Why Investors Are Currently Betting Against Nike, Plus BMW Is Gearing Up For A Big Year

by 2 years ago

morning brew
Enjoy your March 22nd hand-crafted Brew!


“Skeptical” — SunPower CEO Tom Werner, commenting on his feelings towards Elon Musk’s promises about the prices of Tesla’s solar roofs. Werner may be skeptical, but bet against Musk at your own risk.

Market Snapshot

  • This one’s our bad: the Brew may have jinxed the 109-day streak of U.S. stocks not falling more than 1%, which came to an abrupt end yesterday as the Dow and Nasdaq were dragged down by financials, generating their largest declines since September 9
  • The euro hit a six-week high on news that centrist candidate Emmanuel Macron came to play in France’s presidential debate against Marine Le Pen, who has pushed nationalist policies that could weaken the euro if she were to be elected

How ‘Bout Them Apples?

…The tech giant is always keeping us on our toes. Yesterday, Apple (-1.13%) unveiled a string of big announcements. First, it released a cheaper iPad in hopes of reviving the product’s sluggish sales. On top of that, Apple has plans to release a red iPhone in honor of the company’s 10-year partnership with (RED), an AIDS nonprofit. Finally, Apple offered a preview of its new Clips app that releases in April, which lets users stitch videos together and add animations. Sound familiar? It’s a lot like our beloved Snapchat. But Clips lets you post to Facebook and Instagram rather than acting as its own social network. Never a dull day at Apple.

Mind the Gap

…Goldman Sachs (-3.77%) to ship hundreds of jobs out of London. Looks like Brexit has led to another casualty, as one of the world’s largest banks announced yesterday that it plans to send hundreds of its London employees to other EU countries. The announcement comes just a day after Downing Street announced that the Brexit process will officially begin on March 29. Coincidence? Probably not. But enough about Brexit––it’s also been revealed that Goldman is building a “robo-advisor” (think WealthFront or Betterment) geared to give investment advice to some of its affluent clients. Goldman even has a job posting for employees looking to build the platform. Don’t believe us? Check it out.

Start Your Engines

…Because BMW (+0.52%) is gearing up for a big year. The luxury car giant is planning its biggest rollout this year with an array of new and revamped models. This comes as part of BMW’s grand plan to invest more than $10.8 billion in developing technologies to smoothly transition into the age of self-driving autonomy. It doesn’t end there either, because BMW is also trying to speed ahead of rival Mercedes-Benz and reclaim the crown as the top premium car brand. Fasten your seatbelts, folks.

The More Nike Crushes Earnings

…The more haters gonna hate. Despite beating earnings estimates by an insane 28%, Nike (-1.14%) traders put on a record number of short bets—a total of $2 billion to be exact. Why all the hate? Investors are a little on edge with potential trade restrictions or tariffs from The Donald that could destabilize Nike’s big business in China. Sometimes, you just can’t win.

Speaking of Rattling Investors

…FedEx (+2.06% after hours) dropped the ball on earnings by 6%. Who’s to blame? Many analysts are pointing the finger at Amazon, which has cut into FedEx’s margins and volume with its Prime services. Once customers tasted the sweetness of Amazon’s two-day delivery (and boy is it sweet), they started demanding more out of FedEx. More demands = lower prices = smaller margins. That’s capitalism for ya.

What We’re Reading…

  • Six March Madness games will be available live in VR––it was only a matter of time
  • Alibaba fully acquires online ticketing company Damai as part of larger entertainment push
  • UK and U.S. announce similar restrictions on use of gadgets on flights from Muslim-majority countries
  • Lithuanian scammer tricked two American tech companies into wiring him––wait for it––$100 million

Economic Calendar

Water Cooler

Channel Surfing on a Smaller Wave

Do you know how many channels you have? It’s probably more than you think––and you’re probably paying for dozens of networks you’ll never watch. The average number of channels in a cable bundle has ballooned from 129 to 199 since 2008. And how many of those does the average customer watch? 15 a week. So yeah, the cost of cable is higher than it needs to be. Customers are starting to complain, and media companies are being forced to cut back on networks. Here’s more:

  • A recent study shows that channels with small audiences (like MTV Classic, Fox Sports and Discovery Family Channel) cost more per viewer than more popular, well-known channels. So they’re the first to go.
  • NBC Universal is doing away with Esquire and Cloo this year, and Viacom is slimming down its networks from two dozen channels to just six main ones.
  • Not all niche channels are in danger though. Some even make incredible amounts of money. Viacom’s TV Land, which airs shows like “The Golden Girls” and “Roseanne,” earned almost $450 million in adjusted operating income last year. That’s more than Netflix’s $437 million. Yes, TV Land made more money than Netflix. Pause and let that sink in.

The Breakroom

Trivia Answer

The answer is d) 7 years. Quite the commitment for something that you test out for 30 minutes in a mattress store before buying.

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Interview Question of the Day

An investor trading through a discount stock broker who charges $10.00 per transaction bought 200 shares of Vola Tile Corporation at $50.00 per share. The stock quickly increased in value by 50%, but then lost 40% of its value. The investor sold the stock. How much money did the investor gain or lose? (Answer)

Business Person of the Day

Richard Pomes helped turn Fireball Cinnamon Whisky into one of the fastest-growing alcohol brands of the past decade. Now, he’s trying to duplicate his success with tequila, creating a startup in Boston called Ghost Tequila that’s aiming to take advantage of domestic tequila sales rising by 30% from 2010 to 2015. Buena suerte.

Food for Thought

Pinterest, which makes its money from advertising, is targeting more than $500 million in revenue in 2017, according to multiple sources. Those close to Pinterest believe that if Snap (which generated roughly $400 million in revenue the year before its IPO) can fetch a valuation north of $20 billion on the public markets, Pinterest will be poised to rake in something similar. Let the tech IPO renaissance begin?

TAGSBusinessFinanceMorning Brew