Life

Nike’s Stock Is On The Rebound, Plus What Happens When You Have A Boss That’s Younger Than You

#Morning Brew
by Last Updated

Enjoy your December 21st hand-crafted Brew!

QUOTE OF THE DAY

“Methbot” — The name of a Russian cyber fraud scam, which has reportedly been stealing up to a mind-boggling $5 million per day from online advertising companies. According to cybersecurity firm White Ops, Methbot is the biggest fraud operation in digital advertising to date.

 

It’s time to buckle down, put on your game face and be the holiday champ we know you can be. That means no last-minute shopping, no half-assed hallmark cards and absolutely NO REGIFTING. You’re not in this alone. The Brew Crew put in a lot of legwork (way more than we care to admit) and partnered with our well-groomed friends over at Dollar Shave Club.

Market Snapshot

  • U.S. markets rose as the Dow closed at a record high—just 26 points away from the psychologically key level of 20,000, which investors are hoping to see this week as an early Christmas present

The Rite Stuff

…Fred’s Pharmacy (+81.08%—not a typo) agrees to buy 865 Rite Aid (+5.39%) stores. Don’t worry, you’re not the only one who hasn’t heard of Fred’s. The struggling regional pharmacy chain has been losing money—closing stores left and right. So what to do? How about this: borrow a boatload of cash, which allowed it to finance the $950 million deal with Rite Aid and Walgreens (+0.26%) yesterday. Wait, how did Walgreens get involved? Walgreens and Rite Aid are seeking approval for a $9.4 billion merger, and the two pharmacy chains were pressured to sell some stores in order to satisfy antitrust concerns. Today’s pharmaceutical industry is a tough space to operate in. Three options: “get big, get focused or get out.”

Nike Rebounds

…And makes a respectable layup. So far, Nike (+1.85%) has had a less-than-stellar 2016 thanks to stiff competition from sportswear rivals Under Armour and Adidas. Luckily, this quarter brought with it a bit of redemption: Nike beat sales expectations, giving worried investors a chance to catch their breath. The downside? Future orders fell in the U.S.— which is a big deal, considering U.S. sales account for nearly half of Nike’s revenue. But, thanks to growth in China and emerging markets, future orders looked solid overall, signaling that global demand for Nike is still strong. So what’s Nike’s game plan to keep winning in the hotly contested athleisure market? According to the company’s president: “In 2017 we will stay on offense”…whatever that means.

Volkswagen’s Latest Punishment

…And with it, another $1 billion in cash. In the never-ending aftermath of its world-shaking emissions rigging scandal, each stakeholder group is getting a shot at VW. U.S. car owners and regulators just had their chance, and they made the most of it: as part of the agreement, Volkswagen (+0.24%) announced plans to buy back and fix 83,000 vehicles for U.S. car owners under the Audi, VW and Porsche brands. In case you were wondering, that brings the total bill for Volkswagen to $19 billion and counting. The auto manufacturing giant isn’t nearing the end yet either. It’s still facing criminal probes from South Korea and Germany, and it’s on the hook for a whole lot more.

Higher Volume for FedEx

…And lower profitability? Yesterday, logistics giant FedEx (-3.11%) missed on earnings and reduced its forward guidance due to falling margins? What happened? Growing pains: FedEx opened up a bunch of new facilities to handle greater demand for its FedEx Ground service. CFO Alan Graf has been telling investors the same thing: don’t sweat the small stuff—because more capacity today means more dough for investors tomorrow.

More Misleading Info

…More problems: a Facebook story. The European Union has accused Facebook (-0.13%) of providing misleading information during its investigation into Facebook’s acquisition of WhatsApp. What type of misleading information? Apparently, during the 2014 takeover, Facebook inaccurately claimed that it was unable to reliably match user accounts between the two companies (Facebook’s privacy policy changed shortly thereafter for WhatsApp, which allowed automated data sharing and matches). The charges won’t threaten the $22 billion merger, but the media giant can’t walk away with clean hands; Facebook could be fined 1% of its 2014 sales.

Other Stories

Economic Calendar

Beware the Young Boss

Having a boss who’s younger than you can be a nightmare that more and more tortured souls live out every day at work. It’s not bad across the board, but a German study just published in the Journal of Organizational Psychology found that it might have an adverse effect on older employees and can negatively impact both morale and productivity. Here’s more:

  • Employees with bosses younger than themselves at the 61 German companies surveyed reported feeling “anger and fear”—not fun emotions. These negative emotions were reported less by workers with older managers.
  • Beyond organization, there’s a financial impact. Companies with workers reporting these negative emotions performed 9% worse on other financial and productivity measurements.
  • These “age-inverse” managerial relationships aren’t new, and they’re growing more common. Researchers claim it’s a product of the shift towards merit-based rather than seniority-based hierarchies in the workplace.
  • The solution: don’t stunt the young guns. Instead, researchers suggest an investment in leadership training for younger managers to better lead older employees.

Interview Question of the Day

Jim walks 20m to the east, turns right and walks another 15m. Then he turns right again and walks 40m. What’s the direction of his current location and what’s the shortest distance between his starting point and ending point? (Answer)

Video of the Day

Meet Mark Zuckerberg’s new creation and friend: Jarvis. After a year of coding in his spare time, Zuckerberg built an AI to help him run his home. Jarvis uses artificial intelligence technology to learn about and understand Zuck’s preferences, from daily routines to music interests and humor. And did we mention that Jarvis is voiced by Morgan Freeman? Please, check it out.

Food for Thought

What’s Tesla got that Silicon Valley and Detroit don’t? Data. Its treasure trove of real-world data—1.3 billion miles’ worth—is thanks to Tesla’s decision to install Autopilot hardware in every car coming off the production line since October 2014.

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