Facebook Launches ‘Sports Stadium’ Feature, Plus The Rams Moved To L.A. But Was A Poor City Really To Blame?

by 3 years ago

morning-brew

“We just don’t know how to handle it” — Billionaire George Soros, referring to worldwide financial instability partially caused by deflation, a problem not faced on a global scale since the 1930s.

MARKET SNAPSHOT
Big Picture

  • U.S. markets fared well on Thursday, boosted by a long-awaited rally in oil and increased expectations of more stimulus from the European Central Bank
  • European and Asian shares were boosted as well by the ECB announcement, which centered around keeping interest rates on hold until inflation returns

Alternatives to Watch

  • Oil saw its largest one-day gain since October, briefly breaking above $30 during the day
  • After ECB President Mario Draghi hinted at more stimulus, the value of the euro dropped to a two-week low against the dollar—more spending (which Draghi is hoping to stimulate) creates more inflation, which tends to weaken a country’s currency

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CORPORATE PRIMER

 

Verizon’s Welcome Surprise

As the first telecommunications company to release fourth quarter earnings, Verizon has set the bar high. The company handily beat analyst expectations, reporting 3.2% revenue growth during an aggressively competitive quarter for the telecom industry. Verizon’s smartphone and tablet sales sidestepped the usual drop in revenue that comes with two-year plans finishing up, something the company itself wasn’t expecting—no complaints there.

Stuck in the Middle

Japanese electronics maker Sharp has two options: Accept a $5.3 billion buyout offer from Taiwanese manufacturer Foxconn (a major iPhone assembler infamously known for its employees’ suicide attempts)…or accept a significantly smaller offer from a government backed-fund and remain a Japanese company. Sharp hasn’t been doing well financially either—it owes around ¥500 million in debt and faced a net loss last fiscal year. Will Sharp go with the money or stay Japanese? It has a tough choice to make.

650 Million Sports Fans

Yesterday, Facebook launched Sports Stadium, a new online platform for live scores and fan feeds during sporting events. According to Facebook, this means 650 million sports fans that use Facebook can now unite for games around the world, essentially making the social media site the world’s biggest arena. By launching Sports Stadium, Facebook is aiming to compete with Twitter, which is currently the primary social media site for sports talk. With two NFL conference championships scheduled for this weekend, Sports Stadium will waste no time getting its first test.

Starbucks’ Topsy-Turvy Earnings

Starbucks’ earnings dropped a grande 29% from a year ago, and the kicker? These earnings actually beat expectations. Sales, on the other hand, came in under expectations at $5.37 billion, up 12% from January ’15. Expectations aside, that’s a lot of coffee. With slow growth in Europe and Asia, the chain’s overseas revenues have fallen 6%. Never fear: Starbucks recently announced plans to open 500 stores in China this year despite volatile markets and the slowest growth China has seen in 25 years.

 

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OTHER STORIES

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ECONOMIC CALENDAR

THE GOLDEN STATE RAMS

Los Angeles is finally getting its own football team—hello to the L.A. Rams. Despite owner Stan Kroenke insisting that moving from the team’s previous home in St. Louis was due to the city’s poor economic prospects, he may have just wanted to soak up the sun over on the West Coast—when it comes to NFL teams, local revenue really isn’t all that relevant. Here’s why:

  • In the case of the MLB, NHL and NBA, 83% of teams’ revenues are sourced from non-national TV deals, like tickets and regional TV deals. But for the NFL, that drops to just 46%—in other words, it doesn’t matter nearly as much where a team is located.
  • Why is that? Unfortunately for the Rams, the NFL only allows contracts for national TV—meaning all the money to be made in the regional networks of L.A. (upwards of $200-$300 million per year) isn’t theirs for the taking.
  • To be fair, Kroenke isn’t completely wrong: the Rams’ valuation will rise by around $500 million thanks to the move. Guess California really does deserve its title as the Golden State.

INTERVIEW QUESTION OF THE DAY

To prevent arbitrage, the price of the asset must equal the price of what? (Answer)

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BUSINESS TERM OF THE DAY

Radner Equilibrium — A theory suggesting that if economic decision makers have unlimited computational capacity for choice among strategies, then even in the face of uncertainty about the economic environment, an optimal allocation of resources based on competitive equilibrium can be achieved.

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FOOD FOR THOUGHT
35%: J.P. Morgan boosted CEO Jamie Dimon’s pay by 35 percent last year, tying most of the package to future performance after a record share of investors rejected the bank’s compensation practices last year.

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