OPEC Agreement Boosts Stocks

by John Natale, Wells Fargo Asset Management

Stocks reversed early-session losses to end in the green following reports that OPEC will cut oil production for the first time in eight years.

The Dow climbed 110 points, with 21 of its 30 components gaining; the S&P 500 Index rose 11 points; and the Nasdaq added 12. Advancers topped decliners by three to one on the NYSE and by three to two on the Nasdaq. The price of Treasuries weakened. Gold futures decreased by $6.70 to close at $1,323.70 an ounce. The price of crude oil jumped $2.38, or 5.3%, settling at $47.05 a barrel, after a delegate from OPEC said the group agreed to cut monthly production by 750,000 barrels per day to 32.5 million barrels.

In earnings news:

• BlackBerry Ltd. posted breakeven earnings per share in the second quarter from a year earlier on revenue of $334 million, down 31.8%. The firm announced it will no longer manufacture smartphones, handing over hardware production to its global partners while focusing on its more profitable software business. BlackBerry’s shares (BBRY) rose 5.71%.
• Nike Inc.’s shares (NKE) declined 3.78% after its earnings and sales beat estimates but its future orders forecast did not. The athletic footwear and apparel brand’s first-quarter net income rose 5.9% to $1.25 billion from a year earlier on revenue of $9.06 billion, up 7.7%.

In other business news:

• U.S. durable-goods orders were about flat in August from the prior month, the Commerce Department reported. New orders for “core” capital goods minus aircraft and defense—a key measure of U.S. business investment—fell 0.4%. Orders for machinery, computers, fabricated metals, and electrical equipment all decreased in August. Orders for military capital equipment increased 23.6%.
• U.S. mortgage applications fell a seasonally adjusted 0.7% last week from the prior week, according to the Mortgage Bankers Association. The MBA’s refinance index decreased 2.0%, and its purchase index rose 1.0%. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell to 3.66% from 3.70%.
• U.S. stockpiles of crude oil and distillate fuel both decreased by 1.9 million barrels last week, according to the Energy Information Administration. The nation’s gasoline inventories rose 2.0 million barrels. Crude-oil declines were due mainly to a steep drop in East Coast inventories. U.S. crude imports slipped last week by 393,000 barrels a day.
• Anheuser-Busch InBev NV gained approval for its $100 billion takeover of SABMiller PLC, creating a global brewing company with an estimated 46% of worldwide beer profits. AB InBev, which brews Budweiser, will discontinue the SABMiller name and begin trading as a combined firm on October 11. AB InBev’s shares (BUD) rose 1.18%, and SABMiller’s shares (SAB) edged up 0.56%.

*****

If you love a TV show, sometimes you have to set it free. Especially if you don’t feel like paying for it anymore (or if you can’t find it).

A new TiVo survey of 5,500 global TV watchers reveals that more than one-third of viewers have engaged in “show-dumping,” or giving up on a popular TV program—not because they don’t like it anymore but because it’s too difficult or costly to view. 37% of worldwide TV viewers have stopped watching a show they used to enjoy because it’s too challenging to access, with the majority of those shows originating from premium pay-TV channels (such as HBO) or Over the Top (OTT) services.

For those wondering (like I was) what Over the Top means, it is not a TV channel that plays Sylvester Stallone’s 1987 classic arm-wrestling movie, Over the Top, repeatedly. Nor is OTT an entertainment provider that challenges viewers to decide what to watch by arm-wrestling while the Over the Top soundtrack plays in the background in its full ’80s glory. Although I wish it was.

No, OTT is something that millions of us are already using: internet-based entertainment services that allow consumers to bypass cable TV packages, such as NetFlix, HBO’s streaming services HBO Go, and Roku. I just didn’t realize it. With that fun fact out of the way, here are the most frequently dumped TV shows, according to TiVo:

• Shows that require a premium pay-TV package (such as an HBO series that you can access using your cable bundle provider’s On Demand screen)
• Shows that are only available through paid OTT services (like NetFlix, which has a monthly subscription)
• Shows that are unavailable on OTT services that aggregate content (like Amazon, which features endless libraries of content you can watch but only includes a portion of that content as part of its subscription package—the rest you have to purchase)

While price is a common pain point between all three of these examples, they also share a degree of user unfriendliness. Taking into account the on-screen search functions and recommendation tools that services such as NetFlix and HBO offer, more than 47% of the survey’s respondents said they want their entertainment providers to make it easier to find the shows they want to watch.

This makes sense. When I visit NetFlix’s home screen, it’s hard to find a comedy show that’s not listed in the provider’s top-dozen recommendations. All I want is a series of links I can click to find the types of shows I want—perhaps by genre, time period, TV series versus stand-up special, and names of the starring cast.

The same goes for Amazon, where search issues and price combine forces to confound me. One day, my kid has full access to the entire library of Curious George shows, seasons one though nine. The next day, we’re like the Man in the Yellow Hat: We can’t find George anywhere, and after an exhaustive search, we learn that Hulu bought the rights to stream George episodes.

It’s times like that when I put things into perspective and remember my family’s first TV: a 13-inch box set that offered only five channels (well, six if you counted the fuzzy station from Baltimore featuring Captain Chesapeake). Our search function involved getting up from the couch and turning the dial. At the time, the term show-dumping only applied if a.) your show went off the air or b.) it was bad, so you went outside to play.