Get off my lawn

QUOTE OF THE DAY

I don’t think we’re ever going to lose money again.”

A confident American Airlines CEO Doug Parker. Between low oil prices and finding more ways to squeeze money out of passengers, AA looks to keep the good times rollin’.

Market Snapshot

U.S. indexes ended up, with the S&P hitting an all-time high.
The Dow got a nudge from McDonald’s, which climbed 2.2%.
U.S. second quarter GDP was revised upwards to 3.1% YoY.
The dollar fell after its best three-day streak in nine months.

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Rotten Apples?

Apple (-0.62%) is facing production issues with the iPhone X—and that spells trouble as it races to satisfy the Genius Bar wannabes already lining up around the block.

It’s (actually) a Shakespearean tragedy

There’s a bottleneck involving the parts that comprise the much-anticipated facial recognition technology. But Apple has managed to keep things romantic by naming these modules Romeo and Juliet. Romeo is the one shooting red beams to map your facial structure, while Juliet’s the one interpreting the data.

The problem? Romeo parts (produced by LG Innotek and Sharp) are taking longer to build than the Juliets…forcing Tim Cook to asketh: wherefore art thou Romeos?

These supply issues won’t surprise anyone who’s been following Apple this summer, which has also encountered delays sourcing its new OLED displays for the X.

If Apple can overcome these snags (which it’s shown the ability to do), the iPhone X will launch in 55 countries and territories on November 3. But that’s still much later than the September launch of the iPhone 7, and most consumers will have to wait until Q1 2018 to get their hands on the X.

But this hasn’t been Apple’s only headache

We’ll be the first to admit: we were suckers for the new Apple Watch Series 3. Forty million songs on your wrist? Great. LTE connectivity allowing you to take calls without a phone? Even better.

Issue is, the LTE doesn’t seem to be working as promised. Multiple reviews from early testers reveal connectivity issues in different states and with different carriers. And when the watch could scrap together a few bars, the battery performed no better than an OG iPod (maybe a little better).

Still, Apple’s no stranger to missteps prior to a big release. Remember the Great Foxconn Bamboozle of ‘14? Or the Unspeakable iOS 6 Maps Snafu of 2012? It’ll dig itself out like it always does, and we’ll all be using the iPhone X and wearing the Apple Watch in no time.

Hired & Fired

Only a few days have passed since our last edition of “Hired & Fired,” but apparently the chief executive merry-go-round never stops going round…

Hired

Michael Wirth is living proof that if you stick around at your company long enough…then one day you just might run the whole thing. And that’s exactly what happened at Chevron (+0.14%), which just tapped the vet of 37 years to head the No. 2 oil company in the U.S.

Wirth, a former engineer and operator, is known as a “get things done” kind of guy—qualities that Chevron is looking for as it adapts to the new normal of oil prices hovering around $50 a barrel. He’ll replace John Watson, who will head into an easy retirement knowing his company doubled up ExxonMobil in total shareholder returns since 2010.

Fired

Well, technically he wasn’t “fired,” but John Bryant will step down as CEO after seven years at Kellogg (-0.36%). The cereal company has struggled (stock is down 19% over the past year) to adapt to a changing food industry in which acai bowls are replacing Frosted Flakes and Pop-Tarts, two of Kellogg’s mainstays.

Steven Cahillane, chief exec of wellness company Nature’s Bounty, will need to add some more nutritional value to Kellogg’s trail mix when he takes over.

Get Off My Lawn

China is calling in the dogs on North Korea. Kim Jong-un has 120 days to close all North Korean businesses within Chinese borders.

That means 100,000 workers that help fund the North Korean regime to the tune of ~$230 million a year would be sent home packing.

The U.N. turned up the heat on China to crack down on North Korea in light of its nuclear missiles program—two warning shots over Japan and a handful of threats will do that. And China might be the only one with the key to Kim’s heart: trade.

China controls 80% of all trade (~$6.3 billion) that enters and exits North Korea. It has already cut off North Korea’s biggest exports (coal and textiles), and is capping the country’s biggest import (oil).

If Rogen and Franco couldn’t get Kim to negotiate, maybe China can.

Solid as a Rok(u)

You and 38 million others spent 6.7 billion hours binging on Roku’s streaming devices so far this year. Now, it’s taking that momentum to the public markets at $14 a share.

Roku (or ROKU for all you investing enthusiasts) raised $219 million and IPO’d at a $1.3 billion valuation, quickly running up 68% its first day on the Nasdaq.

But before you hit SUBMIT on that $10,000 market order, remember Roku took a page out of Snap’s book with a dual-class stock structure. Class A shareholders (you) will get one vote per share, while Class B shareholders (company insiders) will get 10 votes per share.

It’ll leave CEO Anthony Wood and other execs with 98% voting power when all is said and done.

What Else Is Happening…

GoPro (-1.80%) released the Hero 6, starting at $499.
Instacart is closing in on a partnership with Canada’s biggest grocer, Loblaw.
Ikea acquired freelance company TaskRabbit.
Toshiba finally sold its chip business to the Bain-Apple consortium for $17.7 billion.

Economic Calendar

Monday Earnings: No Events

Economic Events: Chicago Fed National Activity Index (-), Dallas Fed Mfg Survey (+)

Tuesday Earnings: Nike (+)

Economic Events: Case Shiller HPI (+), New Home Sales (-), Consumer Confidence (-), Richmond Fed Mfg Index (+)

Wednesday Earnings: No Events

Economic Events: Durable Goods Orders (+), Pending Home Sales (-), Petroleum Status (+)

Thursday Earnings: Accenture (+), McCormick (+), Rite Aid (+/-)

Economic Events: GDP (+), International Trade in Goods (+), Jobless Claims (+)

Friday Earnings: No Events

Economic Events: Personal Income and Outlays, Chicago PMI, Consumer Sentiment

Buy/Sell/Hold

BUY—The Real Slim Shady

No actually. You will be able to buy stock in Eminem classics. The production company Bass Brothers (Jeff and Mark) filed with the SEC to “mini-IPO” 25% of its royalty rights to Eminem’s music catalog. The duo helped propel Eminem to stardom beginning with 1999’s Slim Shady LP—you know, the album that inspired your 5th grade do-rag. And if opening royalty rights on a discography to public investors seems novel…it is. So to all real investors: please stand up.

SELL—Calculators

We’re no mathematicians, but we can calculate a trade balance (exports minus imports). So it’s a bit strange that at various times over the past decade the U.K. and the U.S. have simultaneously recorded trade surpluses with one another. Fact check—this simply cannot can’t be true. But the official figures bear it out: in 2016, the U.S. quoted a $1 billion goods surplus while the U.K. said it had a surplus of $13.4 billion. Either one country needs to go back to Algebra I, or it’s about time they start collecting the same data.

HOLD—Very Clean Cars

In just a few years you might be taking your vacuum for a spin around the block. That’s because Dyson, the company that’s giving your shag rug the attention it deserves, announced it’s going to build an electric car to be road-ready by 2020. Producing an electric vehicle has always been on the mind of CEO James Dyson, who is a major advocate of curbing auto emissions. Quite the leap for a vacuum company to go into…car production…but we knew something was up when it hired all those directors from Aston Martin and Tesla. At the very least it’ll have a clean interior.

The Breakroom

Question of the Day

What’s the largest amount of money you can have in change and still not have change for a dollar?

Who Am I?

I quit my copywriting job at Esquire in 1952 to launch my own magazine. Circulation of the publication peaked in 1972 at 7.16 million copies sold. I funded part of the restoration of LA’s “Hollywood Sign” by purchasing the letter “Y” at an auction.