Amazon gets dumped
MARKETS
- U.S. markets: The Dow enjoyed a little afternoon delight, managing to claw back most of a 589-point drop earlier in the day.
- Global economy: Another red flag from Europe’s largest economy. German industrial production tanked for the second time in three months in June.
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SHIPPING
How to Make Amazon Your Ex
If you’re a barber who cuts someone’s hair, and then that person opens a salon next door...you’ll probably stop cutting their hair.
Same goes in the world of logistics. FedEx (-0.33%) said yesterday it will not renew its contract to make ground deliveries for Amazon (+0.31%), which has itself emerged as a major logistics player. The announcement came two months after FedEx said it would discontinue U.S. air delivery service for Amazon.
Cut to the chase: The two companies are taking the arrows from their logos and pointing them straight at each other.
When a customer becomes a rival
Seeing more Amazon Prime-branded trucks on the highway? The company is investing in its own delivery capabilities to include cargo planes, local delivery vehicles, big rig trucks, and a network of warehouses.
- Amazon is already its own biggest shipper. According to Rakuten Intelligence, Amazon delivers 48% of its own packages, up from around 15% two years ago.
- And in classic Amazon fashion, it’s turned a cost into a service it can offer to others. Amazon quietly launched a freight brokerage platform in April that undercuts competitors’ prices by 26–33%, per FreightWaves.
FedEx changes its tune
Last month, FedEx finally admitted that Amazon was opening a competing salon. “Some high-volume package shippers, such as Amazon.com, are developing and implementing in-house delivery capabilities and utilizing independent contractors for deliveries, and may be considered competitors,” it said in a filing.
But going to battle with Amazon may not be as painful for FedEx as you think.
- Amazon accounted for 1.3% of FedEx’s revenue in 2018—not even $1 billion.
- There are other fish in the growing e-commerce sea. Think of this move as a party invite to retailers like Target and Walmart who 1) also need the delivery services FedEx can provide and 2) want to take down Amazon.
ECONOMY
The Global Economy Has a Fever
And the only prescription is more stimulus.
Yesterday, central banks in three countries—India, New Zealand, and Thailand—issued surprisingly aggressive rate cuts meant to safeguard their growth-focused economies from the U.S.-China trade war and its global fallout.
- As the WSJ puts it, Southeast Asian markets are “deeply intertwined” with supply chains that rely on both U.S. and China trade.
FYI: The European Central Bank didn’t rule out more stimulus for its September meeting. There could be a global rate cut cycle up ahead.
Investors are jittery
Gold topped $1,500/ounce for the first time in six years thanks to the Red Wedding in the stock market earlier this week. When equities falter and recession threats grow, investors often flee to safe haven assets (like gold...or even bitcoin?) less susceptible to market-driven ebbs and flows.
But investors' favorite comfort food is government debt. Global yields fell yesterday as the equities sell-off sent bond prices climbing. They stabilized by the close, but worries about the economy’s health remain.
TECH
Would You Like to Spin Off This Match?
Barry Diller-chaired tech and media giant IAC (+10.76%) is exploring spinning off its stakes in publicly traded Match Group (+24.16%) and ANGI Homeservices (-3.08%).
Some background: IAC has your “does 8pm work?” text on lock with an 80% stake in Match Group, parent of online dating services Tinder, Hinge, and OKCupid. It’s also fielding your “does 8am work?” text with an 83% stake in ANGI, which owns home services websites Angie’s List and Handy.
Given those businesses’ “healthy prospects,” IAC’s “taking a fresh look” to see if they’re “prepared for separation from the IAC mothership.” That’s...half true.
- While Match reported marriage material earnings earlier this week, ANGI has struggled with an unanticipated surge in customer acquisition costs thanks to changes to Google’s ecosystem (Google is ANGI’s biggest source of traffic.)
Big picture: Nothing’s set in stone, but this is classic IAC. In recent history, it’s incubated businesses from Expedia to HSN to Ticketmaster before spinning them off as their own public entities.
TECH
SoftBank’s Soft Yes on Saudi Arabia
Japanese conglomerate SoftBank said operating profits for its nearly $100 billion Vision Fund increased 66% annually last quarter. And when the first one goes down that smooth, you order another: CEO Masayoshi Son said the second Vision Fund could start investing as soon as next month.
Remember, the first Vision Fund has a straw in big startup milkshakes like Uber and WeWork. But its impressive Q2 was lifted by ballooning valuations of other companies it’s invested in, including Slack, the hotel chain OYO, and DoorDash.
As for the sequel, it’s not clear...
- Who’s supplying the juice. Son said last week SoftBank secured $108 billion in pledges for its second Vision Fund from the likes of Microsoft and Apple. But we don’t know how much any specific investor has committed.
- Whether the Saudis will participate. Son said yesterday SoftBank was in talks with the kingdom, which underwrote almost half of VF1.
SoftBank's relationship with Saudi investors is closely scrutinized. Last year, Son said SoftBank wouldn't "turn our backs" on the kingdom, but he denounced the killing of journalist Jamal Khashoggi.
AVIATION
The 'Ports Guy
The Points Guy released this year’s list of best and worst airports in the U.S. yesterday. And...unless you fly out of Chicago Midway, you’re wrong about yours being “the worst.”
What caught our eye:
- As New Yorkers, we know that Queens has great restaurants, but we’re not usually thinking of the ones at the airport. New York’s JFK won for amenities, with its plentiful lounges and eateries.
- It’s possible the West Coast isn’t so lackadaisical after all. Portland International (PDX) won for on-time flights.
- TPG found that most airports accommodate traveling pets. Denver even has a furry emotional support team.
- And because we all scroll down to No. 1 on any listicle: San Diego International Airport (SAN) was this year’s “winner.” One advantage? It takes seven minutes to get downtown from the airport.
So what do you think? Was TPG right to give San Diego the gold? Let us know here.
WHAT ELSE IS BREWING
- Lyft’s (+5.26% after hours) good news: It raised guidance for the full year. Lyft’s bad news: It announced its lockup period for investors will end earlier than anticipated.
- DeepMind, Alphabet's (+0.41%) AI-focused subsidiary, almost doubled its revenue in 2018...but it also lost $572 million. It has over $1 billion in debt due for repayment this year.
- Samsung announced three new smartphones—the Galaxy Note 10, Galaxy Note 10+, and Galaxy Note 10+ 5G—that will start at around $950.
- Arizona Beverage, which makes...Arizona Tea, is entering the cannabis market. It’ll begin by selling THC-infused gummies and vape pens.
- KKR (-2.51%) reportedly surpassed its $1 billion fundraising goal for its social justice-minded Global Impact Fund.
BREAKROOM
Real Estate Appraiser
Tom Brady isn’t leaving the Patriots, but he and Gisele Bündchen are selling their house in Brookline, MA. Like the two of them, it’s good looking and worth a lot of money.
More details:
- Three-car garage and a circular driveway for up to 20 vehicles
- 9,716 square feet on more than five acres of land
- Five beds, including a barn-inspired guest house with a yoga studio
- A large trophy case (we assume)
What is the listing price?
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Breakroom Answers
Real Estate Appraiser
$39.5 million
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