Wednesday,
July 14, 2021

Market recap

Dow Jones

34,888.79

-107.39 (-0.31%)

S&P 500

4,369.21

-15.42 (-0.35%)

Nasdaq

14,677.65

-55.59 (-0.38%)

Toyota

$179.16

+$0.26 (+0.15%)

United Airlines

$48.50

-$2.12 (-4.19%)

Goldman Sachs

$376.60

-$3.90 (-1.02%)

Amid evolving news surrounding COVID-19 and the economic reopening, your financial needs are our top priority. For more information,click here.

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Top Story

Olympic Sponsorships Face Difficulties Ahead of Games

Spectators Banned from Tokyo Games

Japanese companies, including Asahi Breweries and Toyota (TM), have collectively spent $3 billion to advertise during the upcoming Summer Olympic games in Tokyo. They envisioned stadiums full of potential consumers. But now that spectators are no longer allowed at the events, advertisers are in a difficult position.

Global companies which have multi-year contracts with Olympic organizers should be able to weather the storm, but local Japanese sponsors are pouring money into a one-time event. They will not have an opportunity to make up for losses at future Olympic Games.

Disappointment for Sponsors

Nippon Telegraph & Telephone was gearing up to showcase its augmented reality technology via live demos at the Olympics, while Toyota had plans to show off its green vehicles. Now only employees and those participating in the games will be able to experience these displays of new products.

Asahi, which paid $135 million for the most expensive tier of sponsorship at the Olympics, had envisioned stands full of people drinking its beer. It is now coming up with ways to promote its beer to spectators watching the games at home or in bars. Meanwhile, sponsor KNT-CT, one of Japan’s largest travel agencies, had planned to provide clients with tour packages to the Olympic Games.

Olympics’ Image May Be Tarnished

Headlines about rising COVID-19 cases in Japan are hurting the Olympics’ reputation and causing backlash among Japanese citizens. A recent poll found that more than two-thirds of people living in Tokyo were worried the games would bring new variants of COVID-19 to the city.

The pandemic has caused innumerable challenges for the Summer Olympics. The decision to ban spectators was a blow for sponsors. However, sponsors are now finding creative ways to rapidly adjust their plans ahead of the games.

Understanding Credit Card Interest

Things are about to get interest-ing. To accrue or not accrue? SoFi Financial Planner Brian Walsh takes you step-by-step through understanding how to calculate and understand credit card interest. Watch on YouTube now!


Understanding Credit Card Interest

CBRE Group’s SPAC and Altus Merge

Altus Valued at $1.58 Billion

CBRE Group is expanding in the solar-power installation market, with a SPAC sponsored by the commercial real estate company merging with Altus Power. Altus Power builds and operates solar power installations on commercial buildings. The deal values Altus at $1.58 billion.

The merger will give Altus access to money it can use for expansion. It also puts the company in front of CBRE’s clients, which include some of the biggest owners of real estate in the US, Europe, and Asia. CBRE currently manages 7 billion square feet of commercial space. Many of its buildings have large rooftops and parking lots, making CBRE an ideal partner for Altus. CBRE is also facing pressure from its clients to become greener, so the deal will help with this initiative.

Solar Power Poised for Growth

Commercial properties tend to use a lot of power. Owners and tenants are increasingly looking to solar as a green source of energy. This shift is expected to drive growth for the solar power industry over the next decade with the power-generation capacity of solar panels installed on commercial properties projected to increase 200%.

Solar power is a viable alternative energy source for commercial property owners because the cost of installing has fallen significantly in recent years. In 2009, a 100,000- to 150,000-square-foot solar farm would cost $4 to $5 million to install. Today that cost is down to $1.5 million.

Blackstone Gets a Stake

CBRE launched CBRE Acquisition Holdings (CBAH), the SPAC purchasing Altus, last year on the New York Stock Exchange. It has raised about $400 million. CBRE looked at 80 targets when selecting a merger partner. As part of the deal, Blackstone Group (BX), which led a $350 million debt financing for Altus and already pledged $300 million in preferred equity to the solar panel company, gets a 17% ownership stake in the combined company.

As the world embraces more environmentally friendly ways to produce electricity, solar panels are getting a lot of attention. It will be interesting to see if more real estate and solar panel partnerships follow this deal.

United Airlines and Mesa Air Invest in Electric Planes

United and Mesa Invest in Heart Aerospace

United Airlines (UAL) and Mesa Air (MESA) are teaming up to make electric planes a viable way to transport passengers on short-haul flights. The two companies, along with United’s venture fund, participated in a venture funding round in Heart Aerospace, an electric aircraft maker out of Sweden. The company is in the process of developing a 19-seat electric plane. The investment is part of United’s plan to test new types of aircraft to reduce its carbon footprint.

United and Mesa have each agreed to purchase 100 of the airplanes granted they meet their specifications. The airlines already announced their intention to invest in Archer Aviation, which is making an electric flying taxi. Both companies agreed to purchase as many as 200 of Archer’s electric flying taxis.

Smaller Markets Could Get a Boost

The ES-19 is not expected to begin service until 2026 at the earliest. The plane is expected to fly 250 miles on a single charge and would be used for short flights. United has already identified more than 100 routes which could use and benefit from the ES-19.

The Heart Aerospace electric planes are projected to be cheaper than planes which run on fuel. That could reduce prices for flights in smaller markets and increase the incentive for airlines to fly between smaller destinations. Mesa has been phasing out flights outside of major cities recently, but this could change once it has access to the new aircraft.

Heart’s Planes are Bigger Than Most Other Electric Aircraft

Prior to investing in Heart, United looked at the company for close to a year. United liked that Heart’s planes are bigger than other electric planes in development. The startup raised $35 million in the venture round which had participation from United and Mesa. Heart also counts Breakthrough Energy Ventures, the Bill Gates-created VC fund, as an investor.

Electric planes have the potential to significantly impact the airline industry. Now that United and Mesa have made investments in the technology, it will be interesting to see how other airlines will respond.

Not-So-Breaking News

  • Boeing (BA) will deliver less than half of the 787 Dreamliner planes it produced because of a problem with some of the jets. The defect was found close to the nose of some of the aircraft.

  • JPMorgan (JPM) and Goldman Sachs (GS) topped Wall Street views for their second quarters, with JPMorgan benefiting from the release of loan reserves. Goldman Sachs reported strong IPO and investment banking business.

  • French regulators fined Google $593 million for not making fair content deals with news publishers as was required as part of a copyright deal. It is the largest fine the competition watchdog has ever charged for a company failing to follow a ruling.

  • Mastercard (MA) and Verizon (VZ) are partnering to collaborate on 5G contactless payments. The two are targeting consumers as well as small and medium-sized businesses, and are aiming to roll out the initiative by 2023.

  • The consumer price index surged 5.4% year-over-year in June—its biggest increase in 13 years. Used vehicles, food, and energy prices drove the index higher. Economists had forecast the CPI to gain 5%.

  • Are you ready to make an offer on a house? Here’s some tips on what you need to know about making an offer on a house that will help make you an informed buyer.

Financial Planner Tip of the Day

“When getting ready to buy a house, after assessing your budget and affordability, you may want to give yourself time to save up for a larger down payment. Buyers who put down less than 20% may end up paying private mortgage insurance, which typically costs between 0.3% and 1.5% of your loan amount annually.”

Brian Walsh, CFP® at SoFi

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