MARKETS
- U.S. economy: GDP grew at a 4.1% annual rate in Q2. And as President Trump said, whenever GDP has a "4" in front of it, there's plenty of reason to cheer. But keep in mind, this high-flying economy was boosted by one-time factors (like a surge in exports ahead of tariffs) that won't necessarily contribute to future growth.
- Treasury Secretary Mnuchin's bullish take: "I don't think this is a one- or two-year phenomenon. I think we definitely are in a period of four or five years of sustained 3 percent growth at least," he said on Fox News Sunday.
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TRANSPORTATION
NYC vs. Uber
New York City could become the first major U.S. city to cap the number of vehicles driving for Uber, Lyft, and other ride-hailing companies. And they better get ready: a vote by the City Council could take place as soon as Aug. 8.
The case against Uber: City officials accuse ride-hailers of 1) eviscerating the yellow taxi industry and 2) clogging NYC's streets.
Let's dive in.
Gripe #1: While Uber's exploded in NYC, the classic yellow taxis have suffered.
- Take the price of a medallion, for example (what's required to operate a yellow cab). In 2013, they went for $1.3 million. Now? They're being sold for as low as $160,000.
- Six professional drivers have committed suicide since December.
Gripe #2: Congestion. NYC has a traffic problem, and according to a recent study by transportation guru Bruce Schaller, ride-hailers are making the problem worse, not better.
- If ride-hailers weren't available, ~60% of users in large, dense cities would have either walked, biked, taken public transportation...or not traveled at all.
- Ride-hailers account for an overall 160% increase in driving on city streets.
Uber's fighting back
Here's what Josh Gold, a spokesman for Uber, had to say:
- Not only will the cap "leave New Yorkers stranded while doing nothing to prevent congestion," it'll hurt riders "who have come to rely on Uber because their communities have long been ignored by yellow taxis and do not have reliable access to public transit."
One potential Uber ally: Vocal members of New York's black community, who do feel like they've been ignored by yellow taxis due to racial bias.
Don't live in New York? You should still care
As Frank Sinatra once sang about the city, "If I can make it there, I'm gonna make it anywhere." And we're pretty sure he was talking about ride-hailing regulation.
Meaning, as other major cities around the world try to deal with the Uber phenomenon, they might look to NYC, the U.S.' most populous city, as a laboratory for reining in ride-hailers.
#METOO
CBS Exec Moonves Accused of Sexual Misconduct
One of the most powerful men in Hollywood is being investigated for sexual misconduct. No, you're not having déjà vu—CBS chief exec Leslie Moonves has been accused of unwanted kissing and touching.
Ronan Farrow (who won a Pulitzer Prize for breaking the news of Harvey Weinstein's alleged pattern of rape and assault) published the claims in an exposé in the The New Yorker. Six of Farrow's sources accused Moonves, 68, of unwanted sexual advances in incidents occurring both 20+ years ago and more recently.
CBS responded Friday: "All allegations of personal misconduct are to be taken seriously." It's planning an investigation into claims that "violate the company's clear policies." Btw, CBS stock fell 6% on the news.
- Remember: CBS fired talk-show host Charlie Rose last year after eight women accused him of sexual misconduct... but CBS managers had reportedly known about Rose's inappropriate behavior since the '80s.
Zoom out: These accusations come at a time when Moonves and CBS are in the middle of a legal battle with Shari Redstone, the controlling shareholder for both CBS and Viacom, over the future of the company.
STOCKS
Tech Stocks Need a Reboot
404 Error—gains not found.
Tech stocks faltered last week after a run of less-than-ideal quarterly earnings reports put a damper on Wall Street's buzziest sector. Here's the post-mortem heading into today's session.
- Facebook handed over nearly $120 billion in market value (a loss roughly 7.5x the size of Snap, if you're keeping score) after execs tempered revenue expectations. The damage? The stock's down 17% in five days and Zuck's down more than $15 billion.
- Netflix missed its own forecasts for user growth earlier this month. The damage? Shares are down 9% in the last month, with a 2% slip on Friday.
- Twitter and Intel both stumbled Friday after earnings left Wall Street and Silicon Valley wanting more (Twitter even reported a decline in monthly active users after a purge of fake accounts). The damage? Pretty significant—over the last five days, Twitter stock is down 21% and Intel is down 8%.
But this isn't the norm for the market-leading tech sector. The Technology Select Sector SPDR exchange-traded fund (ticker: XLK) dipped 1.7% Friday...just a few days after notching a record high.
The caveat: Alphabet and Amazon blew projections out of the water with strong earnings last week. Apple is expected to do the same when it reports tomorrow.
TECH
Movie(Hard)Pass
It's a tale as old as time—struggling company briefly shuts down because it runs out of cash and has to borrow $5 million on the fly.
Ok, maybe your parents didn't tell you that one when you were little. But that's what happened to MoviePass parent company Helios & Matheson Analytics (HMNY). Here's what it said...
...but what actually happened? The company disclosed to the SEC that it borrowed $5 million following a "service interruption" Thursday night.
- That interruption? It wasn't "technical issues." The company ran fresh out of cash and couldn't make payments to keep the lights on.
Zoom out: It's the latest scene HMNY would prefer to leave on the cutting room floor. It's hemorrhaged cash for months as its MoviePass subscription service fails to make money.
