“I think anyone who characterizes this as a means to raise prices is ignoring the basic premise of what we’re trying to do here” — AT&T CEO Randall Stephenson, responding to backlash over AT&T’s hotly-debated acquisition of Time Warner. Stephenson is arguing that the goal of the merger is to lower prices in the marketplace…we’ll see about that.
- U.S. markets finished lower after investors reacted to less than stellar earnings reports from some industry giants, coupled with a slight dip in consumer confidence
No Love for the iPhone?
…Apple (-2.79% after hours) sees slumping sales for its flagship device. It was quite the mixed fourth quarter for Apple. The tech giant narrowly beat earnings estimates, yet posted a decline in revenue and profit for the third consecutive quarter. How? Apple actually sold more iPhones than expected, but still saw shipments fall 5% from a year ago. Yet there’s still some good news for the Tim Cook express: Apple’s revenue guidance for next quarter was higher than expected, and fingers are crossed that the recently released iPhone 7 will lead its profits to explode (disclaimer: not literally, Samsung learned that lesson the hard way).
Volkswagen Finally Settles Up
…With Uncle Sam. After rigging over 11 million of its diesel vehicles to cheat on emissions tests, VW (+0.83%) just got its final punishment from the U.S.Department of Justice: a massive settlement for nearly $15 billion. That’s one of the largest corporate settlements ever. So where’s all that cash going? The majority of it is dedicated to a buyback program for owners of rigged vehicles, and the remainder is being put towards environmental programs and investments in developing zero-emission vehicles.
Remember When Your Burrito Collapsed in Your Hand?
…Well, that’s kinda how Chipotle’s (-2.01% after hours) earnings went down too. It’s been almost a whole year since the E. coli spat, and Chipotle is still struggling to maintain customer loyalty. How bad? Long story short, profits dipped 95% and same store sales fell almost 22%. Before you freak out and tell your friends that Chipotle is dead, keep this in mind—the decline actually marks a recovery from the last few months thanks to Chipotle’s loyalty program, Chiptopia.
Steph Curry Can’t Do It All
…He was unable to lift Under Armour (-13.22%) despite solid earnings that beat estimates. No doubt Under Armour has made great strides in recent years to challenge top dog Nike—helped by Steph’s ascent as Under Armour’s prime jewel and strong international growth. But investors loooove looking to the future—and that once-astronomical sales growth is now expected to slow in a major way starting next year through 2018.
Do You Hear That?
…It’s the sound of Pandora (-7.22% after hours) continuing to collapse under brutal competition. The former online music pioneer reported revenue and ad earnings below expectations. What’s worse, Pandora’s closely-watched listener count actually fell slightly to 77.9 million. You can’t blame management for sitting on its hands—it rolled out its ad-free Pandora Plus last month, and will be releasing a full-on Apple Music/Spotify competing service later this year. But it could be too little, too late.
Panera Beats Earnings Estimates
…We’ll break bread to that. Panera (+5.49% after hours) topped earnings expectations for the third time in a row and raised guidance thanks to an increased focus on digital ordering platforms and its catering service line. In a time when most restaurants are suffering from declining foot traffic, Panera bucked the trend and grew same store sales by 3.4%. Kudos.
- Google takes on Microsoft with new digital whiteboard
- BlackBerry launches a 5.5-inch Android phone, the DTEK60
- Google Express adds delivery service to 13 more states
- Google Fiber division cuts staff by 9%, ‘pauses’ fiber plans in 10 cities
- Monday: Visa (+), Kimberly-Clark (-) Earnings; PMI Manufacturing Index (+)
- Tuesday: Apple (-), AT&T (-), General Motors (-), Sprint (-), Under Armour (+), Chipotle (-), Fiat Chrysler (+), Panera (+), Pandora (-), Procter & Gamble (+), Merck (+), 3M (-), Eli Lilly (-), Caterpillar (-) Earnings; Consumer Confidence (-); Case-Shiller Home Price Index (+)
- Wednesday: Coca-Cola, Tesla, Comcast, Boeing, Texas Instruments, Southwest Airlines, Hilton, GrubHub, Buffalo Wild Wings Earnings; New Home Sales
- Thursday: Alphabet, Amazon, Twitter, Baidu, Amgen, Altria, UPS, Celgene, Dow Chemical, Ford, Barclays, Nokia, Aflac, Blackstone, Deutsche Bank, Expedia Earnings; Weekly Jobless Claims; Durable Goods Orders; Pending Home Sales
- Friday: Exxon Mobil, Anheuser-Busch, Chevron, Mastercard, UBS, Phillips 66, Hershey, Xerox Earnings; U.S. Q3 GDP; Consumer Sentiment
Obamacare, Premium Style
Just how affordable is the Affordable Care Act? Well, premiums are getting pricier. The Obama administration announced this week that premiums for plans under its trademark healthcare bill will increase by an average of 25% next year. That’s a huge jump from a 2% increase in 2015 and a 7% increase this year. Here’s more:
- 85% of enrollees receive federal subsidies that increase alongside premium hikes. People making under $47,000 qualify for this assistance. So it’s the 15% (1.6 million people) making more than that who might be in trouble.
- Adding fuel to Trump’s fire? The new data sure has undergone heavy political shelling, especially on the campaign trail. While Donald Trump has vowed to fully repeal Obamacare, Clinton remains a staunch defender as it has provided over 10 million people with access to affordable healthcare.
- Amidst pushback from both sides of the aisle, the optimism of the Obama administration continues. Monday’s announcement claims that three-quarters of enrollees will be able to find a plan for $75 or less. The secretary of Health and Human Services even predicted a 9% enrollment increase over this next open enrollment period. Go figure.
Interview Question of the Day
Using only a four-minute hourglass and a seven-minute hourglass, how will you measure exactly nine minutes? (Answer)
Business Term of the Day
A vanilla option is a financial instrument that gives the holder the right, but not the obligation, to buy or sell an underlying asset, security or currency at a predetermined price within a given timeframe. A vanilla option is a normal call or put option that has no special or unusual features.
Food for Thought
Self-driving truck startup Otto successfully made a 120-mile journey yesterday—delivering beer. Anheuser-Busch teamed up with the Uber-owned startup to drop off a semi-tractor’s worth of beer from Fort Collins, traveling through Denver on its way to Colorado Springs. Cheers to that.
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