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Stock-market futures slip, bond yields pop near 1% amid razor-thin Georgia races


Wall Street had Georgia squarely on its mind Tuesday night, with equity futures and bonds mostly in the crosshairs as investors eyed dual contests for key Senate seats coming down to razor-thin margins in early returns.

MarketWatch’s Victor Reklaitis reported that analysts are describing the Georgia races as “about as close as you can get,” and there are expectations that the winners won’t be declared until Wednesday morning.

At last check, tallies from populous Democratic-leaning counties, particularly in Dekalb, which could swing the vote tally, were looming.

Democratic challenger Jon Ossoff was trailing incumbent Republican Sen. David Perdue, with over 90% of the vote counted, after enjoying a handy lead earlier, according to data aggregated by the Associated Press.

In the other runoff, Democrat Raphael Warnock was also running slightly behind against incumbent GOP Sen. Kelly Loeffler.

The Senate races are runoffs from the November general election, when none of the candidates hit the 50% threshold required to be declared winner.

At stake for the markets is the prospect of a slim Democratic majority in the Senate if candidates can upend GOP incumbents.

Senate Republicans, if either Loeffler or Perdue wins Tuesday night, can be expected to block further coronavirus relief legislation and crimp any Democratic plans for expansive spending after President-elect Joe Biden takes office, experts said.

A Democratic sweep in Georgia, however, would give that party virtual control of that chamber because Vice President–elect Kamala Harris would cast tiebreaking votes as the chamber’s president.

Futures for the S&P 500 index
ESH21,
-0.64%

ES00,
-0.64%

were off 0.7%, while those for the Dow Jones Industrial Average
YMH21,
-0.24%

YM00,
-0.24%

were 0.3% lower, and Nasdaq-100 futures
NQH21,
-1.34%

NQ00,
-1.34%

were off 1.3% late Tuesday.

In the regular session, the Dow
DJIA,
+0.55%
,
S&P 500 index
SPX,
+0.71%

and the Nasdaq Composite Index
COMP,
+0.95%

finished the session solidly higher ahead of the political face-offs.

However, some of the biggest moves were emanating from the bond market, with the 10-year Treasury yield
TMUBMUSD10Y,
1.000%

knocking on the door of 1%, at around 0.985%, as prices fell, after rates finished at 0.955%, marking its highest 3 p.m. Eastern close since Dec. 4, according to Dow Jones Market Data. The 30-year Treasury bond
TMUBMUSD30Y,
1.762%

also was up nearly 4 basis points yielding 1.744% vs. an afternoon close at 1.705%, also its highest rate in a month.

For the bond market, Democratic wins could add to the bearish pressure on Treasurys as analysts say inflation expectations have risen in response as Congress may be more inclined to pass additional fiscal spending measures with a majority, which would weigh on bond prices, dragging yields up.

“It looks like a couple of the larger democratic counties haven’t been totally counted yet so my belief is this may very well swing to the Democrats,” Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities, told MarketWatch.

“If that does happen rates will continue to rise over the next few days. We could very well see 10yr yields near 1.2% shortly,” he wrote.

It is nearly impossible to surmise what outcome Wall Street deems is best suited to push stocks further higher in 2021. Last year, market participants had been wagering that a Biden presidential victory, coupled with Democrats achieving a majority in the Senate, would provide the best scenario for additional financial relief measures to help sustain the economy’s recovery from the Covid-19 pandemic.

However, a blue wave failed to manifest and markets surged into the final weeks of 2020 regardless.



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Dow Slips Amid New Travel Curbs


The index of blue-chip stocks fell 200.94 points, or 0.7%, to 30015.51, marking its largest one-day point and percentage decline in December. The S&P 500 slid 7.66 points, or 0.2%, to 3687.26 to extend its losing streak to a third session.

The tech-heavy Nasdaq Composite, in contrast, rose 65.40 points, or 0.5%, to 12807.92, a new all-time high.

Much of the stock market has lost steam this week as some nations began taking steps to curtail travel in an effort to contain the emergence of a fast-spreading variant of coronavirus from England. The U.K. imposed stringent restrictions on social and business activity, prompting concern that more countries may be required to adopt measures that would hamper the global economic recovery.

“It would be a brave man to suggest this will just remain a U.K.-specific issue,” said

Derek Halpenny,

head of research for global markets in the European region at MUFG Bank. “Are we going back into another phase of more pronounced global lockdowns again?”

Oil prices slipped for a second day amid growing worries over the new restrictions imposed on travelers from the U.K. to other countries. Brent crude futures, the benchmark in international energy markets, dropped 1.6% to $50.08 a barrel.

Meanwhile, the yield on the 10-year note ticked down to 0.917%, from 0.941% Monday, as some investors looked to the relative safety of U.S. government bonds. Yields fall when prices rise.

