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Blue Chip

Visa, Mastercard flush $6.2 billion down the toilet

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Don’t violate antitrust laws… because it could cost you $6.2 billion and 13 years of your life. That number, a billion with a capital ‘B’ is what Visa and Mastercard were required to pay as a settlement for, well, violating antitrust laws. The lawsuit was settled back in 2012 but rejected by major retailers as ‘unfair’ and eventually overturned on an appeal.

 

Okay, so this settlement… represents a $900 million increase from the original one and still must be approved by the court. However, as you can imagine, both companies are excited to put this behind them and move forward. As for the retailers…they’re excited the extra cash.

 

The biggest retailers… opted out of the settlement and that includes Walmart, Target, and Kroger. These stores represent the top 1% of merchants and were able to negotiate better deals on their own. However, the other 99% saw justice served, and it was a victory for the little guys. So, what did we learn today?

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Blue Chip

Your new car could have Google’s Android in it

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Google is partnering with… cars produced by Renault, Nissan, and Mitsubishi to start putting Android in their cars. The alliance of these three automobiles accounts for 10.6 million vehicles sold last year. Now you will be able to see and use Android whether or not you have the phone.

 

Here’s what this entails… Google Maps, Google Play Store, and Google Assistant. However, don’t expect to see this soon because the technology won’t be installed in these cars until 2021. This move by Google is exciting news nevertheless because car companies have been known to develop their own tech to use in vehicles.

 

The automakers are excited… and said in a statement that the deal gives customers “one of the most intelligent infotainment systems in the market.” And now (or in 2021) you won’t have to worry about using your personal device to navigate, listen to music, or do whatever else it is you do with your phone on the road.

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Fang

Welcome to the ‘Instagram Shop’

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Now you can shop on Instagram… and that’s just what you wanted, right? Well, on Monday the company announced that it would be giving users the ability to shop items via Stories and on the Explore page – whether you like it or not! Brands can add one product tag sticker per Story, and the Explore page will recommend brands based on your tastes.

 

Shopping on IG is a massive opportunity for retailers… and Instagram for that matter. The possibility exists because over 90 million accounts already tap to see tags in shopping posts. The shopping features should also fit seamlessly with the app because people already use IG to get their fashion inspiration – you know, by stalking the people they want to be.

 

It’s called ‘social shopping’… ever heard of it? In fact, the new app feature is eerily similar to what Pinterest just started doing with its “buyable pins” where users can purchase the items they see directly on the platform. It remains to be seen, but Instagram may also have a standalone e-commerce app in the works. The world is getting closer to becoming one BIG advertisement!

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Miscellaneous

Transportation stocks are on the move!

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Ever heard of the… Dow Jones Transportation Average? Probably not. However, it is basically the lesser known, possibly estranged relative to the Dow Jones Industrial Average…you know, but for transportation. Interestingly enough, the index has gained 9% on the year which is slightly better than the DJIA which is up 6% on the year.

 

You should invest in transportation… because even Warren Buffett does it. If Warren Buffet does it, you do it. Okay? Berkshire Hathaway has stakes in UPS, United, American, Delta, and Southwest. Heck, Warren Buffett has even contemplated buying an airline and said he “wouldn’t rule out owning an entire airline.” Buffett even acquired railroad Burlington Northern Santa Fe for $26 billion back in 2009.

 

But not so fast… because high oil prices could hurt the transportation industry. Amazon also is investing in cargo freight airlines and experimenting with drones which could put a dent in transportation. Last but not least – trade tensions could drive demand down for imported goods. But for now, all is well for planes, trains, and automobiles…

Blue Chip

From ‘Coke’ to ‘Cannabis’

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They’re watching alright… what are they watching you ask? Coca-Cola is watching CBD, a non-psychoactive part of marijuana. And non-psychoactive means it doesn’t get you high. However, CBD can ease pain, inflammation, and nausea. The marijuana industry is growing and multiplying quickly.

 

First reported by Bloomberg… so we’re not making stuff up this time. Coke is actually in talks with the Canadian cannabis company Aurora Cannabis. Aurora Cannabis is also interested in producing cannabis drinks (or probably doing anything with Coke, for that matter).

 

Constellation, Svedka, and Casa Noble… are all investing $4 billion in Canopy Growth which is yet another Canadian marijuana company. And ever since marijuana was legalized in Canada, some of these companies are trading on US stock exchanges and getting investment from American companies. However, it seems that we are quite some time from seeing marijuana-infused Coca-Cola, but one can dream…

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International

Samsung: Pack your $#!&… we’re going to North Korea

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That’s right… Jay Y. Lee is headed to North Korea with other business leaders and the South Korean President Moon Jae-in Tuesday. And today marks the first trip to North Korea by a South Korean president in over ten years. The goal? To improve relations, connect the two economies, and gain access to valuable trade and infrastructure links.

