0 to 60

MARKETS

  • U.S. markets: Stocks bounced back from a rough Tuesday. The Dow climbed more than 300 points.
  • U.S. economy: GDP grew at a 2.2% annual rate in Q1, slightly lower than the previously estimated 2.3% rate.
  • Earnings: Ulta Beauty, Lululemon, Dollar General, Dollar Tree, Costco.

Want Morning Brew Daily Served Fresh to Your Inbox?
Drop Your Email Below...
 

FINANCE

For Banks, That Red Tape Is Looking Less Sticky

Picture
To Dodd-Frank supporters, May 2018 has quickly become "the month we will never talk about again."

After last week's big rollback, the Federal Reserve Board proposed a suite of changes to the Volcker Rule.

The what? The Volcker Rule (part of Dodd-Frank) was created post-crisis to prevent banks from making risky trades with your hard-earned deposits.

Of course, the banks objected

They complained the rules were so complex they couldn't possibly comply (note to self: use this excuse in future). Many shrank their trading businesses.

JPMorgan CEO Jamie Dimon was even rumored to say that traders would need a lawyer and a psychiatrist to help them follow the rules.

And you know, he might have a point:

  • The law took five agencies and four years to hammer down, and it wasn't even instituted until 2015, five years after Dodd-Frank became law.
  • Regulators themselves aren't exactly sure how to enforce the 1,000-page rulebook. Fed chair Jerome Powell said they should take a "fresh look."

And what did they come up with?

Meet Volcker 2.0, a win for the finance industry and a setback for critics of big banks.

Its purpose? According to Powell, "Our goal is to replace overly complex and inefficient requirements with a more streamlined set of requirements."

And here are a few ways it hopes to do that:

  • Short-term trades held for under 60 days won't be "assumed" to break the Volcker Rule.
  • It will create three different levels of compliance based on the size of the bank.
  • It gives more freedom to banks to set their own "internal risk limits."

What happens next: You know the drill. There's a period for "public comment," and then the regulators will convene for a final vote.

+ For the Brew etymologists: The rule is named after Paul Volcker, the former chair of the Fed (aka that guy up there).

HUMAN RESOURCES

"College Is on Us"-Walmart

Walmart (+2.07%) rolled out a plan to help fund its employees' college tuition, books, and fees.

For just $1 a day, Walmart employees will be able to earn an associate's or bachelor's degree in Business or Supply Chain Management, or pursue a minor in yodeling.

  • Which schools? The University of Florida, Brandman University, and Bellevue University (go Bruins!)-colleges that specialize in adult learning.
  • Why it's a big deal: With 1.4 million workers, Walmart is the largest private U.S. employer. And as you might have heard...it doesn't have a great reputation for how it treats employees.

But it can't afford that reputation anymore

Unemployment is below 4%, which means companies are in a giant rugby scrum for qualified workers.

What that looks like IRL: Employers are pulling out all the stops (raising the minimum wage, expanding parental leave, tuition reimbursement) to attract and retain qualified workers.

ENTERTAINMENT

Don't Pass Quite Yet on MoviePass

MoviePass is putting the critics on silent. Its parent company, Helios and Matheson Analytics, intends to acquire Emmett Furla Oasis Films (EFO Films), controlling 51% of the joint venture (thanks for the scoop, Variety).

You might know Helios: Its shares have dropped from $38.86 to around 42 cents since October. You can thank MoviePass's $10 per month, movie-a-day model, which burns about $20 million a month. It has about $42 million left in the bankfi...

You also might know EFO, with popular movies like Rambo, Lone Survivor, and Escape Plan.

So what's Helios up to?

It's called MoviePass Films, but you can call it a long-term, Hail Mary for MoviePass. Burning this much cash has brought nearly 3 million users into the company's ecosystem. Now it just needs to monetize...

With EFO it can:

(1) Generate revenue through its library of movies.

(2) Start producing its own movies for theaters and digital streaming.

Its first movie, American Animals (which it acquired the rights to), hits theaters Friday.

RETAIL

Dick's Comes Out Blazing Without Firearms

Don't mix business and politics, they said.

Of course, that didn't stop Dick's CEO Ed Stack from taking a hardline stance on gun control in Q1. Dick's raised its minimum age of purchase to 21 and stopped selling assault-style rifles at its Field & Stream hunting locations.

