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The scene at Goldman HQ wasn't jolly

December 18, 2018
Dow Jones: 23,593 (-2.11%)
S&P 500: 2,546 (-2.08%)
Nasdaq: 6,754 (-2.27%)
Bitcoin: $3,496 (+9.06%)
10-Year Treasury: 2.853%


Feels like the tube sock Secret Santa gift. The Dow dropped 508 points to start the week on concerns about the whole world's economic growth -- Now markets are back to where they were way back in April.

1. Amazon's got a "CRaP" problem, so it's bullying companies

"C-R-a-P" -- Please use it in a sentence... A WSJ report revealed Amazon's secret term is bad inside joke: "Can't Realize a Profit.” And it covers everything that's low-priced and heavy to ship -- making them profit-proof. So Amazon’s pressuring big brand CRaP-makers to pull a makeover for their buddy Amazon.

It's corporate body-shaming... Small, low-priced shipments are out. Big, higher-priced shipments are in. And brands are changing packages and unit amounts to cooperate with Amazon:

  • Coke: Its default SmartWater brand order is no longer a $6.99 6-pack (waaaay too unprofitable). You'll have to splurge on the better-for-Amazon, worse-for-you 24-pack for $37.20
  • Campbell Soup: Literally changing the packaging of its multi-pack Chunky Soup and Goldfish crackers. And it built some complicated "predictive technology" to see what other goods are too heavy for Amazon to profit


The Takeaway: Amazon can mess... Walmart bullies potato chips to lower their prices -- and non-compliers are banished to a random shelf behind the DVD box sets. Amazon's got similar clout in ecommerce and can sabotage brands' online sales by booting them from the platform or highlighting competitors instead.
 

2. Malaysia's government thinks Goldman's a criminal

Maybe leave this one off the resume… Goldman Sachs had helped structure Malaysia's domestic investment fund. Now the Malaysian government's charged the investment bank with fraud, saying it bribed and stole from the fund instead of advising it. Goldman shares fell another 2% and are down 27% since November.

Becoming Partner at Goldman… is like nailing a handstand mid-Vinyasa Flow. Now 2 Goldman Partners have pled guilty to stealing $600M in fees related to the fraud-y Malaysian development fund (“1MDB”). Goldman blames the "rogue" partners. Malaysia blames Goldman's willful policy of ignoring ethics for $$$.

The Takeaway: This hurts past and future Goldmans... Analysts think the criminal charge could result in fines over $2 billion. But arranging complex debt deals for complex governments is one of Goldman's best talents -- and it's at risk due to this reputation hit.
 

3. Blueberry supplies squished at the worst time

That paleo-keto smoothie routine... is about to become a splurge. Blueberry supplies have gotten smushed down in Chile, Earth's biggest blueberry exporter. And the shortage's expected to lead to higher prices in grocery aisle 4 for you. It's the kind of "supply and demand" example econ professors cancel class topics to chat about.

We have a fruit wingman... 38 US states produce blueberries, except when it's cold. Like now. So we import from Latin American buddies mid-winter since it's summer down south. From December-February, Chile pumps out more blue than Argentina, Peru, and Mexico combined. Then 2 things happened:

  1. ⛈️ Storms: Bad ones. We're talking hailstorms. Chile usually ships 100 tons of blueberries monthly starting in December, but November weather knocked out entire crops
  2. 👷Strikes: Brutal timing. Half the supply that remains is stuck as 500 dock workers want 1-time $3,600 payments and better work conditions


The Takeaway: China's blueberry craving'll make it worse... Blueberries aren't just facing supply issues, they're about to face some demand drama out of China. Its growing middle class wants to see what the super-food lifestyle's all about, and increasing hunger from a new big buyer could add pressure to prices in the US. #WinterIsComing
 

4. Orangetheory launches pop-up gyms in hotels 

Visit grandma in Boca... Then burn a Boca of calories on the treadmill. 1,000-location fitness studio chain Orangetheory is adding its 1st "pop-up gym" to the Ritz-Carlton in Boca Raton, FL. It's taking its high-intensity interval training religion nationwide to 12 more fancy hotels next year so you can sweat off the omelette station.

Performance-enhanced marketing... Orangetheory isn't just getting its brand in front of you like some hotel mini-shampoo bottle. It's giving you the best version of itself so you'll return home craving orange:

  • Wellness Merger: It's teamed up with hotel spas so you can destroy your body in the Orangetheory class (still costs $30 FYI) before a Norwegian elf deep tissue massage
  • Influencer Gold: It's shipping its top Insta-famous instructors to each location giving out free passes on social media to generate #buzz
  • Exclusive: Each hotel-ized Orangetheory is only open for 6 months. If you don't go, you can't sit with us


The Takeaway: High-end or low-end... No in between. Fashion retail to gym retail's shown that income disparity is pushing consumers to either end -- not the middle. There's Equinox's spa-infused gym option or Planet Fitness' $10/month easy win. Orangetheory's move pushes things even higher.
 


What else we're 'Snacking

  • Tender: Chick-Fil-A is about to become America's 3rd biggest restaurant chain
  • Cancelled: Google's killing "Project Firefly" (aka Google in China) -- and it's dropping $1B to grow in NYC
  • Social-ish: Facebook's pop-up store on privacy basically just gave out marshmallows
  • Abroad: ASOS plummets 40% because retail in Europe is hard
  • Fired: CBS cancels Les Moonves' $120M severance package because his firing was deserved
  • Steal: Netflix snags ABC's top TV creative person


Today's MarketSnacks Daily Podcast

  • A carbon tax solution that pays you carbon checks yearly. Big oil companies are shockingly on board with it
Just Push Play:

'SnackFact of the Day
1/3 of Americans have received a raise this year -- and anyone in New England or the Midwest was most likely to get one

Submitted by Carmen B. (Avon, CT)
Send Us One


Tuesday

  • Earnings from FedEx and Olive Garden
  • China's "Central Economic Work Conference" kicks off the nation's next big business moves

Taco Tuesdays are for sharing.

'Snacks us over to a buddy today:

 
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