 

Here’s how Samsung could benefit… obviously, there is an untapped market in North Korea; but it’s not just smartphones because the company also does engineering, construction, and shipbuilding. However, Lee is more or less along for the ride for now and is going out of a perceived obligation rather than a business opportunity.

 

Here is what the future holds… Samsung Securities, the company’s investment arm, is analyzing the potential for future business in North Korea. North Korea’s economy includes 25 million people, cheap labor, good location, and untapped natural resources. These attributes are all perfect for business, but all of that is easier said than done and any company has their work cut out for them dealing with the “ruling regime.” Kim Jong Un doesn’t like many people – except Dennis Rodman. He loves Dennis Rodman.

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Mid caps

L Brands is shutting down this store after 123 years in business

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If you are unfamiliar with Henri Bendel… don’t worry because most people are in the same boat. The brand was founded in 1895 and became best-known for its designer purses and shoes. L Brands, the owner of big-time brands like Victoria’s Secret and Bath & Body Works, acquired Henri Bendel around 30 years ago.

 

And after 123 years in business… the company will be closing up shop in its remaining 23 locations, including its iconic Saks Fifth Avenue spot which opened way back in 1913. This move comes at a time where L Brands stock is down 55% on the year; that number alone is pretty bad, but those results are magnified by the fact other retailers are having record-breaking years.

 

Here’s why they are shutting down… L Brands is trying to “improve company profitability and focus on our larger brands that have greater growth potential.” Sound familiar? This is something we have seen play out multiple times this year – companies cutting ties with weaker brands and going all-in on what’s working (or sort of working). Still, 123 years is one helluva run.

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Miscellaneous

Chill, man…legalizing marijuana takes time

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Legalizing weed… is not as easy as it sounds. Believe it or not, Uruguay was the first country to legalize the drug nationally in 2013. And Uruguay wants to do things the right way; but doing things the “right way” involves a lot of time and restrictions to show everyone that the country itself is in control of the system. This means only 14 pharmacies in the entire country can legally sell marijuana.

 

Here are the issues… first, only two companies are licensed to grow in Uruguay, Symbiosis and Iccorp. Next is the fact that pharmacies in Uruguay go through United States banks which cannot serve accounts that are involved in the marijuana biz.  This means marijuana transactions must be cash-only which has presented a barrier for most pharmacies to get involved. But if more do get involved, the currently supply will not be enough from just two distributors.

 

Drug dealers hate it… because regulated cannabis has slowed the black market for it down – it is estimated about 55% of marijuana users are using the regulating system to get their fix. Marijuana is also priced in-line with the black market to hinder competition from illegal sources. So some good has come out of legalization after all; but the other “good” things will take time…

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Blue Chip

SpaceX might just send YOU to space – find out today

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SpaceX has its first victim… er, passenger, we should say. That’s right – the first person to fly around the moon in the company’s BFR has been selected. What is a BFR, you ask? It is the ‘Big Falcon Rocket’ which consists of two parts: A massive rocket booster that will out-power anything every built and a spacecraft that will shoot right out of the Earth’s atmosphere – brought to you by SpaceX.

 

Today’s announcement marks the first steps… to sending regular people to the moon and SpaceX will be identifying the first person to go today! Up to this point, Elon Musk has kept quiet about the identity of this individual and the financial terms of the deal.

 

Don’t get too excited… because the BFR is probably several years away from its initial flight. However, the spaceship portion of the rocket could start testing as soon as 2019. SpaceX COO said that the rocket is likely to take flight within a decade, which probably a more realistic timeline given Musk’s overly-optimistic way of thinking. So it is probably more than several years away…

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Blue Chip

The ‘Tesla Fighter’ stock is waaay up!

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Nio has hit the NYSE… and shares were up 76% on Thursday, just the second day of trading. These results are particularly interesting because Nio had to lower their IPO to the lower end of their price range before the big day. On the first day of trading, the stock closed up 5% but was down as much as 15%.

 

Nio is just four years old… and is the company that vows to battle Tesla in China, the world’s most significant electric vehicle market. The company has investors that include Tencent and Baidu and now has $1 billion from the IPO. Still, the electric-car company remains small in scale, but certainly has huge aspirations for the future.

 

It could be a bumpy road ahead… for Nio which is entering a market with fierce competitors that include Tesla, Byd (which Warren Buffet invests in), and Byton. Volkswagen and Ford are also eyeing the electric car market, and specifically in China. But if everyone let ‘too much’ competition stop them, where we would be today?

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