Cream Cheese Accounting

  • Uber Exceeds Investors’ Expectations (Of How Much Money It Can Lose)
  • Federal Probe Tanks Under Armour Stock
  • Tariffs May Be Rolled Back Before December 15
  • The Real Reason Gold is Rallying

 TECH 

Uber Exceeds Investors’ Expectations (Of How Much Money It Can Lose)

Uber exceeded analysts’ forecasts on the top and bottom line for Q3 2019 but is somehow losing even more money than it was before.

(Huh. It’s almost like this stupid business model doesn’t work or something.)

The puke-if-you-like-its-not-our-car app reported revenue of $3.81 billion, compared to an expected $3.69 billion. Which is fine, unless you peek behind the curtain and see the $1.16 billion net loss that hemorrhaged out of the company this quarter.

The Q3 loss of more money than most companies will ever be worth topped its $986 million loss during the same quarter last year. (You know what they say: you gotta lose billions of dollars to make money.)

In an interview with CNBC, CEO Dara Khosrowshahi acknowledged that generally speaking, companies are supposed to not lose a billion dollars every quarter.

“We know there is the expectation of profitability,” said Khosrowshahi, flying around the room, propelled by the force of all of the money shooting from his pockets.

“We expect to deliver for 2021.” (When Khosrowshahi hopes to fire everyone and replace them with robot cars. Even the accountants.)

Revenue from Uber’s Side Projects to Try and Make a Profit Somehow continued to grow at a healthy clip this quarter.

Uber Eats gobbled up some of Grubhub’s dwindling market share, growing 64% year over year. The company’s logistics division, Uber Freight, grew 78%. While Uber’s most established business (just taking people from one place to the other) grew just 19% year over year.

Khosrowshahi laid out his plan to turn this money hole into an actual company by driving lower rates by investing in the best technology rather than offering steep discounts that eat into the company’s bottom line.

(In case it’s not glaringly obvious, “the best technology” is robots that allow us to fire all our drivers.)

Khosrowshahi wants to make it clear to investors that the “growth at any cost” days of the company are over and that efficiency and profitability are now priority numero uno.

 “It was absolutely the right set of priorities for the time,” said Khosrowshahi, while dousing a pile of Benjamin’s in gasoline. “Our priorities are changing.”

Shares of Uber (UBER) declined more than 5% this morning. And we may see a larger wave of selling before the week is out.

Uber’s lockup period on its shares will expire on Wednesday, after which Uber employees will be free to cash in their shares (and they probably will if they’ve been paying attention).

 APPAREL 

Federal Probe Tanks Under Armour Stock

Shares of Under Armour (UAA) are starting to stink as the company confirms reports of a teency weency federal probe into the company’s accounting practices.

Despite beating Q3 expectations, Under Armour’s stock tanked 18% yesterday when it came clean about a federal probe first reported by the Wall Street Journal.

Reportedly, the Feds are investigating accusations that the company spread around its revenue month to month to smooth out the numbers. (We in the biz call that cream cheese accounting.)

According to Under Armour CFO David Bergman, the investigation has been underway since 2017. Which just so happens to be when then-CFO Chip Molloy left the company for “personal reasons.” (“Personal reasons” like how Chip personally preferred all the numbers to be smooth like cream cheese.)

“We have been fully cooperating with these inquiries for nearly two and a half years,” said Bergman on a call with investors. “We firmly believe that our accounting practices and disclosures were appropriate.”

Net revenue for the maker of t-shirts that people give you as a gift when they want to not so subtly tell you to lose weight fell 1% to $1.43 billion from $1.44 billion a year earlier. That beat expected sales of $1.41 billion.

Sales in North America, where Under Armour is struggling to compete with rivals, were down about 4% to $1.01 billion. Meanwhile, sales of footwear dropped like people are finally getting over this whole “wearing shoes” thing, with revenue falling 12%.

When the markets closed yesterday, shares of Under Armour (UAA) were down about 3% year to date.

Editor’s note: Last week, 10-time trading champion Chuck Hughes revealed the secret to how he turned $4,600 into $460,000 a mere two years later.

That’s 10,000% more than he started with.

He’s been using this technique since he started trading 25 years ago, back when he was still an Air Force pilot. And in the last five years alone, he’s generated more than $3.7 million with it.

If you missed out on the big reveal, my publisher Doug wants to offer you a special chance to test drive Chuck’s incredible system.

Click here before it’s too late. This offer expires tonight, November 5 at midnight.