Investors are trying to gauge whether the new strain of Covid-19 will impact the efficacy of vaccines that are being rolled out this month.

BioNTech

Chief Executive

Ugur Sahin

said the vaccine developed by his company, in partnership with

Pfizer,

would likely work against the new variant and is being tested. If a new mutation would make the current vaccine ineffective, BioNTech can develop another tailored to the new variant in six weeks, he said.

Technology stocks traded higher on Nasdaq, in contrast to declines for the S&P and Dow.



Photo:

Michael Nagle/Bloomberg News

“The big unknown is to what degree could the new strain make the efficacy of the vaccine lower,” said

Peter Garnry,

head of equity strategy at Saxo Bank. “If it just turns out to be more infections, and it doesn’t have an effect on the vaccine, then the market will be less concerned.”

Late Monday, a fresh $900 billion fiscal stimulus package was passed by Congress, ending weeks of anticipation from investors about whether lawmakers could end their stalemate. The bill, which includes direct checks to households and relief for small businesses, is expected to be signed by

President Trump.

Even so, the bill’s passage wasn’t enough to propel the broader stock market higher.

“We’ve had the positive news on the vaccines and the fiscal deal, so there’s probably not a catalyst to drive stocks meaningfully higher in the next few weeks,” said

Brian Levitt,

global market strategist at Invesco.

When Is the Market on Holiday?

Select stock-market closures through year’s end

  • Thurs. Dec. 24: U.S. stock market closes at 1 p.m. ET
  • Fri. Dec. 25: Markets closed
  • Mon. Dec. 28: London stock market closed
  • Fri. Jan. 1: Markets closed

Still, Mr. Levitt noted that he maintains a positive outlook on equities.

“In my opinion, betting against stocks over the next year and beyond is betting against medicine, science and policy makers,” he said. “And I’m not willing to make those bets.”

In corporate news,

Apple

rose $3.65, or 2.9%, to $131.88 after Reuters reported that the iPhone maker intends to move forward with its own self-driving car technology.

Exercise-equipment maker

Peloton Interactive

gained $16.82, or 12%, to $161.21, hitting a new all-time-high, after it agreed to buy commercial fitness-equipment provider Precor for $420 million in cash.

Travel stocks and shares of energy companies tumbled.

Norwegian Cruise Line Holdings

slid $1.70, or 6.9%, to $23.08.

Chevron

fell for an eighth consecutive day, losing $1.73, or 2%, to $84.36. That marks the longest losing streak for the oil giant since October 2013.

Meanwhile,

Tesla

tumbled $9.52, or 1.5%, to $640.34, extending its losses for the week to nearly 8%. The electric-car maker made its S&P 500 debut Monday.

Moves in stocks could be big and markets may be especially choppy in coming days because fewer people are trading as the holiday period starts, said

Salman Ahmed,

global head of macro at Fidelity International.

The final stretch of trading in December is historically positive for the stock market. But this week’s losses may be a sign that investors are starting to take profits after a blockbuster year, especially as they consider the possibility of tax changes after President-elect

Joe Biden

takes office, said

JJ Kinahan,

chief market strategist at TD Ameritrade. The S&P 500 is up 14% in 2020, and the Nasdaq Composite has catapulted 43% higher.

Footage shows empty supermarket shelves while trucks bearing cargo get stuck at the border after France imposed a travel ban on Britain following the spread of a new coronavirus strain. Other countries have also barred passengers from the U.K. Photo: Neil Hall/EPA/Shutterstock

Additionally, Mr. Kinahan noted, Tuesday’s worse-than-expected consumer confidence report may also be weighing on markets.

The Conference Board, a private research group, said its index of consumer confidence dropped to 88.6 in the first two weeks of December, from a revised 92.9 in November. Economists surveyed by The Wall Street Journal had expected a level of 97.5.

Still, there were small signs of optimism. Data from the Commerce Department showed Tuesday that U.S. gross domestic product—the value of all goods and services produced across the economy—increased at an annualized rate of 33.4% in the third quarter, slightly stronger than the previous estimate issued last month.

Overseas, European shares rebounded after Monday’s losses. The pan-continental Stoxx Europe 600 gained 1.2%.

Major stock indexes in Asia closed lower. China’s Shanghai Composite fell 1.9%, and South Korea’s Kospi declined 1.6%.

Write to Caitlin Ostroff at [email protected] and Caitlin McCabe at [email protected]

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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‘The Amateur Hour’ Review: Hire Teachers for Higher Education


As the pandemic has forced most colleges and universities to adopt remote instruction, it’s worth remembering that more than 50 years ago some schools voluntarily experimented with remote instruction via televised classes. That did not go well either. Students did not feel the same connection to their instructors and that, in turn, made a difference in what was learned. “It’s better to have a poor instructor in the classroom,” said one unhappy professor in 1967, “than to have a good one on TV.”

