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 10/21 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.).
Office hour times and advisors change every week so keep an eye out for emails from us.
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ISOC x Wellington Management Trip on FRIDAY 10:30AM - 12:30PM
APPLY BY TONIGHT 10/15 11:59PM
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Learn about summer internship and full-time opportunities at Wellington Management this Friday in the firm's Boston headquarters.
Wellington Management Group is one of the largest investment management firms with client assets under management totaling over US$1 trillion. The firm serves as investment advisor to over 2,150 institutions in over 60 countries
Email your resume (in PDF form please!) and a short description of why you wish to attend to
soc-eboard@wellesley.edu
by 11:59pm.
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- U.S. stocks experienced the worst week since March. All three major indexes (Nasdaq, S&P 500, and the Dow Jones) suffered their worst weeks since March. Markets in China hit their lowest level since 2014 on Thursday, while European shares touched their lowest in 21 months.
- Why? Stocks have dropped in the past week because investors are growing concerned about rising interest rates and fears over a possible U.S.-China trade war. Rising interest rates increase borrowing costs for households and businesses, eating into corporate profits while a trade war leads to volatility and uncertainty in the market, which investors don't like.
- What's scary? The driving forces behind this week's downturn -- trade war and interest rate fears -- have been around before this week, and yet market volatility is only spiking now. What does this mean? Experts are puzzled-- as one Wall Street analyst says, "The scariest sell offs are the ones you can't tie to a specific reason."
- Is more instability coming? News reports over the weekend suggest that the latest catalyst of market volatility could be economic and political unrest between Saudi Arabia and the world as questions over journalist Jamal Khashoggi's disappearance remain unanswered.
- IMF Slashes Global Growth Forecasts Amid Trade Risks. The International Monetary Fund (IMF) on Tuesday projected a global expansion of 3.7 percent this year and next, down from the 3.9 percent projected three months ago.
- Why? This lower prediction can be attributed to growing global uncertainty for companies and investors alike in the face of growing trade tensions between the U.S. and China and new trade policies due to new NAFTA and Brexit negotiations. The IMF thinks that if the trade war continues, the global economy may be growing almost 1% slower than it would be without trade war by 2020.
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- Apple is paying $300 million in cash to carve out part of European chipmaker Dialog Semiconductor. Apple has signed a licensing deal with its long-time supplier Dialog and acquired assets including over 300 employees.
- Apple will pay Dialog $300 million in cash to bring over 300 of Dialog's engineers in house and prepay $300 million for Dialog products to be delivered over the next three years.
- Why? This "acqui-hire" boosts the smartphone giant’s chip-design operations and brings in talent and supply lines to the firm, allowing Apple more control over its supply chain. Apple’s talent acquisition comes at a time when the development of more powerful processors for the iPhone is outpacing advances in the device’s battery.
- SoftBank Group Corp. is discussing to bid $15 billion-$20 billion for a majority stake in WeWork.
- What? WeWork is a co-working space startup that provides other startups shared office space to work. It takes on long-term leases for raw office space and builds out the interior with flexible spaces and modern design that it then subleases for terms as short as a month. Despite the real estate focus, it has always marketed itself more like a tech company, promising a lofty vision of connecting people and building community.
- Why? The firm's ambitions include developing entire neighborhoods full of not just its offices, but also WeWork-run apartments, gyms and even schools. Last month, it launched an elementary school, and it has bought a search engine optimization company, a software-coding school and even a stake in a wave-pool business.
- SoftBank risk: SoftBank's Vision Fund is reportedly looking to invest additional capital (up to $20B) in WeWork, which would secure a majority stake in the company. Even for SoftBank, $20B is a massive investment, representing 20% of the $100B Vision Fund. SoftBank shares fell 5% after the announcement, partially due to investor concerns around overexposure to real estate risk.
- Will it happen? TBD...WeWork’s valuation has long baffled real estate landlords. The largest rental office company, IWG PLC, had nearly twice as many desks for rent as WeWork as of June, but roughly one-fifth its valuation. WeWork has also been racking up losses amid its investment in rapid growth. Moreover, its reliance on startups for business exposes it to risks of firms leaving during a recession.
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- Lithium producer Livent (NYSE: LTHM) falls in its stock market debut amid a global market selloff and uncertainty for lithium prices. The firm raised $340 million in its Thursday IPO.
- What? Livent produces pure lithium metals and lithium products that serve as a key ingredient in rechargeable batteries for electric vehicles.
- Why the drop? Livent’s debut comes a day after the major U.S. indices fell about 3 percent each, unnerving investors and pushing them to the sidelines. Additionally, prices of lithium have halved in China, the world's largest lithium consumer, this year from their peak of $24,750 per ton due to oversupply, hurting near-term earnings prospects for lithium producers.
