đź’¸ Weekly Business News
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Welcome to ISOC's weekly newsletter! Here, we break down and analyze key current events in the markets, recent deals, and industry trends to help Wellesley College students better understand what's going on in the business world. Have any questions or comments? We love feedback! Email us at:
isoc-eboard@wellesley.edu
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First off... Upcoming ISOC Events
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Recruiting Office Hours! Sunday 10/28 6pm - 8pm
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Currently recruiting? Stressed out and need some direction? Interested in a finance career but don't know where to begin?
Drop in to office hours
where upperclass members of our e-board and the broader Wellesley community will walk you through the recruiting process, share interview tips, review resumes, and provide 1-on-1 advice. Our student advisors come from a range of finance backgrounds (from investment banking and private equity to investment management and sales & trading) and a range of firms (JP Morgan, Goldman Sachs, Morgan Stanley, KKR, Citi, etc.).
Yining Li
and
Hongyu Lin
will be our advisors next week. Between them, t
hey have experience recruiting for roles in investment management, sales and trading, and equity research.
Office hour times and advisors change every week so keep an eye out for emails from us.
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ISOC x BlackRock NYC Trip coming soon - stay tuned!
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Learn about summer internship and full-time opportunities at the NYC headquarters of BlackRock, the world's largest asset management firm with over $6 trillion in assets under management. Alum Susan Wagner '82 is the co-founder, former Vice Chairman, and COO of the firm.
Travel expenses to and from NYC will be covered.
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- China's growth hits slowest pace in a decade. China’s government reported that the economy grew by 6.5% over the three months that ended in September compared with a year ago, the slowest rate for the country since early 2009.
- Why? Sputtering growth, soaring debt and an escalating trade war with the United States are increasingly weighing on China’s economy. Chinese shoppers are spending less and downgrading their purchases. The stock market has fallen by almost a quarter since its peak in January, and a handful of large firms have defaulted on their loans. On top of this, the trade war between China and America is beginning to erupt, with the two countries imposing tit-for-tat tariffs.
- U.S. government bond prices fall as investors speculate that Fed may raise interest rates higher than previously expected after hawkish Fed minutes. The yield on the benchmark 10-year Treasury note yield rose to 3.198%, the highest in over a week.
- What did the minutes say? The Fed minutes showed policymakers were confident in the current path of interest rate hikes, saying that a series of gradual rate hikes was the correct strategy in helping to maintain a stable economy.
- Now what? Investors are worried that the central bank would raise interest rates above the neutral level-- a point when monetary policy no longer supports growth but isn’t yet restrictive. Because there is no clearly defined neutral level, investors and the Federal Reserve may not agree on what the appropriate level is.
- Why did the bond yield go up? To summarize briefly, when interest rates go up, bond prices go down because investors are less likely to buy these bonds due to their decreased value. When bond prices go down, bond yields go up. If you want to learn more, the Balance does a good job of explaining this concept here.
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- Communication tools company Twilio (NYSE: TWLO) acquires email marketing platform Sendgrid (NYSE: SEND) in a $2 billion all-stock deal.
- Twilio? SF-based Twilio allows software developers to programmatically make and receive phone calls, send and receive text messages, and perform other communication functions using its web service APIs.
- Sendgrid? Denver-based Sendgrid sells an email marketing platform that enables its customers to send newsletters, marketing and email confirmations en masse. As of late last year, Sendgrid sent around 36 billion emails a month on behalf of customers like Uber and Spotify.
- Why? The acquisition makes sense as both firms aim to make building communications platforms easier for developers. Twilio’s current focus is on omnichannel communication, and email is obviously a major part of that. And while it offers plenty of services around voice, video and chat, email hasn’t been on its radar in the same way. This acquisition now allows it to quickly build up expertise in this area and expand its services there.
- Market reaction? Sendgrid stock rose 18%, while Twilio’s stock fell 12% due to investor concerns over the acquisition price.
