Life

Target Taking A Page Out Of Amazon Prime’s Playbook, Plus HP Goes It Alone

#Morning Brew
by Last Updated

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“I don’t expect my action to affect Apple’s stock price” – Bill Montgomery, an Arizona county attorney. The Apple saga only continues: Maricopa County, the fourth largest county in the U.S., will no longer pay to replace or upgrade employees’ iPhones in opposition to Apple’s refusal to cooperate with the federal government.

 

MARKET SNAPSHOT
Big Picture

  • Despite a rough start to the day, U.S. stocks finished slightly higher thanks to stabilizing oil prices that countered the financial sector’s continued drop
  • China’s Shanghai Composite fell over 6% last night, while the smaller-cap focused Shenzhen Composite fell even further, as investors take profits in high-flying small-cap Chinese stocks and worries mount over lending rates unexpectedly surging

Market Movers

  • Shares of auto manufacturers GM and Ford tanked as much as 5% after Morgan Stanley warned investors that the two are heavily exposed to price-drop risks in North America

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CORPORATE PRIMER

Bullseye

Target is taking a page right out of Amazon Prime’s book—and it’s working. The retailer caught on that customers like free shipping, and took a serious risk by gifting free shipping on all orders over $25 this holiday season. The strategy paid off handsomely during their earnings release today: by undercutting Amazon’s minimum purchase amount for free shipping, Target grew sales 34% compared to Amazon’s measly 25%, and shares were up 4% in celebration. To quote Wall Street analysts covering the stock: “it’s pretty darn good.”

Highs and Lowe’s

First, the highs: housing demand and the zero interest rate environment have resulted in steadily rising housing prices, giving consumers the confidence for some good old-fashioned home improvement. Tack on unseasonably high temperatures, and you’ve got perfect conditions for home improvement retailers. And that’s where Lowe’s comes in: the second-largest home improvement chain has taken full advantage of the increased demand, reporting strong growth in quarterly sales yesterday and adjusting sales guidance even higher.

HP Goes It Alone

HP recently split off from Hewlett Packard Enterprise to focus on what it does best—personal computers and printers. But new HP is off to a rocky start: the split company’s first earnings report showed a worrying 12% drop in revenue. HP attributed the plunge to tough market conditions for printers and PCs, and while the company actually met earnings expectations for the quarter, investors remain uncertain. One way or the other, HP isn’t doing well at what it does best.

Gotta “Love” Facebook

That’s an example of one of the new emotions you can express on a Facebook post after the company released a brand new feature: reactions. Reactions is expanding the spectrum of emotions from simply Like to Love, Haha, Wow, Sad and Angry, with the expressed goal of allowing users to empathize with posts more meaningfully. Initial feedback has been mostly positive, according to Facebook. One thing is clear, though: with reactions comes a new way for users to express interests and emotions, which is another piece of data that Facebook can tout for advertisers…and monetize.

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OTHER STORIES

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ECONOMIC CALENDAR

APPLE VERSUS THE U.S. OF A

In case you missed it, Apple is currently in a heavily-publicized standoff with the FBI over demanding access to information on the locked iPhone of one of the San Bernardino shooters. The topic is a contentious one: is it constitutional for the U.S. government to demand access to this particular iPhone, and does doing so set a dangerous precedent? Whatever your opinion, it might interest you to see which way the nation sways:

  • 46% of respondents to a Reuters poll say they’re on Apple’s side, with 20% unsure and 35% standing with the FBI.
  • Since it’s an election year, how does this divide down party lines? 54% of Democrats support Apple, whereas only 37% of Republicans support Tim Cook and Co.
  • A majority do agree that unlocking the shooter’s phone will set a precedent: 55% of respondents believe that doing so will mean the government will use this knowledge to spy on iPhone users.
  • With younger citizens (in the 18-39 age range), the split is more drastic: 64% agree with Apple.

INTERVIEW QUESTION OF THE DAY

Suppose we have 13 cards arranged in descending order: K Q J 10 9 8 7 6 5 4 3 2 1
At any move, you can take a substring of cards and move it elsewhere. For example, 10 9 8 could be moved to the right by two steps to get K Q J 7 6 10 9 8 5 4 3 2 1.
The goal is to sort the string in ascending order, minimizing the number of such moves. How many moves do you need? (Answer)

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BUSINESS TERM OF THE DAY

Vanilla Strategy: an approach to investing or to business decision-making that is basic and common. Some investors and businesses excel because they choose an ordinary, vanilla strategy, while others succeed through innovation. In derivatives trading, a vanilla strategy is the use of two different plain vanilla instruments, such as swaps, at the same time.

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FOOD FOR THOUGHT
Did you know that Instagram now has 200,000 advertisers, with 75% of those advertisers residing outside the United States?

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