Housekeeping note: you might notice a few minor aesthetic changes to the Brew. We know change is hard, but don’t freak out—we’ve just cleaned things up a bit for your viewing pleasure. If anything seems off to you (including any remaining issues viewing on mobile), reply to this email and let us know—good or bad. We’ve got some awesome stuff in the pipeline, so be on the lookout for some big announcements!
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To those of you who reached out about interning for the Brew this summer or joining our social media team, thank you—we were humbled to receive such an overwhelming amount of interest. We’re still in the review process, but we’ll be reaching out to selected candidates shortly. And don’t worry, there will be plenty more opportunities to join the team down the road.
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“Girlfriend owns @apple shares which makes her a didi investor…#Smh #ridesharewars #domesticissues #thanksALotTim” — A tongue-in-cheek tweet (we think?) from Travis Kalanick, CEO of Uber. Last week, Apple announced it invested $1 billion in Uber’s chief rival. Plenty more on this story below.
MARKET SNAPSHOT
Big Picture
- U.S. stocks dropped a bunch and the S&P fell to a one-month low on Friday despite positive data from the retail sector
Market Movers
- Shares of Pepsi traded lower after hedge fund manager Nelson Peltz announced he sold his stake—which he’s held since 2012, when Pepsi’s stock was at $70 (for reference: it’s at $104 today)
- Satellite operator Eutelsat fell 30% after being downgraded on Friday thanks to the firm cutting its outlook for the year
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CORPORATE PRIMER
Apple Did What Now?
Apple can’t stop making headlines. After reporting dismal earnings last month, Apple is investing $1 billion in Didi Chuxing. Learn the name: it’s China’s leading ride-hailing company—controlling 90% of the Chinese market—and Uber’s worst nightmare (especially as Uber spends massive dough trying to break into China). So what’s Tim Cook thinking? Some believe Apple is trying to get back in China’s good graces after the Chinese government shut down iTunes Movies and iBooks last month. Another theory is that Apple is trying a new way to tap into China’s emerging middle-class, which isn’t too crazy about the iPhone these days. Or is it really all about the elusive Apple Car? Whatever the motive, Apple is praying its next headline will be a positive one.
Buffett X Gilbert
We all know the saying: “one man’s trash is another man’s treasure.” Well, it just so happens that the man vying for this diamond in the rough is Warren Buffett. The investing guru himself and the CEO of Quicken Loans (Dan Gilbert, aka owner of the Cleveland Cavaliers) are reportedly in cahoots to buy out Yahoo’s for-sale internet assets. Interestingly, Buffett stated at Berkshire Hathaway’s annual meeting that he’s been slow to adapt to new technology, so this might just be the Oracle of Omaha putting his money where his mouth is.
Retailer Woes Continue
The retail bloodbath still isn’t over: JCPenney posted just plain miserable Q1 earnings on Friday—joining Macy’s, Kohl’s and Nordstrom in a very sad place. The apparel retail giant’s sales dropped off, but JCP didn’t lose as much money as the Street expected (so that’s good, we guess?). JCPenney is in the process of pivoting away from “weather-sensitive” categories, and is hoping in-store add-ins like its Sephora beauty shops will drive greater store traffic moving forward—if consumers are willing to give old-school shopping another chance.
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U.S. MACRO
Retail Sales Really Come Through
Wait, so all the retailers are reporting abysmal earnings, but retail sales actually came through? Yes, it’s true: retail sales jumped 1.3% in April—the largest monthly gain since March 2015, and handily beating estimates of 0.8%. Let’s break it down: auto sales alone rose 3.2%, and the 2.1% online gain (read: Amazon, not JCPenney and friends) marked the largest increase since June 2014. And good news for the old-time retailers, too: this is April data, while those horrific earnings reports we’ve been discussing are from January-March—so things could be looking up next earnings season. Overall, the data looks promising following the almost non-existent GDP growth of 0.5% in the first quarter—keep spending, America.
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OTHER STORIES
- Magic Johnson leaves Square board to focus on infrastructure fund
- Google to pay Arizona folks $20 an hour to ‘drive’ its self-driving cars
- Tesla hires Audi veteran to head vehicle production
- Anti-counterfeiting group suspends Alibaba
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ECONOMIC CALENDAR
- Monday: Mitsubishi Earnings; Housing Market Index
- Tuesday: Home Depot Earnings; Consumer Price Index; Housing Starts; Industrial Production
- Wednesday: Cisco, Lowe’s, Target, L Brands, Salesforce, Staples, American Eagle Earnings; Fed Meeting Minutes
- Thursday: Wal-Mart, Ross Stores, Gap, Dick’s Sporting Goods Earnings; Weekly Jobless Claims
- Friday: Deere, Foot Locker, Campbell Soup Earnings; Existing Home Sales
YOU GET TO BE A VENTURE CAPITALIST
What’s better than monetizing a great idea you have? Profiting off of someone else’s. Easy, right? Not so fast: you could only live the life of a venture capitalist—taking equity stakes in private companies—if you had an annual income of at least $200,000 or a net worth of $1 million. That is, until now:
- Starting today, if you want to invest in a private start-up, you only need $2,000. It’s a win-win—companies can raise up to $1 million a year this way, and less affluent investors (or more risk-averse ones) can take equity stakes in firms without having tons of cash.
- Take Zuvaa, an online marketplace for African fashion. The founder has an engaged customer base, and after sales topped $1 million she’s been keen to expand operations. Selling equity to her already loyal customers is now an easy, viable way to raise capital.
- It might not sound like a big deal, but this type of grassroots investment idea has been in the works for some time: President Obama signed the law four years ago, but the SEC took its sweet time ironing out all the details. In other words, it’s good to go—get out there and invest.
INTERVIEW QUESTION OF THE DAY
Today’s question was submitted by Nick Kiser, a rising junior at the University of Michigan studying financial mathematics. Speaking of—know a great interview question that the Brew hasn’t featured yet? Reply to any of our emails with your suggestion and if it’s a good one, we’ll feature it and give you a shout-out!
Four people need to cross a rickety bridge at night. Unfortunately, they have only one torch and the bridge is too dangerous to cross without one. The bridge is only strong enough to support two people at a time. Not all people take the same time to cross the bridge. Times for each person: 1 minute, 2 minutes, 7 minutes and 10 minutes. What is the shortest time needed for all four of them to cross the bridge? (Answer)
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HISTORY-MAKING STATISTIC
Attention cruise ship aficionados: the world’s largest cruise ship set sail on its maiden voyage yesterday from France. The $1 billion Harmony of the Seas is longer than the Eiffel Tower and has 2,500 staterooms, a 6,630-passenger capacity and 23 swimming pools. This one’s going on the Brew bucket list.
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FOOD FOR THOUGHT
According to the U.S. Bureau of Labor Statistics, 20% of Americans aged 65 and older are still working, the highest amount since the 1960s. We out here.
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