“San Francisco is an amazing city run by incompetent people, who not only can’t solve basic problems…they are making these problems worse” — Early Uber investor, Jason Calacanis, expressing his frustration with a proposal that would require tech companies to pay a 1.5% payroll tax.
MARKET SNAPSHOT
Big Picture
- U.S. markets snapped their four-day rally, as Brexit fears began to resurface during a light volume session of trading
Alternatives to Watch
- 10-year U.S. treasuries closed at record low yields along with debt yields from a whole slew of European countries, reflecting an overall lack of confidence in the global economy
Market Movers
- Delta Airlines, and many other major airlines, dipped after the company announced that revenue per seat flown fell 5%
CORPORATE PRIMER
Attention Netflix Lovers
…Binging just got even easier. Netflix signed a deal with long-time enemy Comcast that will make streamed content available directly through Comcast’s cable boxes. Comcast is hoping that the deal will help its cable services remain relevant in the Netflix age, while the popular streaming service sees the partnership as an opportunity to earn more subscribers. Seems like a good idea, right? Investors were unimpressed though, as shares for both companies were flat following the announcement.
It’s the Icing on the Cake
…For our favorite childhood bakery. Hostess announced it will be going public at a sweet value of around $2.3 billion. That’s quite the comeback for a firm that nearly went bankrupt in 2012. Since then private equity firm Apollo Global Management has turned things around by changing distribution channels and streamlining brand offerings. Now with new public funds, Hostess plans to grow its business outside of snack-cakes and may even look to acquire other companies. Have no fear sugar lovers—Twinkies are here to stay.
Rest in Peace
…The BlackBerry Classic is no more. Yesterday, BlackBerry announced it will no longer be making the BlackBerry Classic—an end of an era for a model that was popular even before touchscreens. Businesses and consumers have largely ditched BlackBerry in favor of phones from Apple and Samsung. With the smartphone market saturated with stiff competition, BlackBerry is making moves to shift their business into a higher software-based concentration. Call it a much needed change of pace with shares down about 30% on the year.
WORLD MACRO
Bank of England to the Rescue
…Or so we hope. In its biannual report on financial stability, the BOE announced that it will be allowing banks to lend an extra £150 billion ($199 billion) to British businesses and households following Brexit. This is a rare instance when a central bank eases bank-capital requirements, with the hopes that banks will lend more to keep the economy running strong during a potential economic slowdown. The report also warned that the stability of the U.K financial system is in danger and that foreign investors are pulling money out of Britain. That’s never good, folks.
OTHER STORIES
- Apple to push organ donation in iOS 10
- Staples ponders U.K. withdrawal
- Twitter names former Facebook chief technology officer to board
- Europe unveils its new secure €50 banknote
ECONOMIC CALENDAR
- Monday: Markets Closed
- Tuesday: Factory Orders (-)
- Wednesday: Greenbrier, Walgreens Earnings; International Trade
- Thursday: Pepsico Earnings; Weekly Jobless Claims
- Friday: Consumer Credit
ALL HAIL SHALE
And the oil saga continues. Although oil prices have steadied, it wasn’t too long ago when they dropped to under $25 dollars a barrel. The latest? A new study shows that the U.S. now holds more oil reserves than Saudi Arabia and Russia, the world’s biggest exporting nations. Time to pump some numbers:
- Norway-based Rystad Energy estimates that the U.S. has 264 billion barrels of oil in reserves. That number surpasses Russia’s 256 billion and Saudi Arabia’s 212 billion. Move over, please.
- The study shows total global oil reserves at 2.1 trillion barrels. That’s 70 times the current production rate, which is about 30 billion barrels a year.
- Over half of the U.S.’s oil reserves are in shale oil, with Texas alone accounting for more than 60 billion barrels of shale oil. What the heck is shale? See below.
- But don’t forget about Saudi Arabia and Russia just yet. The two nations are still able to produce oil for fairly cheap. In fact Saudi Arabia can still pump oil for less than $10 a barrel. Just imagine the profits when oil was at $100 a barrel.
INTERVIEW QUESTION OF THE DAY
A swimming pool has four faucets. The first faucet can fill the entire pool with water in two days, the second in three days, the third in four days and the last one can fill the pool in 6 hours. How long will it take to fill the pool using all four faucets together?
BUSINESS TERM OF THE DAY
Shale Oil — A type of unconventional oil found in shale formations. Shale oil can refer to two types of oil. It may refer to crude oil that is found within shale formations, or to oil that is extracted from oil shale.
FOOD FOR THOUGHT
According to analysts at Deutsche Bank, the so-called yield curve suggests there’s a60% chance of a U.S. recession in the next 12 months. Led by Dominic Konstam, the calculations mark the highest probability of an economic contraction since the financial crisis.
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