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NOT ALL HEROES WEAR CAPES
Everybody: “Markets are plummeting, if only there was someone who could save us!”
Jerome Powell: “Say no more, fam.”
At a conference that sounds about as exciting as listening to a play-by-play of the compliance intern’s weekend at Comic Con, Fed Chair Jerome Powell said he wouldn’t not lower interest rates if the need arose.
More precisely Jerry Interest Rates indicated that he and Plunge Protection Team “will act as appropriate to sustain the [economic] expansion.” Powell stopped short of blaming the trade war for the economy’s woes but hinted at the uncertainty it has caused. The conference headliner admitted the Fed does “not know how or when these trade issues will be resolved.”
Because he’s not our hero. He’s a silent guardian. A watchful protector.
Jerome and his masters of monetary policy face a growing laundry list of sh*tstorms, namely Trump’s trade war (on China, and more recently, Mexico) and a big tech witch hunt which have weighed on markets and the broader economy.
Markets have fallen some 7% since POTUS announced that the US would hike tariffs on Chinese imports to 25% (from 10%). That is until Jay went all “not on my watch.”
NOTHING TO SEE HERE
CVS has big plans for its future, or at least that’s what it’s telling investors. Concerns over the drug store’s $70B acquisition of Aetna have caused panic within investor circles (shares have fallen 20% this year), but CVS used yesterday’s investor day to prescribe chill pills to all of the haters.
CVS leadership projected huge returns once the companies are fully integrated. And synergies. Like so many synergies. The company expects to save some $350M this year and $800M next year, up from the original $750M estimate.
For the time being, things are on track for CVS, which doubled down on its forecasted earnings of $6.75 to $6.90 per share for 2019. By 2022, however, CVS is predicting adjusted earnings per share in the double digits. The news led to a 2.3% spike in share prices.
OK, but how?
To start, CVS is ramping up efforts to launch its HealthHUB stores. By 2021, it plans to have more than 1.5k HealthHUB’s open for business. HealthHUB locations include a more robust health clinic while offering rooms for yoga and seminars from dietitians and respiratory specialists. But they still sell Plan B, right? Asking for a friend …
CVS execs are hoping the new HealthHUB locations can help keep members healthier, therefore lowering healthcare expenses, and making its Aetna acquisition more profitable.
IN OTHER NEWS
- Following suit. Apple finds itself as the defendant in a suit brought by two software developers which claim that Tim Cook’s crew suppresses competition in the market for iPhone applications. App-developers Donald R. Cameron and Pure Sweat Basketball allege that Apple is engaging in anticompetitive behavior by only allowing customers to buy the App through its own store, and taking a 30% commission. The case is similar to the one recently allowed to proceed against Apple by the US Supreme Court which focuses on customers claiming the app store leads to higher prices.
- Klaw-backs. Nike has got itself in a bigger pickle than that time it sent Zion a faulty pair of sneakers. Kawhi Leonard has filed suit against the Swoosh over the rights to his personalized “Klaw” logo … which is more or less a glorified hand turkey if we’re being honest. The Oregon-based company allegedly filed for a trademark for the logo that Leonard designed, behind his back. Leonard had allowed the company to use the logo, which he had developed in college, during the term of their contract. However, Kawhi recently switched to New Balance and swiftly received a cease and desist order, prompting the lawsuit. Hell hath no fury like a corporate sponsor scorned!
- Hertz just launched a vehicle subscription model in response to customer reports suggesting that people don’t feel a need to own a car. The Hertz My Car service will cost between $999 to $1,399 per month, which by my back of the envelope calculation is much more expensive than the price of actually owning a car. Hertz’s holding company’s stock was up 8% on the news.
- Turns out, taxpayers paid roughly $90B more under the tax reforms implemented by President Trump for tax year 2018 vs. 2017 according to data from the IRS. It appears that people (read: TurboTax) did not properly update withholding information to take advantage of the new tax breaks and wound up surprised with smaller refunds in 2018.
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