The vignette comes from

Jonathan Zimmerman’s

“The Amateur Hour: A History of College Teaching in America.” Mr. Zimmerman, an education historian at the University of Pennsylvania, has braided together a smooth narrative from many short pieces of thread, consisting of glimpses into the experiences of faculty members, students and administrators from the early 19th century up through the 1990s, and encompassing two- and four-year institutions, large and small, elite and not. The book is economical in its presentation of materials, gathered from 60-plus archives, and even-handed in presenting the gripes of instructors and students.

The book’s clever title refers to the way that higher education, when hiring, evaluating and rewarding faculty, gives most attention to research productivity and little to teaching effectiveness. Partly this is due to the difficulty of measuring effectiveness in the classroom, but it is also due to the resistance of faculty members to having their teaching reviewed by peers—something that would, Mr. Zimmerman says, “make their teaching truly professional.”

“The Amateur Hour” begins with the recitation model of college teaching, which was near universal in the early 1800s. Students were asked to read an assigned passage and then, at class time, recite either a summary or, some professors might insist, the passage in its entirety. When lectures began to displace recitation, some college presidents worried aloud about the problem of keeping students actively engaged throughout the class session. The Yale Report of 1828 wondered whether the student attending a lecture “may repose upon his seat and yield a passive hearing . . . without ever calling into exercise the powers of his own mind.”



Photo:

WSJ

The Amateur Hour

By Jonathan Zimmerman

Johns Hopkins, 294 pages, $34.95

As more students enrolled in higher education, hiring did not keep pace. Class sizes grew, and students had less contact with professors. Previously, faculty members at small liberal-arts colleges knew every student on campus and could demonstrate personal concern for them. By the late 19th century, however, many American faculty members were trained in Germany and brought back with them a passion for research, as well as more interest in libraries and laboratories than in students. In 1887,

Julius Seelye,

the president of Amherst College, lamented the changes: “Education is a wholly personal work. It is not gained by books, or by instruction alone, nor by anything in place of the living inspiration of the living teacher.”

By 1900, the demotion of teaching in institutional priorities was so pronounced that the headline for an editorial in the Nation magazine declared, in uppercase letters, “THE DECLINE OF TEACHING.” Ten years later

David S. Jordan,

the president of Stanford University, conceded that “the young instructor has been urged to place as many printed pages as possible to his credit” and “encouraged to look with scorn on the ‘mere teacher’ who cares for the intellectual welfare of the students.”

Worse, the better an instructor was at teaching, the less standing he had in his discipline. An Ohio State dean wrote that same year that “there is a rather wide spread notion in American Universities that a man who is an attractive teacher must in some way or other be superficial or unscientific.”

The leitmotif that runs through Mr. Zimmerman’s narrative is that class sizes continued to grow and grow and grow: The economics proved too compelling even for liberal-arts colleges, the last bastions of small-batch instruction, to ignore. The largest classes have been at universities, of course, and since the early 20th century these institutions have been trying to counterbalance the worsening student-instructor ratio with honors seminars, independent study, small-group tutorials and other more personalized formats. But these programs also required assigning many more students to very large classes. “If the colleges are to ask society to support a more individualized type of instruction,” wrote

Homer L. Dodge,

a physicist and dean at the University of Oklahoma, in 1932, “college professors must be willing to learn the technique of handling large groups of students.”

Foundations funded many 20th-century initiatives to improve college teaching, but a lack of knowledge of what was needed for excellence stymied these efforts. “We perhaps can recognize it when we see it,” said one University of Minnesota professor, “but we cannot draw up a bill of particulars beforehand.”

New technology, at various junctures, has briefly promised a means of giving every student personalized instruction—and freeing the amateur instructor to pursue research in his discipline. Mr. Zimmerman brings to light the evangelism of psychologist

Fred S. Keller,

who in the early 1960s developed a template for self-paced college courses that he called the Personalized System of Instruction. But self-paced classes required considerable self-discipline of the students, and though PSIs enjoyed a vogue in hundreds of places in the early 1970s, course completion rates were dismal.

Mr. Zimmerman has been honored for his teaching and is an active participant in a teaching-improvement initiative at his home institution. But even he fumbles for words when trying to describe what makes a great college teacher. It requires a “distinctive rapport” with students, he says, but also “a kind of mystical presence that cannot always be defined but also cannot be denied.” Also worth noting for our Year of the Plague: He believes that the ineffable, energizing spark of education cannot be conveyed via computer connection, but only face-to-face.

Mr. Stross is the author, most recently, of “A Practical Education: Why Liberal Arts Majors Make Great Employees.”