 TRADE WAR 

Tariffs May Be Rolled Back Before December 15

The U.S. and China are considering rolling back tariffs as part of phase one of the trade negotiations.

(And as with all trade wars news, take this with a big ole pinch of salt. In fact, just take a fistful of salt and throw at your wide-open mouth. Whatever lands in there is the right amount of salt to take this with.)

Until now, the premise of the “phase one agreement” was to prevent any further tariffs going into effect.

But officials from both sides of the negotiation table have indicated that things are going so swimmingly, removing tariffs already in place is now an option. (Or this whole thing may be on the cusp of exploding and drawing it out for another year.)

“Both governments have to give to get,” executive vice president at the U.S. Chamber of Commerce and stereotypical “rich man,” Myron Brilliant, told the WSJ. “The two sides are really close to a deal but it will come down to the presidents to make the final call.”

Reportedly, the “phase one” pact also includes:

  • Protection for intellectual property rights
  • Opening up China to U.S. firms
  • Anti-currency manipulation rules
  • The Chinese purchase of American farm goods
  • And a counterfeit Game Boy for Barron

Of course, all this is still up in the air. President Trump and Chinese officials will have to sign off on the deal, and negotiations have broken down at this stage in the process in the past.

China’s state-run media seems to indicate that the Xi Jinping’s regime is happy enough with this agreement. But then again, you know how I feel about “state-run” media. And regimes. And governments who put folks in concentration camps and harvest their organs.

The negotiators are trying to get this phase one deal tied up with a bow before the next round of tariffs go into effect on December 15, so we’ll know soon enough.

In Other News

Delhi Air Quality

Clock icon

ONE LAST THING

The Real Reason Gold is Rallying

Gold’s had a heck of a year, folks.

The precious metal (that financial journalists like to creepily refer to as the “yellow metal”) is up more than 18% year-to-date.

Right now, it’s trading above the crucial $1,500 mark which has held it back in the past. So I reached out to my colleague and macroeconomic expert Graham Summers to find out exactly what’s going on.

Graham. Is this the end of the world?

I’ve been receiving a lot of questions about the recent rally in gold, Shane.

After trading sideways for the better part of five years, the precious metal has been on a tear, roaring higher by almost $300 per ounce. This momentous climb higher is shown on the chart below.

Gold's Major Rally

There are multiple reasons for this, but all of them boil down to the same thing…

Central Banks are Trapped

It is now clear that central banks cannot normalize monetary policy ever.

The Fed, the European Central Bank (ECB), and the Bank of Japan (BoJ) are all talking about cutting interest rates and introducing new Quantitative Easing (QE) programs through which they print new money to buy assets.

This comes after 10 years of the most extraordinary central bank monetary policy in financial history.

The ECB and BoJ currently have interest rates at NEGATIVE. The Fed will be joining them sometime next year. This is forcing the bond market to move into negative yield territory in which lenders are PAYING borrowers for the right to lend them money!

THIS is why gold is rallying.

Gold: A Hedge Against Central Bank Intervention

With over $19 trillion in bonds currently having negative yields… gold, which has a yield of ZERO, is actually looking attractive in relative terms.

Indeed, gold is now looking more and more like a standalone currency: one that cannot be devalued by central banks. As such it is extremely attractive relative to the U.S. dollar, the euro, and the yen.

This explains why the precious metal has broken out against all three of those currencies.

Breaking Out

Put simply, gold is telling us that central banks are about to engage in another round of extraordinary monetary policy. And as gold has already shown us, if you time this correctly you could make a literal fortune…

Computer icon

MARKET MOVEMENTS

Closing Data for 11/4/19

 

DIJA                   $27,441.19   ↑ 0.34%

S&P Index 500    $3,078.20      ↑ 0.37%

NASDAQ             $8,438.64     ↑ 0.62%

Gold                   $1,510.00    ↓ 0.09%

Silver                  $18.07          ↓ 0.31%

Bitcoin                $9,441.20      ↑ 2.37%

  • Apple commits $2.5 billion to help the housing crisis in California. In recent months, Facebook and Google have made similar pledges, as many believe big tech helped create the housing problem.
  • On Sunday, the market value of the entire German stock market was smaller than that of Apple and Microsoft.
  • A day after the McDonald’s CEO was fired, its chief people officer chose to depart the company effective immediately.

Cheers,

Shane Ormond
Editor, One Last Thing

Shane Ormond

Written By Shane Ormond

Shane Ormond is the managing editor for One Last Thing. In a previous life, he wrote and edited copy for International Living in Waterford, Ireland.

