High life

MARKETS

• Metals: Gold settled at its lowest price in more than a year and a half. What's causing the rout? Global uncertainty (h/t Turkey) is driving people to what pays the bills: the U.S. dollar, which rallied to a 14-month high.
• Energy: Oil dropped to a more than two-month low after U.S. crude stockpiles unexpectedly jumped last week.

RETAIL

A Tale of Two Retail Reports

Did you read this one in 10th grade English? It's the story of American retail in 2018, seen through both a macro and a micro lens.

Let's start with the macro

The Commerce Department said that retail sales increased 0.5% in July, topping expectations. And you can thank the usual suspects for the growth: low unemployment, high consumer confidence, and an overall strong economy.

• Remember: This isn't just a throw-away data point. Consumer spending accounts for a mammoth ~70% of U.S. GDP.

Who's benefiting?

• Nonstore retailers (online or mail-order) sales increased 0.8%. With Amazon Prime Day on July 16...was this a coincidence? We think not. Restaurants and clothing stores also had a solid month. Sales for each jumped 1.3%.

Who wasn't as busy?

• Sporting goods, hobby, music, and book stores saw sales decrease 1.7%...while furniture stores also posted lower sales.

Bottom line: Americans love shopping, and they showed it in July.

But since retail can't have nice things...let's focus on the micro

Macy's reported Q2 results yesterday. And even though it beat earnings forecasts, investors sunk the stock 16% (it had been up 66% YTD through Tuesday's close).

Why the tough love? Because when your industry is humming along (see above), you better show you're also surfing the wave. The problem is...Macy's is just boogie-boarding. Comparable sales, including licensed departments, clocked in at just a 0.5% increase.

• Is there hope? Maybe. Macy's is trying to stay relevant by acquiring innovative retailers, testing pop-up concepts, and remodeling stores.

Bottom line, courtesy of this WSJ mic drop: "Macy's has been investing in stores and upgrading its online operations, but its efforts haven't been enough to overcome an inconvenient fact: It is still a department store."

+ Can't get enough retail? J.C. Penney, Nordstrom, and Walmart all report earnings today.

RIDE-HAILING

Uber’s Growth Sputters Just a Little

Throwing a couple warm-up tosses before that planned 2019 IPO, Uber just released its Q2 financials (even though it's not required to disclose them as a private company).

So? The ride-hailer (most recently valued at $62 billion) is still on pace for $10 billion in revenue this year.

Here's the rundown:

• Net revenue was $2.7 billion, up 51% annually
• Gross bookings were $12 billion, up 41% annually
• But that's a slowdown from Q1, when revenue grew 67% and bookings grew 55%

Uber also notched an adjusted loss of $404 million, which narrowed 24% from last year but grew 32% since last quarter.

+ While we're here: Per The Information, Uber's self-driving unit has eaten up $125 million-$200 million per quarter over the last 18 months. Some investors are urging a sale.

AUTO

Headline of the Day

What it means: Think before you tweet, kids. The inquiry into the Tesla (-2.57%) CEO's infamous buyout tweet "has advanced to a more formal, serious stage," per the NYT.

Remember: Musk said that the managing director of the Saudi sovereign wealth fund "strongly expressed his support" for going private, and Elon "understood from him that no other decision makers were needed and they were eager to proceed."

We'll see if that's "secured" enough for the SEC.

CANNABIS

Corona Brewer Bets Even Bigger on Weed

Cementing its presence at your neighbor Scott's house party, Corona brewer Constellation Brands (-6.09%) just invested $4 billion in Canadian marijuana grower Canopy Growth (+30.42%).

• Constellation sound familiar? It's also behind Robert Mondavi wines, Ballast Point beers, and Svedka vodka.

This is a major deal: It's among the biggest-ever corporate bets on the future of cannabis-infused products. And Constellation's wagering they'll take off in popularity (plus hedging against the possible hit alcoholic beverages could take if weed becomes legal everywhere).

• Remember: Constellation took a ~10% stake in Canopy Growth last October to develop nonalcoholic cannabis-infused drinks. Now, it'll have a 38% stake in the pot grower.

FYI, legal marijuana sales are set to hit $7.5 billion in Canada and $10.2 billion in the U.S. this year, per Euromonitor.

Big picture: The deal's further proof that Big Beer (with shrinking U.S. demand) is exploring new options. In the last year, Constellation, Heineken, and Molson Coors have all invested in cannabis-infused beverages.

INTERNATIONAL

Qatar Vows $15 Billion for Turkey’s Economy

Yesterday, Qatar pledged to inject $15 billion into Turkey's economy to help pull it from the brink of collapse. Alexa, play the Friends theme song.

How we got here: The Turkish lira has nosedived—and sent shockwaves through other emerging economies—as a standoff with the U.S. intensifies. Turkey yesterday announced new tariffs from 50%-140% on U.S. products in retaliation for the Trump administration's own tariffs on Turkish steel and aluminum.

The Qatari injection suggests strengthening ties (both economic and political) between the two countries.

• Remember: Turkey backed Qatar last year even as Gulf neighbors imposed economic and travel blockades on Qatar (after accusing the country of igniting regional unrest).

Did we just become best friends? Turkish exports to Qatar were $650 million in 2017, up 48% from a year earlier. Plus, Qatar's chamber of commerce said Turkish construction companies were working on $11.6 billion worth of projects in Qatar.

No word yet on whether Qatar has guaranteed a Turkish victory when it hosts the 2022 World Cup.

MEDIA

Public Radio Networks Turn to Podcasts

Today in "news millennials might care about," two public radio networks, PRX and PRI, are merging in a bid to capitalize on the ballooning popularity of podcasts.

Xs and Os: No money will trade hands, but Boston-based WGBH (which works with both PRX and PRI) will invest $10 million in new content creation, including opening a "Podcast Garage" in D.C. to train aspiring 'casters.

The merger proves what we all suspected: traditional broadcast radio is out, podcasts are in.

• 26% of Americans listen to podcasts monthly (up from 9% a decade ago), per Edison/Triton research.

Via Pew

And before we come back...are you stressed out about meal prep? We never worry, thanks to Blue Ap-

...just kidding. But anyone who's smashed the fast-forward button on a podcast won't be surprised to learn that ad revenue grew 86% annually to hit $314 million last year.

WHAT ELSE IS BREWING

• Goldman Sachs (-0.12%) removed Tesla from its stock coverage, as it's advising the company's go-private talks.
• AT&T (+0.68%) is facing a $224 million lawsuit from a crypto investor who was hacked twice in seven months while using AT&T as a service provider.
• Y Combinator, the startup accelerator behind Airbnb and Dropbox, is expanding to China.
• MoviePass parent company Helios & Matheson Analytics (-4.00%) lost $100 million in Q2. It'll burn through its remaining cash next quarter if its turnaround plan doesn't work.
• Tiffany & Co. (-4.69%) will renovate its NYC flagship store to attract more millennials.

BREAKROOM

BRAIN TEASER
A block of wood, in the form of a cuboid 4" x 7" x 14", has all its six faces painted pink. If the wooden block is cut into 392 cubes of 1" x 1" x 1", how many of these would have pink paint on them?

(Answer located at bottom of newsletter)

Breakroom Answers