We takin' over


"We're competing with sleep, on the margin."-Netflix CEO Reed Hastings on how the company thinks about competition in the wake of slowing subscriber growth (even though earnings beat expectations). Sleep...hm, didn't see that one coming.



Market Snapshot

  • U.S. stocks slid on Tuesday after disappointing earnings numbers from Goldman Sachs and poor sales numbers from Johnson & Johnson.
  • The pound skyrocketed after Prime Minister Theresa May called for a surprise election. European equities took a hit from uncertainty surrounding the upcoming French election and ongoing Brexit negotiations.
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Facebook Enters F8 Guns A Blazin'

Yesterday kicked off the social media giant's annual developer conference, a two-day bonanza highlighting Facebook's (-0.33%) newest products and tech.

The t-shirt-clad Zuck tried his hand at standup (note to self: Fast and the Furious jokes don't land) and made several major announcements, including:

  • FB is diving headfirst into augmented reality
  • "Spaces" is the future of VR social interaction
  • Messenger now includes a virtual assistant and chat extensions
  • Workplace brings collaboration to Facebook
Time to blow your mind and talk AR

Quick refresher: augmented reality is a miniature elephant walking on your desk in the office, whereas virtual reality is you being transported to an elephant watering hole in Kenya. Simple as that.

Today, Facebook shed light on the potential impact of augmented reality. Leveraging its army of outside developers (in true open-source fashion), the company hopes to deliver three key experiences:

  1. Information within existing objects (an arrow on the road guiding you from point A to B)
  2. New virtual objects on reality (a virtual TV that hangs on your living room wall)
  3. Enhancing existing objects (virtual smoke rising from your sweet Morning Brew mug)
But Facebook isn't alone in the race to AR stardom

Several big companies have followed suit––just today, Snapchat "coincidentally" introduced 'World Lenses', a way to add AR elements (Brew Crew obviously tested this) to your surroundings.

So, what's motivating these companies to spend big on AR?

$$$: The AR market is big and only getting bigger. We're talking a $3.9 billion market trending to $117 billion by 2022.

Social impact: From Zuckerberg's perspective, AR has the potential to be an economic equalizer. Imagine that instead of a $500 TV, all you need are a snazzy pair of AR glasses and a $1 app to watch your favorite show. The guy might have a point.

Despite Anti-Trade Talk, IMF Offers Glimpse of Hope

The International Monetary Fund has some good news in the face of crises like Syria, Brexit, North Korea and others: the world's economy should grow by 3.5% this year-0.4% more than in 2016. The 189-country fund says the United States' economy in particular should grow by 2.3% due to a pickup in manufacturing and production.

Speaking of heavy industry, the report came on the same day President Donald Trump announced his "America First" agenda to Snap-on (-0.12%) employees in Wisconsin. Just last week, the IMF warned against such isolationist policies, saying they are harmful in the long run. Econ buffs will know what Keynes had to say about the long run. Only time will tell...

Not All Banks Are Created Equal

Goldman Sachs (-4.72%), one of the strongest stocks since the election, ended a solid earnings streak yesterday with one division to blame: trading. Despite the Street's high hopes for bank stocks, Goldman couldn't cut it and came up $400 million short of analyst-expected revenue. Ouch.

Why? GS is blaming poor market navigation and calm commodities markets (in which it is more heavily invested than other banks). Luckily for its competitors, Goldman was an outlier this time around. Bank of America (-0.10%) beat revenue expectations by $600 million and fixed-income trading revenue shot up 29% to $2.9 billion.

Tumblr Throws Its Hat Into the Ring

Video apps are all the rage these days, and Tumblr wants in. Yesterday, the Yahoo-owned blogging platform launched Cabana, a live video app that lets up to six users chat and watch videos together. In Tumblr's words, Cabana is supposed to act as a "digital couch." We're intrigued.

According to Tumblr, the app tested particularly well with teens, so it could help boost Tumblr's business amidst slowing growth. The downside? Tumblr is a little late to the game and has stiff competition. Good thing competition is only coming from Facebook, Snapchat and Houseparty. Best of luck.

What Else Is Happening…

  • Verizon made a $1.05 billion deal with glass-maker Corning for fiber optic cable
  • Tesla workers in Germany are threatening to strike over wages
  • Turns out millennials don't job jump as much as people think
  • Forbes released its annual Midas List of the most successful venture capitalists
Economic Calendar

  • Monday: United Airlines Earnings (+); Housing Market Index (-)
  • Tuesday: Bank of America (+), Goldman Sachs (-), IBM (+/-), Johnson & Johnson (-), Netflix (+/-), Yahoo (+) Earnings
  • Wednesday: American Express, BlackRock, CSX, eBay, Morgan Stanley, Qualcomm Earnings; Fed Beige Book
  • Thursday: Verizon, Visa Earnings; Weekly Jobless Claims
  • Friday: GE, Morningstar Earnings; Existing Home Sales


The Mystery of Female Readership

The Financial Times is having trouble attracting female readers. Only 21% of its subscribers are women, and of those, only 40% are what the publication would call "engaged." The problem points to a systemic, flawed relationship between women and financial services. Sound familiar? The proposed solution isn't much better, and is ironically named after a man:

  • A new editorial tool, named "Peter's Choice," will help the newsroom be "more aware of women," by having a deeper understanding of what stories women are most interested in and how they interact with the stories. Again, "Peter's Choice" may not have been the best choice of name here.
  • FT does seem to be aware of how this new scheme could be perceived negatively, namely, as institutional mansplaining. Writing in a memo, "To be clear: I am not suggesting we write more 'women's content.'" Instead, editor Lionel Barber explains that the news doesn't have to cease being news to attract female readers.
  • The memo continues: "In fact, our reader feedback confirms that women do not want to be treated differently from male readers." Glad you've gotten to the bottom of it, Financial Times.


Question of the Day

How can I get the answer 24 by only using the numbers 8,8,3,3. You can use addition, subtraction, multiplication, division and parentheses. Bonus rules: you are allowed logarithms, factorials and roots (Answer)

Business Person of the Day

How is Maroon 5 business-related you ask? Well, it turns out BlackRock CEO Larry Fink was the driving force behind the band's name change, as well as the advisor for the pop group's first record label, which propelled them to their current fame. Fancy that.

Food for Thought

57,000 years: how much time the world has spent watching Adam Sandler movies on Netflix. That's longer than human civilizations have existed on earth and equates to about three movies per subscriber.

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