- Novartis (NYSE: NVS) to Buy Cancer-Drug Maker Endocyte (Nasdaq: ECYT) for $2.1 Billion. The deal is the latest effort to reshape the Swiss pharmaceutical giant.
- Novartis? Novartis is a Swiss multinational pharmaceutical firm. It is one of the largest pharmaceutical companies by both market capitalization and sales.
- Endocyte? US firm Endocyte specializes in so-called radiopharmaceuticals, a new class of drug that carries radioactive substances directly to cancer cells so they can kill tumor cells at close range. The firm is currently developing a new treatment for prostate cancer.
- Why? The deal will add a prostate cancer radiopharmaceutical to Novartis’s late-stage pipeline, bolstering its capability in the field, which it expects to be a key growth driver for its business. The acquisition is the new Novartis CEO's latest move to refocus Novartis on high-value prescription drugs since he took the helm in February.
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- Uber and Lyft are in an IPO race. The first to go public would get dibs on investors eager for a piece of the ride-hailing business.
- What? Both companies are currently planning to go public in the spring of 2019, with Morgan Stanley and Goldman Sachs serving as lead underwriters for Uber, and JP Morgan serving as lead underwriter for Lyft. Bankers say Uber could be worth around $120 billion dollars when it goes public while Lyft was most recently valued at $15 billion.
- Why do they both want to be first? The company that goes first is expected to have an advantage and could demand a higher price for its shares as it may garner more attention. Going public first could be especially important for Lyft, given that its IPO. would most likely be swamped by its much bigger rival’s, whose offering would be the biggest to hit the market since Alibaba’s in 2014.
- Bonus q: What is an underwriter? An underwriter agrees to assume the risk of buying the entire inventory of stock issued in the IPO and sell to the public at the IPO price.
- The lengths that bankers go to for business: a top Wall Street banker moonlighted as an Uber driver to woo the firm. Bankers have always been known to go to extreme lengths to stand out from the competition
- What? Michael Grimes, who makes a multimillion-dollar annual salary as Morgan Stanley's top technology banker, reportedly moonlighted as an Uber driver for years to help the firm win a role on one of the largest IPOs of the decade.
- Why? With Uber valued at $120 million, a lead underwriter role for this IPO will earn the investment bank tens of millions of dollars in fees and equally valuable bragging rights.
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- Instacart raises $600 million at a $7.6 billion valuation. The startup's latest round comes 6 months after a $150 million round and 8 months after a $200 million financing. D1 Capital Partners led the round.
- What? Instacart is an on-demand grocery shopping platform. The startup wants every household in the U.S. to use Instacart to order from more than 300 retailers, including Kroger, Costco, Walmart and Sam’s Club, using its mobile app. Customers select groceries through a web application from various retailers and the order is delivered by a personal shopper.
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- Netflix surges after crushing earnings. Netflix is showing accelerating growth as the company expands.
- What? Netflix had a strong Q3, hitting revenue expectations of $4 billion and beating analysts' earnings per share (EPS) estimates by 30%. The company also added significantly more subscribers than expected (1.1 billion domestic, 5.9 billion international), and the stock traded up 15% after the earnings announcement.
- Uber is developing an on-demand staffing business. Dubbed Uber Works, the business will offer 1099 independent contractors for events and corporate functions.
- Why? Uber already has a vast network of drivers — all of whom have become familiarized with the process of filing taxes as an independent contractor — who may be looking for additional work. Some speculate that this new venture may be Uber's newest attempt to diversify its offerings as it prepares for its 2019 IPO. In the last year, Uber has also tried to deploy electric scooters and bike-sharing programs in certain regions.
- Companies benefitting from Saudi cash in Silicon Valley have come under fire following the brutal murder of journalist Jamal Khashoggi. Billions of dollars from the kingdom have flowed into Silicon Valley, making Saudi Arabia the biggest investor in US tech startups.
