroll, marketing, business development, (weapons) purchasing and (weapons) production. But unlike a normal business, ISIS is the subject of a vast investigation by the intelligence communities of nearly every large Western country.
So it went under-the-radar. Post 9/11, terrorists have found it much tougher to safely transfer money through formal financial networks such as international banks. Like anyone who’s looking to make a quick buck from supporters, ISIS has taken to crowdfunding websites and social media to fundraise in relative secrecy and in smaller doses.
But if yesterday’s guilty plea is any indication, the FBI is onto them…one GoFundMe at a time.
Question of the Day
New homeowners Jo and Colin are painting their basement. Working alone, Jo could paint the entire basement in seven hours; working alone, Colin could paint it in six. They work together at their separate and constant rates for two hours; then Colin goes to work at his office while Jo continues to paint. How long in hours and minutes will it take for the basement to be completely painted?
A. 3:00
B. 3:30
C. 4:00
D. 4:18
E. 4:40
(Give Up?)
Who Am I?
- I’m a self-made millionaire.
- I’m the outgoing CEO of Mondelez International.
- I used to be the CEO of Kraft Foods.
- I’m number three on Forbes’ Most Powerful Women in Business.
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Stat of the Day
$5 million
That’s how much marijuana company American Green paid for the town of Nipton, California. Get ready for the Garden of Weeden.