New York Puts Its Foot Down Over Daily Fantasy Sports, Plus Apple Stock Drops On Product Demand Rumors

morning-brew

“There are more words in the IRS code than there are in the Bible. And not a one of them is as good.” — Ted Cruz, during the fourth GOP presidential debate last night. We take it Cruz isn’t much a fan of the IRS.

MARKET SNAPSHOT 

Bad Apple

  • U.S. stocks saw a mixed basket Tuesday: all-powerful Apple fell 3% after Credit Suisse reported that the maker of the iPhone has cut 10% of its component orders, hinting that demand could be declining in upcoming months.
  • Oil prices rose for the first time in four days after the International Energy Agency reported a large decline in recent oil investments. What this means: less chance of oversupply in the future.
  • The greenback took currency markets by storm yesterday, with the dollar reaching its highest level since April as investors continue to prepare for the expected December rate hike.
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CORPORATE PRIMER

DraftKings, FanDuel No More?

Is this the beginning of the end for daily fantasy sports? Perhaps: yesterday, the New York attorney general sent a cease-and-desist order for fantasy sports websites DraftKings and FanDuel in the state of New York. The claim: the strategies for these websites are too heavily reliant on chance to continue operating without regulation. It’s bad news for Giants fans: while the companies are under investigation, New Yorkers won’t be able to gamble (or as proponents would argue, strategically bet) on either of the sites—by some estimates, that means 500,000 affected users. Think this will remain contained within New York? Think again: when the New York attorney’s office files a grievance against a company, other states typically follow suit.

United-Delta Deal Swatted Down

According to the Department of Justice (DOJ), a recent deal between United Airlines and Delta Air Lines isn’t going to fly. The airlines had planned to swap spots at Newark Liberty and John F. Kennedy International Airports. But since United already controls nearly 70% of Newark’s air traffic, the deal set off antitrust alarms. And that’s where the DOJ came in, suing United in an attempt to block its growing New Jersey monopoly.
Hackers Finally Caught
U.S. prosecutors charged three Israeli men yesterday in the massive security hacking of several financial institutions in 2014. To refresh your memory, we’re talking about the largest theft of customer data from a financial institution…ever. The hackers stole information from nearly 83 million customer records—and that was just from J.P. Morgan. What they did with this information is a story in itself: they essentially carried out a stock manipulation scheme by tricking customers into buying artificially inflated stock with the stolen information. Wolf of Wall Street, anyone?

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TODAY IN TECH

T-Mobile’s Big Move

Known for its scrappy, industry-shifting tactics like eliminating two year contracts, telecom giant T-Mobile is making headlines again. Yesterday, they announced plans to allow users to stream video content like Netflix and HBO…for free. What’s the catch? You’ll have to stream it in 480p, a few notches below high definition. We think we’ll live—oh, and having Breaking Bad’s Aaron Paul star in the new ads is a nice cherry on top.

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OTHER STORIES

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ECONOMIC CALENDAR

  • Monday: DISH Network, Hertz, Priceline, Lions Gate Earnings
  • Tuesday: Import/Export Prices
  • Wednesday: Macy’s Earnings
  • Thursday: Cisco, Nordstrom, SABMiller, Viacom Earnings; Weekly Jobless Claims
  • Friday: Retail Sales; Producer Price Index; Consumer Sentiment; J.C. Penney Earnings

AN INDUSTRY DIVIDED

Change is in the air for the EB-5 program. This is the same program that’s being used to fund some of the highest-profile urban development projects in the country, including the final World Trade Center office building. Let’s take a look at the controversy:

  • First, a quick recap: the EB-5 program provides green cards to foreigners who invest $500,000 in American job creation in rural or disadvantaged areas.
  • Perhaps you’re starting to get a sense of the issue here: the program’s original intent is being bent to fit the desires of urban developers in prosperous areas.
  • Members of Congress are leveling serious criticism on the “abuse” of the program, and some influential developers have caught on, banding together to curtail the practice—on select projects.
  • Others will continue to benefit from EB-5 funding as planned, such as The Related Companies’ massive $20 billion dollar Hudson Yards project in Manhattan.
  • The political implications are reflected in Related’s over $700,000 spent in lobbying for immigrant programs over the last seven months and the 10,000 visas supplied to investors every year.

INTERVIEW QUESTION OF THE DAY

There is a boat with a brick of gold and a brick of iron. Both the blocks are exactly 10 inches in size. If they are dropped into the surrounding water of river, which one of the blocks will make the water level higher? (Answer)

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BUSINESS TERM OF THE DAY

Radner Equilibrium — A theory suggesting that if economic decision makers have unlimited computational capacity for choice among strategies, then even in the face of uncertainty about the economic environment, an optimal allocation of resources based on competitive equilibrium can be achieved.

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FOOD FOR THOUGHT
1 degree Celsius: for the first time, global temperatures this year will be more than 1 degree Celsius higher than pre-Industrial Revolution levels.

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