4/28/2016

The Rise of Oil

Oil just reached a 5-month high of $45.33 due to U.S. crude production falling for a seventh straight week and the Fed’s decision to leave interest rates unscathed. Low interest rates = weak dollar = high demand internationally.

Comcast to Acquire DreamWorks

The giant cable corporations are on an acquisition tear. Yesterday Charter confirmed its purchase of Time Warner, and now Comcast is rumored to acquire DreamWorks Animation whose stock skyrocketed 19%. DreamWorks appeals to Comcast because of its links to China and because of its library of content that is particularly attractive to millennials. Another reason is that DreamWorks holds intellectual property on many iconic characters like Shrek, Despicable Me and Casper. DreamWorks Animation also supplies television cartoons to buyers like Netflix and is part owner of AwesomenessTV, a booming online producer and distributor of programming aimed primarily at teenage girls.

The possible deal would value DreamWorks Animation at roughly $3 billion, or about 30 percent more than its current market value. A deal would signal continued consolidation activity in the broader media industry, and it could set off a wave of new interest in other content creators that content-distribution companies might seek to pick up in order to compete more effectively with Comcast.

Less Americans Filing Tax Returns

H&R Block is a website that helps you file your taxes. Most notably, people use it to file their tax returns. But there has been a decline of people filing tax returns and as a result, the company is laying off 250 jobs. This round of layoffs leaves it with 1,735 full-time employees. In all, Block said it handled 19.59 million tax returns in the just-completed tax season, compared with 20.52 million a year ago. They aggressively plan to broaden their tax services to wide range of clients.

Fed’s Interest Rate Decision

The Fed decided to leave interest rates unchanged due to slowing economic activity both domestically and internationally. In December they announced 4 rate hikes in 2016 but now they whittled it down to two. The next possible rate hike is June but analysts expect that to be unlikely. In the U.S, growth in household spending has moderated and there have been slowdowns in business investment and exports. Inflation has been elusive for the Fed despite its easy policy path, which has failed to generate inflation above its 2 percent target due to the transitory effects of declines in energy and import prices.

Yahoo vs. Starboard’s Proxy Battle Settlement

Starboard Value, the hedge fund that invested in Yahoo and is trying to conquer yahoo’s board of directors in order to increase pressure in trying to get the company to maximize shareholder return. Yahoo’s stock dropped 18% over the past 12 months. Both companies came to an agreement that Starboard would get 4 seats at the board. This move could smooth the sale of Yahoo's Web assets. Verizon had emerged as the likely winner after the first round of bids were submitted last week. Yahoo is entertaining offers from buyers for all or part of its core business which includes search, advertising, Yahoo Mail, Yahoo Sports and Tumblr. At its peak in early 2000, Yahoo was worth $255 billion. Yahoo never really recovered from the dot-com bust. After a series of missteps, bad bets and six CEOs over the past nine years, Yahoo is now valued at $34 billion.

But that $34 billion is roughly the value of its stake in its Asian holdings. In other words, the stock market is valuing Yahoo's core Internet business as completely worthless.

Facebook is Killing It

Facebook crushed expectations by 10%. It has exceeded its all-time high share price of $117.59. Facebook also reported Wednesday that monthly active users, a key metric for the company also known as MAUs, were 1.65 billion at the end of the first quarter. Mobile MAUs increased 21 percent year-over-year to 1.51 billion at the end of the quarter. Zuckerberg said people around the world spend on average more than 50 minutes per day on Facebook, Instagram and Messenger — and that's not even including WhatsApp. And there are 1.09 billion daily active users that spend around one hour a day on their page, Instagram or messenger. Wall Street had expected the social media giant to announce a year-over-year quarterly revenue increase of about 48 percent — massive growth for a company Facebook's size. Facebook's actual growth came in at 52 percent against the comparable year-ago revenue of $3.54 billion. Facebook held its annual F8 global developer conference earlier this month, discussing a slew of initiatives including its work on artificial intelligence and virtual reality. The most widely heralded announcement of the event, however, was Facebook's push for chatbots on its platforms. Chatbots — interactive, responsive messaging programs — could allow users to communicate with brands and companies through Facebook. If successful, such a development would effectively leapfrog the currently dominant mobile app economy and allow the company to create its own thriving digital ecosystem.

Growth In Mobile Payments

PayPal announced a growing customer base and a 26% increase in its transaction volume. PayPal has found a new avenue of explosive growth: mobile payments. We’re talking about not only PayPal's one-touch mobile payments feature, but other rapidly-growing services that PayPal owns like Venmo—which saw transaction volume increase an incredible 124%.

SpaceX Plans

Elon Musk’s SpaceX plans to land an unmanned spacecraft on Mars as soon as 2018 with the help of NASA.  On average, it’s 140 million miles from Earth, though the planets come to within about 35 million miles every 26 months. of the 43 robotic missions to Mars, including flybys, attempted by four different countries, only 18 have been total successes. Musk said he wants to go to Mars for “the defensive reason of protecting the future of humanity, ensuring that the light of consciousness is not extinguished should some calamity befall Earth.” SpaceX is currently developing a new Dragon spacecraft that would be able to fly humans—and not just cargo—to the space station.

Tinder Trying To Innovate

Tinder announced this morning it’s testing a new friend-finding feature called “Tinder Social” in its popular dating app. The idea is to offer a way for you and your group of friends to find and connect with other groups out in the real world. Similar to how Tinder works for finding prospective dates, Tinder Social lets friends swipe and match with other groups they want to meet. Unfortunately, Tinder users who are being opted into this feature by default are surprised to find that it automatically displays which of their Facebook friends are also using Tinder – information not everyone wants revealed. Tinder has a sizable enough user base – an estimated 50 million+ users – to make such a feature really take off.

Americans Saving Less for Retirement

The U.S retirement account (401k) consist of $14 trillion. But Americans are putting their current happiness (vacations, flat screens, new cars) way above their future well-being which cut the account by 12% down 1.7 trillion. So why does this happen? Two main biases: present bias—where you live for today, and exponential bias—where you don't quite understand just how great compound interest can be. 55% of people preferred less money today than plenty more money in a year.

Opinion on a Brexit

According to the Bank of England Governor (Mark Carney), if England exits the European Union, high inflation and low economic growth will result. It is forecasted the pound will depreciate by as much as 20%, which will induce inflation to rise 1.5% in two years. A weak pound will make imports into England more expensive, which will force consumers to pay higher prices.