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10-year US treasury bonds cracked the 3% yield mark yesterday for the first time in four years. The result is a bearish outlook on equities going forward and a general sign that the economy could be at risk.
Don’t worry, nobody in your office knows what that means either …
Let’s recap. Bonds are issued by companies or governments as a way to get cash now with a promise to repay, with interest, at a later date. The length of time and repayment (coupon) remains the same while the bond price and interest rate can fluctuate (in opposite directions of each other). Ipso facto: interest rate (yield) goes up, bond price goes down.
But what does it all mean, Basil?
It means people are freaking out. 10-year US treasury bonds are a barometer of global borrowing costs. As interest rates go up, the cost of borrowing (mortgages, etc.) go up. The more expensive it is to borrow money, the less likely companies are to invest in their business. With companies not performing well, the stock market declines. You see, it’s a circle.
Water Cooler Talking Point: “Still confused? We’ve got full coverage on everything from WTF is the yield curve to what this all means for the economy. Go directly to Insider Information below. Do not pass Go. Do not collect $200.”
JUST DO IT
Nike-owned Converse lost it’s CMO earlier this year, and this week we found out where Julien Cahn landed: streetwear brand, Supreme.
Replacing Cahn is no small task, but living up to its corporate motto, Nike just did it. Sophie Bambuck will be transitioning from her role as Nike’s Senior Brand Director in Europe, the Middle East, and Africa. During her time in EMEA, Bambuck made the region Nike’s top business unit globally.
Nike has experienced a recent executive exodus, across business units, after conducting internal probes regarding allegations of misconduct. The executives who have left include Trevor Edwards, who many at Nike believed was the heir apparent to CEO Mark Parker.
Water Cooler Talking Point: “Nike is a dream job for anyone who has ever loved sports or had any sort of interest in the sportswear space, so you know that there must be some serious internal turmoil going on if your executives are all packing up and heading for the hills. Nike recruiters, if you’re reading this, give me a call.”
“YEA, I VAPE”
The FDA is cracking down on e-cigarettes in an effort to curtail sales to “the youths.” One of their biggest targets is Juul, an e-cig that resembles a flash drive.
Retailers were given notice that the FDA is doing undercover work to see if they’re selling e-cig products to underage buyers. The fun police have sent out (strongly worded) letter warnings and eBay has removed all Juul products from its site.
Additionally, anti-tobacco groups are calling for the FDA to ban fruity flavors that are more attractive to young kids and commission a regulatory review.
E-cigarettes were initially marketed as devices to ween people off of the real McCoy. But multiple health organizations have urged the FDA to take action as all signs point towards e-cigarettes being a gateway drug.
Water Cooler Talking Point: “You know what the best part of living through the rise of the e-cig is? (Nope, it isn’t the public health crisis that is exploding e-cigs.) It’s the fact that we can tell our grandkids about the wild west days of unregulated vaping: there are no rules … people are “smoking” in offices, restaurants, bars and up until last year, on commercial flights.”
IN OTHER NEWS
- I hope you have a big trunk because Amazon is putting its package in it. Bezos and his merry gang of storefront slayers have teamed up with GM and Volvo to deliver packages to the trunk of your car in 37 US cities. This doesn’t seem so other-worldly considering Amazon already delivers directly to your living room.
- Regulators will fine Altaba, aka legacy Yahoo!, $35M for failing to disclose its massive email breach back in 2014. This marks the first time the SEC has levied a fine linked to data breach disclosures. Equifax: “Hold my beer.”
- Spotify dropped a new Freemium version of its app which allows on-demand play for all.
- Citigroup will reorganize its credit markets unit. The reorg comes as the current credit market’s chief, Carey Lathrop, announces plans to take a leave of absence. In unrelated news, Lathrop’s messages and phone calls dating back to the financial crisis have become central to a case surrounding Citi’s bankruptcy claim against Lehman Brother’s assets.
- US indices were down yesterday:
- DOW: -1.74%
- S&P 500: -1.34%
- NASDAQ: -1.70%