MARKET SNAPSHOT
Green For Everyone
- It may not have felt like it, but U.S. stocks had quite a strong week—in closing slightly higher on Friday, the S&P 500 wrapped up its best week of 2015, while the Dow rose for a sixth straight week. If that’s not enough, the S&P and Dow both closed above the “psychologically relevant” levels of 2,000 and 17,000, respectively (read: investors like round numbers).
- European and Asian markets also rallied on Friday, and global stocks as a whole had their best week since 2011. Evidently, investors were unfazed by the Federal Reserve’s mixed signals: after minutes from their September meeting indicated major concerns over global economic growth and low U.S. inflation, on Friday two Fed officials basically said that barring anything extreme, interest rates would still rise by the end of the year. How comforting.
- The Fed’s generally negative sentiment helped lift gold to a seven week high, while commodities as a whole had a strong week, helping emerging economies that are heavily reliant on strong commodities prices.
- We’d never forget about oil—despite a flat Friday, oil rallied big-time (9 percent) last week to close back near $50 as U.S. production continues to falter.
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WORLD MACRO
Congress Ends Crude Oil Export Ban
On Friday, the House of Representatives voted 261-159 in favor of ending a U.S. ban on crude oil exports—a ban that was put in place during the Arab oil embargo of the 1970s. Republicans and oil corporations are ecstatic, as they believe the ban prevents the U.S. from capitalizing on burgeoning oil production and stifles competition with Russia and Iran. The Democrats counter that lifting the ban would undermine the fight against climate change while lining big oil’s pockets with further profits. The bill now moves to the Senate. However, if passed, Obama has suggested he will use his almighty presidential veto.
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CORPORATE PRIMER
Interested In Owning Ferrari?
You might never be able to afford a Ferrari, but here’s your chance to be a shareholder. The luxury auto giant is being valued at around $10 billion in the initial IPO stage, and plans to sell under the ticker name…(wait for it) RACE. Fiat Chrysler currently holds a 90 percent stake in Ferrari, but will have its ownership reduced by 10 percent after the IPO. It’s looking to sell off even more shares in 2016 to finance what can only be called an ambitious turnaround plan.
Banks and Housing Concerns
This week, we’ll get to peek into the health of the housing market when financial institutions like J.P. Morgan, Bank of America and Wells Fargo report earnings. In light of new restrictions and the housing market cooling in August by 4.8 percent, analysts are suspecting a wave of tightening on credit availability that will reduce mortgage availability nationwide. Only time will tell the health of the market, but the strength of banks’ earnings will be a good indicator of if these concerns are fleeting or not.
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TODAY IN TECH
#JustLostMyJob
New Twitter CEO Jack Dorsey knows how to make an entrance. Just one week after announcing his permanent position as CEO, Dorsey is jumping right into restructuring in an attempt to rekindle the beleaguered social media company’s growth. How so? By enacting layoffs across all departments, starting this week. Twitter currently employs 4,100 people around the world, and while the company is not commenting on speculation, it’s rumored that most of the layoffs will target engineers. Here’s hoping Dorsey has a strong endgame.
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OTHER STORIES
- Ford to invest $1.8 billion to expand R&D in China
- The major players in “Steve Jobs” the movie
- Microsoft’s hardware push
- Yahoo bans employees from paid fantasy sports sites
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ECONOMIC CALENDAR
- Monday: Columbus Day (Markets Open, Banks Closed)
- Tuesday: JPMorgan, Johnson & Johnson, Kinder Morgan, Las Vegas Sands Earnings
- Wednesday: Netflix, Bank of America, Delta, Wells Fargo Earnings; Retail Sales
- Thursday: Goldman Sachs, Citigroup, Philip Morris Earnings; Weekly Jobless Claims; Consumer Price Index
- Friday: General Electric Earnings; Industrial Production
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THE MONEY BEHIND THE ELECTION
With election season finally near(ish), let’s take a look at the people behind the scenes who got our candidates this far. The New York Times conducted a rundown of the demographics of donors, and exposed some pretty interesting statistics:
- Just 158 families have provided nearly half of all campaign money so far, totaling about $176 million. Not since before Watergate have so few individuals and businesses provided so much money early in a campaign.
- 138 of these 158 families backed Republicans, and 50 of the families are on the Forbes 400 list of billionaires.
- They’re mostly self-made, and a plurality of the donors have careers in finance. In fact, more than a dozen of them were born outside of the U.S.
- But at the end of the day, they’re all very similar. Many of them are neighbors—eight donors live in the same neighborhood in Houston (some on the same block), and two live on Indian Creek Island Road in Florida, the most expensive street in America.
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INTERVIEW QUESTION OF THE DAY
Why can’t you use EV/Earnings or Price/EBITDA as valuation metrics? (Answer)
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BUSINESS TERM OF THE DAY
Purchasing Power — Purchasing power is the value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you would be able to purchase.
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FOOD FOR THOUGHT
$15 billion: the value of a merger deal between Meituan, a Chinese startup that deals in a Groupon-esque model, and Dianping, another Chinese startup that delivers meals and restaurant deals.
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