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Hi John, here's what you need to know for November 7th in 2:58 minutes.

🎤 Finimized to some bangin’ beats at Iceland Airwaves in Reykjavík, Iceland (2°C/36°F ☀️)

⏳ Keep it brief

Arigatō, But No Arigatō

What’s Going On Here?

On Wednesday, Japanese conglomerate SoftBank reported third-quarter results which revealed the company’s first quarterly loss in 14 years. And we already know who’s to blame…

What Does This Mean?

SoftBank has poured over $10 billion into co-working space company WeWork – both directly and via the $100 billion Vision Fund, its venture capital investment subsidiary. But after SoftBank bailed out WeWork following a highly publicized fall from grace – in which its valuation shrank from $47 billion in January to just $8 billion last quarter – the value of the company was reduced by $4.6 billion on SoftBank’s books, leading to a major accounting loss. Adding insult to injury – and losses to its bottom line – some of SoftBank’s other investments also did poorly during the quarter: Uber, Slack, and Guardant Health’s stocks all lost roughly a third of their value.

Why Should I Care?

For markets: A little bit of both.
At its core, SoftBank is a “defensive” telecom company, meaning its earnings should be pretty stable and predictable. But loss-making companies such as Uber and Slack are “cyclical”: they have less predictable earnings that ebb and flow with the economic tide, making SoftBank – which has bet big on these companies – a riskier choice for investors than a traditional telecom company (tweet this).

The bigger picture: A brave new world dot com.
SoftBank is, erm, banking on both the digitization of the new economy and – like several others in industries from healthcare to banks – on growth outside Japan. That might work out in the long run, but it can expect a bumpy road for now. Whether investors are prepared to sign up for that journey and back another $100 billion Vision Fund remains to be seen: Saudi Arabia and Abu Dhabi, the current Vision Fund’s two major investors, seem reluctant to commit to another round in the wake of the WeWork turmoil.

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The Inadequate Driving Machine

What’s Going On Here?

German car manufacturer BMW may have reported rising third-quarter sales on Wednesday, but the carmaker hasn’t exactly lived up to its ultimate reputation: it’s expecting a “significant decrease” in its profit for 2019 as a whole.

What Does This Mean?

After a series of setbacks earlier this year – both operational and regulatory – BMW reported an 8% increase in sales and an 11% jump in third-quarter profit versus a year ago. But profit for the year is down 37% so far, and between Brexit uncertainty, trade war tensions, and a global economic slowdown, the carmaker isn’t expecting any miracles this quarter either. Adding pressure to profitability is BMW’s need – whether due to regulation or competition – to invest big in electric vehicles, automated driving, and more. That might explain the $13 billion cost-cutting program it’s moving forward with, then…

Why Should I Care?

The bigger picture: Things are looking up.
With German carmakers like BMW struggling, it’s little wonder eurozone manufacturing activity is hovering near a seven-year low. But data released on Wednesday offers a glimmer of hope: it showed signs of life for German manufacturing, which has been the biggest contributor to the slump in the bloc’s activity. The data showed a rebound in German factory orders, with demand rising 1.3% in September – far exceeding estimates of a 0.1% gain.

Zooming out: Everyone has to leave home sometimes.
German sportswear brand Adidas also reported earnings on Wednesday, beating growth estimates for both sales and profits. The company makes more than 70% of its sales outside Europe, so it’s less exposed to the region’s weakening economy. Sales have been rising in North America, Asia Pacific, and emerging markets – and now that European sales have joined the party, growing last quarter, perhaps it’s time to start looking at the region more optimistically.

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💬 Quote of the day

– Zach Braff (an American actor, director, screenwriter and producer)