- Several IPOs were put on hold after the market sell-off last week due to market volatility and zaniness.
- Why? As major global indices hit lows, many companies aiming to sell shares started taking a step back from the capital markets, canceling or postponing planned initial public offerings. Companies -- and their advisers -- prefer to make their trading debuts into stable markets to avoid wild swings in the share price or being swept up in a rout.
- Who? In the past two weeks, at least eight IPOs have been withdrawn or postponed. On Thursday, LeasePlan, Europe’s largest vehicle fleet operator, canceled its plans for an initial public offering, which could have valued the company at €6 billion ($7.5 billion). Tencent Music, the Chinese music streaming firm, is pausing its U.S. IPO until at least next month
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- Kahoot raises $15 million at a $300 million valuation. The educational gaming and trivia startup out of Norway raises its latest round, let by mostly Nordic investors, to continue investing in building the platform and making acquisitions.
- What? The Norwegian startup is best known for its game-based quizzes and claims 70 million monthly active users and a presence in almost half of U.S. K-12 schools. Over 51 million games have been created on the platform.
- SmileDirectClub has raised $380 million at a $3.2 billion valuation. Clayton, Dubilier & Rice led the round, which featured participation from Kleiner Perkins and Spark Capital.
- What? SmileDirectClub is a direct-to-consumer teeth-aligner startup that started with the idea of using teledentistry to virtually connect licensed dentists and orthodontists with people who want to straighten their teeth. Since its inception in 2014, SmileDirectClub says it has helped more than 300,000 people straighten and brighten their teeth. The startup says it costs 60 percent less than other types of teeth-straightening treatments.
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- Facebook revised the number of accounts hacked from 50 million to 29 million.
- Hackers collected the names and contact info — phone numbers and emails — for all 29 million people. The hackers also collected a lot of other information on 14 million of those 29 million users, including but not limited to “gender, locale/language, relationship status, religion [and] hometown.” Check here to see if your personal data was breached.
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- Sears files for bankruptcy, marking the collapse of a retailer that dominated the U.S. for much of the 20th century.
- Why? What’s going on? Sears was due to repay $134 million in debt today but instead, it has defaulted on the payments and filed for bankruptcy. The firm has performed poorly in the past decade, racking up up more than $11 billion in cumulative losses since 2011 while its annual sales have dropped nearly 60%. Although the firm has cut expenses and closed unprofitable stores in recent years, it has struggled to keep up with online rivals such as Walmart and Amazon.
- Now what? Its biggest shareholder and biggest creditor, a hedge fund, is pushing for a broader restructure that would include shaving more than $1billion from Sears’s $5.5 billion debt load, selling $1.5 billion of real estate and $1.75 billion of other assets. The bankruptcy has also caused one of the largest pension defaults in American history, affecting the pensions of over 90,000 retirees. However, the government has announced it will step in to cover those benefits.
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- Gold glitters as stocks fade. Last Thursday, gold gained momentum through lower-than-expected US inflation rate and climbed 2.9% as global stocks extended their losses.
- Why? Gold is seen as a "safe haven asset" by investors, and prices tend to rise in times of economic or political uncertainty. There is still risk aversion in the marketplace after recent high volatility in the world stock markets
- Oil Prices Waver On U.S.-Saudi Tensions. Threats exchanged over the disappearance of journalist Jamal Khashoggi push up prices.
- Why? President Trump said the U.S. would impose “severe punishment” on Riyadh if an investigation implicates the Saudi government in the case of Khashoggi's disappearance. The Saudis responded by vowing to retaliate against any punitive measures from Washington, while noting that the world’s largest exporter of crude oil “plays an impactful and active role in the global economy.” The tit-for-tat threats between the U.S. and the Saudis are “giving rise to new uncertainty for the oil market."
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Breaking the Glass Ceiling
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Jessie Xiao,
ISOC Co-Vice President
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This week we will be introducing our other co-vice president,
Jessie Xiao
! Jessie is a junior majoring in Economics and minoring in Computer Science. She also serves as the President of the Consulting Club and the President of Mogul at Wellesley. Her
previous internships include working for a tech startup, government work, and research. Jessie is really passionate about female empowerment and music.
Why did you join ISOC?
I joined ISOC because before coming to college, I had no knowledge of economics or finance. However, once I started falling in love with my economics classes, I wanted to start exploring potential career options and thought joining ISOC would help. Sure enough, it has.
What's your advice for Wellesley students who are interested in finance?
My advice to underclassmen is to not limit yourself. Keep an open mind to different experiences because you may never know what you’ll fall in love with.
How has your Wellesley experienced shaped your career outlook?
Wellesley has taught me that your career is not just about finding a job and making a living, but it is also about contributing to society. By the end of my career, I hope to have improved at least one aspect of our community.
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