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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Dow Futures Are Softer Amid a Fed and Treasury Clash


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As Apple releases its new line of Macs, the biggest beneficiary may be Microsoft


Apple is set to launch its next generation of MacBooks this week. For the first time since the surprise 2005 announcement by Steve Jobs that Apple was moving from PowerPC to Intel (x86), the company is set to take on chip-making responsibility for the Mac.

With Apple
AAPL,
-0.37%

coming off strong earnings that included better-than-expected growth for its Mac line, which grew 7.3%, more than double the PC market’s 3.6%, it would seem like the perfect moment for its new launch of improved MacBooks.

However, I believe the launch could test Apple, as it is essentially deriving the silicon for its new Macs from the iPhone. In time this may pan out well, but there is a good chance this show could get off to a rocky start.

Apple has made many claims about its new MacBooks, and while we will have to wait until Tuesday’s event to get the full picture, there have been plenty of leaks on what to expect from the company.

It’s the same old-new normal for Apple, which CEO Tim Cook alluded to at this year’s WWDC event, including promises of a whole new level of performance, with the lowest power consumption, maximizing battery life to be better than ever before. Also, a new level of graphic performance and even more market innovation.

In the WWDC transcript, Cook’s exact words were: “The Mac will take another huge leap forward.”

All of this will remain TBD until broad benchmarking and compatibility testing for software and peripherals is available.

Challenging transition

My biggest concern, though, isn’t the promises, but rather the potential vulnerabilities for Apple. The transition from Intel
INTC,
+1.87%

to its new Arm-based silicon is almost certain to be a challenging transition that will impact both consumers and developers.

The company’s entire software ecosystem will have to be rewritten to work on this new architecture, and this takes time. Microsoft
MSFT,
-1.02%
,
for instance, has been working for a decade on building its software ecosystem to run smoothly on Arm-based variants, both of its Surface Pro X but also other Arm-based notebooks from the likes of Samsung and Lenovo. The improvement has been material, but it has been markedly difficult to meet all the developer and consumer needs.

More specifically, the transition from Intel to Apple’s new silicon will likely break applications, and create compatibility issues with peripherals. While I expect Apple to have a set of “hero apps” that will work flawlessly, this certainly won’t be the case across all the apps, tools and games used by Mac consumers.

Reaction of consumers, developers

This will leave consumers frustrated with their new Macs, perhaps more so than Mac’s constant quality issues with its keyboards in recent generations. Furthermore, this creates more work for developers, who will now be required to support disparate apps for the Intel version and the Arm version — this is anything but straightforward.

Perhaps Apple’s biggest mistake is its claims that this transition will be seamless. Sure, that is good marketing, but the more realistic approach should be: “Bear with us while we make the Mac experience even better.”

Another big question mark for Apple will be around support of its current generation of Intel-based Macs. The company was heavily scrutinized for its short period of support for PowerPC after shifting to Mac. The support period lasted only three years, and that left some Apple customers dissatisfied. Many Mac users stay with a device for five to eight years, and certainly won’t want to be forced to buy another $2,000-plus device prematurely if Apple decides to stop supporting its Intel-based Macs after three years. This will be something to watch closely.  

If Apple does stumble for a period while it seeks to perfect its new silicon, the next question is where do consumers seeking an alternative to Mac turn?

Microsoft stands to gain

I believe Microsoft could be the big winner during this transition for the Mac. The Microsoft Surface has seen its growth rates up 37% in its most recent quarter, tracking over $6 billion in its trailing four quarters. This number is still much smaller than Mac, which saw its Mac revenue at $9 billion in its most recent quarter, reflecting its best quarter ever, growing 28% year over year. Still, I believe there may have been some padding with buyers seeking to upgrade before Apple moves away from the Intel-based silicon.

Maybe more than just Microsoft and Surface’s growth momentum is the brand strength and ultra-premium branding that comes with Surface. I have long believed Microsoft’s endeavor into Surface had much less to do with competing with its large software OEM’s like Dell
DELL,
+0.55%
,
HP
HPQ,
+3.40%

and Lenovo, and much more to do with building a true competitor to the Mac.

This has been visible in the entire approach to Surface, including acute attention to details such as the packaging, the branding on the notebooks, the construction materials and the premium pricing. Microsoft has also been wise in its development of the Surface to include Intel, AMD
AMD,
-1.64%
,
and Arm-based variants, giving customers a choice while taking advantage of its ability to support all three chipsets’ software compatibility nuances.

Tuesday’s launch has a lot at stake for Apple. Apple’s move away from Intel has long been touted as a big problem for Intel, but it could be equally, if not more problematic, for Apple. With Microsoft Surface continuing to gain momentum for its ultra-high-quality notebooks, Mac faces more competition and will be under pressure to get this right— sooner than later.

