Let's Make a Deal (Book)

QUOTE OF THE DAY

People are looking for an independent voice, a real independent voice, that at least has an inkling of what they’re talking about.

Market Snapshot

• U.S. indexes tumbled after the Senate revealed corporate tax cuts could be pushed back to 2019.
• Disney missed earnings, falling 3% after hours.
• The VIX spiked as much as 20% during midday trading.
• Earnings dragged down European markets.







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Let's Make a Deal(Book)

Yesterday, we invited some major CEOs to hang at our office, but it turned out they were already booked by those pesky upstarts at The New York Times.

Hurt but unfazed, we’re still going to bring you the most notable bits from the DealBook Conference:

“Uber 2.0”

In his first public interview as Uber’s CEO, Dara Khosrowshahi confirmed SoftBank’s interest in a multibillion dollar investment (he says it’s just a matter of time). He’s also eager to turn the page from the previous leadership: “The culture went wrong, the governance went wrong, the board went in a very bad direction.”

And what better way to usher in “Uber 2.0” than to tease some mouthwatering plans...like a 2019 IPO (!). And those aerial taxis we wrote about yesterday? Not satire. “In five years you're going to see some flying cars out there." Good to know, but you step in first, Dara.

AT&T in the Spotlight

It’s been a rough few days for CEO Randall Stephenson. The DOJ reportedly demanded AT&T (+1.67%) drop Anderson Cooper and the rest of CNN’s 30-pundit panels to complete its takeover of Time Warner (-1.64%). Well, that’s news to Stephenson. “I’ve never been told that the price of getting the deal done was selling CNN. Selling CNN makes no sense.”

While Stephenson refuted that CNN was ever a bargaining chip, he’s still antsy about doing the $85 billion deal. And he’s not ruling out a court date with the Trump administration to finish the job: “We’re ready to litigate now.”

Best of the Rest

Mellody Hobson, president of investment firm Ariel Investments, used the podium to draw attention to the lack of diversity in American C-suites. “Where is the corporate Kaepernick?” she asked. Amex (-1.45%) CEO Kenneth Chenault agreed, “we don’t have enough honest discussions about race in this country.”

Starbucks (-0.95%)CEO Howard Schultz dumped his latte on the GOP’s tax plan: “When so many people are living paycheck to paycheck, corporate America does not need a tax cut.”

So, Howard, why don’t you team up with Cuban and hit the campaign trail? But not in place of Dirk.

Department Store Blues

Investors pulled out their shopping bags, as Macy’s (+10.98%), Kohl’s (+0.93%), and Nordstrom (+4.52%) all reported for Q3. If you haven’t been inside a mall circa 2012, you’re not alone. Department stores have been cast aside with the rise of e-commerce. Look no further than Macy’s, which has suffered same-store sales decline each of the last 11 quarters (this one was no different).

Or how about Nordstrom? The family that runs the retailer tried to take the company private but couldn’t even convince banks to touch the deal with a 10-foot pole. And maybe there’s a reason—same-store sales dropped 1%.

Despite marginally positive news for both Kohl’s and Macy’s (the former increased same-store sales, the latter beat profit expectations), our lingering question is:

How quickly can they shift to e-commerce while balancing store closures?

For Macy’s...not quickly enough. Growth in retail e-commerce is up 16% YoY with Macy’s hovering around 13%. That may not feel significant, but when you’re talking tens of millions of dollars in potential sales, it is.

Nordstrom is a bit more innovative. It’s testing a hybrid model with its new, inventory-free 3,000 ft2 stores. You’ll still get the fun of trying on clothes (while sipping on a martini) with the convenience of same-day delivery.

As for Kohl’s? It’s already sold its soul to the devil, listing products on Amazon and going as far as accepting in-store Amazon returns to drive traffic—think about that for a second...

So if there’s one takeaway from the Brew’s quarterly retail update, it’s this: Amazon is everywhere. *Cue eerie outro music...

Are big-box retailers doomed to fail, or do certain companies/industries stand a chance to fight off Amazon?

#VerificationSuspended

Yesterday, Twitter (+1.58%) suspended all account verification on the social media platform. You know, that little blue check mark that means your tweets are more important than others.

