Red Wedding

MARKETS

• U.S. markets: The tech sell-off continued. On the economic front, Q4 GDP came in above estimates at 2.9%.
• International markets: Asian markets got hit with the tech bug. The Nikkei and Hang Seng both finished lower.

TECH

The Autopsy of a Tech Sell-Off

When Amazon drops 6% in early-day trading, you know something's up. And according to Axios, that something was the president floating harsher tax treatment on Bezos' ~$700 billion empire.

Amazon should be fine (after all...what's $53 billion in lost market cap?), but we can't help but zoom out and address the much broader question: will this tech sell-off amid decade-high valuations continue and reverse FAANG's good fortune?

We hope not—GNAAF just doesn't have the same ring to it.

But rumors are spreading on Wall St. after tech's Red Wedding

Even the Tullys would've been shocked at Tuesday's bloodbath.

• Facebook: Zuck agreed to testify before Congress (-4.9%)
• Nvidia: It's temporarily stopping its self-driving program (-7.8%)
• Twitter: A famous short-seller announced a position (-12%)
• Others: Apple, Alibaba, Netflix, Tesla, and Google all fell 2.5% or more.

Some analysts say ‘brace for more.' FAANG stocks (and other tech stocks) are sitting at abnormally high valuations...like, 2000-era tech bubble valuations. All it would take is a little bit of regulation here, some data breaches there, and pop—the bubble bursts.

Which...to put it bluntly...wouldn't be great. Tech now holds substantially more influence over the market's direction than it did a few years ago. In fact, the tech sector now accounts for 26.8% of the S&P (financials are second with 16.8%).

Okay, but how does this affect me?

Well, not everyone's a stock picker like Buffett. For most investors, passive, low-cost index funds do the trick. And one of the world's favorite funds to own (with ~$200 billion AUM) is SPY—an index that tracks the S&P.

So if you like tracking broader market performance, and things go sour for tech (which is now more heavily weighted in the market)...well, you see where this is going.

Stop and think: The economy is still very strong and tech companies could bounce back in no time. BUT, it's hard to ignore the other side of the argument.

TRANSPORTATION

Tesla Has that Sinking Feeling

Chased by an angry mob of shareholders and bondholders, Elon Musk sprints toward his Falcon Heavy rocket. ‘Warm up the engines,' he yells, ‘set a course for Mars!'

Okay, maybe we haven't reached that point yet, but Tesla is having an awful week. Its stock is down 15% since the start of trading Tuesday, as investors grow anxious of Tesla's ability to fund itself and produce Model 3 sedans.

A series of unfortunate events:

• The National Transportation Safety Board is investigating a fatal accident involving Tesla's Model X (specifically, its semi-autonomous Autopilot system).
• Moody's downgraded Tesla's credit rating and gave a tank-half-empty analysis of its finances. Now, bonds are trading at their lowest levels since they were issued.
• Waymo bought 20,000 Jaguars to charge ahead in the self-driving race.

Tesla's big test: Next week it will report deliveries of the Model 3, the company's first mass market vehicle and the key to unlocking financial sustainability. But as we saw this week, observers aren't exactly betting it'll hit its 2,500-a-week target.

TECH

Tim Cook Sounds Off on Facebook and Privacy

In the eye of the swirling data privacy hurricane stands a calm and confident Tim Cook. During an interview with Recode and MSNBC, Cook laid into Facebook for its (mis)handling of user data and tried to set Apple (-1.10%) apart as a tech company that's actually, you know, responsible.

On regulation: "I think the best regulation is no regulation, is self-regulation...However I think we're beyond that here."

What would he do if he were in Mark Zuckerberg's shoes? "I wouldn't be in this situation."

And it's true—Apple has been a fierce advocate of customer privacy, sometimes to the point of controversy. Remember when it refused the FBI's request to gain access to one of the San Bernardino shooters’ iPhone?

But Cook knows this isn't comparing Apple to apples. Facebook's business model depends on selling your data to advertisers, while Apple's main focus has been selling hardware.

The Crew's take: Tim Cook is trying to establish Apple as the adult in the tech playroom. Right now, it's working.

PHARMA

Takeda Is Laser-Focused on Shire

Takeda, Japan's largest pharma company by revenue, is making noises about acquiring Shire Plc (or more fondly known as the makers of Adderall).

The bid could approach $50 billion, which is interesting considering Takeda is worth $42 billion. Translation: how in the world is it gonna pay for Shire?

We'll find out soon enough

Takeda needs to decide on a bid by April 25, so time is ticking. Meanwhile, Shire shares wasted no time surging 26% on the news.

This announcement comes on the heels of other recent pharma transactions (that weren't measured by the gram) involving Pfizer and Merck, which were looking to unload their over-the-counter units.

What does all this pharma frenzy mean for you? Takeda could raise or lower the prices of Shire products, including Adderall and drugs for rare diseases.

WHAT ELSE IS BREWING

• Navigation app Waze is releasing a new ad business that allows companies to advertise on its GPS system.
• Facebook (+0.53%) is changing up its privacy controls.Ripple donated $29 million of its XRP digital currency to fund public school initiatives.
• Ripple donated $29 million of its XRP digital currency to fund public school initiatives.
• Per Reuters, one of Uber's self-driving gurus is leaving the company.
• Relativity, a startup that 3D-prints rockets (yes, you read that right), raised $35 million.

WATER COOLER

BIGGER PICTURE

They say a picture is worth a thousand words….which is great, because we definitely don’t have room for a thousand words.

Don't look now, but the company behind your 8th grade phone (and zero subsequent phones) is on a serious comeback. BlackBerry beat profit estimates in Q4 and offered a bullish outlook for 2019.

Wait a sec—are we talking about the same BlackBerry? The company whose clunky hardware was sent into oblivion by the iPhones and Galaxys of the world?

Actually, yes. While you were busy leaving your BBM phase behind, CEO John Chen engineered a successful pivot from smartphones to enterprise software and services—a segment that brought in $108 million in revenue last quarter (a 19% jump).

Throw in new partnerships with Jaguar and Microsoft and you've got yourself a nice little roadmap for the future. Since September 2016, its stock has even outperformed Apple's.

THE BREAKROOM

AROUND THE WORLD

SoftBank doesn't mess around. CEO Masayoshi Son announced plans to build a $200 billion solar project in Saudi Arabia. The plant would generate 100x more energy than any other solar plant (proposed or existing).

GUESS THE COMPANY

Founded: 1883 in Cincinnati, OH

Industry: Grocery

Market cap: $20.8 billion

Fun fact: It is considered one of the largest employers in the country after Walmart (among public companies).

(Answer located at bottom of newsletter)

BRAIN TEASER

What is so unusual about this number?

3608528850368400786036725

(Answer located at bottom of newsletter)

Breakroom Answers

Guess The Company
Kroger

Brain Teaser
The number formed by its first n digits is divisible by n, e.g. 36 is divisible by 2, 360 is divisible by 3, 3608 is divisible by 4, etc.