It’s quiz time at the Brew! It’s as easy as 1-2-3-4-5: answer all five questions about this week’s big stories correctly, and you could win a Brew swag prize and a shoutout in an issue next week! Get to it!
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“Deliberately raised technological barriers” — The Department of Justice, in a statement accusing Apple of making it more difficult to execute a warrant in the landmark case involving the iPhone of one of the San Bernardino shooters…the plot thickens.
MARKET SNAPSHOT
Big Picture
- U.S. stocks closed slightly lower in a chaotic trading session as investors reacted to more stimulus from the European Central Bank as well as a dip in oil
Alternatives to Watch
- The euro traded in its widest price swing since December, initially falling before reversing course once the ECB announced it would lower rates
- Oil dropped from its three-month high as progress towards a global production cut was halted thanks to Iran’s apparent refusal to participate
Market Movers
- Coca-Cola’s stock took off after RBC Capital predicted a multi-year bull phase that could see 20% to 60% growth over the next few years
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WORLD MACRO
ECB’s Desperate Measures
With all our bickering about the Federal Reserve raising interest rates in the U.S., we sometimes fail to see how well-off the U.S. economy is compared to the rest of the world. After all, inflation is hard to come by these days. Just yesterday, the European Central Bank (ECB) cut interest rates in the Eurozone to zero and expanded asset purchases, all with the hopes of bolstering Europe’s fragile economy and bringing back inflation. The announcement comes on the heels of the Fed’s important policy meeting next week, when an increase in interest rates is set to be discussed…quite a contrast indeed.
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CORPORATE PRIMER
Yahoo Defends Its Turf
Activists. Just the sound of the word sends Fortune 500 companies skittering into hiding. Yahoo has had to deal with activist investor Starboard for some time now, and executives have finally reached their breaking point. Starboard most recently advised the struggling tech company to elect certain members to its board, but Yahoo brushed aside the recommendations and hired two alternate members in a spiteful response. Territory has been marked, shots have been fired—it’s Starboard’s move now.
Men’s Wearhouse Tapers Business
The dress clothing retailer isn’t liking the way it looks. A 31.9% drop in sales has eroded its bottom line significantly, and now 250 stores will be shut down as a result. The sales dip has been attributed to management’s decision to end the long-established “Buy One Get Three” promotion at Jos. A. Banks stores (acquired by Men’s Wearhouse in 2014). With fewer customers dressing to the nines, the company is doing what it can to remain profitable.
Twitter Ain’t Too Proud to Beg
With a 60% decline in share value over the past year, Twitter is struggling to hold on to what it has left. In this case, we’re talking about its talent. In order to keep employees from leaving the increasingly-fractured nest, Twitter is now offering cash bonuses and sweet stock options for its remaining employees. These aren’t your everyday bonuses, too: they go up to $200,000, and as for the options, CEO Jack Dorsey is donating one third of his stock to company equity pools. The bottom line: four of its executives left in January, and Twitter thinks that’s quite enough.
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OTHER STORIES
- Taco Bell has joined the breakfast wars with a $1 menu
- Apple’s spring 2016 event will be held on Monday, March 21
- DiGiorno pizzas, Stouffer’s meals recalled for glass in food
- TransCanada seen eyeing path to U.S. shale gas in deal talks
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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
CREDIT CARD DEBT: THE AMERICAN WAY
Shocker: Americans love to buy stuff. This year more than ever, it seems, as credit card debt shot up $71 billion in 2015—taking the total amount to a bloated $917.7 billion (that’s almost a trillion dollars, people). With credit buildup at its highest rate since the recession of 2008, it’s only natural to wonder if this is something to worry about. Here’s the breakdown:
- Simply put, Americans love their plastic: the average U.S. household carries $15,762 in credit card debt…yikes.
- Some argue that U.S. consumers are comfortable with spending when they’re gainfully employed: more than 400,000 jobs were added in 2016, and the unemployment rate now stands at an eight-year low of 4.9%.
- That being said, wage growth has remained fairly stagnant. In fact, U.S. workers earned an average of three cents an hour less in February than January.
- Plus, seven of the previous ten quarters reflected year-over-year regression in consumer performance, triggering fears of another potential downturn.
INTERVIEW QUESTION OF THE DAY
How would you use the three main valuation techniques to conclude the value of a firm? (Answer)
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BUSINESS PERSON OF THE DAY
Gillis Lundgren passed away at the age of 86 yesterday. Lundgren was an industrial designer who helped pioneer the simplistic, no-frills design segment of the furniture industry. He was best known for his Billy Bookcase, popularized at Ikea, which millions of homeowners have used to design their home libraries.
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FOOD FOR THOUGHT
Pizza Hut is planning on giving away free pizzas (with a catch) on March 14, otherwise known as Pi day. All you have to do is answer one of three questions issued by famed Princeton math professor John Conway. Good luck!
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