QUOTE OF THE DAY
“I can’t try to be Howard. I’m not Howard” — Newly-appointed Starbucks CEO Kevin Johnson, as he replaces ex-CEO Howard Schultz. Let’s see if Kevin can add his own flavor to the world’s most iconic Brew (next to us, of course).
· U.S. stocks finished mixed on Friday, but it was the first weekly decline for markets since the U.S. election, with technology stocks a particular drag
· The euro dropped to 20-month lows after exit polls in Italy indicated an overwhelming majority of voters rejected Prime Minister Matteo Renzi’s referendum to streamline parliament, a proposal he vowed to resign over if it wasn’t passed (spoiler alert: the referendum was soundly rejected yesterday, and Renzi promptly resigned)
Airbnb Breathes a Sigh of Relief
…After making up with New York City. In October, our beloved Airbnb filed a lawsuit against the Big Apple. The reason: if an NYC host illegally advertised on Airbnb, it wasn’t just the host who could be financially penalized—Airbnb would be too. What do we mean by “illegally advertising?” One example Airbnb hosts can’t rent out multiple units in a home, aka basically running an illegal mini-hotel (yes, this happens). Worry no longer: NYC has clarified that the law is aimed at individuals, and Airbnb won’t be fined for any host transgressions—crisis averted, and cue Airbnb dropping its lawsuit. That’s a big bullet dodged for a high-profile market worth $1 billion in revenues for Airbnb. Of course, this lawsuit is just one of many regulatory challenges facing Airbnb, so this likely won’t be its last tango with the law.
Apple Fesses Up
…Finally. In a letter to auto regulators, Apple’s (+0.37%) Director of Product Integrity (yes, that’s a thing), Steve Kenner, emphasized the tech giant’s prospective investment in machine learning and autonomous transportation. Let’s translate that to English: Apple all but confirmed it’s more interested in self-driving car tech (i.e. the software inside) than self-driving cars themselves (i.e. the hardware). We’ve known for a while about the not-so-secretive Project Titan (because ‘Project T-Rex’ was already taken), aka Apple’s internal self-driving car division. But a Bloomberg investigation in October claimed that internal strife had already caused the tech giant to narrow its focus from creating its own self-driving car to just developing the software. Regardless, there’s still a long ways to go. Regulatory hurdles and data-sharing disputes aren’t making autonomous driving a very easy market to enter. At least Apple hasn’t totally given up.
…Going once, going twice, sold? Well, not quite yet, but the second time might be the charm. Pandora (+16.11%) is now reportedly interested in selling itself, specifically to SiriusXM (-5.60%). The struggling music streaming service had initially declined a $15/share offer by Liberty Media (the owner of Sirius), hoping to get a better price. But after Pandora’s stock tanked below $10 and pressure from activist investors increased, $15 ain’t looking so bad after all. Liberty CEO Greg Maffei has been vocal about his belief in the “free space,” whether it be traditional radio or online (Pandora), versus paid players like Spotify and Apple Music. Seems like he’s about ready to put his money where his mouth is.
All That Glitters Isn’t Gold
…Just take a look at the jobs market. Over the weekend, unemployment figures dropped from the heavens, and they looked good from the outside—the headline unemployment rate fell a bunch to 4.6% and 178,000 jobs were added in November. Not bad, right? Unfortunately, it’s not that simple. Despite the unemployment rate hitting a nine-year low, wages and the broader labor participation rate both ticked down, leaving analysts with mixed feelings. Don’t worry too much though, that interest rate hike you’ve been waiting for all these months is still looking pretty likely before 2016 is up.
· Deutsche Bank cuts ties with 3,400 clients in trading business
· Facebook to invest $20 million in local housing as Silicon Valley faces crisis
· United to pay $2.4 million over ‘Chairman’s Flight’
· Venezuela to issue bigger bills this month as currency plunges
· Monday: ISM Non-Manufacturing Index
· Tuesday: Bank of Montreal, Dave & Buster’s Earnings; International Trade
· Wednesday: Costco, Lululemon, H&R Block Earnings; Job Openings and Labor Turnover Survey
· Thursday: Broadcom Earnings; Weekly Jobless Claims
· Friday: Consumer Sentiment
The New Kid on the Block
On September 19, the real estate sector became the newest member of the S&P 500. How’d it fare during its rookie season? See for yourself: of the 11 sectors in the S&P 500, the real estate sector, made up of real estate investment trusts (REITS) and management companies, has been the worst performing. Yikes. Let’s run through the numbers:
· Since its debut less than three months ago, the real estate sector is down 7.9%. In the same time frame, the S&P 500 is up 2.5%. Talk about not carrying your weight.
· Which charitable sectors picked up real estate’s slack? Good ol’ financials and energy have advanced 17% and 10%, respectively, since real estate hit the scene.
· These are strange times indeed. According to J.P. Morgan Asset Management, this is pretty out of the ordinary. From 2000 through the first half of 2016, REITs have yielded an annual average return of 12%.
· So why the sudden decline? Just like Brexit was the answer to most questions this summer, the frequent answer now is Trump. Since the election, and specifically renewed expectations of higher growth (due to less regulation and taxes), investors view high dividend stocks like REITs as less attractive.
Interview Question of the Day
How do I value the shares that I own in a private company? (Answer)
Business Person of the Day
After stepping down as CEO of Zenefits on Friday, David Sacks appears to be joining his long-time friend Peter Thiel on Donald Trump’s transition team. You may not have heard of him, but Sacks keeps good company: he was an early executive at PayPal along with Elon Musk and Thiel. On to the next one.
Food for Thought
The early bird catches the worm. Like Richard Branson and Jack Dorsey, many billionaires seem to fully embrace the idea of waking up before the crack of dawn. Why? It’s often claimed that the morning is the most productive time of the daybecause there are little to no distractions. Here at the Brew Crew, on the other hand, we’re most definitely night owls.
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