You don't know Jack

MARKETS

  • Turkey: The currency crisis is taking its toll. Moody's followed S&P and downgraded the country's sovereign credit rating deeper into "junk" territory.
  • Energy: U.S. crude eked higher Friday, but still notched its seventh-straight weekly loss. Oversupply and weakening demand concerns are weighing heavily heading into this week.

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EARNINGS

Trump’s Latest Business Idea: Consider Dropping Quarterly Earnings

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President Trump tweeted his latest post-breakfast idea Friday: America's businesses should stop reporting finances every quarter and move to a twice-a-year system. And no one's asked us, but we're already calling it the "financial solstice."

And with at least 91% of the S&P 500 done with Q2 earnings reports, we think now's the perfect time to examine what Trump means by "greater flexibility & save money."

Here's the gripe

Many CEOs of public firms feel the pressure to meet arbitrary financial goals or to "beat" Wall Street forecasts every three months negatively impacts the way they do business.

  • "Short-termism," the argument goes, can discourage companies from investing in things like technology, research, hiring, etc.
  • And don't forget, everything from macroeconomic trade talks to the weather can affect a company's quarter.

Warren Buffett and Jamie Dimon (heard of them?) floated the idea earlier this year. And Elon Musk (you've definitely heard of him) proposed taking Tesla private for similar reasons.

Who cares and why?

Time to reignite the long-running debate.

Who's in:

  • Boston University economics professor Stephen Terry. He said in a 2017 paper that companies meeting quarterly earnings forecasts tend to grow less in R&D—suggesting they might intentionally skip investing in research to meet those targets.

Who's out:

  • Shareholder activists—they've continually called for more information from public firms, not less. And you can bet moving to a financial solstice model (we're running with it) would limit the info available to investors in public companies.

Who's undecided:

  • SEC Chairman Jay Clayton hasn't embraced either side of the argument just yet. Remember, eliminating quarterly reporting would remove a practice the SEC's stood by since the Great Depression.

Bottom line: Don't sleep on this. With everyone from Buffett to Dimon to the president attacking quarterly reports, "long-term" thinking is having a moment.

SOCIAL MEDIA

Who’s That Bearded Guy on Your TV? Twitter CEO Jack Dorsey

Yes, we live in a divided country. But if conservatives and liberals can agree on one thing...it's that Twitter CEO Jack Dorsey has some explaining to do.

  • From the left, critics have attacked him for allowing hate speech/conspiracies/trolling to persist on the platform.
  • From the right, commentators (including the president) have accused Dorsey and other social media companies of silencing conservative viewpoints. Especially after a few of those companies removed content from conspiracy theorist Alex Jones from their platforms.

To try to release some of the building pressure, Dorsey's been on a media blitz. And it seems like he's talked to just about every outlet on the planet. Two excerpts:

  • Dorsey told CNN Twitter does not "look at content with regards to political viewpoint or ideology..." BUT "I think we need to constantly show that we are not adding our own bias, which I fully admit is left, is more left-leaning."
  • The Washington Post reported Dorsey said he's "experimenting with features that would promote alternative viewpoints in Twitter's timeline to address misinformation and reduce ‘echo chambers.'"

Bottom line: Mark Zuckerberg had been the tech CEO in the hot seat...we think he'd be overjoyed for Dorsey to replace him.

INTERNATIONAL

Can You Name the City?

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It's Mecca, Saudi Arabia. And this week...it's packed. Over 2 million Muslims from around the world are currently gathering in the holy city for the annual pilgrimage known as Hajj.

As you can imagine, this is quite the opportunity for travel companies. And Etihad Airways did not miss a beat:

  • It's operating 16 additional flights between its home base, Abu Dhabi, and two cities in Saudi Arabia. In fact, it's seen a 17% increase in Hajj travelers YoY.
  • Etihad is offering "extra provisions" to pilgrims, like giving them access to the Etihad E-Box inflight entertainment system's dedicated Holy Quran channel.
  • Where are the pilgrims coming from? Top inbound destinations are the UK, the U.S., Australia, Pakistan, Indonesia, and Nigeria.

