Here are the top business stories of the past seven days.
The US economy grew by less than expected in the second quarter, according to an advance estimate released Friday. But underneath the bad headline is the real story of what’s going on in the economy right now, and the story is pretty simple: consumers are winning.
Verizon bought Yahoo. The deal, announced Monday morning, marks the end of an era for Yahoo and is another piece of what has been a multiyear, $10 billion plan from Verizon to take on Facebook and Google, the biggest names in digital advertising. Yahoo activist investor, Eric Jackson of SpringOwl asset management, told Business Insider on Monday his firm was “subdued” by the sale. The sale seemed to trigger a strange hiring frenzy. It is unclear if Marissa Meyer, Yahoo CEO, will stay with the company. Her golden parachute will be worth $54.9 million if she gets fired.
Business leaders in Texas can’t find workers who can follow directions and do simple maths. The Dallas Federal Reserve announced that its business-activity index figure rose to -1.3 in July. The report also includes comments from respondents’ completed surveys, edited slightly for publication. And many in the July report pointed to the shortage of quality labour.
The warning signs for the economy started stacking up. Caterpillar, the world’s largest maker of massive industrial equipment lowered its 2016 earnings forecast on Tuesday, saying it did not expect economic conditions or its key industries to improve. The restaurant sector could be sending a warning sign about the US economy, too. And service-sector activity in July grew at the slowest pace in five months, according to Markit Economics’ preliminary report.
The Fed held rates. There are now fewer reasons to be worried about the US economy, according to the Federal Reserve. “Near-term risks to the economic outlook have diminished,” the Fed’s policy statement said on Wednesday. As expected, the Federal Open Market Committee left the benchmark fed funds rate unchanged in a 0.25% to 0.50% range.
Deutsche Bank’s profits nosedived. Profits fell in the second quarter nosedived to just 20 million euros, or $22 million, from 800 million euros in the same period last year. John Cryan, the bank’s CEO, said something that should frighten the bank’s employees. Edward Misrahi, the founder and chief investment officer of Ronit Capital, said that Deutsche Bank was his No. 1 short trade.
A big tech deal landed. Analogue Devices struck a deal to buy chipmaker Linear Technology. The $30 billion merger is more evidence of the tech market’s most dominant trend right now. There are two clear winners on Wall Street from the deal.
Bridgewater Associates fired back. The giant hedge fund hit back at The New York Times for its recent story on the company’s culture. Bridgewater called the story a“distortion of reality” — but only part of it. The firm has always proudly owned the part of its culture where everything is recorded, either on audio or video, in the name of “radical transparency.”
Facebook crushed it. Facebook smashed it last quarter, and Wall Street went nuts. The social-networking giant reported its second-quarter earnings on Wednesday — and the numbers beat analysts’ expectations on just about every important metric.
And Ford whiffed. Ford on Thursday reported second-quarter earnings that missed analysts’ expectations, also saying there were risks to achieving the company’s full-year outlook. Business Insider spoke with CFO Bob Shanks right after earnings were released, and he said that while issues surrounding Britain’s vote to leave the European Union and challenges with the struggling Brazilian market might have looked like major problems for the quarter, Ford had actually planned for them. But he did point to a red flag for the entire auto market: There has been an unexpected acceleration in the pace of incentive spending.
Amazon is on a roll. It beat across the board, with Amazon setting another record-high quarterly profit for the third consecutive quarter. It also transpired that a business Amazon launched a year ago has already generated $1 billion of revenue.
The biggest takeover in years had a rocky patch when SABMiller and its shareholders were waffling about the price of its takeover by Anheuser-Busch InBev. But that’s over now, and Chinese regulators approved the deal too.
The stock market did nothing. The stock market has been really boring. And now we have some data to really — and I mean really — back that up. Ryan Detrick, senior market strategist at LPL Financial, noted on Twitter that Thursday marked the 11th straight day the S&P 500 closed inside a 1% trading range, the first time this has ever happened, according to record going back 45 years. This really is the “dullest market in decades.”