“I started a company that had $2.5 million in revenue and 30 people, and I left a company that had $22 billion in profit, and I feel that net, net, that was a pretty good success” — Ex-Microsoft CEO Steve Ballmer, as he recapped his drifting relationship with Bill Gates. Turns out money doesn’t solve everything.
Market Snapshot
- Global markets took the weekend to recover from a rough ending to the week, with Europe posting its worst week in nine months and the S&P in the red for a ninth straight day—the longest negative streak since 1980. Let’s get these elections over with
- Shares of SolarCity spiked 9% after Tesla’s buyout offer received a seal of approval from an advisory firm that recommended shareholders on both sides approve the deal
Something for Everyone
…In Friday’s October jobs report. Employment reports are always a BFD in the economic world, but this one took on special importance, since it came right before (gulp) the presidential election (did you forget?). So how’d America do? Well, if you’re a pessimist, you could point to the economy only adding 161,000 jobs, well below expectations. Plus, while the employment rate fell a tick to 4.9%, that was caused by people exiting the workforce entirely, so the labor force participation rate actually dropped to 62.8%. Not great. But if you’re an optimist, you’ve gotta be happy to see average hourly earnings rise 2.8%, easily the fastest growth since the recession. Bonus: rising wages also motivated more workers to quit in hopes of greener pastures—a positive development. Overall, the report may not ultimately affect the election, but probably solidifies the Fed’s intentions to raise interest rates in December as expected. We’ll keep you posted.
Samsung Blows Up
…Again. As if recalling nearly two million Galaxy Note 7 phones last month wasn’t enough, we’ve got another Samsung recall. For those keeping score, that makes the battered electronics company officially 0 for 2 this fall. Yep, on Friday, Samsung (+1.04%) announced a recall of nearly three million washing machines following the discovery that the lids of the machines were at risk of literally blowing off while in use. The lone bright spot in the midst of these fiascos is that Samsung is planning to include a Siri-like AI feature in its Galaxy S8 phone, slated for release next year.
Talent Isn’t the Only Thing That Can Get You to Hollywood
…Several billion dollars can too. Just ask Wang Jianlin, a Chinese billionaire just aching to buy up Hollywood. His holding company, Dalian Wanda Group, had already bought movie studio Legendary Entertainment (known for “Jurassic World”) and movie theater chain AMC. Jianlin’s follow up? On Friday, his company bought Dick Clark Productions, a TV producer known for the Golden Globes and other awards shows, for $1 billion. Don’t worry, Jianlin has already said he won’t interfere with the awards process. But that hasn’t stopped Washington officials from sounding the alarm over increasingly common Chinese acquisitions of large U.S. media companies, citing concerns of censorship and propaganda. We’ll see about that—or maybe we won’t.
Two of the Hottest Tech Companies
…Just scratched each other’s backs. Google Capital, now called CapitalG (very punny), is one of Alphabet’s (-0.01%) venture capital arms. And it just disclosed an equity stake in Snapchat over the weekend. Snapchat joins a big-name portfolio, right next to investments in companies like Airbnb and Glassdoor (heard of ‘em?). What’s in it for Google? For starters, Snapchat is kind of a big deal to the youths in social media today. Oh, and having a front-seat ticket to Snapchat’s inevitable 2017 IPO might make for a solid payday, too.
Other Stories
- Taco Bell is creating 100,000 new jobs in the U.S.
- Sprint will support next-gen texting on Android next year
- Activision Blizzard creates ‘Overwatch’ e-sports league
- Tesla crash in Indianapolis leaves two dead
Economic Calendar
- Monday: HSBC, Priceline, Marriott, MGM, Ferrari Earnings
- Tuesday: CVS, TripAdvisor, Valeant Earnings; U.S. Presidential Election; Job Openings and Labor Turnover Survey
- Wednesday: DISH Network, Mylan, Viacom, Shake Shack Earnings
- Thursday: Disney, Macy’s, Nordstrom, Ralph Lauren, Michael Kors, Kohl’s Earnings; Weekly Jobless Claims
- Friday: J.C. Penney Earnings; Consumer Sentiment
Sorry, I Don’t Carry Cash
With the growth of credit cards and companies like PayPal, Square and Venmo, it might seem like cold, hard cash is getting left by the wayside. However, a new report from the Federal Reserve Bank of San Francisco says that cash is still king…for now. So don’t tell us you “don’t carry cash”—we can see right through you. That said, the excuse may soon become legitimate—cash’s reign might be slowly fading. Here are the facts:
- Of the 150 billion transactions last year, cash was used 32% of the time, with debit cards coming in second at 27% and credit cards with 21% in third. So cards combined beat cash. Noted.
- And millennials never use cash, right? Wrong. Americans aged 18-24 actually used cash more than any other age group—38% of the time.
- So what’s driving the relatively high number of cash transactions? It’s all about small payments: Americans used cash 66% of the time for payments of $10 or less.
- Cash shouldn’t get too happy with its lead, though. In 2012, the same report showed that Americans used cash in 40% of transactions. Compare that to 32% this year, and we may see debit cards take the lead soon. Watch your back, cash.
Interview Question of the Day
Break out your Econ 101 notes: what happens to producer and consumer surplus if the market equilibrium price falls? (Answer)
Business Term of the Day
According to Jason Zweig of the WSJ, interval funds are one of this year’s hottest investment ideas. An interval fund is a type of investment that periodically offers to repurchase its shares from shareholders. These funds can hold nearly anything, from commercial real estate to distressed debt. In contrast to closed-end funds, interval fund shares typically don’t trade on the open market.
Food for Thought
If your preferred presidential candidate loses this Tuesday, are you ready for an election night Doomsday? Survivalists aren’t taking any chances. Long-term food sales have tripled in the event that cans of food are better than money in the bank.
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