Daniel Newman is the principal analyst at Futurum Research, which
provides or has provided research, analysis, advising and/or consulting to
Qualcomm, Nvidia, Intel, Microsoft, Samsung, ARM, and dozens of companies in
the tech and digital industries. Neither he nor his firm holds any equity
positions in any companies cited. Follow him on Twitter 
@danielnewmanUV.





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Nationhood: A Better Future for Puerto Rico


Regarding Jenniffer Gonzalez’s letter “Of Course Puerto Rico Deserves to Be a State” (Oct. 28): Unlike politics in the U.S., Puerto Rican politics are not based on the usual left/right spectrum, but on the centuries-old status issue. Pro-sovereignty groups were persecuted and exiled by the colonial government as well, ingraining a colonial mentality in many Puerto Ricans. Today, Puerto Rican politics is still based on the status issue and rooted in these colonial fears.

In 2020, not only did the Democrats erase statehood from their platform and Republican leaders say no to statehood, but the U.S. Justice Department invalidated the Nov. 3 “statehood yes or no” referendum and stated that even if statehood were to win, it would not lead to statehood. Statehood is not economically viable, as detailed in the 2014 U.S. Government Accountability Office report, but Puerto Ricans and Americans have an opportunity to forge the path to sovereignty and free association.

Free association would offer Puerto Rico a dignified relationship with the U.S., where Puerto Rico would be a U.S. ally and economic strategic partner. Currently, free association is the option with the largest growth of support in Puerto Rico. Together, both sovereignty options garnered almost 39% of the vote in the 2012 plebiscite.

This referendum will show Americans that statehood is not supported by an absolute majority of Puerto Ricans. After 500 years of colonialism, Puerto Ricans deserve freedom and nationhood, not statehood.

Javier A. Hernández



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U.S. Stocks Rise Ahead of Tech Earnings


U.S. stocks rose Thursday, rebounding after fresh data showed jobless claims dropped and the economy expanded sharply in the third quarter.

The Dow Jones Industrial Average gained 137 points, or 0.5%, as of the 4 p.m. close of trading in New York. The S&P 500 added 1.2%. Both indexes on Wednesday suffered their biggest one-day percentage declines since June.

The Nasdaq Composite advanced 1.6% ahead of earnings reports from some of the biggest companies in the technology sector.

Fresh data showed that 751,000 Americans applied for initial unemployment benefits through the week ended Saturday, down from a seasonally adjusted 791,000 in the prior week. The decline is a sign that the labor market is slowly recovering, though claims remain at historically high levels.

Meanwhile, U.S. gross domestic product for the third quarter rose at an annual pace of 33.1%, the biggest gain ever. The increase followed a record drop in output earlier in the year when the virus and related shutdowns disrupted business activity across the country.



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Quibi Is Shutting Down Barely Six Months After Going Live


Quibi Holdings LLC is shutting down, according to people familiar with the matter, a crash landing for a once-highflying entertainment startup that attracted some of the biggest names in Hollywood and had looked to revolutionize how people consume entertainment.

The streaming service, which served up shows in 5- to 10-minute “chapters” formatted to fit a smartphone screen, has been plagued with problems since its April launch, facing lower-than-expected viewership and a lawsuit from a well-capitalized foe.

On Wednesday, founder Jeffrey Katzenberg called Quibi investors to tell them he is shutting the service down, some of the people said.

Mr. Katzenberg and Chief Executive Meg Whitman decided to shut down the company in an effort to return as much capital to investors as possible instead of trying to prolong the life of the company and risk losing more money, according to the people familiar with the matter.

Employees will be laid off and will be paid a severance, the people said, and the company will explore selling the rights to some of its content to other media and technology firms.

The decision marks a disappointing turn of events for Mr. Katzenberg, a former

Walt Disney Co.

executive and DreamWorks co-founder who pitched the streaming service as a revolutionary new entrant to the video-streaming wars.

Quibi was designed for people who consume entertainment in short increments on their smartphones, but the coronavirus pandemic forced would-be subscribers away from the kinds of on-the-go situations Quibi executives envisioned for its users. Quibi eventually allowed subscribers to watch its shows on their TVs.

Even before the Covid-19 crisis, Quibi had its share of skeptics in the media world, since consumers already had free options for short-form video, such as

Alphabet Inc.’s

YouTube. Quibi’s bet was that it could charge subscriptions by creating higher-end content, and it paid handsomely to develop that programming. Some Quibi executives believed the venture could have been a success, if not for the pandemic, with better execution, pointing to the rise of TikTok, people close to the company said. Some of them believed, for example, that Quibi could pivot to a “freemium” model, offering some content for free while making customers pay for the top programming.