  • iShares ETF Exceeds Highs and Lows

    Chuck Hughes

    by Chuck Hughes
    On Jan 17, 2020

    IYG on steady rise since mid-October…

    An article in Investing

  • Putin on the Ritz

    Putin on the Ritz

    Shane Ormond

    by Shane Ormond
    On Jan 16, 2020

    Russian President and shirtless horse rider Vladimir Putin announced a major constitutional reform yesterday to set himself up as secret king of Russia for all time.

    An article in Investing

  • Clear 52-Week High Trend Detected

    Chuck Hughes

    by Chuck Hughes
    On Jan 16, 2020

    Agilent Technologies’ uptrend has been building momentum since December…

    An article in Investing

  • #CNNisTrash

    #CNNisTrash

    Shane Ormond

    by Shane Ormond
    On Jan 15, 2020

    Well, folks. That’s the last Democratic debate before the Dems drive their little hybrids to the polls and start voting, so you know what that means!

    An article in Investing

  • VHT in Keltner Channel “Buy Zone”

    Chuck Hughes

    by Chuck Hughes
    On Jan 15, 2020

    Healthcare-tracking index pulling back from Upper Channel…

    An article in Investing

  • A Fundamental Reshaping of Finance

    A Fundamental Reshaping of Finance

    Shane Ormond

    by Shane Ormond
    On Jan 14, 2020

    BlackRock CEO Larry Fink says everything being on fire all the time might impact investors who want to invest in stuff that isn’t on fire all the time.

    An article in Investing

  • Int’l Semiconductor Maker on ‘Buy’ Signal Still

    Chuck Hughes

    by Chuck Hughes
    On Jan 14, 2020

    ASML approaching its 1-year uptrend mark…

    An article in Investing

  • Tesla Farts, Stock Surges 8%

    Tesla Farts, Stock Surges 8%

    Shane Ormond

    by Shane Ormond
    On Jan 13, 2020

    The car of the future will talk and make fart noises, says Tesla CEO and incorrigible man-child Elon Musk.

    An article in Investing

  • ADBE Trading in Clear Bullish Pattern

    Chuck Hughes

    by Chuck Hughes
    On Jan 13, 2020

    Digital media bigwig trades past its former highs and lows…

    An article in Investing

  • An Airplane "Designed by Clowns"

    An Airplane "Designed by Clowns"

    Shane Ormond

    by Shane Ormond
    On Jan 10, 2020

    Happy Friday! With temperatures projected to be in the 60s this weekend in Baltimore, our team is finally ready to brave the outdoors.

    Before we get to that though, let’s review.

    Monday

    In Altucher’s Secret Income, James recommends selling five PDF Solutions (NASDAQ: PDFS) Feb. 21, 2020, $17.50 puts.

    For additional upside, also buy two PDFS May 15, 2020, $17.50 calls. Read on…

    After that, James sent a profitable Secret Income exit alert. Sell Telaria (NYSE: TLRA) at market. Go here to learn more.

    Tuesday

    In the Top 1% Advisory, James uses the U.S.-Iran conflict as a lesson in managing emotions in investing. Go here for more.

    Then, we rang the register in Altucher’s Weekly AlphaBrain Alert. Sell to close Planet Fitness (NASDAQ: PLNT) Feb. 21, 2020, $72.50 calls. Here are the full details.

    Finally, we published the January issue of The Altucher Report, found here.

    Wednesday

    In Altucher’s 420% Syndicate, James reveals his 2020 outlook for cannabis ― and how you can impact it. Here’s the full update.

    Thursday

    In Altucher’s Weekly AlphaBrain Alert, James sent two new recommendations.

    First, buy to open Atlassian (NASDAQ: TEAM) March 20, 2020, $140 calls.

    Then, buy to open Slack (NYSE: WORK) April 17, 2020, $22.50 calls. Here’s the full alert.

    Later, James’ discussed bitcoin’s recent price movements in Altucher’s Investment Network. Read on…

    Friday

    We started Friday with a Crypto Trader update from James. Read it here.

    Finally, The Altucher Report highlighted some reader responses to the question, “What did you do to reinvent yourself recently?” Go here for access.

    Enjoy your weekend!

    Sincerely,

    Michelle Rind
    A fresh batch of internal communications from Boeing employees reveals that pretty much everybody involved knew the 737 MAX was a flying garbage fire but prioritized cost-saving measures over the lives of their customers and employees.

    An article in Investing