You and the Brew…it’s a match made in heaven. But how about you, the Brew and the Financial Times? Now things are getting interesting. Use your very own link (provided below) to share the Brew: if you’re a top two sharer this week, you’ll win your very own year-long subscription to the FT! Otherwise, each share gets you one raffle ticket, and we’ll raffle off three more subscriptions. Now get sharing!
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“I think the public trust in us might take a generation to re-establish itself” — HSBC CEO Antonio Simoes, addressing customers’ lack of trust in big banks due to scandals across the industry since the financial crisis.
MARKET SNAPSHOT
Big Picture
- Investors reacted poorly to a renewed oil drop and some rough Chinese data (more on that in a sec), causing the U.S. market to break its five-day winning streak
Alternatives to Watch
- Disagreements regarding a production cut plan and Goldman Sachs warning that the recent six-day rally wasn’t sustainable caused oil to drop 3%—that’s what we call a self-fulfilling prophecy
Market Movers
- Hardwood flooring retailer Lumber Liquidators dipped 7% after short seller Whitney Tilson claimed that Lumber’s wood carries a much higher cancer risk on workers than expected
- British luxury apparel manufacturer Burberry jumped 5% after an anonymous investor took a 5% stake in the company, prompting management to prepare to defend against a takeover—yes, things could get hostile
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WORLD MACRO
China Really Does It This Time
Early Tuesday morning, China reported that its exports fell an absolutely insane 25.4% last month. That’s double what economists were predicting, and marks the largest drop since May 2009 (and that was a bad year too). February’s Lunar New Year holiday can be blamed in part for the drop, but let’s not make too many excuses here. After all, China’s imports were also down 13.8% for a not-so-sweet 16th straight monthly decline.
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CORPORATE PRIMER
Burn of the Week: United Airlines
United Airlines has gained a reputation for unreliability among air travelers, and apparently among shareholders as well. Yesterday, two hedge funds with a substantial stake in the airline initiated a proxy fight, proposing six new candidates for the board to rival United’s proposed directors. Here comes the burn: hedge fund executives addressed United Airlines, stating “we have no more confidence that you will act responsibly in the future than we have evidence that you have done so in the past.” Ouch.
Dick’s Can’t Win ‘Em All
This year’s balmy excuse for a winter has taken a toll on Dick Sporting Goods. A 17% profit decline resulted mainly from slowing demand in seasonal merchandise and clothing—in other words, winter sports gear didn’t get any love. While next quarter looks relatively slow as well, management is still optimistic in the long run. Part of that optimism comes in the form of rival Sports Authority’s bankruptcy, not to mention a new sporting apparel product focus that Dick’s hopes will give it a much-needed boost.
HBO Making More Shows for Us
If you’re a fan of HBO (and seriously, who doesn’t love Game of Thrones), listen up: HBO is increasing the number of global original series hours by 50%. That’s a $2 billion dollar budget geared at growing the millennial audience, and it sounds like a win-win (and a dream come true) to us at the Brew. Outside of its solid HBO business, CEO Jeff Bewkes was also quite bullish on the state of affairs of Time Warner (which owns HBO), with superhero movies and Harry Potter spinoffs coming out the wazoo in 2016.
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OTHER STORIES
- Chevron, citing tough industry conditions, slashes spending budget 40%
- Home Depot will reimburse customers $13 million for data breach
- Lockheed seeks to lay off up to 1,000 aeronautics workers
- Citigroup markets, investment banking revenue slow
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ECONOMIC CALENDAR
- Monday: Shake Shack (-), Urban Outfitters (+) Earnings; Fed Vice Chair Stanley Fischer Speech; Japan Q4 GDP (+)
- Tuesday: Dick’s Sporting Goods (-) Earnings; European Union Q4 GDP
- Wednesday: Square, Box, Smart & Final Earnings; EIA Petroleum Status Report
- Thursday: Dollar General, El Pollo Loco, Party City, VeriFone Earnings; Weekly Jobless Claims; Treasury Budget
- Friday: Kirkland’s Earnings; Import/Export Prices
NIKE DUMPS ‘POVA
This January, Maria Sharapova (aka the top earning female sports star), tested positive for a banned substance at the Australian Open. Although Sharapova was prescribed the drug in 2006 and has been taking it since, a banned drug is a banned drug, and Sharapova’s sponsors are taking this seriously. Here’s the breakdown of what’s at stake for the dethroned female sports hero:
- Nike, which has been sponsoring Sharapova since she was 11 (read: 11 years old), has suspended its $70 million, 8-year contract.
- Tag Heuer has also dropped the tennis superstar, and Porsche followed suit by postponing any further activities involving Sharapova. That’s what we at the Brew call a lose-lose-lose.
- Last year alone, Sharapova made $29.7 million between her endorsements, athletic career and confectionery brand Sugarpova (pun evidently intended). But with illegal drug use possibly inflicting some serious brand damage, Sharapova stands to lose more than just her reputation.
INTERVIEW QUESTION OF THE DAY
Thinking about the treasure, the gringo forgot what day it was, so he asked four aborigines and got these answers:
A: Yesterday was Wednesday.
B: Tomorrow will be Sunday.
C: Today is Friday.
D: The day before yesterday was Thursday.
Because everything you need to know is how many people lied, I will not tell. What day of the week was it? (Answer)
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BUSINESS TERM OF THE DAY
Years Certain Annuity — An insurance product that pays the holder a monthly income for a specified number of years. A years certain annuity is similar to other annuities because they are generally used to provide a steady income during retirement, but differ by providing income for a predetermined amount of time regardless of how long the annuitant lives.
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FOOD FOR THOUGHT
Did you know that Costco is planning on increasing its minimum starting wage from $11.50 an hour to $13.50 per hour? Costco employees rejoice!
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