Why Twitter Shares Rose 8% Yesterday, Plus Is The Stock Market Finally Out Of The Weeds?

morning-brew

“Starting to think this whole thing really is covering up some shaddy (sic) s**t.” — An employee at the company that managed Hillary Clinton’s private email servers, after being instructed to reduce the duration of time Clinton’s emails should be stored on a backup server.

MARKET SNAPSHOT 

Stocks Come Out on Top

  • In an up-and-down, high-volume day, U.S. stocks started strong, fell all the way into negative territory and finally rebounded to finish well in the green across the board. In the process, the S&P 500 hit a 3-week high.
  • A late biotech rally sent the S&P to a solid 1.5 percent gain in a rebound from Tuesday’s weakness. The rule of thumb in recent sessions has been “as biotech goes, so goes the market,” a mantra that held true yesterday.
  • After China’s markets were closed this past week for a holiday (yes, classic China), the stock market reopened higher last night by nearly 4 percent. It’s a strong move, but weaker than expected given that emerging market shares had advanced 7.4 percent during the extended hiatus.
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U.S. MACRO 

Mortgage Applications Through the Roof

Applications to refinance and purchase homes soared this past week, increasing by about 25 percent. More volatile interest rates and the introduction of new government regulations had Americans scrambling to apply for mortgages. Did we say new regulations? Yes, we did: “TRID” is a combination of small, old regulations meant to give consumers full information and make the process of applying for a loan easier to understand. Sounds innocent enough, but some consumers just don’t want the hassle; hence the push to get applications through before the deadline.

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CORPORATE PRIMER

Winners and Losers

A bevy of corporate news yesterday had some companies feeling good, and others, well, not so much:

Winners:

  • Twitter, which jumped 8 percent after Saudi Arabian billionaire Prince Al-Waleed bin Talal increased his stake in the company to 4.45 percent. It’s always good to have a Saudi billionaire on your side.
  • EMC, which jumped nearly 8 percent after-hours after the WSJ reported that the data storage giant was in talks to merge with Dell. If it goes through, the merger would be one of the largest tech-industry mergers in recent history.
  • Lumber Liquidators, well, kind of. The hardwood-flooring retailer agreed to pay $13.2 million to resolve a number of compliance issues, and the clarity sent shares higher by 12 percent—minor consolation with the stock still down 78 percent on the year.

Losers:

  • Yum Brands, which got hammered 18 percent after reporting abysmal earnings (see yesterday’s Brew for more).
  • Deutsche Bank, which fell over 6 percent after warning that it will be taking an unexpected $7 billion quarterly loss. The culprit: a number of writedowns, as new CEO John Cryan looks to right the ship of Europe’s largest investment bank.
  • Monsanto, which reported a $495 million loss last quarter and announced plans to slash 2,600 jobs—a whopping 14 percent of its workforce. The stock was flat despite the bad news, but shares of the agriculture giant are still down 20 percent in the last 12 months.

Chronicles of the Beer Industry, Episode 2

It’s hard to impress the pretty girl that would make you a global superpower in the beer market. Yesterday, SABMiller rejected yet another takeover proposal by Anheuser-Busch, this one valued at $104 billion, 44 percent higher than Miller’s value before negotiations began. It was Anheuser-Busch Inbev’s second try, up from its previous offer of around $100 billion. SABMiller isn’t completely saying no to the dance, but Busch has to sweeten the deal before they can get the board of directors and the Santo Domingo family, a majority Miller shareholder family, on board. Third time’s the charm? We’ll see.

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TODAY IN TECH

Is This Real Life?

We’ve all heard of insider trading, but after yesterday, we might need to start worrying about insider fantasy-ing too. The scandal began when news broke that a DraftKings employee won $350,000 by taking advantage of data only employees have access to, sparking an uproar over unfair access to inside data in the fantasy sports industry in general. In a booming industry with hundreds of millions of dollars flowing in from venture capitalists and fantasy fans, it becomes not a question of if, but when this unregulated industry will begin facing government oversight.

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OTHER STORIES

  • Sony proceeds with plan to sell music publishing unit
  • Amazon launches Snowball
  • Jet ditches its membership fees
  • Urban Outfitters parent company asks employees to work for free
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ECONOMIC CALENDAR

  • Monday: ISM Non-Manufacturing Index
  • Tuesday: U.S. Trade Gap, Yum Brands/PepsiCo Earnings
  • Wednesday: Monsanto Earnings
  • Thursday: FOMC Minutes Release, Weekly Jobless Claims, Alcoa/Domino’s Earnings
  • Friday: Import/Export Prices

INTERVIEW WITH RACHEL BLATT

Rachel is a marketing and content strategist at Genius (formerly Rap Genius) who has built teams and partnerships in varied environments, from the corporate sphere to nonprofits. She joined Genius in the fall of 2014 after a trip around the world. Previously, she was the Global Content Director for the branding firm Wolff Olins, devising media strategies to drive new business and directing launch plans for client work, including USA Today, the Smithsonian Institution, Univision, Refinery29 and Firefox OS.

What led to the transition from Rap Genius to Genius?

Tom and Ilan, my bosses, started Genius six years ago as a place where their friends could go to explain their favorite hip-hop tracks to each other. The lore goes that a few days into the project, the sixteenth song that was uploaded to the site and annotated wasn’t actually a song, it was an Emily Dickinson poem. That’s when the light bulb went off that they’d built a tool that stretched way beyond rap, way beyond music. Online, every text is a living document that people can and should be able to add knowledge to. Our community kept growing and kept pushing the platform into new genres like news, history, law, sports and screen—our mission expanded and our name changed with it.

What is the most valuable lesson or skill you developed while traveling the world, and how have you applied it to your career now?

I really believe and find strength in the idea that any two strangers can find something in common with each other. No matter what, if you find yourself in the same room, on the same flight or in the same forum with someone else, all of the different moments in your lives have led you to an overlapping experience that you now have in common. I think about that a million times a day in my role at Genius, which is all about meeting new people and looking for new ways to collaborate—whether it’s a new user who’s just come to Genius and has been kind enough to share their product feedback with me or a media partner who wants to use our technology to push the limits of their own site.

Number one piece of advice for students transitioning into the workforce?

In my last week of college, a friend gave me my first tarot reading. I forget the question I asked and the exact cards that came up, but I’ll remember her interpretation forever: “at this point in your life, the only mistake you could possibly make is to not do anything at all.” In other words, move forward in any direction and you’ll be fine. Even if you totally hate what you get yourself into, you’ll learn something about the world and your place in it. You only lose if you stand still.

How do you like your coffee?

I like my coffee immediately upon waking and black.

INTERVIEW QUESTION OF THE DAY

What are precedent transactions? (Answer)

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BUSINESS TERM OF THE DAY

Uncollected Funds — The amount of a bank deposit that comes from checks that have yet to be cleared by the bank from which the checks are drawn. Essentially, uncollected funds are sums of money that the bank needs to account for prior to releasing the funds to the depositor.

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FOOD FOR THOUGHT

$73.8 million: the payroll of the Houston Astros, the team with the lowest payroll of any playoff-bound Major League Baseball team.

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