“Move fast and break things. Unless you are breaking stuff you are not moving fast enough.” Mark Zuckerberg. Good advice in business, bad advice behind the wheel of a car.
Market Snapshot
- U.S. indexes finished lower on continued tension between the U.S. and North Korea.
- Venezuela inflation rose to 248% on the year.
- Aluminum prices are at 2014 level highs due to lower Chinese output.
- Oil rose slightly with a drop in U.S. crude inventories.
Satis-factories
Never been the most popular in the room?
Build a manufacturing plant.
After announcing a joint venture to produce 300,000 vehicles a year in the U.S., Japanese automakers Mazda (-1.18%) and Toyota (-0.98%) are getting DMs from eleven(!) states that are all competing to land the factory.
Which states?
We’re not going to list them all here, but they’re almost exclusively in the Midwest or Southeast.
The Southeast? No, not a typo. There’s a decent chance your BMW was assembled by South Carolinians and your Nissan’s just as Tennessean as charcoal-filtered whiskey. The region has been a popular destination for foreign car companies (and manufacturers in general) because of weak unions, cheap labor and generous financial incentives.
And incentives are what they’re after
Like any good haggler, you can bet Mazda and Toyota will be pitting states against one another to get the best deal. The companies can expect incentive packages that include free land, tax credits, workforce training grants and infrastructure projects.
Of course, officials aren’t happy about dishing out taxpayer money to lure companies, money that according to critics of “corporate welfare” could be spent better elsewhere (like education). But many states feel like they don’t have a choice.
Because…
Jobs
But not just any kind. These are coveted manufacturing jobs, the kind of middle-skilled, decent-wage jobs this economy needs to combat economic inequality.
Case in point: Wisconsin, which ranked 33rd in job growth and lost manufacturing jobs last year, is offering $3 billion in incentives for Foxconn (the Taiwanese company that makes your iPhone) in a deal announced a couple weeks back.
But it may not be worth the asking price. New analysis concluded that Wisconsin won’t see any economic benefit from the Foxconn factory until 2042…
All of this to say: when states compete with one another, corporations like Foxconn, Toyota and Mazda win.
To Infinity and Beyond
Scott Van Pelt’s gleaming bald head isn’t hypnotizing millennials like it used to—Disney (-3.88%) cable networks, led by ESPN, contributed to the company’s 23% decline in operating income for Q3. Maybe that’s why Disney is leaving Netflix and offering its own subscription streaming service (conveniently after Netflix’s acquisition of Millarworld this Monday. Hmmm).
This might seem like an uphill battle with popular original shows like HBO’s Game of Thrones and Amazon’s Transparent standing in its way, but Disney has a few fan favorites up its sleeve as well.
Between Jessica Jones, Daredevil, Luke Cage and Iron Fist, Marvel offers its parent Disney an estimated 12 million reasons to start its own subscription service. And that’s before tapping into a fan-crazed Star Wars franchise that’s brought in over $30 billion.
There’s opportunity here. That’s for sure. And if Disney can harness it, the hit from ESPN won’t be fatal. We can just see it now: Around the Horns, hosted by Mike Wazowski.
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Working Hard or Hardly Working?
Turns out Americans are as lazy as ever, but at least we’re taking a step out of our slippers in the right direction.
The U.S. Labor Department reported a 0.9% increase in nonfarm business-sector productivity—a fancy way of saying how fast goods and services output rose from April to June. But before you start giving your pal Jim a pat on the back for all that hard work, consider this:
That figure is still well below historical productivity standards of 2.1%. If Americans ever want to see the fruits of our labor pay off in higher salaries and stronger economic growth, we have to start boosting those numbers.
Either that, or your buddy Jim might make way for the new JimBot 9000. We hear that guy’s hilarious.
The Boss Takes on the Bots
It’s only been hours since Bruce Springsteen announced he’s doing an eight-week Broadway run and we’re already desperately scanning SeatGeek to find affordable seats.
That’s because online bots are completely distorting the market by collecting tickets to popular events when they first come on sale, leaving the average consumer to pay a premium on secondary ticketing websites like StubHub.