Quibi, which cost $4.99 a month, also had to compete with a growing number of rivals, with Walt Disney’s Disney+,

Apple Inc.’s

Apple TV+,

AT&T Inc.’s

HBO Max and

Comcast Corp.’s

Peacock all launching in the past year.

Mr. Katzenberg and Ms. Whitman had raised about $1.75 billion from high-profile investors including Disney, Comcast’s NBCUniversal and AT&T’s WarnerMedia.

The company spent aggressively to develop its content. Its lineup of star-studded programming included a court show featuring Chrissy Teigen, a romantic comedy with Anna Kendrick and an action thriller starring Christoph Waltz and Liam Hemsworth.

Quibi has drawn on the deep Hollywood connections of Mr. Katzenberg, who ran Disney’s movie business, co-founded DreamWorks SKG and led its animation spinoff DreamWorks Animation SKG Inc., the studio behind “Shrek” and “Kung Fu Panda.”

The streaming service attracted blue-chip advertisers including

PepsiCo Inc.,

Walmart Inc.

and

Anheuser-Busch InBev SA,

securing about $150 million in ad revenue in the runup to its launch. Those deals came under strain earlier this year amid lower-than-expected viewership for Quibi’s shows, prompting advertisers to defer their payments.

In recent weeks, Quibi hired a restructuring firm, AlixPartners LLP, to evaluate its options, the people said. It recommended the options to the board of directors this week, laying out a list that included shutting the company down.

AlixPartners didn’t immediately respond to a request for comment. The firm previously handled the bankruptcy of Enron Corp.,

General Motors Co.

and Kmart.

Earlier Wednesday, Mr. Katzenberg and Ms. Whitman held a conference call with investors to explain the decision to shut the company down. During the call, Mr. Katzenberg told investors that the company decided to return $350 million in capital rather than pursue a new strategy that could have attracted additional subscribers but would have required a hefty investment, according to a person familiar with the call.

The Information earlier reported that Mr. Katzenberg told people in the media industry he may have to shut down the company.

The decision to hire AlixPartners came after starting a process to sell the company, The Wall Street Journal reported. Quibi pitched suitors including NBCUniversal on a sale, according to people familiar with the matter, but would-be buyers were put off by the fact that Quibi doesn’t own many of the shows it puts on its platform.

NBCUniversal declined to comment.

Quibi is also fighting a legal battle with interactive-video company Eko, which claims Quibi is violating its patents and has stolen trade secrets. Hedge fund Elliott Management Corp. is financing the high-stakes patent lawsuit.

The fight centers on a key feature of Quibi’s app that plays different videos for users depending on whether they are holding their phone horizontally or vertically. Quibi has denied infringing on Eko’s patents or stealing trade secrets.

Write to Benjamin Mullin at [email protected], Joe Flint at [email protected] and Maureen Farrell at [email protected]

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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Peloton Bike+ Review: Rationalizing a $2,495 Exercise Bike


If there is a winner in Corporate America’s grueling Tour de Pandemic, Peloton would be it.

As we endured month upon month of quarantine, the word “Peloton” became as ubiquitous to in-home exercise gadgets as Kleenex is to tissue, or Band-Aids are to boo-boos. For those who can afford them, swanky stationary cycles and treadmills that pipe live-streamed classes into our living rooms are a godsend during lockdown.

Peloton enjoyed a 172% revenue increase between April 1 and June 30 compared to a year ago and posted its first quarterly profit. By July, its order backlog built to $230 million, or more than 100,000 bikes. The company’s $38 billion stock-market valuation makes it worth more than

Ford Motor Co.

To celebrate, Peloton launched an even swankier product called Bike+. This $2,495 machine is a nod to the future of in-home fitness, where smart exercise gear is more versatile, offers every class you’d get at the gym and is capable of interacting with users in real time.

At first glance, the Bike+ looks nearly identical to the standard Bike. Introduced in 2014, the original can now be had for $1,895 following a Covid-era price cut. I’ve put several miles on both models over the past year: Both burn just as many calories, deliver just as much miserable leg burn and produce just as much sweat.

The Bike+ display can pivot away from the handlebars to make it easier to do non-bike parts of the workout, such as weight training.



Photo:

Kimberly Stoll

If I bend the math a certain way, putting the Bike+ in my home office costs less than a gym membership I’m struggling to utilize. But, I’ve really got to be limber, since working out with Peloton instructors and tracking your metrics also require a $39-a-month “all-access” subscription.

Health-club fees are all over the board—from

Planet Fitness’s

$10 a month to potentially hundreds for Equinox. But these gyms require us to leave our bunkers, lowering their current appeal. Peloton is making good use of the stay-home status quo to get people comfortable with pricing plans that were difficult to digest in normal times.

Meanwhile, introducing a more expensive bike with added bells and whistles allows the company to cut the price of the entry model, setting up a two-tier system that reinforces this notion of affordability.

