Market News 8/07

Markets

Let's hope for a better week in the stock market, as the S&P 500 and Nasdaq had their worst performance since March last week. However, if we shift our attention from stocks to bonds, there's an intriguing development: Yields on the 10-year Treasury note have surged to almost their highest level in over a decade. This suggests that investors believe elevated interest rates will persist for a considerable time, which could be unfavorable for prospective homebuyers but a positive indicator for robust economic growth.

S&P 500 Rises After Posting Weekly Loss

Monday saw a positive start for the S&P 500, bouncing back from previous losses. This week's focal point will be Thursday's consumer-price index, crucial in determining potential interest rate hikes by the Federal Reserve later this year. Additionally, the producer-price index and consumer sentiment data are scheduled for release on Friday.

The stock market witnessed some notable movements. Tesla's shares declined following the resignation of its CFO, Zachary Kirkhorn, leading to a drop in the Nasdaq. Tyson shares also slid after the company reported a quarterly loss. However, Berkshire Hathaway is heading towards reaching an all-time high.

Amidst the ongoing earnings reports, this quarter has been the worst since 2020. Nevertheless, private-equity giant KKR reported profits, and Palantir Technologies is expected to release its earnings after the market closes.

Berkshire Hathaway experienced a rise in its stock value, driven by Warren Buffett's conglomerate swinging to a profit in the second quarter.

The yields on U.S. government bonds remained relatively stable, with the benchmark 10-year Treasury yield slightly increasing to 4.086% from 4.060% on Friday. Remember, yields rise as bond prices fall.

Overseas markets generally displayed weakness, with the Stoxx Europe 600 index slightly declining. In Asia, the Nikkei 225 Index rose by 0.2%, while the Shanghai Composite Index fell by 0.6%.

Tech

Zoom isn’t good enough for zoom

Rest in peace, fully remote work: 2020–2023. You had a remarkable run that forever changed the concept of work from the comfort of our couches.

The reason for this untimely demise? Zoom, the renowned videoconferencing software company, has mandated that employees residing within a 50-mile radius of its offices must now work in-person at least two days a week, according to Insider.

During the pandemic, Zoom became the face of remote work, quickly rising to prominence as the go-to platform for work meetings and virtual social gatherings. The significance of Zoom's decision to call its employees back to physical offices speaks volumes about how CEOs perceive the future of fully remote work.

This shift away from remote work has taken a toll on Zoom's stock performance. After experiencing a staggering 6x increase during the pandemic, Zoom's market value has plummeted by over $100 billion since its peak, as reported by Insider.

In contrast, Google is taking a different approach to entice its employees back to the workplace. The tech giant is offering a special deal to its workers: they can stay at the Google-owned hotel on its Mountain View campus for just $99 a night, as mentioned by CNBC. The hope is that this affordable and convenient option will encourage more employees to return for in-person coding and collaboration.

Although this "Summer Special" offer isn't covered under approved business travel, many employees are crunching the numbers and finding that $99 per night amounts to around $3,000 per month, which is often less than what they pay for rent in the expensive Silicon Valley area. Additionally, having someone make their bed is an added perk that makes the deal even more enticing.

Environment

Record Alaska Glacial Flood Prompts Emergency Measures in Juneau

Officials in Juneau, Alaska, have taken the step of issuing an emergency declaration due to a devastating river flood. The floodwaters broke records and caused significant damage, including the destruction of at least two homes, while many other residences are under threat.

Thankfully, as of Sunday, the floodwaters have started to recede, and the National Weather Service no longer anticipates a continuing threat. However, Juneau authorities have cautioned that the Mendenhall River banks are still unstable, urging the public to avoid the area and stay away from the river.

Efforts are underway to assess the extent of the damage caused by the flooding. Juneau officials are actively evaluating structures impacted by the flood, with a focus on identifying buildings that are unsafe for occupancy. Residents of these unsafe structures will be contacted to ensure their safety.

The flood originated from the Suicide Basin, located near the Mendenhall Glacier above Juneau. Water from the basin flowed into the nearby Mendenhall Lake and Mendenhall River, causing the devastating flood. At its peak, Mendenhall Lake reached nearly 15 feet, surpassing the previous record set in July 2016 by approximately 3 feet.

Sports

What just happened to college football?

In recent days, college football has undergone significant changes, leading to the demise of traditional geographic rivalries, the weakening of a once-proud conference, and the establishment of several national superconferences, all driven by the pursuit of lucrative TV deals.

The developments underscore the growing professionalization of college football, which stands out as one of the few university sports products capable of commanding billions of dollars for television broadcasting rights.

Here's a summary of the recent events:

1. Oregon and Washington have departed from the Pac-12 to join the Big Ten, aligning with their West Coast counterparts USC and UCLA. This move transforms the once-Midwestern-focused Big Ten into a 18-team conference spanning the entire country.

2. Arizona, Arizona State, and Utah have also announced their intention to leave the Pac-12 for the Big 12, following Colorado's decision to do the same two weeks ago.

3. As a result, the 108-year-old Pac-12 is on the brink of collapse, with only four schools remaining: Stanford, Cal, Oregon State, and Washington State.

The driving force behind these shifts is the stark difference in TV revenue between conferences. The Big Ten and SEC have secured massive TV deals, ensuring substantial payouts to their member schools. Meanwhile, the Pac-12's attempts to strike a deal with Apple TV+ fell short in comparison, contributing to the recent exodus.

The financial disparity is evident: The Big Ten distributed $58 million to each of its schools during the 2021–22 fiscal year, a number expected to grow under its new TV deal. In contrast, the proposed Apple deal for the Pac-12 would have provided approximately $30 million to member schools, at the high end of the range.

These changes have raised concerns about the impact of TV money on college football. The head football coach at Washington State pondered whether we have reached a point where TV money has significantly altered the landscape of the sport. Regardless of whether one agrees with the notion that conference realignment has "destroyed" college football, it is evident that the reshuffling has eroded the regional distinctiveness of each conference that once added to the sport's allure.