Weekly Financial Recap March 4th

Some highlights of this past week’s news in business

Snapchat CEO, Evan Spiegel 


Snap Inc. (SNAP), the parent company of Snapchat, launched their public offer on Wednesday, March 1st at $17 a share. The camera company ended the week at $27.07, almost 60% above the initial price. Snap’s current market capitalization is just over $37 Billion. Snapchat secures its title as the biggest tech IPO since Chinese E-commerce site Alibaba and the most valuable one since Facebook. While share prices soared in the first two days of trading, the social media company has yet to generate profits while it tries to brand itself as a camera company.

Nintendo released Switch, its hybrid home console and mobile gaming system. While early reviews of the system were positive, many reviewers were unable to test key aspects of the console’s online play and game downloading features. The Japanese company expects to make 2 million units available this month, making the product in high demand. The Verge’s Ross Miller praised the Switch:

“The most shocking thing about the Switch might be how many obvious pitfalls Nintendo has managed to elegantly avoid. Going from playing on the tablet to the TV is completely effortless, and there’s no sense of compromise whichever way you choose to play. Once you hold and use the Switch, it just makes sense.”

However, Nintendo will have to ensure that it fully supports the console with necessary games to allow users to take advantage of its multiple features. This will include ensuring online game downloading is successful as well as adapting its rich chest of iconic games to the versatile console.

Spotify, the music, video, and podcast streaming service, announced that it has reached 50 million users via its Twitter on March 2nd, just 5 months after they announced reaching 40 million users. Rumors have erupted of the streaming company’s premium service called “Hi-Fi” that could be available to customers between $15-20 a month. The new service could include current premium offerings as well as concert tickets, vinyls, and lossless high fidelity streaming.

Markets – Commodities  

Outbound shipments of U.S. Shale oil continue to surge as last month’s daily production reached above 1.2 million barrels per day (b/d), exceeding production of Algeria, Ecuador, and Qatar – all OPEC member countries. While U.S. oil production continues to undermine OPEC’s November agreement to curb oil production and raise prices, OPEC should strongly consider alternative options to decrease global oil supply. This may come in the form of ramifications for those member-countries who fail to meet their agreed upon cuts or collective additional cuts from the oil cartel.
*Investor Tip: Now would be a great time to short oil. 

131118133916-edd09-janet-yellenU.S. Federal Reserve Chairwoman, Janet Yellen 

Markets – Currencies

Investors are expecting continued volatility for the Euro on the heels of the French election to take place on April 23rd. Leading candidate, Marine Le Pen, has promised a referendum on a French exit from the European Union if elected. Nomura Securities believes that current Euro volatility is following a similar pattern as it did last summer just before the British vote. Nomura’s Report suggests that FX volatility rises prior to the event and falls significantly afterward. They explain that is partly because the market historically tends to take advantage of “perceived” attractive levels of investment while pricing out the tail risk completely.
*It might not be a bad idea to short on the Euro as well, as the French election gets closer 

U.S. Economy 

A March interest rate hike is almost guaranteed in the coming weeks as Federal Reserve Chairwoman, Janey Yellen said an increase in short-term interest rates would be suitable at this month’s Federal Open Market Committee’s (FOMC) meeting. Mrs. Yellen later said that the rate hike would be conditional on the continuation of current expectations of employment and inflation. Pending details from the Trump administration’s plans to cut taxes and announce its infrastructure spending as well as other economic policies, we should expect to see 2-3 increases by the FOMC this year, particularly in June and September.

Ali Punjani
Independent Business Blogger


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