Pharma Douche Martin Shkreli Facing 20 Years In Prison And Things Don’t Look Good For Blue Apron


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“The anonymous, uncorroborated claims are untrue and terribly unfair.”
There’s an alleged scandal brewin’ at Fox News. It involves a camera and certain body parts. We’ll let you do the math.

Market Snapshot

  • The Dow posted its eighth straight record on strong bank gains.
  • The dollar jumped on a strong jobs report.
  • The U.S. trade deficit narrowed to an eight-month low.
  • Gold dropped on strong earnings releases.

Big Enough for the Both of Us

It’s a new age for traditional car companies. Don’t believe us? Silicon Valley is reinventing the wheel with electric vehicles and autonomous technology, while sub-$50 oil has shifted consumers back to gas-guzzlers.

In these troubling times, Toyota (+0.81%) is purchasing a 5% stake in Mazda and hoping two heads might be better than one.

Together, the two Japanese automakers are creating 4,000 jobs by building a $1.6 billion U.S. production facility.

So, what’s in it for Toyota—the #3 car seller in the states

Last year, the U.S. auto industry hit a record 17.55 million unit sales. It’s a win for the industry, but not each automaker individually.

Toyota watched its family-sized sedans fall by the wayside (Corolla sales fell 9% in 2016) as tastes trended towards flashier trucks, SUVs and electric vehicles. This partnership is its shot to get back with the times.

A brand new facility in the U.S. helps Toyota minimize import tax laws, while ramping up production of its SUV fan favorite, the RAV4. More importantly, Toyota now has an additional pool of capital for electric vehicle R&D.

But, is Mazda the real winner?

Nearly a third of Mazda’s revenue comes from the U.S with one of the best ROICs in the industry. So what’s the bad news? They don’t produce any cars in the states.

By allowing its big brother to take a 5% stake (Toyota sells 10 million cars a year vs Mazda’s 1.6 million) Mazda is capitalizing on its most important market as American policies seem to shift towards protectionism.

And if the little guy got some help joining the electric race as well, it certainly wouldn’t hurt.

ADP Fights Back

This week on: Hedge Fund Activists Who Overthrow Companies, Pershing Square’s Bill Ackman and human resource firm ADP (-0.34%) square off.

Although the details are fuzzy, it appears Mr. Ackman has leaked the juicy details of his 8% stake in ADP—a proverbial warcry in the hedge fund world.

But, ADP is standing strong. In a swift act of defiance, it did the most mature thing you can do in the face of danger: it tattled on Mr. Ackman.

ADP said Ackman is looking to swipe five seats of the ten person board. And if he gets his way, even CEO Carlos Rodriguez might be on the chopping block.

Either way, ADP might be smart to get ahead of this. Under Mr. Rodriguez’s reign, ADP shares have returned 164% (including dividends). As for Ackman’s fund? It’s fallen 35% over the last two years.

That is Not What We Ordered

It’s been a rough month for meal-kit startup Blue Apron. Its IPO performed terribly (down 42%), co-founder and COO Matthew Wadiak was removed from his corner office and Amazon’s knocking on the door…

…all of this before Friday’s announcement that it is consolidating its New Jersey operations into one highly-automated fulfillment center. 1,270 workers were given the option to relocate or they’ll be laid off. That’s 24% of the company’s total workforce.

While the news doesn’t signal a catastrophe (the new facility will employ 2,000 workers), things do appear to be rotten with Blue Apron. And no, we’re not going to take the easy way out and blame Bezos this time.

Remember that free pad thai you got with your favorite podcast’s discount code? And then proceeded to never order Blue Apron again? Yeah, same.

Blue Apron has a miserable customer retention rate and because of the marketing blitzkrieg, it loses money acquiring most new customers.

How quickly things have gone sour for a company that generated $800 million in revenue in 2016. There’s still time to make Blue Apron Great Again, but it seems investors have recently lost their appetite.

You’ll Get ‘Em Next Time

Martin Shkreli’s days of picking fights with Captain America look to be numbered. The infamous “face of corporate greed” has had a hand in everything from jacking up the price of an AIDS medication 5,000% to mismanaging investment funds. And on Friday, he was convicted on two counts of securities fraud. Reality bites.

From the 2009 to 2014, “the most hated man in America” falsified fund returns by taking profits from his pharmaceutical company Retrophin and paying it out to investors. If you’re saying to yourself “Hey, that sounds like a Ponzi scheme!” that’s because it’s a Ponzi scheme.

While Shkreli has yet to be sentenced, he could face up to 20 years. Or, according to a YouTube livestream from the man himself (only hours after the verdict), “It’ll be a Club Fed where I play basketball and Xbox for a couple months.”

What Else Is Happening…

  • Google (+0.58%) is competing with Snap’s Discover feature.
  • Travis Kalanick is supposedly still fighting for control of Uber.
  • Potbelly (+2.29%) is considering a sale.
  • Tesla (+2.83%) lowered the price of its Model X SUV to $79,500.

Economic Calendar

  • Friday (August 4th):
  • Earnings: Berkshire Hathaway (-)
  • Economic Calendar: Unemployment Rate (-), Nonfarm Payrolls (+), Trade Gap (-)
  • Monday:
  • Earnings: CBS, Twilio, Tyson Foods
  • Economic Events: Consumer Credit
  • Tuesday:
  • Earnings: CVS, Hertz, Time Inc, Wayfair, Valeant, Walt Disney, Michael Kors, Plug Power, Ralph Lauren
  • Economic Events: Small Business Optimism Index
  • Wednesday:
  • Earnings: Alibaba,, 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

From Michael: Seinfeld Case Study

For any Seinfeld lovers out there, what happens when you post a scientific case study based entirely on Seinfeld episode? Apparently, the journal still goes ahead and publishes it. It just goes to show, don’t trust everything you read online. Including this. No just kidding, this is real.

Check it out

From Josh: It’s your pal, Al

Al Gore finally dropped An Inconvenient Sequel on Friday. I’ve yet to see it, but cannot wait to put on my secondhand jacket, grab my locally sourced snacks and rideshare my way to the documentary. It makes me think about Tasty. Each time one of those delicious videos convinces you to cook instead of eat out, you reduce your footprint. Now multiply that impact out over 87M FB likes.

Take a bite

From Alex: Flying Under the Radar

Been thinking about buying a drone for a while now, but can’t decide which to pull the trigger on. All I have to show for my obsession is about 50 hours of research and a laundry list of possible purchases. Yesterday, I added another to the list. SKEYE Pico Drone is the world’s smallest drone, and is a great option if you’re looking to bring one to the office and not get fired.

Fly the little guy

From Lauren: Now That’s a Sight

Last week, while stalking my favorite nature photographer (totally normal), I learned about his recent project with National Geographic and Airbnb to find the best viewing location for the total solar eclipse on August 21st. Now, Airbnb is offering two lucky nature-lovers a free trip to watch the eclipse from a custom geodesic dome in central Oregon. Did I mention this is the first total solar eclipse in 99 years?

If you win, I better be your plus one

The Breakroom

Question of the Day

At a party, everyone shook hands with everybody else. There were 66 handshakes. How many people were at the party?

(Give Up?)

Who Am I?

  1. My family and I are majority owners of CBS and Viacom.
  2. I served in an army intelligence unit that decoded Japanese military codes in WWII.
  3. In 1979, I escaped death during a hotel fire accident that left half my body with third degree burns.
  4. My father changed our family name from Rothstein to what it is now.

(Any guesses?)

Stat of the Day

8 billion hours

The amount of time Americans were stuck in traffic in 2015. Let’s hope The Boring Company can do something about that.