Massive week for cereal

The educational portion of this newsletter focuses on stock futures

Source: Giphy

How we feel about having a 3-day weekend

In 2:55 minutes, you will learn:

  • 5 headlines that pretty much sum up the week
  • How Kellogg’s made preparing cereal even easier
  • Why stock futures are useful to all investors
  • Our rec of the week

Five headlines that sum up the week

1. McDonald’s has collabed with K-pop group BTS

Source: Giphy

This week, McDonald’s debuted a new meal featuring K-pop group BTS. The meal – 10 pieces of chicken McNuggets, a medium order of french fries, a medium Coke and sweet chili and Cajun dipping sauces – is only half of the package. BTS also unveiled a clothing line that incorporates the McDonald’s logo with their signature purple. This collab is the first to be available worldwide; in the past, McDonald’s worked with Travis Scott and J. Balvin but only offered it in the U.S.

2. Google and HCA have partnered to bring algorithms into health care

Source: Giphy

Google has expanded its reach into HealthTech through its new partnership with hospital chain HCA. The tech giant is using anonymized patient data to create algorithms that will help inform medical decisions. HCA accounts for around 5% of hospital services in the U.S. and has over 2,000 health care sites in 21 states. Google’s not the only tech company to go down this path. Amazon and Microsoft also have deals with hospitals to analyze patient information.

3. Gap and Walmart are launching a home goods brand called Gap Home

Source: Giphy

Gap and Walmart have announced a new partnership and plans to launch a line of home goods that will be sold at Walmart. Expanding its presence beyond apparel has been part of Gap’s broader plan to monetize its global brand recognition as the company’s CEO moves to restructure the business model. Gap reported strong  quarterly sales numbers yesterday and raised its outlook for the full year. Walmart also announced its quarterly earnings of $138.3 billion earlier this month.

4. California is incentivizing residents to get vaccinated with money

Source: Twitter

In California, you can become a millionaire just for getting your COVID vaccine. The state has set aside $116.5 million in cash prizes and gifts with the biggest cash prize of $1.5 million going to 10 residents. Winners will be announced on June 15, the day the state’s economy is set to fully reopen. Additionally, 30 people will be selected to receive $50,000 while the next 2 million people to get vaccinated will be eligible for $50 grocery store gift cards.

5. Amazon bought MGM for a modest $8.5 billion

Source: NDTV

Amazon has officially acquired MGM for $8.5 billion – an amount that probably feels like pocket change for Jeff Bezos. The purchase of MGM is Amazon’s second largest purchase to date, with its largest still being Whole Foods. Owning MGM gives Amazon exclusive rights to the James Bond franchise as well as its massive collection of television shows. With Amazon Prime already being the second largest streaming service, there’s only upside to expanding its library. According to CNBC, Amazon stock  has grown 1,588% in the last 10 years. If you invested $1,000 in 2011, those shares would be worth $16,881.75 today.

ICYMI: Kellogg’s created a robot vending machine for its cereal

Source: CNET

Absolutely no one:

Kellogg’s: We made a robot vending machine that combines all of our cereal into one bowl and tops it off with like bananas, espresso syrup and chocolate.

Kellogg’s has unveiled a sophisticated vending machine that assembles the cereal bowl of your dreams in 90 seconds or less. From different milk options to a selection of toppings, you have the option to creating your own bowl or applying one of the menu options. Hawaii 5-0, for example, is a combination of Frosted Mini Wheats, Bear Naked Triple Berry Granola, and pineapple, coconut and mango. 

The “Kellogg’s Bowl Bot” was launched as part of a partnership between Kellogg’s and Chowbotics, which is owned by DoorDash. Right now, you can only find this vending machine on Florida State University and University of Wisconsin-Madison campuses. Prices start at $2.99 per bowl but could cost over $6 depending on how wild you get with your bowl.

Stock futures provide valuable info even if you don’t invest in it

Source: Giphy

TL;DR

Stock futures are futures contracts that focus on stocks or the stock market. It uses high leverage, meaning traders don’t front 100% of the contact value when they enter the trade. This is not be mistaken from options trading – investors are obligated to buy or sell an asset. The main upside of investing in futures is the potential to profit on price swings or hedge against risk.

What are futures?

Futures are derivative financial contracts that require action from both the buyer and seller at a future date. The buyer will be required to buy an asset at a set date and price, while the seller must sell the asset at a set date and price. (Futures differ from options, which give investors the right but not the obligation to purchase assets.)

Futures are called derivates because they derive their price from the underlying asset. 

It’s considered an advanced instrument best suited for experienced investors and institutions.

Source: Giphy

What are stock futures?

Stock futures are futures contracts that focus specifically on stocks or the stock market. Individual investors use these contracts to profit on price swings, while institutional investors often use them to hedge against risk.

Stock futures often use high leverage, which means that traders don’t front 100% of the contract value when they enter the trade. Instead, the broker will require an initial margin amount, or a fraction of the total contract value. This amount varies based on:

  • The broker’s terms and conditions
  • Contract size
  • The creditworthiness of the investor

Unlike the stock market, stock futures trading begins at 6pm on Sundays, and remains open until 5pm on Fridays. Trading halts for a 30-60-minute window at the end of each business day.

What are futures used for?

Investors buy futures contracts for two primary purposes: speculation and hedging.

Investors who use futures for speculation are doing just that: speculating on the direction of movement of the underlying asset’s price.

Investors also use futures to hedge against price movements of the underlying asset. The goal is to prevent losses from unfavorable price changes, rather than to speculate on how far the asset will rise or fall.

Often times, companies will hedge against products that they use or produce to ensure that they don’t incur sudden losses. However, investors and hedge funds often use futures to hedge against assets in their portfolios, too.

Source: Daily Advent

Pros of stock futures

  • May only require a deposit that totals a fraction of the full contract amount
  • Futures contracts make for easy speculation on the price direction of the underlying asset
  • Gains are amplified due to leveraged positions

Cons of stock futures

  • Unlimited risk on leveraged positions that may potentially increase far above the contract price
  • Gains and losses post to your account daily, meaning that you may lose your position or have to post more funds in your margin account if market movements decrease the value of your position
  • Lack of trading interest may negate stop-loss orders if your broker can’t sell a losing futures contract

The bottom line

Even if you don’t invest in futures, they can be a valuable source of information. For example, futures provide everyday investors with a gauge of how professional traders and institutional investors perceive the health of a stock, index, commodity or the stock market at large. It can even provide insight on the broader economy. 

Visit our Learning Center for the full “Investing Explained” resource

Source: Bloomberg

This Bloomberg article takes a closer look at the rippling effects that the pandemic has had on the entertainment industry. From streaming platforms skipping theaters and debuting new titles online to Amazon’s most recent acquisition of MGM, it’s crazy to remember a time when sports were cancelled. But with media companies battling over streaming rights, even the way we watch sports can change forever.