Primetime

MARKETS

  • Trade: Tell us if you've heard this one before. After "constructive" talks, U.S.-China trade negotiations continue. President Trump called on China to "act now."
  • Bitcoin: The world's biggest cryptocurrency jumped to a nine-month high over the weekend. Someone's excited for Consensus 2019.

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FITNESS

Maybe Flywheel Should Consider Boxing

Flywheel Sports, a boutique fitness studio operator/source of the Brew's in-office competitive spirit, is in flux.

One of Flywheel's lenders--NY-based investment firm Kennedy Lewis--has seized control of the company and is gauging interest from potential buyers, per Bloomberg.

The Flywheel story

It has 40+ studios from West Hollywood to Westchester and peddles classes including intense cycling and barre. It's secured $120.9 million in funding.

These days, you don't have to be a frequent flyer at the SoHo Lululemon to take part in the boutique fitness craze. That's because the next frontier for the fitness industry is your living room.

  • Flywheel has pivoted from focusing on studios to put its at-home bike business into overdrive.
  • The bike starts at $1,699 before tax, delivery, and a $39/month subscription. Flywheel is reportedly weighing a deal to sell its at-home bikes through Amazon and Best Buy, too.

We'll call it pulling a Peloton. The other boutique fitness wunderkind offers a similar setup, albeit with a smaller brick-and-mortar presence and a slightly higher price point.

And it's worked for Peloton

The company is most likely going public this year, and the numbers look strong:

  • Peloton booked about $400 million in revenue in 2017. And a few months back, it was on track to do $700 million in sales during its current fiscal year.
  • It's raised about $995 million in funding, most recently at a $4.15 billion valuation.

Zoom out: Flywheel has struggled to keep pace with Peloton as consumers shift away from in-studio toward in-living room. Pair that trend with slowing Flywheel sales growth and it makes sense why this could be a tough sell for Kennedy Lewis--Flywheel put earlier plans to sell itself for around $350 million on hold late last year on account of no one wanting to buy it.

MARKETS

Hope You Liked Kingda Ka

Because markets this week promise all the same dips, dives, thrills, and height requirements.

After President Trump escalated the U.S.-China trade war this weekend, investors are prepping for a spike in volatility as scaredy-cats and pragmatists alike head for safe haven, lower risk assets like U.S. Treasuries, gold, and the dollar.

What are market watchers saying?

  • Miller Tabak & Co. suggested a 10% drop in the S&P 500 from its recent high is possible. As of now, the index is less than 3% from its record.
  • AMP's Nader Naeimi: "Markets had priced the best-case scenario and odds are shifting towards the worst-case scenario."

A potential worst-case scenario: Computer-based, volatility-targeting funds could have the rug pulled out from under them. They currently have the highest level of exposure to U.S. stocks since the fall, per the WSJ, "a troubling sign for those who believe the funds exacerbated some of the market's worst selloffs in 2018."

Bottom line: An expected spurt of volatility should keep your resident newsletter writers busy this week.

MEDIA

TV Networks Get Upfront and Personal

If you go for drinks at an NYC bar this week only to feel like an extra in a Mad Men episode, you probably stumbled into a party for Upfront Week.

Upfront Week is when TV networks release their primetime schedules for the upcoming season. Then, they unleash an army of smooth-talking, martini-sipping salespeople to pitch brands on buying ad inventory.

  • The upfront market is large. TV networks will try to sell 75% to 80% of ad inventory for the upcoming season far before it begins, according to Variety.
  • And there's plenty of demand. eMarketer estimates the upfront market will grow 2.4% this year to $21.25 billion.

If you're clued in to the growth in streaming and the decline of linear TV, that stat is as puzzling as The Big Bang Theory's popularity. But analysts note the shrinking number of eyeballs watching primetime TV has forced brands to compete even harder to get in front of those millions of viewers. That means networks can charge higher prices.

+ NBC's the overachiever. It already released its slate yesterday.

ENERGY

Where's a Nobel Gas When You Need One?

Helium, one of the plutocrats of the periodic table, is currently experiencing a global shortage. The impacts are widespread.

  1. Party City, which is closing 45 stores nationally, said Thursday a helium shortage has "negatively impacted" balloon categories.
  2. The scientific community is getting antsy. Doctors use helium in medical imaging like MRI scans, and researchers use it to pressurize high-tech fuel tanks.

How did we get here? Close to 75% of the world's helium comes from Qatar, Wyoming, and Texas. But economic embargoes on Qatar banned it from passing gas to other countries...and the U.S. is in the process of exiting the helium market. That explains why crude helium prices jumped 135% last fall for 2019 delivery, per Gasworld.

Possible solutions: Those in the helium know propose investing in recycling, but scientists have gone as far as floating a ban on helium balloons. They feel it's important to conserve the element for more pressing situations than post-Ethan's bar mitzvah shenanigans.

CALENDAR

The Week Ahead

We're heading into this week with a Cannes-do attitude.

Monday: Webby Awards; earnings (Legg Mason, Take-Two, Tencent Music Entertainment)

Tuesday: Small business index; Cannes Film Festival begins; earnings (Aurora Cannabis, The Container Store, Ralph Lauren, Tilray)

Wednesday: Retail sales; industrial production; Christchurch Call summit; China's industrial production and retail sales data; earnings (Alibaba, Cisco, Farfetch, Macy's)

Thursday: Housing starts and building permits; Tiger goes for another trophy at the PGA Championship; VivaTech conference begins; earnings (Nvidia, Walmart, Baidu, Manchester United)

Friday: Consumer sentiment; earnings (Deere & Co.); remind your boss it's National Pizza Party Day and see what happens

And a bonus Saturday: Australians head to the polls with the economy as the top issue. The country hasn't had a recession in 27 years.

WHAT ELSE IS BREWING

  • Amazon employees have been mistakenly removing ads with religious content, per CNBC.
  • Qualcomm CEO Steve Mollenkopf earned a bonus worth about $3.5 million for his efforts settling global litigation with Apple. All in a day's work.
  • Federal prosecutors want to disqualify the lawyer defending Huawei in a bank fraud case over a conflict of interest.
  • Zillow is expanding its home-buying business to 20 markets by this time next year.
  • Kawhi Leonard reinvented physics.

BREAKROOM

Greater Than, Less Than, or Equal to

  1. The number of countries in Africa // The number of countries in Europe
  2. Bitcoin price on May 10, 2019 // Bitcoin price on Nov. 1, 2017
  3. Return on an Uber investment placed in 2016 // Return on an S&P 500 investment placed in 2016
  4. The duration of the 2019 Kentucky Derby // The time elapsed between two pitches thrown by Arizona Diamondbacks pitcher Zack Greinke the other night

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Breakroom Answers


Greater Than, Less Than, or Equal to
1. Greater than. There are more countries in Africa than in Europe 2. Greater than. The price of bitcoin was higher two days ago than on Nov. 1, 2017 3. Less than. The S&P 500 has gained ~50% while a 2016 Uber investor lost 15%, per Felix Salmon 4. Equal to

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May 13, 2019
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