CALENDAR
The Week Ahead...Can You Believe August Is Basically Here?
If you thought last week was a doozy, may we present you...this hectic week. Good thing we have International Beer Day to cap it off.
Monday: National Cheesecake Day; Earnings (Stifel, Caterpillar, AthenaHealth, Chegg)
Tuesday: FOMC meeting begins; Bank of Japan meets; Earnings (Apple, Shopify, Nintendo, P&G, Pfizer, Pandora, Honda, Baidu)
Wednesday: World Wide Web Day; Earnings (Tesla, FitBit, Humana, Square, Volkswagen, Sprint, TripAdvisor, U.S. Steel Corp.)
Thursday: Bank of England meets; Earnings (Wayfair, Blue Apron, Cigna, GoPro, Aetna, CBS, Kellogg, Yum! Brands)
Friday: Jobs data for July; International Beer Day; Earnings (Kraft Heinz)
ENTERTAINMENT
Reason #5,249 Why Studios Will Never Stop Making Sequels
First released in 1996, the "Mission Impossible" franchise is older than some of you.
But that didn't stop its sixth and latest installment, "Fallout," from bringing in $61.5 million in North America this weekend. That's good for the No. 1 spot at the box office.
Zoom out: Although it sits dead last in market share among Hollywood's "big six" studios, Viacom's Paramount Pictures is making some moves.
- *Whispers* Remember when "A Quiet Place" took theaters by storm back in April?
- And it's hoping you're not bored of Tom Cruise, because "Top Gun: Maverick" is set to open next summer.
Pop Quiz: Can you name the "big six" Hollywood studios? (Answers below...keep your eyes up here.)
Answer: Universal, Paramount, Disney, Warner Bros., Sony, 20th Century Fox
WHAT ELSE IS BREWING
- Disney and 21st Century Fox shareholders voted to approve Disney's $71 billion acquisition of Fox assets.
- Walmart is in the early stages of prepping a streaming platform to compete with Netflix and Amazon, per the WSJ.
- BMW is raising prices on two of its U.S.-made SUV models in China, per Reuters. The reason? Chinese retaliatory tariffs.
- President Trump tweeted that he'd be willing to shut down the government if Democrats don't help him pass his stated immigration policies, like a border wall with Mexico.
BREAKROOM
INSIDER TIP
From Morning Brew Insider, Roni: Do you find yourself texting the same phrases over and over (like your email address to clients)? To streamline things, Roni uses "Text Replacement" for iPhone. It's a feature that allows you to replace shorthand with the words you actually want to text. Use it for the everyday "omw" or "ttyl" or—you didn't hear this from us—maybe even prank your friends. Find it by going to "Settings" → "General" → "Keyboard."
BUSINESS TRIVIA
Fill in the blank: According to a new paper, the average corporate tax rate globally has fallen from 49% in 1985 to ___ in 2018.
(Answer located at bottom of newsletter)
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Breakroom Answers
Business Trivia
24%
Uber- Market forces ultimately will win. That's called capitalism. Does it really matter that Yellow Cabs have been hurt? No. They don't exist to guarantee jobs. They exist to offer the public a service. When a better service is available (defined by the market) , they are no longer necessary. Their argument is likely similar to an older version of the horse and buggy gang protesting against the Model T.
There will be court battles. The Union will weigh in (what a f---ing joke!). But at the end of the day, people prefer Uber to hailing a cab. That's all that matters.
Not necessarily. The quality of Uber's service in Manhattan has declined rapidly and palpably in the last couple of months, while cabs have remained the same as always.
Furthermore, yellow cab drivers are better drivers. They've been doing this professionally their whole lives, and they know the ins-and-outs of driving in the city. Can't count how many times an Uber driver has taken me on some ridiculous, winding journey because they don't have the requisite knowledge to critically assess the route their GPS is suggesting.
If you prefer cabs over Uber; take a cab. The city shouldn't decide for you.
Have to agree (with specifically NYC in mind). I'm a devout capitalist and would absolutely never advocate for letting yellow cabs survive just so taxi drivers have work, but the service Uber provides in Manhattan is sometimes pretty appalling and often times crazy overpriced relative to hailing a yellow cab. To echo your point, these NYC yellow cab drivers know the streets better than anyone and the service they provide (IMO) can't be replicated by an Uber driver. Now Boston, for example, is a whole other story and I wouldn't hate to see yellow cabs die here.
Hate to say it, but I'm not hopeful about Uber prospects against the city council after what they did to Airbnb.
I’m sorry, but uber X, Pool, Bus, etc is a cancer.
They clog the streets, making commutes endlessly long. The idiots don’t know the city, don’t know the rules, double park, make all kinds of erratic driving maneuvers, etc.
I don’t want an arbitrary ban, but tax them or penalize them. Clogging the streets with suburban idiots who want to make a buck isn’t the solution.
Reviews certainly help.
Great comment. The city and its roadways were not built to accommodate a cottage industry of people who need to idle for minutes at a time on the curb. Curbside is where the bus lane is. Trying to cross the island on 34th street, for example, is a huge pain because the busses are constantly weaving in and out of their own lane to get around the idling ubers. Ridiculous.
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