“It’s getting a bit overvalued. And I’m also talking about people that I work with, so I got to be careful” — House of Cards Producer Dana Brunetti, voicing his opinion on Netflix’s value, a day after the company posted lower-than-expected subscriber numbers. Brunetti also believes that Frank Underwood would beat Clinton or Trump “by a mile.”
MARKET SNAPSHOT
Big Picture
- U.S. markets closed mixed after a slew of earnings reports gave investors conflicting views on the state of the economy
Alternatives to Watch
- Gold ended higher as European markets fell, slightly diminishing investors’ recent appetite for risk
Market Movers
- Shares of Nintendo fell 8% after the stock price had nearly doubled over the past seven sessions, riding out the incredible success of Pokémon Go
CORPORATE PRIMER
Microsoft Hits A Homer
…Into the clouds. The tech giant blew past expectations yesterday, causing shares to pop up after hours. The key to success? Microsoft Azure—the company’s cloud computing service. Over the past year, Azure has doubled its revenue, making up for Microsoft’s struggling phone business. But don’t forget about good ol’ Office 365. The service which gives you Word, Excel and PowerPoint saw commercial revenue grow 54%. The impact of Microsoft’s latest acquisition, social media platform LinkedIn, will have more of an effect next quarter—so, hold tight and stay tuned.
Keep it Rolling
…J&J impresses the Street. Johnson & Johnson topped analyst earnings expectations after seeing pharma sales grow 9% year-over-year. Although many conglomerates are getting leaner by specializing, J&J is bucking the trend. Johnson and Johnson has actually grown in scale and locked in steady revenue streams from its consumer products line. And believe it or not, J&J could even get bigger—the New Jersey-based company has over $39 billion in cash for M&A-led growth.
From Bad to Worse
…More states are targeting Volkswagen. Wait, didn’t this happen before? Quick recap: last month, Volkswagen agreed to a $14.7 billion dollar settlement with federal regulators and car owners for breaking all kinds of pollution and consumer protection laws (and lying about it). Now today: New York, Massachusetts and Maryland coordinated a round of lawsuits—this time for breaking additional state-level environmental and anti-fraud laws. Yep, there’s a whole other layer of legislation for VW to suffer through.
WORLD MACRO
Back to Brexit
…And back to bad news. The International Monetary Fund cut its forecast for global economic growth by 0.1 percentage point—thanks, of course, to Brexit. Although it might not seem like a lot, the downgrade makes global growth on par with 2015, which was the slowest growth since the recession. How about the U.K. specifically? The IMF expects the U.K. economy to grow by 1.3% next year, which is 0.9 percentage points lower than it said back in April. On the bright side, the Fund did rule out a full-blown recession in the U.K. Oh goody.
OTHER STORIES
- Pokémon Go will launch in Japan today
- Twitter signs NBA deal to stream new shows
- Monsanto rejects Bayer’s sweetened offer
- Snapchat now lets you use Bitmojis in snaps
ECONOMIC CALENDAR
- Monday: Bank of America (+), IBM (+), Netflix (+), Yahoo (-) Earnings
- Tuesday: Goldman Sachs (+), Johnson & Johnson (+), Microsoft (+) Earnings; Housing Starts (+)
- Wednesday: eBay, Morgan Stanley, American Express Earnings
- Thursday: AT&T, Chipotle, General Motors, Starbucks, Visa Earnings; Weekly Jobless Claims; Existing Home Sales
- Friday: General Electric, American Airlines Earnings
CAST YOUR BALLOTS
All of this RNC talk has got everyone thinking about November. In less than four months, Americans will hit the voting booths to choose our next Commander-in-Chief. Where are Americans’ heads at? That’s a big question—let’s start by breaking it out by the ever-popular millennial demographic. So what do millennial voters care about the most? The Harvard Institute of Politics surveyed 1,000 Americans aged 18-29 to answer that very question. Here goes:
- Asked to rank a list of issues in order of importance about one-third of young voters said improving the economy was the most important, followed by 12% deeming the fight against terrorism to be most crucial.
- While many millennials may “Feel the Bern,” just 5% of those surveyed said reducing money in politics was their chief concern and only 2% prioritized Wall Street reform.
- The main difference between millennial voters and their elders is actually showing up to vote. In the 2012 election 69% of Baby Boom voters said they voted, while only 46% of eligible millennials could say the same.
- Young people do tend to lean to the left. Of those surveyed, 40% were Democrats, 21% Republicans and 36% independents. Who do millennials think will win? Hint: it’s not Trump.
INTERVIEW QUESTION OF THE DAY
How do you get 24 from 9, 6, 11 and 3 using addition, subtraction, multiplication or division? (Answer)
BUSINESS TERM OF THE DAY
Opportunity Cost — the cost of an alternative that must be forgone in order to pursue another certain action. Simply put, it’s the benefits you could have gotten by taking an alternative action. For example, the opportunity cost of going to college is the wages you would have earned if you had worked instead.
FOOD FOR THOUGHT
Student debt helps the economy. At least that’s what the White House says. Debts still remain manageable, the opportunity cost of attending higher education is lower and the future workforce gets educated. Bonus: student debt is less likely to make a recession more severe or slow an expansion compared to mortgage debt.
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