“This is a supernova that will explode one day” — Bill Gross, co-founder of PIMCO and current manager at Janus, warning that the recent central bank policies of pushing trillions into bonds with negative rates could prove disastrous…to say the least.
MARKET SNAPSHOT
Big Picture
- U.S. stocks ended their three-day winning streak yesterday as oil prices pulled away from their highs but still closed significantly higher than session lows. Meanwhile, Financials raked it in, ending the day in the green
Market Movers
- Shares of Health Insurance Innovations plummeted 20% after a double-whammy: it received a downgrade from Raymond James, and the Department of Health said it would cut down on short term health insurance plans for the company’s biggest product
Tesla dipped slightly after the National Highway Traffic Safety Administration looked into rumors that the company’s Model S was having suspension problems, which could lead to a safety recall
CORPORATE PRIMER
Not So Fast
You can’t revolutionize the entire transportation industry without creating a few enemies—and France knows a thing or two about revolutions. A French court has convicted and fined Uber and two of its executives for violating national public transportation and privacy laws. Sound a bit harsh? It is: Uber is getting slapped with a $900,000 fine, while the two executives are getting hit to the tune of $34,000 and $23,000, respectively. It’s not chump change, but it’s far lower than the $100,000 taxi drivers were demanding in damages. While the ruling sets an unfavorable precedent for future legal actions against Uber, we doubt the company is feeling the pain; after all, it just received an easy $3.5 billion dollars from a Saudi Arabia investment fund.
One Step Forward, Two Steps Back
Ever since Tesla announced the debut of its affordable Model 3 earlier this year, demand for the electric car has been absolutely outrageous. The only problem: consumers are only hot for the Model 3, and not Tesla’s other, more expensive models. Ideas, anyone? Enter a cheaper revival of the once-discontinued Model S 60 sedan. By “cheaper” we’re still talking a $60,000 car, but bringing a kind-of affordable car back on the market is Elon Musk’s way of capitalizing on the Model 3 hype. Investors weren’t exactly enthused, with shares down 2% yesterday, possibly also due to the NHTSA launching a probe over safety concerns on the Model S—quite the buzzkill.
Good Deal Gone Bad
Energy Transfer Partners (a big player in natural gas pipelines) is proving to be quite the flake—but with good reason. After offering to purchase Williams Companies for $33 billion back in 2015, Energy Transfer has gotten cold feet. The issue? $33 bil last year is a lot different from $33 bil this year: the huge decline in oil prices took a financial toll on both companies, and Williams Companies is only worth $17 billion today—a nearly 20% decline in value. Unfortunately, Energy Transfer is stuck in a contract to follow through with the plans, which just got the green light from the FTC. With the contract deadline approaching, Energy Transfer Partners is doing whatever it legally can to break off the deal. Whatever the result, it doesn’t look like a win-win is in the cards.
Good Looks, Yahoo
Update: The Yahoo sweepstakes are still going strong, and there’s been plenty of movement. The latest? Verizon $3.5 billion bid for Yahoo’s core internet assets has been seriously one-upped. How much we talking here? Multiple offers of at least $5 billion. You guessed it, Verizon’s chief rival AT&T is in the mix, as well as a group co-led by Quicken Loans founder Dan Gilbert and Warren Buffett. Let the games begin.
OTHER STORIES
- Google co-founder is secretly building flying cars
- House passes Puerto Rico rescue
- Tinder bans users under 18
- Passwords for 32 million Twitter accounts may have been hacked
ECONOMIC CALENDAR
- Monday: Janet Yellen Speech
- Tuesday: Valeant Earnings (-); Productivity and Costs (-)
- Wednesday: Lululemon Earnings (+/-); Job Openings and Labor Turnover Survey (+)
- Thursday: H&R Block Earnings (+); Weekly Jobless Claims (-)
- Friday: Consumer Sentiment
BOTTLED UP
It’s about time the water cooler touched on its namesake: water. Americans treat bottled water like it’s the best thing since sliced bread. Scratch that—if we had to choose, we’d probably just eat the loaf whole. We just can’t get enough of this stuff:
- According to the Beverage Marketing Corp., Americans have cut 61 to 68 trillion calories over the past 15 years due to the switch from soda to bottled water. That’s the rough equivalent of cutting 161 hot dogs, 126 donuts or 87 cheeseburgers from your diet last year. That’s a lot of hot dogs you can now justify eating…you’re welcome.
- Bottled water is now a $13 billion dollar industry, and sales surpassed 11.7 billion gallons in 2015, compared to just 4.7 billion in 2000. Isn’t it just water in a bottle?
- Believe it or not, soda companies are loving the change. Pepsi now estimates that less than 25% of the company’s sales are from soda as it shifts its focus to water and healthy snacks.
INTERVIEW QUESTION OF THE DAY
Why is an income statement important for a business and investors? (Answer)
BUSINESS TERM OF THE DAY
Profit and Loss Statement (P&L) — P&L, or income statement, is a financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time (usually a quarter or year). It provides information about a company’s ability to generate profit by increasing revenue, reducing costs or both.
FOOD FOR THOUGHT
21 states are suing Delaware over abandoned money orders. Thanks to Delaware’s friendly incorporating laws and abandoned property rules, Delaware holds onto abandoned property, which makes it the state’s third-largest source of general revenue—amounting to more than half a billion dollars.