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Bad News From China, Ukraine, and Amazon Prime Sends Dow Down 231

By Jack Kramer and Nick Martell – Mar 14, 2014 at 6:00AM

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Good morning, good lookin'... The three things you need to know on March 14th are:

Although U.S. retail sales figures for February topped expectations, the Dow (^DJI 0.69%) fell 231 points Thursday for its fourth straight loss on international geopolitical concerns.

1. Ukraine & China developments bother Wall Street
Tensions were a-risin' Thursday between the West and Russia over the ongoing Ukraine-tastrophy. The Crimeans of Ukraine's strategic peninsula are preparing to vote over the weekend on whether they should separate and join Russia. Meanwhile, Secretary of State John Kerry warned that the U.S. and the EU could take "very serious" steps if the two countries don't resolve their spat soon. Ouch.

On the other side of the Great Wall, China released two pieces of un-sweet, very sour econ data: Although industrial production rose 8.6%, and retail sales gained 11.8% during the last couple of months, both figures were notably below economists' expectations. This is fresh after a report earlier in the week showed China's exports surprisingly dropped in February, leaving investors unimpressed with the world's second largest economy.

The takeaway is that the theme of the week has been international headlines other than Justin Bieber. While China's government is targeting 7.5% economic growth this year, Premier Li Keqiang mentioned in a press conference that the country could finish 2014 short of the goal. And Russia's stock market dropped more than 10% during two days this week as potential sanctions from the U.S. and the Europeans threaten the country's economic stability.

2. Amazon lifts "Prime" annual membership fee to $99
Angry 20-something males filled the streets, hurt and confused, after receiving horrible news from (AMZN 1.58%). Their Amazon free-shipping membership (aka "Prime'" is increasing in price from $79 per year to $99. How could this be?

It couldn't last forever. The Prime membership is liberating for many Internet shoppers -- free two-day shipping on millions of items -- at a cost of $79 since it was introduced in 2005. Amazon explained the price hike to existing members in an email (which was forwarded to the MarketSnacks team from one Rye, NY native and Prime member dependent upon bulk peanut butter and protein tub orders), that increased fuel prices and shipping costs forced their hand.

If just 10% of the 20 million members abandon their elite online shopping club because of this price hike, it would still equate to a $202 million boost in profits. That's easy math, and easy extra revenues from a group of customers who are completely hooked after nine years of addiction.

The stock took a $4 boost as Wall Street heard the news. The price fell back down to just a small 0.2% drop as the broad-market decline Thursday affected AMZN. But this might finally be a sign that the company will take steps to generate profit, something the $74 billion sales company has never really done in its history.

3. JetBlue sells TV technology for $400 million
Mike Tyson isn't the only person willing to spend millions on a television. JetBlue (JBLU 0.07%) owns the high-flying company behind its back-of-the-headrest TVs, called LiveTV, which it sold to French aerospace company Thales on Thursday for $400 million. Now you know who to thank for helping you catch up on all those Bravo reality shows when you're not at home.

The takeaway is that JetBlue paid a fifth of that price for the company 12 years ago, and investors applauded JetBlue's investment return by pumping the stock up 0.7% Thursday. LiveTV earned JetBlue $72 million last year as the technology was installed on 461 planes of other airlines, including United, Alitalia, and Frontier, with orders for 196 more aircraft in 2015. You're our boy, Blue.


  • Reuters/UMich Consumer Sentiment

MarketSnacks Fact of the Day:  Tyson Chicken slaughters 135,000 head of cattle a week, 391,000 hogs, and an astonishing 41 million chickens. Nearly all Americans regularly eat Tyson meat -- at home, at McDonalds, at a cafeteria, at a nursing home.

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Jack Kramer and Nick Martell have no position in any stocks mentioned. The Motley Fool recommends The Motley Fool owns shares of We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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