Thursday Oct.03, 2019
Microsoft invents a new thing: "Phonebook"
_Happy Mean Girls Day. Markets aren't celebrating._
Hey Snackers,
Fetch isn't happening. Mean Girls Day is.
Markets pulled a Regina George as the Dow aggressively dipped 800 points in last two days. Blame it on more mounting evidence of a global economic slowdown.
Invent
Microsoft failed smartphones. So it invented a new Smartphone-ish foldable device.
It's product unveil season... We expected Microsoft to show us new Surface tablets for your aunt's holiday wish list. We didn't expect a smart device that defies labels. The dual-screen Surface Duo arrives next year — Picture 2 iPhones connected book-style at the spine so they fold. We call it the "Phonebook." Just don't call it a phone (Microsoft hates that).
Bill Gates' has accepted his destiny... The billionaire co-founder's #1 mistake was letting Android (owned by Alphabet) become the leader of mobile phone software. Software was Microsoft's thing (just ask Clippy). Now Microsoft's new hardware runs on Android's operating system — shocking for the company defined by its historic operating system domination.
Microsoft has its swagger back... It embarrassingly missed on smartphones the 1st time — it acquired Nokia in 2013, didn't do much with it, then killed its Windows phone in 2017. Since then, Microsoft's stock has grown 90% and it's now the most valuable publicly-traded company on Earth. With that confidence, it's taking on Apple and Samsung on their turf.
PS: CEO Satya Nadella says this "device" has two screens so you can be creative on one side, productive on the other (like a brain).
Chew
Chipotle's newest menu item is actually a major strategy shift
We know. Guac is extra... But Chipotle's too busy scaling its newest limited time menu item: carne asada (grilled beef showered in lime juice love and cilantro). It's the 1st newly-tested option since 2018's chorizo, and it arrived just before another surprise change at Chipotle.
The Fast Food Breakfast Wars... Chipotle is surviving by not fighting in it. Dunkin's got breakfast bowls, McDonald's does breakfast-only donut sticks, and Starbucks offers egg-white sammies. Breakfast is the new battleground because it's a daily habit that fast food hasn't satiated yet. Chipotle don't care:
- New-ish CEO Brian Niccol dropped this last week: “We’re not going to be doing breakfast anytime soon.”
- Instead, Chipotle's focusing on the opposite of breakfast. Dinner. Carne asada, paired with its new drive-thru Chipotlanes and delivery, works nicely with that.
This carne asada is a powerful executive statement... Chipotle's old CEO was opposed to new menu items — especially "limited time offers" that could disappoint diners once they get 86'd. But Brian has a different interpretation:
- "Menu Fatigue." He thinks a lack of new proteins lost customers who can only barbacoa so many times.
- Chipotle's stock has nearly doubled since last year as it tests out new flavors (queso, chorizo) and a loyalty program that hooks you after you try them.
Arbitrate
After the WTO's big decision, America slapped tariffs on European airplanes and cheese
First rule of World Trade Organization... feel free to talk about World Trade Organization. The WTO is actually a 164-nation club of countries down to trade with each other in economic harmony. Here's what the WTO does for its members after they pay club dues:
- Set the rules: How should the buyers and sellers of stuff behave? Who pays for what? What taxes and fees are fair?
- Resolve conflicts: If two countries aren't on speaking terms because of a trade snafu, the WTO decides who was right/wrong. Apologies ensue.
- Ensure peace: Countries that trade with each other are less-likely to go to war with each other — that's the underlying purpose of the entire institution.
The WTO just decided that the US is right... Europe has been busy subsidizing Airbus, the continent's big airplane maker. Since that's not fair to America's Boeing, the WTO OK'd the US to toss $7.5B worth of tariffs on European-made Airbus planes. Delta, American, and Alaska shares all fell because they'll pay big taxes when they next buy Airbus jets.
This is how trade disputes are supposed to be handled... Only problem: it took 15 years for the WTO to reach this decision (literally). The US immediately responded by throwing taxes on goods we import from the European Union, like jets, cheese, and Irish Scotch. Expect Europe to retaliate, as trade increasingly becomes a zero-sum game soaked in politics, not economics.
What else we’re Snackin’
- Brakes: Tesla shares drop because the hefty 97K cars it delivered last quarter didn't reach expectations (fyi, its new China factory starts production this month)
- Headline: Vice Media acquires Refinery29 as it tries to capture a female audience
- Fussball: ESPN+ snags streaming rights to Germany's Bundesliga soccer league
- Zero: E-Trade and TD Ameritrade both follow Schwab's lead, ending stock trading commissions (another 2 bite the dust)
- Vouch: Apple employs 443 "Dreamers," and CEO Tim Cook just defended them hard in a letter to the Supreme Court
Thursday
- Earnings from Pepsi, Corona-brewer Constellation Brands, and Costco
Correction: In yesterday's Snacks, we mentioned that the percentage of revenues that came from trading commissions for E-Trade was 25% and TD Ameritrade was 16% — but we switched them by mistake. It's actually 16% of E-Trade's revenues that came from commissions and 25% of TD Ameritrade's.
Disclosure: Authors of this Snacks own shares of Tesla.
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