July 30, 2013 Update

DJIA:15,522 S&P 500:1,685 NASDAQ:3,599 Gold:$1,323 Oil:$103.88 EURO:$1.33 YEN:98.00

The Market for Love

Technological advancements have altered nearly every aspect of human life, even the process in which we mate. According to the U.S. Census Bureau, women are getting married at a median age of 25.1 years old, a 4.3 year increase since 1970; for men, the median age has risen to 26.8, a 3.6 year increase. The same holds true for the average age of reproduction. Over the same period, birth rates have increased for women over 30 but have fallen for the women younger than 30. Americans are tying the knot at the oldest average ages in history, which means they’re dating longer than ever before. As a result of this cultural shift, the demand for digital dating services has been heating up; making unique opportunities for entrepreneurs to develop online programs to match these lonely markets. As of FY12, the dating services industry pulled in revenues of $2b, averaging a 2.9% increase over a five year period. eHarmony has an estimated revenue of $275mm, up 3.8% YoY. Dating services companies have increased at a five year average annual pace of 3.1% to reach a total of 3,898 companies in FY12. The market is expanding. And as divorce rates rise among the baby boomer generation, I think the demand for a low risk method to meet older singles will continue to grow. In addition to online dating sites, mobile phone apps have dominated the dating industry for the younger generation. Tinder, an add-free start up company, has been matching markets for only nine months but has already gone viral. The app is responsible for introducing over 100mm couples and for 50 marriage proposals. Users of Tinder link the app to their Facebook, where a photo and basic information is shared. Users swipe past candidates until a person of interest is found, in which they press like. If the same person fancies you as well, the market is made; and if not, rejections are kept unknown. 85% of Tinder’s users log on a weekly basis and 65% use the program daily. Bang with Friends, a similar start up, has matched over 200,000 couples since its genesis in January. A survey by Christian Mingle and J-Date found that about 37% of American young adults between the ages of 21 and 34 ask for dates through text message. In 1970, the cell phone, let alone the internet, didn’t exist! The growth of the dating services industry reflects a shift in romantic culture, where technology and romance cross. But which is the cause and which is the effect? Or are they both the effects of an external cause; like the fact that people are living longer than ever before. The internet has become the encyclopedia of life, an endless platform of wisdom. The trust placed in cyber space is remarkable. Americans have become comfortable outsourcing labor to a country in which they have never been, sharing personal information to an unknown audience, and going on dates with people of whom they have never met and share no mutual friends with. The spark between technology and romance has created a dating market with very limited downside and unlimited upside, and is only going to get hotter as people continue to live longer and rely on the conveniences technology provides. 

Domestic News

• Market UpdateFutures are up ahead of data reports, and a busy premarket earnings schedule.
• The Case-Shiller 20-city home-price composite will be released at 9:00, it is expected to show YoY gains for May of 12.3%, slightly higher than April’s 12.1%.
• The Conference Board will release its consumer-confidence index at 10:00, a slight fall to 81.1 is expected for July from June’s 81.4 (which was the highest level in over five years). 

International Updates

Asia

• Market Update Japanese shares rebound after four days of solid losses as the yen helps exporters, despite the falling factory production rate.  

Europe

• Market Update Markets are struggling for direction after an upbeat German consumer confidence data outweighs mixed earnings reports. 
• According to the report, German consumers are most optimistic they have been in six years as the forward-looking consumer-sentiment indicator rose to 7.0 in August from 6.8 in July. 

Corporate

• Pfizer (PFE) Q2 EPS was $0.56 per share, beating expectations of $0.55, revenue of $12.97B is down 7% YoY and missed expectations by $40mm. Net profit down 10%, but net income rose to $14.1B or $1.98 per share, driven by a patent settlement over an acid reflux medication.