Tom Cortese, a Peloton co-founder and its chief operating officer, told me the company doesn’t want to mess up a good thing, so the Bike+ revamp primarily only addresses items that riders wanted improved: The adjustment levers are updated for easier use; cables are better hidden in the bike’s guts; multipiece steel construction has been replaced by single-piece units without bumpy weld marks.

Peloton redesigned its power cord and adapter in order to keep with the bike’s own sleek design.



Photo:

Kimberly Stoll

“We even made the AC adapter smaller and nicer looking,” Mr. Cortese said. Emblazoned with a prominent “P,” the plug mimics the same thoughtful industrial design that has long made the Peloton a looker.

Such aesthetic refinements aren’t worth the $600 hike over the standard model, however. (You can buy a decent road bike for about that much.)

A lot of value is in the Bike+’s 24-inch touch screen. It’s bigger and easier to see than the traditional bike’s 21.5-incher and has a new 360-degree swivel feature. Flipping the screen away from the handle bars toward the rest of the room is a hallmark improvement, allowing for easier viewing of yoga classes, weight-training sessions and guided meditation when pedaling is not on the day’s agenda. Or when both are called for.

I recently took a 30-minute boot-camp class taught by Robin Arzón. The class started with a seven-minute bike ride, then 13 minutes with dumbbells, and then back on the bike for 10. Twirling the screen toward my workout mat and weight bench made the process easier.

The hardest part was what Ms. Arzón called a “Mr. Rogers’s shoe change”—the cumbersome process of unclipping your cycling shoes, then changing into sneakers, then doing the reverse, while increasingly exhausted.

Peloton riders must wear cycling shoes. Putting them on, clipping them into the bike, then unclipping them again is an exercise routine of its own.



Photo:

Kimberly Stoll

Bigger front-facing speakers, integrated into the screen, are welcome for the aging among us, or those who simply like it loud like a real cycling studio. There’s also a camera embedded in the Bike+ screen with a “privacy slide” shutter.

A new Bike+ feature allows a rider to remotely lock the resistance setting into an instructor’s suggested level and avoid setting it manually. If Ms. Arzón yells out a setting in the 45%-to-55% range, the bike automatically sets my pace at 50%. Having this feature means I don’t have to pay constant attention and I don’t have to fiddle with the resistance dial. Unfortunately, it’s currently available only on archived classes, not live rides. And certain competitors already offered the feature.

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To be fair, much of what comes on a Peloton can be gotten from a few other bikes on the market. Among the small group of connected-bike competitors is NordicTrack’s $2,000 S22i Studio Cycle and Echelon’s $1,600 EX5S. They also employ a design far more sophisticated than the Coppertone-colored Schwinn Deluxe Exerciser my grandmother had in her bedroom.

(Schwinn does have a connected bike, too. It’s designed to work with Peloton’s lower-cost app for nonowners, which my colleague Nicole Nguyen recently covered.)

I’ve taken classes on various “connected” bikes, and most set a slightly lower bar than Peloton. This isn’t because they’re less challenging; it’s because nothing rivals Peloton instructors, who are as inspiring as they are intimidating. Ms. Arzón, for instance, is an attorney turned ultramarathoner and motivational guru. Others are national champion cyclists and fitness models.

Peloton also has the biggest, and possibly most engaged, community. The company boasts one million “connected fitness” subscribers, about 300,000 more than NordicTrack, for instance. Its nearly three dozen instructors teach live classes that can be attended by tens of thousands in real-time or via the archive.

Instructor Robin Arzón teaches a 30-minute cycling class, using the ‘Hamilton’ soundtrack as the playlist.



Photo:

Kimberly Stoll

The Peloton formula—hardware, classes and social interaction—leads to the thrill and adrenaline of a sport rather than the drudgery and isolation of working out at home.

My own stats—such as the record output pace I’ve set in the past—are always in front of me as a target to beat. Peloton’s leaderboard allows me to compete in real-time against thousands of other riders, segmenting down to people in my age group and gender if I want.

In Irene Scholz’ Sept. 22 intervals ride, for instance, I ranked 10,420 out of 16,814 riders—a placement I see as respectable since I’m mainly a swimmer. My rank among a smaller segment of riders—men in their 40s—was slightly more favorable.

This gamification of exercise, Mr. Cortese said, is “the most positively addictive behavior” on the planet. Is there anything unhealthy about having a nagging desire to get on the bike? Perhaps not, but is there anything cost effective about it?

The Bike+ can be financed for $64 a month. (The traditional model can go for $49 a month.) Add $39 for the connected membership, and I’m at $103 a month.

That’s $18 more than my Life Time Fitness gym membership—which includes more weights, bikes, treadmills, sauna benches and mouthwash than I could ever use, particularly since membership seems to have dwindled amid Covid-19. (For the record, I only use the 25-meter pool, the shower and the mouthwash.)

