Morning Brew: Nike’s Stock Is Soaring Right Now, Should You Still Consider Buying It?

nike-air-max-90-hyperfuse-blue-orange

“God bless America.” Pope Francis, concluding the first speech in history delivered by a pope to a joint session of Congress. God bless America indeed.

MARKET SNAPSHOT 

Uncertainty and Emissions in the Air

  • U.S. stocks closed slightly lower on Thursday, and many investors eagerly digested a speech delivered by Federal Reserve chairwoman Janet Yellen. She remained relatively upbeat on the U.S. economy and reiterated that the ever-elusive rate increase should still happen this year. Yellen also suffered a bout of dehydration as she finished her speech, but don’t worry, she’s okay.
  • Oil finally finished with a positive day, getting support from a weakened U.S. dollar, which makes importing oil to the U.S. easier for crude companies. But why did the dollar fall? Data released yesterday indicated higher-than-usual weekly jobless claims and weakened demand for durable goods.
  • European investors didn’t appreciate the fact that the Volkswagen emissions scandal may have spread to BMW as well. BMW shares tanked 8 percent on the rumors, dragging European markets down with it.
  • The VIX volatility index (which measures how much markets fluctuate—we’ll spare you the gory details), finished above 20 for the 24th straight session, an apt summary of recent market uncertainty.
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WORLD MACRO 

This Way Nor(that)way

The central bank has lowered interest rates. But not the U.S. central bank (i.e. the Fed)—it’s Norway, which unexpectedly lowered rates to a record low 0.75 percent yesterday. And before you ask, yes, blame low oil prices: Norwegian oil companies have cut more than 20,000 jobs recently, driving unemployment to its highest levels since 2006. There’s more: the Norwegian Krone currency got crushed, extending its precipitous fall this year that has pushed inflation well above the central bank’s 2.5 percent target. And don’t expect higher rates any time soon—the Norges Bank plans to keep rates below 1 percent through 2018. Rough times for the home of the fjords.

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CORPORATE PRIMER

Nike Earnings Blow Out

After signing a $1 billion dollar deal to become the official provider of uniforms for the NBA, Nike is balling out. The elite athletic apparel giant grew revenue by 5 percent and posted earnings of $1.34 per share, beating analyst estimates by over 12 percent. Not only is Nike dominating on the court, it’s dominating in the market—it checks in as the top-performing blue chip stock in 2015, outperforming the Dow by 29 percent. With shares up a whopping 8 percent after hours, the good times just keep on rolling.

Caterpillar Cuts Back Once Again

Caterpillar released some dismal news yesterday, announcing they will be laying off around 10,000 jobs through 2018. Demand for construction equipment is expected to decline over the next year, decreasing Caterpillar’s revenue outlook by $1 billion. If the prediction holds, it would be the first time in Caterpillar’s 90 years of existence that its sales have declined for four successive years. The global mining industry is continuing to feel the pain, which means Caterpillar might be hiding in a cocoon of meager performance for longer than expected.

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TODAY IN TECH

iPhone Insanity

‘Tis the season for Apple’s annual iPhone release: today marks the launch of the iPhone 6s and 6s Plus. Customers have been lining up outside Apple stores since yesterday eagerly awaiting the new phones, which boast better cameras, upgraded processors and more sensitive, feature-filled touchscreens than previous iPhones. Also being unveiled today is Sprint’s conveniently-timed $1 iPhone plan, a program that allows customers to trade in an iPhone 6 and lease a new 16GB iPhone 6s for just $1 per month. Sprint’s new plan aims to boost the struggling carrier’s market share, demonstrating the always-relevant influence of the iPhone.

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OTHER STORIES

  • Deutsche Bank and Goldman Sachs team up
  • Lockheed says U.S. approves of Sikorsky takeover
  • Volkswagen to hire Porsche CEO
  • Silicon Valley to meet with India’s prime minister
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ECONOMIC CALENDAR

  • Monday: Existing Home Sales
  • Tuesday: AutoZone/Carnival/General Mills Earnings
  • Wednesday: Manufacturing Index
  • Thursday: Durable Goods, New Home Sales, Weekly Jobless Claims, Janet Yellen Speech, Nike/Bed Bath Earnings
  • Friday: Consumer Confidence, 2Q GDP Revision #3

A VISIT FROM THE POPE

In case you missed it, Pope Francis visited the U.S. for the first time this week. In addition to praising President Obama’s stance on climate change, he also addressed the state of American capitalism. Here’s what he had to say:

  • The Pope sent capitalism some praise, acknowledging the progress that has been made to raise people out of “extreme poverty.”
  • However, he did warn the public that they must also remember that some are still trapped in a “cycle of poverty.”
  • Some Republicans have accused the Pope of being “anti-capitalist,” especially with regards to income inequality and climate change.
  • The Pope also praised “the spirit of enterprise,” but said an economy should be “inclusive” and that business should focus on “improving the world.” With the way the Pope was skillfully hedging his bets on the American economy, you’d think he was hanging out with U.S. politicians for longer than a few days.

INTERVIEW QUESTION OF THE DAY

A one-armed surgeon needs to operate on three patients, but he only has two individual surgical gloves and he can’t get any more. How can he operate on the three patients in turn without infecting the patients or himself? (Answer)

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BUSINESS TERM OF THE DAY

Debt Ratio — A financial ratio that measures the extent of a company or consumer’s leverage. The debt ratio is defined as the ratio of total debt (long-term and short-term) to total assets, expressed as a decimal or percentage.

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FOOD FOR THOUGHT

60 miles: the new distance record that scientists at the National Institute of Standards and Technology have achieved for quantum teleportation. We’re not quite sure what that is, but it sounds really impressive.

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