- Why is there so much Saudi money in tech? Crown Prince Mohammed bin Salman has poured money into American tech companies both directly and indirectly, as part of an initiative to diversify the country’s oil-dependent economy. It’s called Vision 2030, and the Saudis hope to invest at least $2 trillion within the next two decades in industries like energy and technology.
- What is the effect of Saudi investments? The nation’s sovereign Public Investment Fund has been one of its largest means of directly investing into American tech companies like Uber, investing $3.5 billion in the ride-sharer in 2016. The Crown Prince also invested $45 billion into a SoftBank subsidiary, the Vision Fund, which made subsequent investments in a number of US tech companies such as Slack, DoorDash, and Nvidia.
- How has the US responded? Officials are now discussing ways to penalize the country for the killing, whether through sanctions or other methods. Firms like he Endeavor talent agency reportedly backed out of a $400 million investment from Saudi Arabia’s sovereign wealth fund following the news. Virgin Galactic, a space tourism venture, has also suspended its partnership as a result of tensions.
- How does this affect tech companies? Silicon Valley is known for consumer-facing idealistic mission statements, and as tensions continue to grow, these investments could make it appear as though the companies support the Saudi’s politics.
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- Search for Amazon HQ2 Sparks Real- Estate Speculation. Investors say focus on the finalists for Amazon’s second headquarters is a way to bet on places with a growing pool of tech talent
- Background: The Seattle-based online giant said last year it was looking to invest $5 billion in a second headquarters that could employ up to 50,000 people over two decades. After 238 cities and towns applied, Amazon narrowed a list to 20 finalists in January.
- What? Speculators are raising funds to invest in real estate near the winning site—wherever that may be—or are gathering cash commitments so they can pounce immediately after the winner is announced.
- Why? “HQ2 is guaranteed to meet three criteria: tech job growth, tech job growth and tech job growth,” says investors.
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- China is funding the future of American biotech. As Chinese VCs invest billions in US startups to solve China's biggest health problems, the country is positioning itself to be the global leader in medical investing.
- What? Chinese venture firms have invested more this year into life science and biotech in the US than they have back home, providing tens of billions of dollars in financing for over 300 US-based companies. Chinese capital’s newfound appetite also flows into the mainland. Business is booming for Chinese medical startups, who are also seeing the strongest year of venture investment ever, with over one hundred companies receiving $4 billion in investment.
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Breaking the Glass Ceiling
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Yining Li,
ISOC Events Chair
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This week we will be introducing our events chair,
Yining Li
!
Yining is a junior majoring in Economics and Mathematics. She also serves as Co-President of the Chamber Music Society and plays the piano. Last summer, she interned at Rogers Investment Advisors, a fund of funds in Tokyo, Japan. Next summer, she will be interning at Citi for Sales and Trading.
Why did you join ISOC?
I joined ISOC as a general member for the networking opportunities and recruiting resources that ISOC provides. But more importantly, I joined ISOC’s e-board for the people. ISOC gathers a group of people who are proactive, goal-oriented and always on top of their businesses. I enjoy working with them and helping more Wellesley women who are interested in finance with career choices.
What's your advice for Wellesley students who are interested in finance?
Recruiting is not as scary as it may sound. But sometimes bad luck gets in the way, and my advice is to be very patient with yourself. As long as you keep yourself on “track”, such as networking to get a better sense of what role you are genuinely interested in, or taking advantage of ISOC resources etc, you will get the opportunity you deserve eventually.
How was your finance experience in Japan/Asia?
It was very interesting to see how culture influences investors’ behavior and in turn shape corporate structures. For example, many Japanese domestic investors are very conservative and favor low-risk and low-return products; senior leaders of many Japanese firms do not have incentive-driven salaries and tend not to make bold executive decisions. I think this summer made me realize even more that the financial services industry is truly global and that a healthy financial system is critical to every economy. We can work in finance anywhere in the world. But no regions, markets, or products are the same. It’s the people who are making business decisions, where cultural background is a huge factor. That’s why the industry is fascinating to me.
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