But the Boss is fed up.
He’s teaming up with Ticketmaster’s new Verified Fan technology to make sure the ticketing process is as equitable—to humans—as possible. The process is simple: confirm you’re not a robot before August 27th and be entered into a randomized drawing to take place three days later.
Then pray.
What Else Is Happening…
- Vantiv
(+3.07%)finalized its deal to purchase payment processor Worldpay for $10 billion. - GE
(+0.55%)is delaying its HQ move to the Boston waterfront. - Seeso, NBC’s comedy streaming service, is shutting down after only a year and a half.
- Beauty subscription startup Birchbox is shopping around for buyers, including Walmart
(+0.65%).
Economic Calendar
- Monday:
- Earnings: CBS (+), Twilio (+), Tyson Foods (+)
- Economic Events: Consumer Credit (-)
- Tuesday:
- Earnings: CVS (+), Time Inc (+), Wayfair (+), Valeant (+), Walt Disney (+), Michael Kors (+), Plug Power (-), Ralph Lauren (+)
- Economic Events: Small Business Optimism Index (+)
- Wednesday:
- Earnings: Cars.com (+/-), Office Depot (-), Wendy’s (+)
- Economic Events: MBA Mortgage Applications (+), Wholesale Trade (+)
- Thursday:
- Earnings: Blue Apron, Kohls, Macy’s, Nordstrom, Noodles & Co, NVIDIA, Snap
- Economic Calendar: Jobless Claims, PPI
- Friday:
- Earnings: Dish, JCPenny
- Economic Calendar: CPI, Baker-Hughes Rig Count
Water Cooler
The Back Burner
One morning this May, residents living on Presidio Terrace in San Francisco woke up to find out their street had been purchased. And it might have been an investment for the ages.
Because, as far as streets go, this one’s pretty great. Presidio Terrace is an exclusive road in an already exclusive city, dotted with 35 mansions once home to public figures like Nancy Pelosi and former SF mayor Joseph Alioto.
So who are the sinister gentrifiers that gobbled up Presidio for a bargain?
Maybe not who you’d expect: a couple by the names of Tina Lam and Michael Cheng, a Silicon Valley engineer and real estate investor, respectively. They bought Presidio Terrace for 90k at an auction back in 2015, when it was up for sale because of an outstanding property tax bill of $994 (the residents complained the bill was repeatedly sent to the wrong address for decades).
So you’ve got yourself a street. Now what? Well, since finding parking in San Fran is a total nightmare, it should be lucrative to rent out the 120 parking spaces on the street. Or, they could find another buyer, cash in and head straight to Vegas.
For now, Lam and Cheng are biding their time and exploring their options while the residents explore every legal avenue to recover their beloved street. Either way, owning Presidio Terrace must be particularly satisfying for Cheng and Lam, who wouldn’t have been allowed to buy a house on the street until racial housing laws were overturned in 1948.
THAT is how you stick it to the man.
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Question of the Day
Walking across campus, a student interviewed a group of students. 25% of the students took a finance class last semester, 50% took a marketing class last semester, and 40% took neither a finance nor a marketing class last semester. What percent of the students in the group took both a finance and a marketing class?
(Give Up?)
Who Am I?
- I am considered the “face of virtual reality in gaming.”
- At age 24, I ranked #22 on Forbes’ 2016 richest entrepreneurs under 40.
- In March 2014, my company was bought by Facebook for $3 billion.
- I created my first prototype VR headset in my parents’ garage at age 17.
Stat of the Day
33%
The percentage of college students who admitted in a survey to buying drugs on Venmo.
Next Week’s Economic Calendar
- Monday:
- Earnings: No Events Today
- Economic Events:
- Tuesday:
- Earnings: Coach, Home Depot, Urban Outfitters
- Economic Events:
- Wednesday:
- Earnings: Cisco, Perry Ellis, Progressive
- Economic Events:
- Thursday:
- Earnings: Alibaba, Gap, Wal-Mart
- Economic Calendar:
- Friday:
- Earnings: Deere & Co, Estee Lauder, Foot Locker,
- Economic Calendar: