“We’re taking this very seriously. We’ve got contractors and people from across the United States and some from Canada coming in.” — Shawn Howard of TransCanada, which operates the controversial Keystone pipeline. Yesterday, a major section of the pipeline was shut down after an oil spill occurred in South Dakota. Environmentalists must be licking their chops.
MARKET SNAPSHOT
Big Picture
- U.S. stocks opened the week lower as major auto manufacturers fell thanks to Tesla’s Model 3 bonanza
Market Movers
- Firearms manufacturer Smith and Wesson shot downward 15% after being downgraded by three different banks due to a falling number of background checks tied to handgun sales
- Shares of Twitter, continually plagued by sluggish user growth, actually rose 8% yesterday after a MasterCard exec claimed the company would be interested in partnering with the social networking site
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U.S. MACRO
Factory Orders Wave On Their Way Down
You’ve seen it plenty of times before—at this point, disappointing economic news is hardly surprising. Let’s get through it: thanks to the perfect storm combo of a strong dollar and oil volatility, new U.S. factory orders fell 1.7% in February, reversing all the gains made in January and continuing the downward trend of the past 19 months. Yes, 19 months. The silver lining? A survey done last week shows factory activity may be gaining momentum in March, so maybe there’s something to look forward to after all. If not, blame us for jinxing it.
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CORPORATE PRIMER
More Taxes
After two weak regulation rounds, the U.S. Treasury Department went all out against tax inversion deals yesterday evening. Did we lose you there? Here’s what the heck we’re talking about: in a corporate tax inversion, a U.S. company is able to lower its tax rate by relocating its legal headquarters by merging with a smaller, foreign firm. Thanks to its notoriously low tax rates, Ireland is a fan favorite for tax inversions. Fancy that—Dublin-based Allergan is poised to be acquired by Pfizer in the biggest inversion deal to date. Looks like good timing for the Treasury and bad timing for the two pharmaceutical firms, sending Allergan shares down 21% after-hours.
Deals On Deals
While busily providing us with the sweetest deals out there, Groupon has cashed in on a few itself. Back in February, Alibaba took a 6% stake in the company, and now investment firm Atairos (created by Comcast) has financed $250 million as well. The money is a plus, no doubt about it, but the real gem of the agreement is Comcast working with Groupon on new tactical blueprints, hopefully helping fix major kinks in its business model. The deal clearly hit the spot with investors, with Groupon’s stock up 10% on the news.
The Intel On Intel
Executives have been dropping like flies recently at Intel, deciding to retire or leave the company to “focus on their next career opportunity.” As if. Just yesterday, two of its most prominent executives walked out the door. What’s really up? Some blame the trend on CEO Brian Krzanich’s takeover in 2013. He shook things up by focusing on “outside hires” to bring in fresh talent to help penetrate the mobile chip market. It was an unprecedented choice at Intel, and a very unpopular one amongst employees hoping to climb the ladder. But hey, business is business?
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OTHER STORIES
- Taliban app gets booted from Google Play store
- Apple has made Siri a baseball trivia guru
- Alaska Air confirms plans to acquire Virgin America
- Amazon CEO Jeff Bezos hints at new, high-end Kindle
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ECONOMIC CALENDAR
- Monday: Factory Orders (-)
- Tuesday: Walgreens, Darden Restaurants Earnings; International Trade; ISM Non-Manufacturing Index; Job Openings and Labor Turnover Survey
- Wednesday: Bed Bath & Beyond, Monsanto, Constellation Brands Earnings; Fed FOMC Minutes
- Thursday: Rite Aid, Ruby Tuesday; Weekly Jobless Claims
- Friday: Wholesale Trade Data
LESS TAXES
The Panama Papers—if you’ve been paying attention the past 48 hours, this phrase should ring a bell. 11.5 million documents from Panama law firm Mossack Fonseca were leaked to German newspaper Süddeutsche Zeitung, but it’s the quality, not the quantity of the papers that has been most shocking: the leak has exposed many politicians, business moguls and athletes for holding offshore bank accounts. There’s a lot of juicy information in 11.5 million documents, so let’s get started:
- Though Russian President Vladimir Putin was not directly mentioned, his close friend Sergei Reldugin was. It’s as suspicious as it sounds—he may have laundered as much as $2 billion for Putin and Co. Friends that good are hard to come by.
- Consequences may not be big in Russia, but they are elsewhere. Exhibit A: Iceland, where the public has called for its Prime Minister to step down. The juicy part: he dodged impending conflict of interest laws by selling half of his offshore company to his wife…for $1.
- Bonus: U.K. Prime Minister David Cameron’s late father was found to have avoided U.K. taxes for three decades through an offshore fund.
- Keep an eye out: the documents involve nearly 215,000 companies and over 14,000 clients…and interestingly, none from the U.S. But more info is still to be revealed, and Zeitung editor Stefan Plöchinger ominously said “just wait for what’s coming next…” The Brew is on the edge of its coffee-stained seat.
INTERVIEW QUESTION OF THE DAY
What is the sum of the first 100 whole numbers? (Answer)
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BUSINESS PERSON OF THE DAY
Thomas Staggs, Walt Disney’s Chief Operating Officer, announced yesterday that he would step down. After current CEO Robert Iger announced he would retire in June 2018, Staggs seemed to be first in line as his heir apparent. But Staggs failed to impress Disney’s board, which wouldn’t guarantee him the successor role. It seems Disney isn’t the happiest place on Earth for everybody.
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FOOD FOR THOUGHT
Tesla’s stock price has risen a whopping 60% since hitting a 12-month low in February (thank the Model 3). But not so fast, investors: yesterday, Tesla missed its first quarter sales target for Model S cars and Model X SUVs…you know, the cars that are actually on the market.
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Congrats to Ryan Inge, who works for BB&T Scott and Stringfellow in Richmond, VA., for winning last week’s (very much not an April Fool’s joke) Brew quiz! In addition to this shout-out, Ryan’s taking home sweet Brew swag. Check out Friday’s issue for another chance to win big!
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