“These predictions of a hard landing are destined to come to nothing” — Xu Shaoshi, China’s top economic planner, defending the state of China’s economy. China did concede over the weekend that it will be tough to match growth levels seen in previous years—the first step is admitting you have a growth problem.
MARKET SNAPSHOT
Big Picture
- Friday marked the heaviest trading session since early February in a volatile day that led U.S. stocks higher—with the S&P trading above 2,000 for the first time since early January
Alternatives to Watch
- Oil recorded an astounding 9.5% gain last week as the U.S. rig count dropped by another eight rigs (less rigs = less supply = higher prices)
Market Movers
- The biggest gains came from Brazil after the beleaguered country’s former president was arrested amidst a corruption probe, leading investors to believe the arrest of its current president may come next
- Mining giant Vale and U.S. Steel led the biggest weekly rally since 2008 for mining companies as commodities rebounded from the arrest in Brazil
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U.S. MACRO
Jobs Market Does its Job
This month’s jobs report came out on Friday…we don’t want to jinx anything, but things are looking pretty darn good. 242,000 jobs were added, the unemployment rate held steady at 4.9% and the private sector has had 72 consecutive months of job gains—which happens to be the longest streak on record. Even better, for those who possess a bachelor’s degree, the unemployment rate is 2.5% (stay in school, kids). Wages did fall 0.1% in February, although yearly growth is at 2.2%, which remains slightly above the inflation rate. We’ll take it—chalk this one up as a win.
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CORPORATE PRIMER
Office Space
Let’s put it this way: office supplies aren’t the least dull thing to be shopping for—and this little truism was highlighted by Staples’ recent quarterly results, with same-store sales down 5%. Just imagine how Staples feels: the disappointing quarter has ushered in another 50 store shutdowns. The only bright side Staples can look forward to is a potential mega-merger with its arch-nemesis Office Depot, but getting 70% of the market and regulators on board is a whole other animal.
Economy Catches Up With Goldman
It has been a tough year for banks, and Goldman Sachs is no exception. Despite its rep as one of the best banks on the Street, Goldman has felt the brunt of the volatile economy on its fixed income and currency (FIC) trading division. With a near-zero interest rates and a challenging regulatory environment, Goldman is cutting about 10% of its FIC business. These days, revenues from this segment only make up 15% of the pie, a far cry from the 40% it made in Goldman’s hey-day.
Snapchat Raises $175M of “Eh”
Everyone’s favorite photo messaging (and news) app has raised another $175 million in funding. Keep your champagne corked—by Silicon Valley standards, this is actually quite low. Here’s what we mean: the funding implies a valuation of $16 billion, which is actually flat compared to last year. So what gives? Simply put, investors are getting skeptical of massive Silicon Valley valuations—plus, Snapchat has only recently begun monetizing its app with advertising, and hasn’t done a great job so far. Here’s to hoping the beloved app doesn’t disappear as fast as our selfies.
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OTHER STORIES
- United Airlines CEO Munoz to return five months after heart attack
- Deemed illegal in Texas, FanDuel to pull out of state
- SpaceX rocket misses sea landing after successful satellite launch
- Tinder’s new share button will let you play matchmaker
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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, Smart & Final 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
STEPH CURRY ON YOUR FEET
NBA superstar Steph Curry is on fire—and not only on the court, but off it too. Morgan Stanley recently predicted that Curry’s line of shoes will beat out LeBron James’ for the position of top seller this year. Here’s the lowdown:
- The win wouldn’t just be for Curry, it would also be for sponsor Under Armour, which trails Nike (LeBron’s sponsor) in the footwear industry.
- Currently, Curry’s sneaks are trending at a $160 million annual sales rate. Compare this to the $150 million rate of LeBron’s shoes.
- However, it’s important to note that a contributing factor to this growth may be Under Armour underpricing Curry’s shoes in order to boost market share—hey, business is business.
- Plus, Nike doesn’t have to worry just yet: Nike and its Michael Jordan subsidiary account for 90% of the basketball sneakers market, while Curry’s product is Under Armour’s lone bright spot.
INTERVIEW QUESTION OF THE DAY
Alice came across a lion and a unicorn in a forest of forgetfulness. Those two are strange beings. The lion lies every Monday, Tuesday and Wednesday and the other days he speaks the truth. The unicorn lies on Thursdays, Fridays and Saturdays, however the other days of the week he speaks the truth. The lion says, “yesterday I was lying and two days after tomorrow I will be lying again.” Which day did he say that? (Answer)
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BUSINESS TERM OF THE DAY
Rate Level Risk — A type of interest rate risk which asserts that the characteristics of interest rate fluctuation are variable (as opposed to constant) over a period of time. Although interest rates are expected to fluctuate over the period of an investment, the probability of an interest rate change is not always constant, nor is the magnitude of the volatility of interest rate changes.
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FOOD FOR THOUGHT
Ever wanted to own a professional sports team? You can now: 1% of the New York Yankees is on sale…for a cool $24 million.
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