Good morning and Happy Friday, April 14th—Brew Crew (and the markets) will be taking a long Easter weekend on Monday. Here’s your hand-crafted Brew to finish the week strong.
QUOTE OF THE DAY
“You all should expect as a given that when you have a new president and they get going… it’s going to be a sausage-making period” — JPMorgan Chase CEO Jamie Dimon, cautioning investors about possible market turbulence under the new administration. Not sure about the sausage analogy, but we get the point, Jamie.
Market Snapshot
- Stocks closed out a three-day losing streak on Thursday afternoon, just hours after the U.S. announced it had dropped its largest non-nuclear bomb in Afghanistan.
- Bonds and oil remained relatively stable, while gold hit a five-month high, as investors flock for safety amid rising tensions at home, in Russia and the Middle East.
Story Wars
With stories on every major social app now, can Snapchat keep its edge? We’re not so sure.
Instagram announced yesterday that 200 million people were using its eerily similar Stories feature every day—well above the 161 million Snap recently reported.
Snap may have invented stories, but Facebook quickly snapped up the concept: Facebook-owned Instagram added stories last August, then Messenger did, too. And, WhatsApp wasn’t far behind, adding stories in February. Now Instagram will get playful stickers and location tags so you can jazz up your selfies. Seeing the pattern?
Another reason Snap should be worried
User growth. This will be the number one sticking point for investors when Evan Spiegel and gang hold their first earnings call on May 10th.
In the months before Snap’s IPO, user growth slowed dramatically to just 4 percent over the previous quarter.
At the same time, Instagram and Messenger were quietly creeping up. Messenger now claims 1.2 billion users. With such an edge, Facebook could bring even a bad imitation of any Snapchat feature to millions more users virtually overnight.
But, you’re saying there’s a chance
- Snap’s most faithful demographic skews much younger than Facebook’s or Instagram’s
- Users open the app a shocking 18 times a day
- Snapchat’s “Discover” section blends news, entertainment and TV in a unique way
It all comes down to monetizing what makes Snapchat special. Snap has innovated before, and investors will be hungry for more come May 10.
Big Banks Just Can’t Win
Revenue is up and earnings are better-than-expected… yet financial stocks still finished down after reporting. What gives?
First, geopolitical risk. A nice way of saying sh*t is going down globally. Following news of the U.S. bombing in Afghanistan, financials quickly reversed course from their early morning gains.
Second, regulation risk. Investors are eagerly awaiting tax reform and regulation reductions, both of which are positive for financials. But everyone will have to sit tight as congressional focus still remains on healthcare.
Here’s a quick cheat sheet on the banks that reported yesterday:
- J.P. Morgan Chase—profit up 17% thanks to bond trading and lending margins
- Citigroup Inc—profit also up 17% because of (you guessed it)…bond trading
- Wells Fargo—profit flat on lower mortgage banking revenue and that itsy-bitsy sales scandal (that’s sarcasm) a few months back
The Electric Vehicle War Is Heating Up
Tesla’s (+2.41%) stock jumped again today, as it always does when founder Elon Musk tweets something vague-yet-exciting. This time it’s trucks. Musk says Tesla will announce new semi trucks in September, with a pickup truck release in 2020.
Tesla is winning the clean car race, but as its cars become more commonplace, so too do competitors. Lucid Air unveiled its flagship $60,000, fully-electric luxury sedan at the New York International Auto Show yesterday. Can Tesla hold off the competition on its path to mass adoption of its crown jewel, the Model 3? In Musk we trust.
Can Nostalgia Save J.C. Penney?
Plano, Texas-based department store J.C. Penney (-1.99%) announced last month that it would close 138 stores across the country. But tides have turned, with sales surprisingly increasing at the stores slated for closure. Now the chain says it will push back liquidation and closing of these stores by six weeks. Macy’s (+0.02%), Sears (-2.32%) and others continue to feel the pain as consumers’ tastes change––and hopefully they too will see short-term relief like their retail comrade.
What Else Is Happening…
- Dr. David Dao has filed court papers against United after being dragged off his flight
- Uber engineer-turned-whistleblower Susan Fowler is launching an engineering magazine with help from Stripe
- Apple has a secret team developing glucose sensors for diabetes treatment
- British tech stars are in Silicon Valley wooing possible investors ahead of Brexit
Economic Calendar
- Monday: Labor Market Conditions Index (-); Janet Yellen Speaks
- Tuesday: NFIB Small Business Optimism Index (-); 10-Year Treasury Auction
- Wednesday: Delta Earnings (+); Import/Export Prices (+/-)
- Thursday: JPMorgan (+), Citigroup (+), Wells Fargo Earnings (+/-); Weekly Jobless Claims (+); Consumer Sentiment (+)
- Friday: Consumer Price Index; Retail Sales
Research Supports the Obvious: Early Morning Class is Bad
Think class starts too early? You’re not alone, and your complaints have been substantiated. Researchers in Nevada and Britain analyzed first- and second-year college students’ performance in the morning hours.
- Their findings won’t come as a surprise to anyone who has fallen asleep in that 8am class—students learned better in classes that began later in the morning.
- “Teens’ biologically ‘natural’ day begins about two hours later than is optimal for prime-age adults,” writes co-author Mariah Evans. “The best times of day for learning for college-age students are later than standard class hours begin.”
- Starting later doesn’t mean that students are lazy, though. The study revealed another obvious trait of students: staying up late to study. Twice as many students consider themselves “evening people” as opposed to “morning people.”
Question of the Day
Draw one line to make the following equation true: 5+5+5+5 = 555 (answer)
Stat of the Day
671.1 million tons: That’s how much extra corn, wheat, rice and soybeans is currently sitting stockpiled around the globe. Massive harvests and rock-bottom commodity prices have not been nice to farmers and distributors.
Business Person of the Day
Terence Kwok may only be 25 years old, but he’s one of the most successful entrepreneurs in Hong Kong. His company, Tink Labs, is on track to be the island-nation’s first ever unicorn, (a company valued at over $1 billion). Tink puts smartphones in hotel rooms for guests to interact with the front desk for services, as well as for sightseeing and picture taking on their travels.
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