The result? Pro-gun activists were up in arms, investors expected lower sales, and Dick's proved them all wrong...

  • Sales rose 4.6% from a year ago. Profit climbed 3.2% to $60 million.
  • Dick's boosted full-year guidance and shares popped 26%.

Connecting the dots: Ed Stack deserves a pat on the back, but he's still racing against the retail clock. Same-store sales fell 2.5% and lower gun sales during hunting season could pinch the top line.

AUTO

Technology Is Incredible: Tesla Model 3 Edition

Picture
Wondering why Tesla (+2.81%) is valued like a tech company? Here's one reason.

May 23: Consumer Reports (CR) did not recommend the Tesla Model 3 in part because of poor braking performance (taking more distance to stop than a Ford F-150). Musk told CR he'd fix the issue.

Only one week later: CR tested the Model 3 again and found that the car's braking distance improved by 19 ft. That's enough for a stamp of approval.

So...what happened? Tesla sent an over-the-air software update that-once downloaded-improved braking performance on its high-tech vehicle.

Mic drop, from CR's head of auto testing: "I've been at CR for 19 years and tested more than 1,000 cars...and I've never seen a car that could improve its track performance with an over-the-air update."

WHAT ELSE IS BREWING

  • Fox (+0.03%) and Disney (+0.29%) set a date of July 10 for a shareholder vote on Disney's proposed acquisition of $52 billion of Fox assets. Comcast, the clock is ticking...
  • Singapore Airlines will fly the world's longest commercial flight from Singapore to Newark in October. How long are we talking? 18 hours and 45 minutes.
  • Tronc, a newspaper conglomerate, just acquired Virginia's biggest newspaper, The Virginian-Pilot, for $34 million.
  • Coffee Meets Bagel, a popular dating app, raised $12 million to expand internationally.

BREAKROOM

COURSES WE'RE TAKING
Excel from Beginner to Advanced on Udemy-Every business pro needs the tools of a business pro. With this course, you'll be summing columns in no time, making PivotTables that'll make your eyes pop, and even dabble in some Macros.

+ For those savvy Excel users looking for a challenge: Try this course on for size.

BRAIN TEASER
Two hundred people in an auditorium are asked to think of a single digit number from 1 to 9 inclusive and write it down. All those who wrote down a prime number are now asked to leave. Ninety people remain behind in the hall. How many of these are expected to have written down an odd number?

(Answer located at bottom of newsletter)

Want Morning Brew Daily Served Fresh to Your Inbox?
Drop Your Email Below...

 

Breakroom Answers


Brain Teaser
36 (Explanation)

Comments (1)

May 31, 2018 - 8:13am
WSO Monkey Bot, what's your opinion? Comment below:

Eos enim ut perferendis est et. Repellat quia est doloremque est. Fugiat nobis ratione harum optio quaerat. Id ipsum reprehenderit cum nam.

Start Discussion

Career Advancement Opportunities

November 2022 Investment Banking

  • Jefferies & Company (▲08) 99.6%
  • Lincoln International (= =) 99.3%
  • Financial Technology Partners (+ +) 98.9%
  • Evercore (▽01) 98.5%
  • Bank of America Merrill Lynch (▲01) 98.1%

Overall Employee Satisfaction

November 2022 Investment Banking

  • PJT Partners (= =) 99.6%
  • Evercore (▲02) 99.3%
  • Greenhill (▲06) 98.9%
  • Canaccord Genuity (▲15) 98.5%
  • William Blair (= =) 98.1%

Professional Growth Opportunities

November 2022 Investment Banking

  • PwC Corporate Finance (▲14) 99.6%
  • Lincoln International (▲03) 99.3%
  • Jefferies & Company (▲04) 98.9%
  • William Blair (▽02) 98.5%
  • Evercore (▽01) 98.2%

Total Avg Compensation

November 2022 Investment Banking

  • Director/MD (10) $613
  • Vice President (38) $392
  • Associates (219) $256
  • 2nd Year Analyst (139) $163
  • 3rd+ Year Analyst (19) $160
  • 1st Year Analyst (463) $153
  • Intern/Summer Associate (88) $151
  • Intern/Summer Analyst (336) $92