Americans Bet A TON On The Super Bowl, Plus January’s Job Report Showed A Solid Start To 2017

Enjoy your February 6th hand-crafted Brew!


“When we were just getting started, many people didn’t understand what Snapchat was and said it was just for sexting, even when we knew it was being used for so much more…we eat, sleep, and poop with our smartphones every day” — Snapchat’s official IPO filing, demonstrating that Spiegel and Co. aren’t afraid of calling out millions of people for their less-than-sanitary bathroom habits. The Brew Crew may be guilty of said habits.

Market Snapshot

  • U.S. stocks finished higher to close the week as investors reacted positively to Friday’s jobs report, giving the Dow its best trading day of the year so far
  • Markets were led higher by banking stocks, which skyrocketed after Trump signed an executive order that focused on rolling back Dodd-Frank. Speaking of…

Farewell, Dodd Frank?

…Last Friday, the Trump administration made its first move to chip away at the Dodd-Frank Act. First thing’s first: what exactly is the Dodd-Frank Act? It’s a hefty piece of financial legislation that covers things like bank stress tests to combat “too big to fail,” consumer lending requirements and whistleblower protection (more on that below). The Obama administration enacted the regulation in response to the 2008 financial crisis. But there’s a new sheriff in town now, and the Trump administration has called for a full review of Dodd-Frank in an executive order signed on Friday. The implications? Scaling back its regulations would make life on Wall Street a lot easier and save banks tons of money by cutting compliance costs. On the other hand, Dodd-Frank supporters argue that changing the Act could work against consumers’ best interests. Either way, Dodd-Frank’s a major doozy, so expect it to take some time for Washington to figure out what’s next.

A Small Fish

…With a big appetite. Canadian retailer Hudson’s Bay (+3.90%) is looking at taking over a retail giant over seven times its size. That’s right folks, it has its eyes on one of America’s least favorite stocks right now. Need another hint? How about a company whose shares are down 50% since 2015? Admittedly, that’s the case for a lot of retail companies, but we’re talking about Macy’s (+6.41%). So what’s in it for Hudson’s Bay? Chairman Richard Baker believes “many retailers aren’t properly valued because investors don’t fully understand the real estate they hold.” Macy’s’ real estate assets? They’re worth an insane $20 billion—but the deal is young. Macy’s has a mountain of debt and financing the deal could be tricky. Stay tuned, Brewers.

Google Sells to a Startup

…Is this real life? Yes, yes it is. Here’s the scoop: two years ago, the artist formerly known as Google (+0.23%) acquired satellite imaging company Terra Bella for about $500 million. On Friday, Alphabet announced that it would be selling Terra Bella to Planet Labs, a San Francisco-based satellite operating startup founded by former NASA scientists. The financials of the deal haven’t been disclosed, but rumor has it that Planet won’t be paying the full $500 million that Google bought it for. Yikes. It’s not quite as simple as Google getting rid of an asset that wasn’t working: the two companies have agreed to a multi-year contract where Google will purchase Earth-imaging data from Planet. Planet Labs is one of many companies trying to revolutionize the satellite world, making them cheaper and less risky to create. Good luck, Planet.

Jobs, Jobs, Jobs

…January’s job report showed a solid start to 2017, with the U.S. adding 227,000 jobs, crushing expectations of 175,000. The strongest sector? Retail, adding 46,000 jobs despite the holiday season coming to a close. And although the unemployment rate climbed slightly to 4.8%, it was for a good reason: more people jumped back into the workforce. But it wasn’t all good news: wage growth slowed down. Average hourly earnings inched a mere three cents higher last month—only 2.5% on an annualized basis—despite 19 states raising their minimum wage. The real victim of the mixed news? The chances of an interest rate hike coming in the near future—the odds of a March hike dropped to 9% from 18%.

Other Stories

  • Nordstrom drops Ivanka Trump-branded clothing and shoes
  • Deutsche Bank to cut equities and fixed income trading staff
  • IMDb is closing its message boards
  • Domino’s now lets you order from its full menu via Facebook Messenger

Economic Calendar

  • Monday: Twenty-First Century Fox, Tyson Foods, Hasbro Earnings
  • Tuesday: Walt Disney, BP, General Motors, Zillow, Panera, Buffalo Wild Wings Earnings; Job Openings and Labor Turnover Survey
  • Wednesday: Sanofi, Allergan, Time Warner, Yum! Brands, Whole Foods, GrubHub,
  • Thursday: Coca-Cola, Twitter, CVS, NVIDIA, Activision Blizzard, Kellogg, Viacom, Dunkin’ Brands, Yelp, Pandora, Zynga Earnings; Weekly Jobless Claims
  • Friday: Import/Export Prices; Consumer Sentiment

Super Bowl Betting Gets Crazy

Last night, millions and millions (and millions) of people watched as Tom Brady cemented his legacy as the GOAT with his fifth Super Bowl ring after leading the Patriots to a ridiculous 25 point comeback. But the real winner, as always, was the gambling industry. According to an estimate from the American Gaming Association, Americans bet nearly $5 billion on Super Bowl 51. For comparison, $9.2 billion was gambled on March Madness last year…but that’s an entire tournament. Here are the numbers:

  • Americans bet approximately $4.7 billion on the big game—an 11% increase from last year and the highest amount of money bet in Super Bowl history.
  • Who benefits? Surprisingly, it’s not Vegas. A whopping 97% of the $4.7 billion was bet illegally, with only $132 million legally wagered at sportsbooks in Nevada.
  • So what did people bet on? Short answer: anything and everything. Whether it was Lady Gaga’s hair color for the halftime show to how many times “Trump” would be said during the broadcast, if you could think it, you could probably bet on it.
  • The biggest loser of the night: one big believer in the Falcons who put $1.1 million on Atlanta to beat the spread (the Patriots were favored by three points…and won by six in OT). Someone please check on him to make sure he’s doing okay.

Interview Question of the Day

What average annual growth rate is typical for the banking sector? (Answer)

Business Term of the Day

In 2010, the Obama administration passed a huge piece of financial reform legislation called the Dodd-Frank Wall Street Reform and Consumer Protection Act (quite a mouthful, we know). Dodd-Frank had several major purposes: to make the financial system more transparent and accountable, to prevent institutions from becoming “too big to fail,” to end government bailouts funded by taxpayers and to end risky and abusive financial services practices, to name a few. Agencies like the Consumer Financial Protection Bureau were created to enforce and oversee financial practices. Parts of Dodd-Frank, like the Volcker Rule, have separated the investment and commercial functions of banks and required banks to hold a higher percentage of their assets in cash.

Food for Thought

If someone told you consumers wouldn’t care if 74% of brands disappeared tomorrow, would you believe them? According to Havas Group’s “Meaningful Brands” report, this seems to be the case. Why? Consumers expect brands to make a contribution to their well-being and make their lives easier. Apparently, a solid chunk of brands are just making things more complicated. Yet there is one sector consumers love in particular: tech. Who would’ve guessed?

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