QUOTE OF THE DAY
When there is nothing left to sell, they will sell their souls to the devil."
Former Brazilian president Luiz Inácio Lula da Silva (Lula, for short) is pretty, pretty bitter about the current administration's efforts to privatize dozens of government holdings.
- U.S. indexes finished down, despite receiving a boost from key tax and debt ceiling decisions.
- Gold sank as investors waited on announcements from Jackson Hole.
- Oil prices fell 3% as U.S. refineries closed ahead of Hurricane Harvey.
- U.S. Consumer Comfort hit a 16-year high.
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Brazil is up for sale.
Well, a chunk of it. South America's largest economy announced it will be privatizing government holdings-everything from the state lottery to electricity generators and highways…57 assets in all.
It's a bold move to turn around a country that's gone from exciting, rising superstar to over-the-hill, chaotic mess (think Shia Labeouf post-Transformers). During its 2016 recession, Brazil's worst in history, GDP shrunk 3.6% to $1.8 trillion. Which would have been bad enough…if it hadn't already dropped 3.8% the previous year.
So why privatize?
Well, governments have been attacked the world over for running businesses into the ground. Bureaucracy and efficiency don't mix, critics say.
Proponents of privatization would probably refer you to Embraer, a Brazilian aircraft manufacturer that grew to be the third largest commercial aircraft maker in the world…but only after the government sold its majority stake in 1994.
That's the thing. Brazil's government owns a lot of valuable companies. The expected $18.4 billion windfall from the firesale could be funneled back into projects like road and energy infrastructure, which should set the stage for future economic development. Not to mention, help pay off a debt load that's 71% of the country's GDP.
But it's not that easy
After all, it wouldn't be a Brazilian administration without a proper corruption scandal (and pushing through major policies are hard enough without one).
President Michel Temer is under attack for having a conversation with the former chairman of JBS, the world's largest meat processor. Sounds innocent enough…until you roll the tape. A secret recording reveals (not so innocent) conversations that reek of bribery and obstruction.
You also have the Brazilian left-which is hardly a fan of privatization. Instead of shrinking the government, its preferred strategy would be to "prime the pump" through more public investment, generating tax revenues that would (ideally) shore up the country's finances.
But the left, too, is in chaos. Lula, the former President, was recently convicted for bribery. And his successor, Dilma Rousseff? Impeached.
But hey, at least they still have churrascaria…so there's that.
"It's for the Taxman"
When 11-time world boxing champion Floyd Mayweather and UFC lightweight champion Conor McGregor square up this Saturday, it will be for more money than most people see in a lifetime. Or like…four lifetimes.
Showtime, the network lucky enough to win streaming rights, is expected to net (at minimum) $460 million, with projections reaching $700 million.
For reference: Avengers: Age of Ultron posted one of the best box office weekends ever at $191.3 million, Mayweather's last fight against Andre Berto raked in $38 million, and last year's Stanley Cup Playoffs only brought in $45 million in ad revenue for NBC.
That's not to suggest fights haven't (and won't again) reach this level of commercial dominance-2015's Mayweather vs. Pacquiao match took in $600 million.
All we have to say is…thank you Conan O'Brien for making this possible.
Driving Straight, With Blindfolds On
Don't quit on Uber just yet (it'll charge you $5 for that).
The stories circling Uber this year have been anything but pleasant. A battered and bruised leadership team, legal battles, and allegations of sexual harassment have painted a picture that shows Uber lost at sea without a compass.
But while Uber faced a storm of external challenges in 2017, a look at the company's financials (per Axios) shows that its core business seems to be chugging along just fine.
- Gross bookings: up 17% from last quarter to $8.7 billion.
- Global trips: up 150% since last year-90% in developed markets + 250% in developing markets.
- Tipping: up to $50 million since it rolled out the program on June 20th.
- Adjusted Net Revenue: $1.75 billion in Q2, up from $800 million in Q2 last year.
- Adjusted Net Loss: fell 14% year-over-year to $635 million
* Lyft introduced tipping five years ago and has only hit $250 million total.
It's clear Uber's financial situation is improving. Chalk that up to cost-cutting measures which include a key partnership in Russia and nixing an auto leasing business that was losing ~$9,000 per car.
Still, if Uber really wants to right this ship, it might want to start by hiring a CEO. Cars might be starting to drive on autopilot-companies typically don't.
What Else Is Happening…
- China Life and Baidu plan to launch a $1 billion private equity fund.
- Sears is closing 28 more Kmart stores as the retailer's struggles continue.
- SoftBank is investing $4.4 million in WeWork…only a week after the Brew Crew moved into a WeWork. (Coincidence? We think not!).
- If you're an Amazon Prime member, count on special discounts at Whole Foods.
- Monday Earnings: No Events Today
- Tuesday Earnings: DSW (+), Intuit (+), Salesforce (+)
- Wednesday Earnings: Express, HP (+), Lowe's (-), Williams-Sonoma (+)
- Thursday Earnings: Dollar Tree (+), Perry Ellis (+), Staples (+/-), Michaels (+)
- Friday Earnings: No Events Today
Economic Events: No Events Today
Economic Events: Redbook (+), House Price Index (+)
Economic Events: MBA Mortgage Applications (-), New Home Sales (-)
Economic Events: Jobless Claims (+), Consumer Comfort Index (+), Existing Home Sales (-)
Economic Events: Durable Goods Orders, Baker-Hughes Rig Count
BUY: Honey, We're Comin' Home
It was a scene straight out of National Treasure. In a covert heist, Germany's central bank, aka the Bundesbank, returned $27.9 billion worth of gold bars (50,000 if you're counting) back to Frankfurt. The gold had been transferred to vaults in New York, Paris, and London during the Cold War, when Germany feared the Soviets would take possession. The Bundesbank isn't divulging any details about the transfer (we assume they hired Nick Cage). But it has asked that you burn this newsletter after reading.
SELL: Urine Luck
Better hold that brew closely-you never know what (or who) might end up in it. A brewery in Denmark is concocting a new pilsner made with human piss-you read that right-and appropriately labeling it the "Pisner." Catchy, right? To be clear, this homemade lemonade isn't coming straight from the source and into the bottle before it gets sealed and sent. Instead, the company is malting barley by fertilizing it with urinal fluid from Northern Europe's largest music festival. So that makes it a little better, right?…right?
HOLD: Funeral Robots
This week, death takes front stage at the Tokyo International Funeral and Cemetery Show. Featuring the latest gadgets and gizmos from the industry, it's basically Disney World for a mortician. But this year's expo is particularly brimming with innovation in the burial space. Pepper, a robot introduced by SoftBank in 2014, has been programmed to perform funeral rites such as "chanting Buddhist sutras." We're skeptical of an immortal automaton playing a key role in something so personal as a funeral. But at $450 a pop, Pepper will certainly be a cheaper alternative than a human priest, who can charge more than $2,200.
Question of the Day
What do these words have in common?
Who Am I?
I launched my first business, a college laundry service, while at SMU.
I also started an outdoor billboard company that focused on marketing country music.
I competed on "The Amazing Race" with my sister in 2002.
I am the Chief Shoe Giver of my $625 million virtuous shoe business after selling half of it to Bain Capital.
Stat of the Day
Oh, what we would do to be Mavis Wancyzk. She's the lucky winner of Wednesday's Powerball with the winning sequence of 6, 7, 16, 23, 26 and Powerball number 4. That's the best (and probably last) trip to a small gas station in Chicopee, MA she will ever take.