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“You can’t put a financial firm in jail. Everything that went wrong or was illegal was done by some individual, not by an abstract firm…there should have been more accountability at the individual level.” — Ben Bernanke, former Federal Reserve chairman, on the 2008 financial crisis. Evidently, Bernanke wishes more of the bad guys who caused the crisis should have ended up in jail.
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MARKET SNAPSHOT
Wild Friday
- Hold onto your hats: it was a wild ride for the U.S. markets on Friday as the disappointing jobs report had investors running for the hills…until they came roaring back. The major indices were down as much as 1.5 percent early in the session, but reversed course in a hurry to finish well in the green. It was only the biggest intraday market reversal since 2011—no big deal.
- Despite a rough start, U.S. stocks had a fairly strong week overall, finishing up 1 percent across the board. Even healthcare, which has been in an absolute freefall, had a strong Friday, closing up over 3 percent.
- Oil also staged a rally to close the week, finishing up nearly 2 percent. The recent news flow hasn’t always explained oil’s wild and meandering ride, but on Friday it was appropriately bullish: the U.S. oil rig count declined for a fifth straight week, an indication that perhaps the summer selloff is finally taking its toll on American oil producers.
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U.S. MACRO
Missing: 58,000 Jobs
The September jobs report came out on Friday, and things aren’t looking great: the U.S. economy added 142,000 jobs for the month—falling well short of the consensus expectation of 200,000. And that wasn’t all: wage growth was flat and the manufacturing sector took a beating. All told, the labor force participation rate (the overall percentage of citizens in the workforce) fell to its lowest point since 1977. This indicates that the U.S. is not immune to the global economic slowdown, and places a major roadblock in front of the Federal Reserve, which will once again decide whether to raise interest rates when it meets later this month.
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CORPORATE PRIMER
How Much Are You Willing to Pay?
Welcome to the “Happiest Place on Earth” (except for weekends, holidays or the summer). Disney’s amusement parks have been bursting at the seams in peak times of the year thanks to some strong demand. Key catalysts like the popularity of “Frozen” and “Star Wars” amidst an improving economy has sent ticket prices soaring, so Disney is considering implementing “demand-based pricing”—essentially repricing tickets during slow and busy times, which the company hopes will help smooth out the gruelingly long lines we’ve all come to hate.
Heads Will Roll
It’s tough to be in the labor force these days—just ask Sprint and Delta. Yesterday, Sprint announced they’re looking to slash up to $2.5 billion off their balance sheet, in an effort to offset their recent tumble to the bottom of the big four cell phone providers. On the flip side, Delta Airlines announced they’re looking to cut jobs in order to boost productivity, despite remaining highly profitable since the collapse in oil prices. Damned if you do, damned if you don’t.
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TODAY IN TECH
“Do the Right Thing”
Well, that just about covers the basics. Over the weekend, Google officially transitioned into Alphabet, its spiffy new holding company. With the new name comes a new, broader code of conduct; Google is even nixing its famous “Don’t Be Evil” motto in favor of something a bit more generic: “Do the Right Thing.” Alphabet will be comprised of two reporting units: Google (the traditional Google businesses), and all other Alphabet businesses. This will bring clarity to Google’s financials and separate its moonshot ventures like the self-driving car and smart contact lenses from its main unit—the “Right Thing,” according to investors.
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OTHER STORIES
- Global regulators finalize new capital rule for big insurers
- NASA astronauts can already farm on Mars
- What to expect from Microsoft’s Surface Pro 4
- NFL finally goes a month without an arrest
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ECONOMIC CALENDAR
- Monday: ISM Non-Manufacturing Index
- Tuesday: U.S. Trade Gap, Yum Brands/PepsiCo Earnings
- Wednesday: Monsanto Earnings
- Thursday: FOMC Minutes Release, Weekly Jobless Claims, Alcoa/Domino’s Earnings
- Friday: Import/Export Prices
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SODA IS GETTING FLAT
What’s the last thing you drank? Chances are it was water and not soda—something that wouldn’t have been true just a few years ago. Despite the failures of soda tax proposals—including Michael Bloomberg’s short-lived ban on big soda cups—cultural attitudes towards soda in America seem to have shifted. Here’s more on this new “trend” of drinking water:
- In the past 20 years, soda consumption has fallen from its peak in the 1960s-1990s. Sales of full-calorie soda have declined by over 25 percent, and it doesn’t look like the trend will slow any time soon.
- So what’s filling in the gap? One consultant projected that sales of water will surpass those of soda by 2017.
- Companies are taking notice: Coca-Cola increased its range of products to 700 from 400 just this year. Some of these products include smaller soda packages, which means less calories per can but a higher price per ounce.
- Though PepsiCo and Coca-Cola both sell water, which has similar profit margins to soda, consumers have less water brand loyalty—a big concern when it comes to competing in grocery stores and vending machines.
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INTERVIEW QUESTION OF THE DAY
A man is asked what his daughters look like. He answers, “they are all blondes except for two, all brunettes except for two, and all redheads except for two.” How many daughters does he have? (Answer)
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BUSINESS TERM OF THE DAY
Satellite Operation — A small office in a different location from a company or government agency’s main office. Reasons for opening a satellite operation may include reaching an underserved area, expanding market share and lifestyle/quality of life factors for employees.
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FOOD FOR THOUGHT
17 percent: the portion of C-suite executives that are women, according to new data from leanin.org. |
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