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🍨 Daily Scoop: No more gig economy

By Fri, Sep 13, 2019

Hi Scoopers,

The stock market was a roller-coaster on Thursday. Two opposing forces first dragged investors down into the ditch and then elevated them high to the peak. In the end, the stock market finished barely in the green. One retailer got punished by millennials and another retailer got saved by the power of free shipping. Meanwhile, the fate of the gig economy is questioned by Californians.

We got all that and more in the “Overall Market,” “What’s Up?” and “What’s Down?” sections. Scroll down to read more.

MARKETS

  • U.S. markets:After the upward rally on Wednesday, all three major indices decided to take the day slow, and not to move too much. Scroll to the Overall Market section to learn more.
  • Cryptocurrency: Similar to the overall market, Bitcoin’s price didn’t move that much and stayed slightly higher than the $10,000 mark.

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OVERALL MARKET

Today’s roller-coaster

What happened on Thursday?

All three indices moved up just enough to finish the day in the green. Despite the relative calm finish, investors went through a roller-coaster ride during the day.

First up, came the news that the Consumer Price Index rose 0.1% in August, and 1.7% in the 12 months ending August. Investors didn’t like the news too much. The Fed may use the higher Consumer Price Index as evidence that the economy doesn’t need any boost, and not cut the interest rate.

One person, in particular, didn’t like the news whatsoever and went to the length to name-call the Fed’s Chairman. The market fell rapidly in the early hours of the day, in reaction to the news.

Then, came the news that in a reciprocal fashion, President Trump delayed the new round of tariffs on the Chinese imports by two weeks. Investors liked the news, and the stock market recovered from the early dismay.

WHAT’S UP

What analysts love to see!

So, what happened?

Shares of Etsy (Ticker: ETSY) were up more than 4% on Thursday. The company reported lower-than-expected quarterly earnings on August 1. But the revenue was up by 37%. The company recently introduced a “free shipping” option to its customers. Also, it launched a new ad platform for Etsy sellers, helping them to reach shoppers both on and off the Etsy site. Overall, the company is growing its operations through innovative ways to attract shoppers and sellers. The retail e-commerce market is still young, and it is a good time to be a part of it.

ECONOMY

2% inflation target: check!

What’s happening?

The Bureau of Labor Statistics released the Consumer Price Index for August. The index was up by 0.1% compared to July. The core consumer price index that doesn’t include food and energy prices rose more than 2%. And, that’s where things get interesting.

The Federal Reserve’s inflation target is around 2%. If the economy achieves such a target, the Fed doesn’t see any reason in further boosting the economy. While the Consumer Price Index is not the primary tool that the Fed uses to measure inflation, but it is an indicator of how the Fed judges the strength of the economy.

What does this mean?

Don’t get too surprised if the Fed decides to keep the interest rate at its current level. Despite what President Trump believes, the U.S. economy doesn’t see to be needing an intervention.

What’s down? 

Millennials causing trouble, again.

So, what happened?

Rite Aid’s (Ticker: RAD) stock price dropped by more than 20% on Thursday. The company received a ‘sell’ rating and a 48% lower price tag by Deutsche Bank analyst George Hill. Rite Aid faces tough competition due to changing trends followed by Millenials. Millennials prefer to buy cheaper over-the-counter medicines and Rite Aid has been trying to appeal to them by cutting down prices.

WATER COOLER

The fate of the gig economy

Califonia lawmakers are about to kill the gig economy. Grubhub (Ticker: GRUB) and Uber (Ticker: UBER) are among the companies that are trembling.

The governor of California is about to sign a new law that forces these companies to hire all their drivers and delivery staff as their employees. Suddenly, hundreds if not thousands of drivers need to be fully hired as employees and get compensated as such.

The gig economy is built on the back of low-cost labor who are willing to drive people and deliver food for cheap. If the governor signs the law, the fate of the gig economy becomes unclear.

Can Uber and the likes of Uber survive if they have to burn even more cash to compensate all their drivers? Reply to this Scoop and lets us know how you feel about this new soon-to-be law?

About the Author

The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card