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Five on Friday

Are We In A Recession?

Yet another rollercoaster week on Wall Street as the Government’s $2 trillion bailout plan continues to divide opinion and dictate stock movement

#AStimulatingPlan

The U.S. economy may be getting a brief boost from the government’s $2 trillion stimulus plan, but will it be enough? 

Is a recession inevitable?

The Senate passed a historic $2 trillion coronavirus relief package Wednesday night as it tries to stem the destruction the pandemic has brought to American lives and wallets. The 880-page document includes direct payments to individuals, stronger unemployment insurance, loans and grants to businesses, and more health-care resources. Though this may deal with the short-term problems at hand in keeping key sectors afloat (or in the air in Boeing’s (NYSE: BA) case), it may not be enough to stave off a recession. If there’s one thing that’s inevitable in economics, it’s that there will always be a recession at some point, and if it wasn’t caused by COVID-19, it was coming eventually. The best thing investors can do now to prepare is stick with a long-term buy and hold strategy, shore up savings, kick back with a beer, and wait for all this to blow over. 

Bet you didn’t know

Recent estimates have put the cost of the coronavirus to the global economy at potentially $3 trillion, which doesn’t include the U.S. stimulus plan. 

#NotMyNetflix

If you’ve noticed a slight decrease in the quality of your Netflix (NASDAQ: NFLX) account, fear not, it’s all part of the plan.

What’s up with my streaming quality? 

At least one conflict has been halted, however briefly, by the coronavirus outbreak. We are of course referring to the devastating ‘Streaming Wars’, whose combatants — including Netflix, Amazon (NASDAQ: AMZN), and Disney (NYSE: DIS) — have laid down their arms to help in the COVID-19 fight as best they can. Netflix announced it would reduce streaming quality by 25% to aid internet providers around the world, as millions begin working from home, thus increasing the traffic. As many of us continue to self-isolate, and our pale, vitamin D deprived bodies wither away in solitude, the one constant we can look forward to is that our streaming devices still work (for now); we just need to accept a lesser quality feed. The ‘King of Streaming’ is joined in its efforts by Google-owned (NASDAQ: GOOG) YouTube, Disney+, Facebook (NASDAQ: FB), and Amazon. 

Bet you didn’t know

Collectively, streaming platforms account for a major chunk of global Internet traffic, amounting to 60% in 2019 alone, so it’s nice to see them doing what little they can.

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#Tech&Toys

At times lately it has felt like there is no rhyme or reason to the stock market… That’s it, I don’t really have anything reassuring to add, here’s some news from the week.

What is going on this week? 

The COVID-19 pandemic is obviously dictating much of how the market moves lately, but companies are still operating as normally as possible. Nike’s (NYSE: NKE) earnings report fell afoul of all the market noise this week, but it was actually pretty optimistic: Thanks to a boost from its digital business and growth in North America, the company was able to offset much of the weakness in China from closing stores following the COVID-19 outbreak, and saw revenue climb 5% to $10.1 billion. Meanwhile, another titan of industry, Apple (NASDAQ: AAPL), could be in a spot of bother — despite releasing an awesome looking new iPad Pro on Monday. Analysts predict that the company will be forced to postpone its annual September iPhone release due to delays. Let’s round up with some good news though, as toy-maker Hasbro’s (NASDAQ: HAS) shares soared this week after announcing that China’s supply chain is coming back to life. I’m still waiting on my Baby Yoda toy though…

Bet you didn’t know

I ordered a Baby Yoda toy on December 16, and it won’t be delivered until May 5. That’s 141 very long, Baby Yoda-less days… I’m very upset Hasbro!

#VirusDontSell

Despite an upsurge in people staying at home with nothing to do, ad revenue for major social media companies has taken a hit. 

What companies are losing ad revenue?

There may be more people stuck at home using social media, but the big names are taking some damaging hits to ad revenue this week. On Monday, Twitter (NYSE: TWTR) withdrew its revenue and profit forecast for the first quarter, despite monetizable daily active users climbing 23% year on year to 164 million. Meanwhile, across Silicon Valley, Mark Zuckerberg’s Facebook is also feeling the sting of COVID-19. With companies around the globe being forced to shut due to the ongoing pandemic, businesses can no longer afford to spend money on social media advertising. This is most obvious in countries taking aggressive actions to combat the virus, which includes much of Europe, Facebook and Twitter’s largest markets after the U.S. According to analysts, Facebook and Google could stand to lose more than $44 billion in ad revenue because of the coronavirus. 

Bet you didn’t know

It is estimated that both Twitter and Facebook earn 85% of their total revenue from ads alone. Maybe they’ll be forced to sell data to make up the losses; Zuckerberg strikes me as the type. 

#AndFinally

*Disclaimer: The following paragraph must be read in the voice of a Texas-based used-car lot salesman doing a commercial on TV.*

“Bored of working from home? In need of a little extra cash? Don’t believe in all this ‘coronavirus’ nonsense? Well, head on down to WeWork, where you’ll fit right in, and we’ll even pay you a bonus worth $100 per day or up to $500 per week. Can’t afford the medical bills from that virus you contracted? Too bad, WeWork can’t help with that, but we can give you “the power to elevate your consciousness’!”

*Disclaimer over*

That is obviously not a real job posting, but it’s basically what WeWork is offering employees across the U.S. and Canada this week. Workers are being incentivized to come into the office against government wishes, in the midst of a pandemic. The company that gave the world Adam Neumann and the biggest IPO sh*tshow of all time just doesn’t know how to stay out of negative headlines. 

It’s actually not that funny

In all seriousness, there really is nothing funny about what WeWork is doing, and though this news was leaked via a private company memo, WeWork should be pretty ashamed. Though something tells me that this company’s integrity ship sailed a long time ago. 

Bet you didn’t know

Interestingly, a 2019 survey of 2,000 workers found that those who work from home are actually paid roughly $4,000 more on average per year than those who commute. 

The Week In Numbers

11%

is how much the Dow Jones rose on Tuesday, it’s biggest one-day percentage rise since 1933.

1,200

ventilators were reportedly delivered by Tesla (NASDAQ: TSLA) factories this week as companies step up to help in the COVID-19 fight. 

3.28 million

jobless claims were reported on Thursday in the U.S., far surpassing the 665,000 from the Great Depression.


MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.

Jamie Adams
Jamie Adams
Jamie is a writer here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.