MISC

Weekend Digits

4.31%. How much TiVo stock fell Friday after Bloomberg reported Amazon could be hatching a new live television recorder. The project (called "Frank") will record live TV and stream that video to smartphones...think catching up on reruns of Law & Order on the elliptical machine.

$25.2 million. How much the film "Crazy Rich Asians" raked in during its weekend debut at No. 1 at the North American box office. It's the first studio-produced film with a largely Asian American cast in 25 years. Good news for fresh faces in Hollywood, and good news for Warner Bros.: it only cost $30 million to produce.

$1.2 billion. The profit Tesla short sellers have turned since Elon Musk's tweet about taking the company private back on Aug. 7. Musk's hope? Stave off short sellers' "attacks" against Tesla. Musk's reality? Only 4% of short sellers have changed their minds on Tesla since the tweet...but Tesla stock is down 19% in the same timeframe.

REAL ESTATE

For Sale: Anbang’s Luxury Hotel Collection

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The Chinese insurer made a splash by acquiring the portfolio from PE firm Blackstone for $5.5 billion two years ago. And it had been listening to offers for individual properties.

But now? It's ready to sell the whole darn thing to raise cash, per the WSJ.

  • Remember: The Chinese government seized control of Anbang in February. Then, it sentenced former chairman Wu Xiaohui to 18 years in prison for fraud and embezzlement.

So we hope you're hungry for some cookies—let's hit Anbang's open house circuit:

  • Always wanted to be a ski bum? Then check out the Four Seasons in Jackson Hole, WY.
  • Try the Essex House Hotel in Manhattan for a view of Central Park and a classic Art Deco feel.
  • If you're in the mood for something a little more...steamy, the InterContinental in Miami is your scene.

What's not for sale? NYC's Waldorf Astoria, which Anbang bought for a record $1.95 billion in 2015.

CALENDAR

The (Pretty Chill) Week Ahead

If your calendar's looking a little bare, don't worry—everyone's is. Welcome to the August slump.

Monday: Earnings (Estee Lauder); World Mosquito Day, Chocolate Pecan Pie Day (you win some, you lose some)

Tuesday: Earnings (TJX Cos., Urban Outfitters, Kohl's, J.M. Smucker)

Wednesday: Existing home sales, FOMC minutes; Earnings (Target, Lowe's); Pecan Torte Day (big week for pecans, huh?)

Thursday: New home sales, Jackson Hole Economic Policy Symposium begins; U.S. tariffs on $16 billion of Chinese goods goes into effect; Earnings (HP, Gap, Intuit);

Friday: Durable goods orders, Fed Chair Jerome Powell is set to speak as the Jackson Hole Symposium continues, Pluto Demoted Day

WHAT ELSE IS BREWING

  • Saudi Arabia's sovereign wealth fund is in talks to invest in Lucid Motors, an electric car maker that hopes to rival Tesla, per Reuters.
  • Kofi Annan, the first black African to lead the United Nations, died at age 80.
  • Venezuelan President Nicolas Maduro announced plans to raise the minimum wage over 3,000% and devalue the currency by 95% to try to turn around the sinking economy.
  • Elon Musk gave an emotional interview to the NYT a few days ago. Learn what happened behind the scenes.

BREAKROOM

SCROLLING THROUGH SOCIAL MEDIA
For a snapshot of just how unoriginal we humans can be, head to @insta_repeat on Instagram. The account identified patterns in users' photos to reveal just how (eerily) similar many of our posts are. Our favorite theme? "The disembodied hand pour." Check out the rest.

BUSINESS TRIVIA
As if being the CEO of Twitter isn't enough of a responsibility, Jack Dorsey is the chief exec of another company as well. Can you name it?

Hint: With its stock price up nearly 200% over the past year, this company's in pretty good "shape."

(Answer located at bottom of newsletter)

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Breakroom Answers


Business Trivia
Square

 

Ut eaque ducimus nostrum. Corporis corrupti commodi iure nesciunt.

Cum fugit velit ex enim non tempora. Omnis earum et corrupti magnam. Autem repellat consequatur autem commodi perspiciatis qui est.

Array

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