“I would say that this does feel like it is a dead cat bounce” — Carson Block, founder of research company Muddy Waters LLC, on the recent stock market rally. It’s clear that Block isn’t too optimistic—check out the business term of the day below for a definition of a dead cat bounce.
MARKET SNAPSHOT
Big Picture
- Despite initially falling, U.S. stocks finished slightly higher yesterday, led by oil and tech rebounds
Alternatives to Watch
- The value of New Zealand’s currency, the kiwi, fell sharply after its central bank unexpectedly cut interest rates. This signaled that further economic stimulus may be necessary to generate inflation
Market Movers
- Despite falling nearly 70% over the past year, scandal-ridden Valeant Pharmaceuticals rose 4% after announcing it would add three independent board directors to strengthen corporate governance
- Now Yelp knows how it feels to get a bad review: shares fell 5% after UBS downgraded the stock from “neutral” to “sell,” citing increased competition
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CORPORATE PRIMER
Amazon Takes to the Skies
It’s finally here: Amazon’s very own* fleet of planes. *Well, they’re actually leased. To be exact, we’re talking a 5-7 year lease of 20 cargo planes from Air Transport Services Group (lovingly referred to as ATSG). What does this mean? Yes, this could be the much-anticipated first step for Amazon to implement its own air freight delivery service—and it could mean faster deliveries for you. Amazon isn’t the only one pleased with the deal—ATSG shares took off 17% following the news.
Good News for Volkswagen
Just kidding, it’s still bad news. Here’s the latest and worst: yesterday, U.S. Volkswagen CEO Michael Horn resigned in what’s being labeled a “mutual agreement” (haven’t heard that one before). Horn’s work at VW was exemplary, and he’s best known for his work improving dealer relations. But hey, when your company undergoes a multibillion-dollar emissions rigging scandal and posts falling sales for four straight quarters, shareholders feel a little safer seeing heads roll.
Employees Get a Bad Case of Chipotle
Chipotle is up to its old tricks again…you know, the ones where they make you seriously ill. The Mexican chain closed a Boston restaurant yesterday after multiple employees got sick, and one tested positive for norovirus (aka a particularly grisly vomiting bug). Perhaps you’ve noticed that this isn’t the first time Chipotle has closed locations due to health scares, but this time the burrito-maker was ready. The sick employees stayed home, the restaurant was promptly cleaned and it should reopen today (can’t wait to eat there). Investors, however, lost their appetites from the whole ordeal, sending Chipotle’s stock down as much as 6%, but shares recovered somewhat by the end of the day.
Right Angles For the Win
Public tech companies Box and Square both reported better-than-expected Q4 earnings yesterday. Let’s start with the 2-D shape, Square, whose revenue was far from flat—the point-of-sale technology company (in plain English: it powers many of Starbucks’ registers), posted revenue of $374 million, beating estimates by $30 million. The positive results take some of the pressure off CEO Jack Dorsey, who has the two-dimensional job of running both Square and Twitter. Box, a digital storage and content-sharing provider, posted a loss on revenue of $85 million—but the loss was expected, so we’ll call it a win (investors did too, pushing shares up 12% after hours). Box is currently focused on acquiring big customers like AIG and Home Depot in an effort to become profitable by Q4 of 2017.
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OTHER STORIES
- Hilton Hotels has a robot concierge that just wants to help
- Google surprises with early preview of Android N
- Corona recalls beer after finding shards of glass in bottles
- Facebook buys Masquerade, whose app lets you “face swap”
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ECONOMIC CALENDAR
- Monday: Shake Shack (-), Urban Outfitters (+) Earnings; Fed Vice Chair Stanley Fischer Speech; Japan Q4 GDP (+)
- Tuesday: Dick’s Sporting Goods (-) Earnings; European Union Q4 GDP
- Wednesday: Square (+), Box (+) Earnings; EIA Petroleum Status Report
- Thursday: Dollar General, El Pollo Loco, Party City, VeriFone Earnings; Weekly Jobless Claims; Treasury Budget
- Friday: Kirkland’s Earnings; Import/Export Prices
IT’S THE CLIMB
Too often, we get so caught up in our day-to-day lives that we forget to take a step back to appreciate how we got to where we are today. Of course, we’re talking about the U.S. stock market. Let’s explain: yesterday marked the seventh year of the stock market’s still-ongoing bull market. That’s a big deal—it’s the third-longest of all time—and it’s made a lot of people a lot of money:
- Since the bull market began on March 9, 2009, the value of all U.S. stocks has risen a mind-numbing $16 trillion. Not billion, trillion. If you need some perspective, consider that U.S. GDP is just a smidge higher at $17 trillion.
- You probably don’t need us to tell you who the big winners have been, but consider that the seven top gainers (including Apple, Google/Alphabet, Microsoft and Amazon, to name a few) account for $2 trillion of those gains on their own.
- Even beaten-down names have had quite the run. Bank stocks like Wells Fargo and JP Morgan have all recovered from their declines during the financial crisis, while General Electric (which was very dependent on its financial unit in 2009) has rebounded an incredible 306%. Not bad, U.S. stock market, not bad at all.
INTERVIEW QUESTION OF THE DAY
After a hard day the gringo wanted some time to relax. But a few minutes later two aborigines wanted to talk to him. To make things clear, the gringo asked: “is at least one of you an honestant?” After the answer, there was no doubt. Who are they and who answered? (Answer)
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BUSINESS TERM OF THE DAY
Dead Cat Bounce — No, it’s not literally a dead cat bouncing (although that would be…interesting). It’s an expression describing a temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend—basically a fakeout to raise investor hopes before quickly crushing them.
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FOOD FOR THOUGHT
U.S. air travel this upcoming spring break season is expected to rise 3% over last year to 140 million passengers, which would set a new record. Airlines are no doubt salivating.
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