It all started when someone (most likely a temp working verification protocol) green-lighted the account of Jason Kessler—a Unite the Right white supremacist who so eloquently tweeted, "I must be the only working class white advocate with that distinction." And to little surprise, the Twitter firestorm ensued.

But it’s not @Jack’s swift response to rethink the verification process that caught our eye. It’s this increasingly fine line between what’s policeable content and what’s freedom of speech. Fresh out of a congressional hearing last week, Twitter, Facebook, and Google are proving that great power does in fact come with great responsibility.

And what’s worse for Dorsey and Twitter? All the headaches of that responsibility without the fun of profitability.

What Else Is Happening…

• ESPN will lay off 100 more employees after Thanksgiving.
• Senate Republicans released their version of a tax reform package.
• Activist hedge fund Third Point took a 5% stake in mall-owner Macerich (+7.42%)
• Amazon (-0.33%) is opening pop-up shops in Whole Foods stores for the holidays.

Economic Calendar

• Monday     Earnings: CVS (+)

                    Economic Events: No Events

• Tuesday    Earnings: Snap (-)

                  Economic Events: Small Business Optimism Index (-), JOLTS (+), Consumer Credit (+)

• Wednesday    Earnings: Roku (+), Square (+), 21st Century Fox (+/-)

                        Economic Events: Petroleum Status (+)

• Thursday   Earnings: Kohl’s (-), Macy’s (+), Nordstrom (+), NVIDIA (+), Time Inc. (+), Walt Disney (-)

                   Economic Events: Jobless Claims (+), Wholesale Trade (+/-)

• Friday       Earnings: JCPenney

                 Economic Events: Consumer Sentiment, Treasury Budget

Buy/Sell/Hold

BUY—Krusty Krab Competitors

We know what you’re thinking: another chili crab restaurant is going public in Singapore? You bet. This time it’s No Signboard Holdings, a former food stall that clawed (sorry, had to) its way to the top of the chili crab culinary scene. It’s hoping to replicate the success of its rival, Jumbo Group, whose shares have almost doubled since a 2015 IPO. The $95 million it expects to raise from investors (which include JPMorgan) will be directed toward beer production, and, presumably, finally hanging that sign.

SELL—The New Gold Standard

Gold is losing its luster, with demand sitting at its lowest level since 2009 (down 9% YoY). How come? With major indexes hitting fresh highs seemingly every day, investors have a healthy risk appetite (and Bitcoin is a delicacy for some). This isn’t true everywhere, though. In China, fears of yuan depreciation and a crackdown in real estate investment have boosted gold imports 35% since 2016.

HOLD—It’s Levioooosah, Not Leviosaaaah

The creator of Pokemon Go, Niantic, is back at it with its latest AR breakthrough—a game called Harry Potter: Wizards Unite. And unite they will. If you remember last summer’s Pokemon Go craze, gangs of aspiring Harrys and Hermiones (let’s be real, no one wants to be Ron), will hunt down the latest Hippogriff roaming around Times Square. Let’s just hope this time people will watch where they’re going. Summoning a Patronus doesn’t give you the excuse to walk into oncoming traffic.

The Breakroom

Question of the Day

Each sentence contains two words that phonetically sound like a world capital. The words will be in left-to-right order, but not necessarily consecutive.

Ex. The Sigma Chi house can be found on Fraternity Row. —> CAIRO (Chi + Row)

1. After a meal at a Thai restaurant, I rose to pay the bill.
2. Baseball fans in the Bay area root for the Giants.
3. The Russians watched a black car whisk past Lenin's tomb.

(Answer located at the bottom of newsletter)

Who Am I?

I started a hip-hop comedy group at Wesleyan—My first big Broadway hit was In the Heights—I wrote the music for Moana—My most recent musical received the most Tony nominations ever.

(Answer located at the bottom of newsletter)

Stat of the Day

$60,000—The potential annual cost of that all-important blue “verification” check mark on Twitter (well, before yesterday). In some cases, Twitter requires a $5,000/month ad spend to maintain account verification.

Breakroom Answers

Question of the Day: Taipei, Beirut, Khartoum
Who Am I?: Lin-Manuel Miranda