Brexit” — The word that Bank of America now forbids its senior staff from using to avoid influencing the debate over whether Britain should exit the European Union. It’s the “he who must not be named” of the financial world.
- Federal Reserve Chairwoman Janet Yellen jolted U.S. stocks to a new 2016 peak after stating in a speech that the Fed would be cautious in rate hikes, citing a troubled Chinese economy and low oil prices—the usual suspects
- Chipotle dropped 8% after Wedbush Securities downgraded the stock to the dreaded “underperform,” stating that its sales-recovery figures are much like expecting its employees to forget to charge you for guacamole—overly optimistic
- On the other hand, Buffalo Wild Wings rose 4% after receiving an “outperform” rating from Telsey Advisory Group and a “Conviction Buy” rating from Goldman Sachs, both citing low chicken wing prices
The Impact of Terrorism on Air Travel
Yesterday morning, an Egyptian man claiming to wear an explosive vest hijacked an EgyptAir plane. Fortunately, no one was harmed and the man was detained, but coming on the heels of the March 22 terrorist attacks in Belgium, the bigger picture isn’t looking great. Analysts expect these horrific incidents will weigh on the minds of U.S. consumers as they plan their travel arrangements abroad, and maybe even domestically as well. In particular, keep an eye out for airline stocks, including United Airlines, Delta Air Lines and American Airlines, whose shares have already fallen.
Volkswagen Back At It
Everybody’s favorite car company is back in federal court again—this time for false advertising. After rigging vehicles to cheat on emissions tests, Volkswagen claimed its diesel vehicles satisfied environmental standards in a huge advertising campaign. That’s about as unscrupulous as it gets—many consumers were misled by Volkswagen’s advertisements and purchased cars thought to have environmental and economic benefits (when they clearly didn’t). So in comes the Federal Trade Commission, which is suing with the hopes of righting VW’s very bad advertising wrong. Like so many times before, the government is laying down the law on VW, which we suspect is getting the idea that laws were made to be followed, not completely disregarded.
SoundCloud Shows Up Uninvited
It’s a ballsy move to enter into an already overcrowded industry, and it’s even ballsier to start out by competing against the likes of Apple and Spotify—but hey, that’s exactly what popular audio distribution platform SoundCloud is doing. SoundCloud Go, which launched yesterday, is a paid subscription service (novel idea) that will allow artists the ability to pick and choose which tracks they drop for free, and which tracks they don’t (okay, actually a novel idea). It’s still the edgy, underground music service it always has been, but now friendlier to your local DJ.
Remember the hot mess that solar company SunEdison had gotten itself into? No? Long story short, SunEdison delayed its annual report filing not once, but twice due to an inability to get its accounting act together. And that’s just the recap—the big news broke yesterday that SunEdison is at “substantial risk” for bankruptcy. Here’s what we mean by substantial: with nearly $12 billion of debt remaining from its acquisition strategy, SunEdison is positioned for the biggest non-bank bankruptcy in a decade. Naturally, investors couldn’t get rid of SunEdison fast enough, sending shares plummeting an insane 55% to 57 cents—and it was at $30 just last summer. Even Valeant is impressed.
- Nintendo’s first smartphone app, Miitomo, arrives in the U.S.
- Yahoo asks potential buyers to bid before April 11
- Instagram extends video length limit to 60 seconds
- Snapchat redesigns chat to add stickers, audio and video notes
- Monday: Consumer Spending (-); Pending Home Sales (+)
- Tuesday: Dave & Buster’s (+/-) Earnings; S&P Case-Schiller Home Price Index; Consumer Confidence (+)
- Wednesday: Micron, Lululemon, Carnival Earnings; ADP Private Employment Report
- Thursday: Weekly Jobless Claims
- Friday: BlackBerry Earnings; March Unemployment Report; ISM Manufacturing Index; Consumer Sentiment; Consumer Spending; Motor Vehicle Sales
MILLENNIALS TAKE IT TO THE BANK
Say what you want about millennials, but you’ve got to admit they know how to handle their finances. Yes, millennials are saving machines, in some cases putting more in the bank than their stingy parents. Here are some stats to take home to your folks:
- 62% of millennials (aged 18-29) are saving more than 5% of their pay, up from 42% last year.
- 40% of millennials said that they were saving their money for a potential emergency. This was rated above saving money for a big purchase, such as starting a family or buying a home. Taking precautions, but not ready to settle down—we like it.
- The number one goal of 34% of millennials is to save more money, compared to the 20% whose top goal was a healthy lifestyle. Definitely not mutually exclusive, but with millennials, we’ll take what we can get.
- We saved the best news for last: the unemployment rate for 20-24 year-olds fell to 8.6% in February, down from 9.9% a year ago. Bottom line: millennials are saving paychecks, holding jobs and setting priorities. Parents, give yourselves a pat on the back.
INTERVIEW QUESTION OF THE DAY
Two women apply for a job. They are identical. They have the same mother, father and birthday (including year). The interviewer asks, “are you twins?” to which they honestly reply, “no.” How is this possible? (Answer)
BUSINESS TERM OF THE DAY
Patent Cliff — A colloquialism to denote the potential sharp decline in revenues upon patent expiry of one or more leading products of a firm. A patent cliff is when a firm’s revenues could “fall off a cliff” when one or more established products go off-patent, since these products can be replicated and sold at much cheaper prices by competitors.
FOOD FOR THOUGHT
$1 billion: the amount of ad revenue that NBC claims to have already reached in preparation for the 2016 Rio Olympics.
Congrats to Sophia C., a freshman at the University of Pennsylvania, for winning last week’s Easter-shortened quiz! We’re back on the usual schedule this week, so make sure to open Friday’s issue for this week’s quiz!
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