"Do you know how expensive China just made this helmet?"
She started it.
Just after Friday's fresh US tariffs kicked China under the table, China pinched back. Now investors are pulling the car over — The Dow plummeted 617 points for its worst day in four months on trade war family drama.
Yanked a hammy... Flywheel, the 40-studio spinning chain launched by a SoulCycle founder, is walking out of the class — it's been taken over by its biggest investor/lender. And the new boss is looking to make 2 moves pronto:
Coincidence?... Nope. Peloton pioneered the tech-enabled at-home bike in 2012. Since then, it's stolen customer butts from major gym chains through extreme convenience. First, it's suing Flywheel for copying its home spin bike. Second, it's planning to IPO this year at an $8B valuation. Here are the 3 keys to Peloton's soul:
Peloton is the Apple of sweating... Just as your iPhone generates $$ for Apple via services (think Apple Music), digital content drives the value of Peloton's bikes. Without the virtual class subscription, it's just hardware. So Peloton instructors are "treated like pro athletes" to produce better classes, while the new Peloton app offers yoga/lifting/walking videos for $19/month. Content is calorie-crushing king.
"No, you hang up"... (but with geopolitical tension instead of puppy love). One business day after President Trump hiked tariffs on Chinese-made imports from 10% to 25%, China announced higher tariffs on $60B in USA-made goods starting June 1st. That dropped stocks the moment Monday's markets opened.
"Americans' entire shopping cart will get more expensive"... Straight talk from a Walmart/Target lobbyist. Since Friday, half of Chinese imports have a 25% tariff — The other half is full of goodies you're probably wearing/touching/tapping right now (electronics, t-shirts, Silly Puddy). Here's what's surprisingly hit on both sides:
Hold your breath until June 28/29... President Trump meets Chinese President Xi Jinping at the G-20 Summit in Japan. Trump said he could decide not to impose those new tariffs if they agree to something. But markets are bracing for the full-blown, tit-for-tat, back-and-forth trade war we're in. The impact of each tariff is higher prices and less profit.
Lance Armstrong would be impressed... According to a lawsuit filed in federal court by 44 state prosecutors, Teva Pharmaceuticals is a criminal mastermind. The allegation: It corralled 19 other drug firms to keep generic drug prices high — 1,000% higher than they could/should be. That's anti-competitive, illegal, and just wrong. So it dropped Teva stock 15%.
That's a lot of attorneys general... Here are a couple things we noticed from this lawsuit:
One thing Americans aren't polarized on... Drug prices. Successful lobbying and divisive politics allowed pharma firms to raise prices on life-or-death drugs for years. Now a Republican President, over a dozen Democratic presidential candidates, and 44 state prosecutors want it to stop. Investors have already left the stadium. This game's over.
Today's 15-minute Snacks Daily pod: