“Swipe right, or swipe left? Cameron joins #Tinder dating app to attract young voters” — RT_com, tweeting about rumors that British Prime Minister David Cameron had joined Tinder to reach out to millennials as the Brexit vote looms. Unfortunately, the rumors aren’t true, so you won’t be seeing Cameron’s face on your Tinder feed anytime soon.
MARKET SNAPSHOT
Big Picture
- Is an interest rate hike in our future? Investors seem a tad bit worried about that, as stocks fell and the Dow hit a seven-week low after strong economic data raised the odds of the Fed making its move
Market Movers
- The collapse of peer-to-peer online lender Lending Club continued yesterday—the stock fell 11% after it disclosed it was under investigation by the Justice Department. It’s now down nearly 50% since CEO Renaud Laplanche resigned earlier this month
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CORPORATE PRIMER
Amazon Delivers Steaming Dish of Dominance
Not even innocent GrubHub can escape the far-reaching wrath of Amazon. A little out of context? Let’s get you up to speed: last August, Amazon launched its one-hour-or-less food delivery service for Prime Now members. Fast forward nine months, and Amazon is expanding its meal service to Manhattan and Dallas, bringing the service to a total of 10 cities. While it must compete with established delivery services like GrubHub, Seamless and Caviar, Amazon’s free delivery and order-tracking features are sure to please hungry customers. Once again, Amazon has proven that there’s basically no market it can’t conquer.
Home Depot Improvement
Americans have emerged from their winter malaise and realized, wow, the house looks terrible. With spring cleaning and ambitious home improvement projects under way, Home Depot couldn’t be happier. The home improvement chain’s earnings were at full speed ahead, with a 7.4% increase in sales and a 14% increase in net income. Why the great performance? A few factors have fallen in Home Depot’s favor, including a stronger housing market and warmer weather. In fact, U.S. housing starts (another name for new construction projects) rose a hefty 6.6% in April. We’re seeing hard hats everywhere we look, and Home Depot is seeing dollar signs—and bucking the downtrodden retail trend in the process.
Pandora On Sale
It’s a sad day for a company when the catalyst for a stock boost of 6% is due to shareholder activism or being bought out. Alas, that’s the position struggling streaming music radio service Pandora’s finds itself in. Company performance has been abysmal, with shares down 37% post-IPO. To us, a sob story. To an activist investor, a perfect storm. Yesterday, Keith Meister of Corvex Management increased his fund’s stake in the company to 9.9%, and is now publicly calling for Pandora to sell itself. Time to turn the Pandora station to “Daniel Powter – Bad Day.”
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U.S. MACRO
U.S. April CPI Is For Real
The consumer price index (CPI), which for those curious is a broad measure of consumer prices (aka inflation), rose 0.4% last month, the gauge’s largest monthly gain since February 2013. This is a big deal: core prices are now up an annualized 2.1% from a year ago, just above the Fed’s 2% inflation target that seemed so out of reach not so long ago. Housing, food, energy and medical supplies (as discussed in yesterday’s water cooler) were the big gainers, while clothing and car prices declined. This may not be a one-hit wonder either: the recent increase in oil prices and a weakening dollar (which makes imports more costly) will likely continue to push prices higher. If you’re wondering how you should feel about this, “cautiously optimistic” could be the right term. Steady inflation (i.e. 2%, just how the Brew likes its milk) is a sign of a healthy economy, but it does mean your earnings won’t buy as much stuff in the future as they would now. Better than the alternative, though.
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OTHER STORIES
- Taco Bell tests upscale interiors to boost dinner trade
- Quaker Oats recalls products for possible Listeria contamination
- S&P cuts Icahn Enterprises rating to junk, outlook stable
- HP is finally going to start making 3D printers
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ECONOMIC CALENDAR
- Monday: Housing Market Index (+/-)
- Tuesday: Home Depot (+), TJ Maxx (+), Red Robin (-) 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
HOT DIGGITY DOG
Sick and tired of paying a king’s ransom for a lousy hot dog at a lousier sporting event? Rejoice, sports fans (in Atlanta, at least): starting next season, the Atlanta Falcons will be slashing concession prices at home games, including $2 hot dogs and $5 beers. The Falcons believe that lower concession prices will encourage fans to buy more at the stadium (it’s got us hungry for an all-beef and a nice cold beer already). Let’s get to the meat:
- This will make the brand-new $1.4 billion Mercedes-Benz Stadium the cheapest stadium to eat in the NFL, where the average price for a beer is $7.42. Goodness gracious. Is the beer painstakingly engineered, road-tested and inspected in Germany before being shipped for sale in America? We didn’t think so.
- Under the old price regime, concession companies like Aramark or Levy would see profit margins of up to 77% on food and drinks. In other words, they win every sports game they sell at.
- Who loses? Us, of course, but how are the teams themselves making out? Believe it or not, concession sales hardly make a difference for NFL teams, which only play seven home games each season. Concession sales generated $5.2 million in revenue for the Colts in 2013, while every NFL team makes over $200 million in national revenue each season.
- So what are the Falcons expecting? According to the CEO of Falcons owner Arthur Blank’s company, “It could be a 10% bump, it could be a 30% bump, who knows.” For now, let’s just hope other teams follow the Falcons’ lead.
INTERVIEW QUESTION OF THE DAY
How many times in a day are the hands of a clock at right angles? (Answer)
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BUSINESS PERSON OF THE DAY
In the first three months of 2016, renowned investor George Soros purchased $264 million of gold, and also snagged the option to buy 1.1 million options from the SPDR Gold ETF. Why? The precious metal is already up 20% this year. Soros is famous for going big or going home, and he’s already sitting pretty on this bet.
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FOOD FOR THOUGHT
Though Apple has been struggling recently, there’s one bright spot: in its last fiscal year, Apple’s revenue in India surpassed $1 billion. Tim Cook sees India as his next (or backup) China, which might explain why Cook is visiting India next week for the first time as CEO.
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