I talked to Peloton Chief Executive John Foley about the pricing breakdown and he told me to look at this as a family plan rather than an individual one. If my wife and I both worked out with it, the individual cost is $51.50 a month. If my kids also started using it regularly—slim chance though that may be—the per-workout cost could get down as low as $2.

This is an apparent bargain compared to my trips to the gym, which include driving 6 miles and competing for the pool’s lap lanes. I recently did the math on this membership: When I’m fully using it, I pay about $3.50 a visit. Or, if you want to be really specific, 10 cents per lap.

—For more WSJ Technology analysis, reviews, advice and headlines, sign up for our weekly newsletter.

Write to John D. Stoll at [email protected]

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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Future

U.S. Stock Indexes Open Higher on Earnings Optimism


U.S. stocks opened higher Monday, continuing last week’s gains as investors look ahead to a week that could bring the start of a turnaround for corporate earnings.

The S&P 500 rose 0.8% after the opening bell, lifted by gains in technology shares. The Nasdaq Composite jumped 1.3%. The Dow Jones Industrial Average added 0.3%, about 98 points.

The early gains are on track to extend last week’s rally, during which the benchmark S&P 500 index advanced 3.8%, its biggest weekly gain in three months. Driving part of the rally, some investors said, was signs that the November presidential election could have more of a decisive result than originally expected as polls showed a growing lead for former Vice President Joe Biden over President Trump.

This week, the focus is likely to shift to the third-quarter earnings season. Investors are betting that the results will show corporate performance has turned a corner, helping lift stocks higher. With the economy continuing to slowly reopen, profits of large companies in the S&P 500 are now projected to drop 20% from a year earlier, an improvement from the 25% decline anticipated at the end of June.

“There is a big sense that [the third quarter] was a big quarter for growth in the U.S.,” said Kit Juckes, macro strategist at Société Générale. “It’s economically not as bad as our worst nightmare.”

Earnings will continue to rebound but the pace of improvement will slow, said Jim Cielinski, global head of fixed income at Janus Henderson.

Many companies “almost had to shut down” in the second quarter, “so the mere reopening, particularly in goods-producing companies, can lead to a pretty abrupt improvement,” he said. But, “with increased lockdowns or quasi-lockdowns, the pace of that should slow.”

Markets are also betting the Democrats may secure control of the Senate in the November election, making it a full sweep. That would lay the ground for a large stimulus package to be passed by Congress, offering additional relief to households and businesses, in the early months of next year.

“There is a good chance that we’ve overplayed the volatility due to the November election,” said Edmund Shing, Global Head of Equity Derivative Strategy at

BNP Paribas.

The Federal Reserve is still “in ‘whatever it takes’ mode,” and both major parties are committed to more stimulus, though a bipartisan deal is very unlikely, he said.

The latest White House offer on a new coronavirus package hit resistance from both Democrats and Republicans over the weekend, deflating hopes that an agreement would be struck before Nov. 3. But investors had already written off hopes of a deal before the election, and are looking ahead to the new year.

There is little incentive for lawmakers to reach an accord before the election, Mr. Shing said. That is partly because there will inevitably be a considerable lag between the actual spending and the growth, which he predicts would only start in earnest toward the end of 2021.

“The greatest odds of increased stimulus would come with the clean sweep. And we’ve already seen the Democrats’ numbers are much larger,” said Mr. Cielinski.

A decisive Democratic victory is likely to increase the scale and focus of a potential fiscal injection, Mr. Cielinski said. “What the attempt of the Democratic package is, it’s a reallocation of income away from corporations and more toward the general populace, and in particular the lower earning echelons of the general populace,” who have a higher propensity to spend, he said.

In premarket trading, shares of

Twilio

jumped 4.7% after the cloud-communications company said it would buy data-platform firm Segment in a $3.2 billion stock deal expected to close during the fourth quarter.

In commodities, Brent crude, the international oil benchmark, fell 1.3% to $42.32 a barrel.

The market for U.S. Treasurys is closed for Columbus Day.

Overseas, the Stoxx Europe 600 gained 0.8%. The yield on Italy’s benchmark 10-year bond fell to a new all-time low of 0.686%.

China’s Shanghai Composite Index closed up 2.6% and Hong Kong’s Hang Seng Index advanced 2.2%.

Over the weekend, China made it easier for traders to bet the yuan will fall in value, a move analysts said showed that the country’s central bank wants to slow any further rally in the currency. Starting Monday, banks no longer need to deposit 20% of their sales when buying and selling what are called currency forwards denominated in U.S. dollars for clients.

The yuan weakened 0.8% to about 6.74 per dollar in offshore markets.

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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