Maybe McDonald’s Isn’t Failing After All, Plus Amazon Made $25 BILLION Dollars Last Quarter

morning-brew

“I’ve served this patient population for a long time, and when I see a company do this…it just shocks the conscience.” — Imprimis Pharmaceuticals CEO Mark Baum. You might recall last month that Turing Pharmaceuticals controversially jacked up the price of its decades-old drug Daraprim by 5,000 percent. Now Imprimis is offering an alternative drug for a mere $1 per pill. Faith in humanity restored.

MARKET SNAPSHOT 

Markets Wake From Slumber

  • It was massive gains all around for U.S. stocks yesterday—and you can thank positive housing and unemployment data. Existing home sales staged a healthy rebound last month and applications for unemployment benefits continued to hover near their 42 year lows.
  • European markets jumped to the positive side as well. Why? The European Central Bank’s rate announcement definitely helped (more on that in a second), along with a series of strong earnings reports from a number of major European companies. The only downside: the announcement caused the euro to drop 2 percent against the dollar.
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WORLD MACRO 

Rates Aren’t Changing Again?

Let’s take a closer look at the ECB’s big announcement: European Central Bank President Mario Draghi disclosed yesterday that interest rates will remain at zero (sound familiar?). But it doesn’t stop there: he also commented that the ECB is considering tacking on more stimulus to its already-in-place stimulus program, in a potential double-down maneuver. This all comes as a result of very low Eurozone inflation and a stubbornly slow economic recoveryhere’s to hoping our friends across the pond get well soon.

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CORPORATE PRIMER

Big Mac is Back

McDonald’s is finally back in the game, reporting 0.9 percent growth in same-store salesits first quarterly increase in two years. McDonald’s attributed the rise to changes in at-home operations, but the introduction of all-day breakfast options, buttermilk crispy sandwiches (our mouths are already watering) and the use of higher quality ingredients certainly didn’t hurt. However you spin it, the company’s new, more customer-oriented business approach had investors convinced, and shares surged 8.1 percent to an all-time high.

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TODAY IN TECH

Amazon…Profitable?

Amazon may have a history for growing at a loss, but not this quarter. With large revenue contributions from Amazon Prime and Amazon Web Services, the e-retailer handily topped analyst expectations with positive earnings of $25.4 billion, its second straight quarter of profitability. The strong report sent shares rocketing nearly 10 percent after hours on Thursday and left analysts wondering what’s ahead for the increasingly diversified (and increasingly controversial) company.

Microsoft Gains Momentum

The strong tech vibes rubbed off on old establishments too: Microsoft edged out Wall Street predictions with revenues of $20.4 billion. Despite a decline in demand for PCs, the continued growth of Microsoft’s Azure cloud computing service and the recent introduction of Windows 10 have both helped the company regain momentum, and shares responded appropriately, jumping nearly 7 percent.

Alphabet Hits the Big Time

Make it three for three: Alphabet Inc., the newly-minted parent company of Google, strolled past earnings expectations and jumped 10 percent after hours in the process. The good news came from significant advertising sales growth (where else?) from both YouTube and the Google search engine. Investors also remain fans of Alphabet’s more transparent financial reporting standards, meaning it’s now much easier to determine which divisions are bringing home the dough and which are sucking resources. Now with its stock price at an all-time high, Alphabet is here to stay.

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OTHER STORIES

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ECONOMIC CALENDAR

  • Monday: IBM, Morgan Stanley, Halliburton Earnings; China GDP
  • Tuesday: Chipotle, Verizon, Yahoo Earnings; Housing Starts
  • Wednesday: American Express, Boeing, Coca-Cola, eBay, General Motors, Las Vegas Sands, SanDisk Earnings
  • Thursday: Alphabet, Amazon, AT&T, McDonald’s, Microsoft, Under Armour Earnings; Existing Home Sales; Weekly Jobless Claims
  • Friday: Procter & Gamble Earnings

HILLARY BACK IN THE SPOTLIGHT

Now that election season is upon us, we may finally stop hearing about Benghazi—but not before one last hurrah. Yesterday, presidential candidate Hillary Clinton underwent in-depth questioning by Republican lawmakers regarding her role in the 2012 Benghazi attacks that killed four Americans. Here’s more:

  • The hearing ended up Democrat vs. Republican: Democrats claim the Republicans are only pursuing this as part of a partisan “crusade,” while Republicans feel they have legitimate grounds for inquiry into state security.
  • On her part, Clinton praised the victims of Benghazi but insisted that the attacks should not lead to a retreat from diplomacy.
  • Republicans pursued a line of questioning focused on Clinton’s communications regarding security, including why she didn’t respond to requests for increased security and whether it was her job to directly respond.
  • Clinton’s other major controversy, her use of a private email server while serving as secretary of state, was only brought up briefly. One scandal at a time, folks.

INTERVIEW QUESTION OF THE DAY

During the latest round of the BrainBashers triathlon, Keith was fourth. Adrian is not the oldest, but is older than Duncan, who was not second. The child who was next in age to the youngest finished second. The child who finished in third place is older than the child who finished first. Billy is younger than the child who finished in third place. Can you determine who finished where and place the children in order of age? (Answer)

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BUSINESS TERM OF THE DAY

Gnomes — 15-year, fixed-rate, pass-through securities offered by the Federal Home Loan Mortgage Corporation, or Freddie Mac’s, cash program. The securities offered under this program have a maturity of 15 years. A pass-through security pools debt obligations and passes income obligations from the person or entity that owes the debt to the shareholders.

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FOOD FOR THOUGHT
$150 million: the amount billionaire investor Carl Icahn has pledged to invest in his own super PAC.

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