Amazon To Take On Spotify With New Music Streaming Service, Plus Facebook To Ban Private Sales Of Guns


morning-brew

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“Things could fall apart within months.” — German Finance Minister Wolfgang Schaeuble. Many are anxious at the possibility of a “Brexit” as Britain prepares for an upcoming referendum regarding its status in the European Union.

MARKET SNAPSHOT
Big Picture

  • It was the worst January for U.S. stocks in 7 years, but at least it ended on a decisively positive note after the Bank of Japan implemented negative interest rates

Alternatives to Watch

  • Oil also continued its swift rally, and it has now rebounded 25% over the last few sessions from 12-year lows as investors anticipate a global deal to cut production
  • Though it was a strong move to boost economic activity, the aforementioned negative rate hike sent the value of Japan’s currency, the yen, negative against all 16 of its rival currencies

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U.S. MACRO

 

GDP Almost Close to 1%

The first estimate for U.S. Q4 GDP is in, and it’s pretty meh: the economy grew at a 0.7% annualized rate, a smidge below the consensus estimate of 0.8%. China’s lagging production as well as drops in consumer and business spending contributed to the disappointing number. And there’s more rough news: after last year’s 2.3% growth, economists forecast 2016 growth to fall to just 2%. No wonder the Fed will likely take its time raising interest rates.

 

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CORPORATE PRIMER

Amazon Takes On Spotify

Amazon is reportedly planning to launch a “stand-alone” music streaming service with a price point of $9.99 a month (sound familiar, Spotify lovers?). Of course, Amazon already offers one million songs as part of its current Prime Music offering, but this new service will rival the 30 million that Spotify and Apple Music currently have. All we know for sure is subscription loyalty will soon be tested.

Uber’s Little Present

NYC ride hailers awoke to a pleasant surprise on Friday morning. Reacting to fewer rides this winter, Uber lowered its base rate for UberX from $8 to $7. You’d better believe taxi drivers are upset about the cut, but let’s not forget about Uber drivers, whose earnings are also on the chopping block. Don’t worry too much, though: absurd NYC-level surge pricing is still in full effect.

Facebook Takes a Stand

Mark Zuckerberg is responding to President Obama’s call to clamp down on unlicensed gun transactions by banning the private sale of guns on Facebook and Instagram. With 1.6 billion monthly visitors, the social network is among the world’s largest marketplaces for guns. Although the ban does not limit licensed gun dealers and clubs, Facebook is relying on users to report violations and curb illegal gun sales. This new policy has thrust Facebook into the center of a major social debate, and with Facebook’s recent evolution towards e-commerce, this stand might pave the way for smaller businesses to follow in its footsteps.

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OTHER STORIES

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ECONOMIC CALENDAR

  • Monday: Alphabet, Aflac, Wynn Resorts Earnings; ISM Manufacturing Index; Personal Income and Outlays
  • Tuesday: Chipotle, Yahoo, Dow Chemical, Exxon, Ferrari, Gilead, Keurig Green Mountain, Match Group, Michael Kors, Pfizer Earnings; Motor Vehicle Sales
  • Wednesday: General Motors, GoPro, Yum Brands, Buffalo Wild Wings, Comcast Earnings; Private Employment Report; ISM Non-Manufacturing Index
  • Thursday: LinkedIn, Lions Gate Entertainment, Phillip Morris, Ralph Lauren, News Corp, Cigna, Clorox, ConocoPhillips, Deckers, Dunkin’ Brands Earnings; Weekly Jobless Claims
  • Friday: January Jobs Report; Tyson Foods Earnings

GETTING A C+ IN C++

Computer science, welcome to high school. President Obama has called for $4 billion in funding for states in the hope that every student will have access to a computer science curriculum. Here’s the breakdown on how today’s kids will outsmart us all one day:

  • Currently, only a quarter of K-12 schools in the U.S. offer programming or coding classes, and only 28 states count these classes towards graduation.
  • However, this might all change: the U.S. Chief Technology Officer has said that computer science is a “new basic skill.”
  • $135 million of the funding will go to the National Science Foundation and Corporation for National and Community Service, while $100 million will go directly to school districts for costs such as training teachers and expanding access to resources.
  • But there’s one catch: this proposal still needs to be approved by Congress as part of Obama’s 2017 budget.

INTERVIEW QUESTION OF THE DAY

You have a single match and are in a pitch black room with a candle, an oil lamp and a gas stove. Which do you light first? (Answer)

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BUSINESS TERM OF THE DAY

Dark Pools — Don’t worry, they’re not as scary as they sound: dark pools are essentially private stock markets that allow investors to trade in secret, mainly to prevent tipping off other investors. They account for around 20% of all trading activity, and are typically operated by big banks—but when banks mislead investors as to how their dark pools work, there are consequences: Barclays and Credit Suisse were fined a combined $154.3 million over the weekend for doing just that.

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FOOD FOR THOUGHT

$12,012.26 — What Google paid to buy the domain “google.com” last year. Babson College MBA—and former Google employee—Sanmay Ved accidentally stumbled upon the domain and bought it for $12. Not a bad ROI.

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