Life

The Curse of High Expectations, Plus Ralph Lauren Fashioning A Comeback

#Morning Brew
by Last Updated

“Leaving is quitting and I don’t think we’re quitters” — British Prime Minister David Cameron, in yet another attempt to dissuade British citizens for voting in favor of the Brexit during an EU referendum debate. T-minus two weeks to the Brexit vote…

MARKET SNAPSHOT

Big Picture

  • U.S. stocks finished mixed but favored the positive side as the S&P and Dow both booked gains boosted by a rally in the energy sector

Alternatives to Watch

  • Oil reached a 2016 high yesterday, finishing above $50 for the first time in almost a full calendar year, as U.S. oil stockpiles are expected to continue to fall, and ongoing attacks on Nigeria’s oil industry are still, well, ongoing

Market Movers

  • Tesla shares were up 6% after comments from billionaire investor Ron Baron were more than optimistic: he claims the company will grow to be the largest in the world

CORPORATE PRIMER

Ralph Lauren Fashioning a Comeback

Balling on a budget? You won’t like this one. With Ralph Lauren’s stock down about 50% in the last three years, new CEO Stefan Larsson has some cost-cutting plans in the pipeline. Before we let you get ahead of yourself, we’re talking cost-cutting for the company, not you. Alas, the source of the pain stems from a “bloated management structure” and an inefficient inventory system. This means closed stores (50, to be exact), eliminating about 8% of the full-time staff and reducing the discounts offered to ballers like you.

No Avail For Valeant

Yesterday was a bad day for Valeant, but then again, is there ever good news when Valeant is involved? The bruised and battered pharmaceutical company announced disappointing earnings, and on top of that, released a plethora of slashed earnings predictions for the remainder of the year. Naturally, shares plummeted 14.5%, an unwelcome decline considering the company’s stock had already lost 90% of its value as of Monday (yes, you read that right). Following the release, new CEO Joseph Papa referred to Valeant’s looming difficulties as “speed bumps“…officially winning the prize for biggest understatement of the year.

Yahoo: Just Checking In

A new chapter in the chronicles of Yahoo: communications giant Verizon has submitted a $3 billion bid for Yahoo’s web business. Cool, but what brought us here? Let’s recap: Yahoo hasn’t been performing well financially, and CEO Marissa Mayer has been on the hot seat for months. Activist investor Starboard has pressured for change by encouraging a sale of its core web business (not including Alibaba, which Yahoo owns a large chunk of). Mayer and the rest of Yahoo finally decided to sell, and bids for the internet portion of Yahoo have been pouring in. There’s no shortage of suitors, including big names such as AT&T and private equity firm TPG. Verizon remains the top dog, but only $3 bil? You can do better than that.

WORLD MACRO

The Curse of High Expectations

Another day, another growth scare. This time, it’s the World Bank, which downgraded its global growth forecast from 2.9% from 2.4%. What’s the problem? Low commodity prices (cough oil cough) are breaking the bank for countries that rely on exporting these goods. Meanwhile, the U.S. is now expected to grow just 1.9%, down from 2.4% in 2015. Ugh. Plus, all this talk of interest rate hikes has pushed the dollar higher, making U.S. goods pricier for foreigners.

OTHER STORIES

ECONOMIC CALENDAR

JOIN THE CLUB

Finish this sentence without a trite Barenaked Ladies quote: “If I had a million dollars…” Whether you chose to say “I’d build a tree fort in our yard” or “I’d buy you a green dress”, we can all agree that being a millionaire would be pretty sweet—and get this: according to the Boston Consulting Group’s Global Wealth report, millionaires will control more than half of the world’s wealth by 2020. Here’s what’s up:

  • Millionaires control 47% of the world’s wealth and will likely control 52% by 2020—which isn’t all that surprising. Cha-ching!
  • The number of millionaire households grew by 6% in 2015, which is actually a pretty big slowdown from the 11% growth in 2014. Still, that’s a lot of new money.
  • As usual, Asia killed the game, with its millionaire population growing by 17%, by far the most for any region in 2015. Next was Western Europe, with 11% millionaire growth. What slackers!
  • What about America? The U.S. still handily has the largest number of millionaires, with eight million of ‘em. Here’s a little fun math to finish up: if each of the eight million U.S. millionaires threw a mil into a big pot, you’d come out with eight trillion bucks.

INTERVIEW QUESTION OF THE DAY

A snail is at the bottom of a 30 foot well. Every hour the snail is able to climb up three feet, then immediately slide back down two feet. How many hours does it take for the snail to get out of the well? (Answer)

BUSINESS TERM OF THE DAY

Invisible Hand — The theory that free markets allocate resources efficiently through the individual pursuit of self-interest. Adam Smith, considered the founding father of economics, introduced the invisible hand in his book, “The Wealth of Nations,” published in 1776.

FOOD FOR THOUGHT

India may have embellished its latest GDP numbers, but it’s still a fast-growing and attractive economy in the eyes of many company execs. CEO Jeff Bezos said yesterday that that he would invest an additional $3 billion on top of the $2 billion investment in India already announced in 2014.