“Every office needs a chrome panda” — Dropbox CEO Drew Houston, commenting on his decision to keep a $100,000 chrome panda statue for the company’s new office despite a round of cost cuts and perk cancellations.
MARKET SNAPSHOT
Big Picture
- U.S. markets fell again yesterday for the fourth session in a row despite retail sales coming in strong. The downer? Fears of a Brexit continue to dominate the markets
Alternatives to Watch
- Yesterday marked history, as Germany’s 10-year bond yield fell below zero, now joining Japan and Switzerland in negative territory
Market Movers
- VirnetX, a tech company labeled a “patent troll” by Microsoft, popped up 18% after the Supreme Court ruled in favor of the company’s policy of suing for patent infringement, as it’s done in the past to Microsoft, Apple and Cisco
CORPORATE PRIMER
Twitter Buys a New Friend
Twitter dropped some major cash yesterday—a $70 million investment in audio service SoundCloud. Yep, that’s one struggling company investing in another. To be fair, they’ve been friends for a while now: SoundCloud and Twitter have been collaborating and providing integrated services since 2014. Twitter CEO Jack Dorsey hopes to take its “community-supported” approach in a new direction, and a new direction is just what both companies need (SoundCloud isn’t even profitable yet—the horror!). However, SoundCloud recently unveiled subscription services to bring in some dough and better compete with rival Spotify. Let’s see if Twitter’s chunk of change will land SoundCloud (and Twitter, too) back on solid ground.
The Bonds That Drive Us
Everybody wants a piece of equity in uber-popular Uber, but does anybody want an Uber IOU? Yesterday, the ridesharing service hit the leveraged loans market (fancy word for private market junk bonds) to raise as much as $2 billion, bringing its recent total debt and equity financing to $15 billion. Uber has no plans to go public anytime soon, and therefore must resort to these more exotic markets to raise capital—but at what cost? It’s shooting for a 4.5% interest rate on the debt, which is actually fairly low for a first-time issuer, but most analysts are scoffing. Uber has won market share by burning money through the absurd promotions we’ve all come to love—will the cash come back to Uber before it’s too late?
A Whole Lot of Something
Think Whole Foods is the healthiest place to get your groceries? Think again: the FDA has just slapped the company with a letter listing “serious concerns” about the state of its Massachusetts plant. Among the problems mentioned were ceilings leaking onto prepared foods like pasta and quesadillas, plus ammonium sanitizer being sprayed near salad…yum. On top of that, the plant was also the subject of listeria accusations earlier this year. Following the release of the FDA’s letter yesterday, Whole Foods shares dipped by nearly 3%…along with everybody’s appetites.
U.S. MACRO
Healthy Spending Habits
U.S. Consumers came through in the clutch this May, driving retail sales up 0.5%. 0.5% may not seem like a whole lot, until you consider that consumer spending makes up a hearty two-thirds of overall economic output. So yes, it’s a lot—and who took the largest amount of our money? Amazon, of course—the gain was led by 1.3% growth in non-store sales, A.K.A. online shopping. The upbeat report thickens a soup already chock-full of mixed economic data, and leaves us with a question: how are things actually going? The Fed’s got a big meeting today to talk all about it, and you can rest assured we’ll have the scoop for you in tomorrow’s Brew.
OTHER STORIES
- Iran said to have deal with Boeing
- Tesla teams up with Nordstrom
- Facebook messenger can now send SMS texts
- Twitter now lets you retweet yourself
ECONOMIC CALENDAR
- Monday: N/A
- Tuesday: Retail Sales (+); Import/Export Prices (+); Business Inventories (+)
- Wednesday: Fed Meeting Announcement; Producer Price Index; Industrial Production
- Thursday: Oracle, Kroger, Rite Aid, Smith & Wesson Earnings; Consumer Price Index; Weekly Jobless Claims; Housing Market Index
- Friday: Housing Starts
VACATION: AN ACT OF WAR
That’s how it feels these days, anyway. We have vacation days for a reason, but honestly, who do you know that uses all of their vacation days every year? Maybe a few courageous souls at most. As it turns out, over half of the workers in the U.S. left vacation time unused last year, amassing a total of 658 million unused vacation days. 658 million days…all relegated to that strange limbo made specifically for unused vacation days, lost for eternity and fated to wonder, “Why wasn’t I used?” Here’s why:
- One reason: the increased usage of the internet, smartphones and technology as a whole has left employees feeling more attached to their work than ever before. Our ability to remain constantly connected leaves us feeling indispensable, making it even harder for us to escape our work. Deep.
- It’s also becoming typical to forfeit vacation days due to the fear of returning to a massive pile of work to do. The feeling that “only I can do my job’ only adds to the pressure.
- Of the 658 million unused vacation days, 222 million were forgone because the days expired, couldn’t be compensated for or otherwise. This number comes to an average of two full days sacrificed per worker. Use ‘em or lose ‘em, people.
- Unused vacation days are equivalent to $61.4 billion in benefits. In other words, American workers are willingly volunteering hundreds of millions of days of free labor.
- And get this: if Americans used all of their vacation days, $223 billion in spending on restaurants, home-improvement projects, hotels and other travel would be added to the economy, and 1.6 million jobs would be created in the process. If not for yourself, do it for the economy.
INTERVIEW QUESTION OF THE DAY
What is the exact difference between a hedge fund and mutual fund? (Answer)
BUSINESS TERM OF THE DAY
Crack Spread — No, it’s not related to what you think it’s related to. The crack spread is created in commodity markets by purchasing oil futures and offsetting the position by selling gasoline and heating oil futures. This investment alignment allows the investor to hedge against risk due to the offsetting nature of the securities.
FOOD FOR THOUGHT
Get this: according to Bloomberg New Energy Finance, by 2027, the cost of constructing new wind and solar farms will become cheaper than the cost of running existing coal and gas plants. Nothin’ wrong with that.