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By Jason Stipp and Jeremy Glaser | 05-15-2015 06:00 AM

Friday Five: Economy Walking a Fine Line

This week's retail sales report was not so hot to stoke fears of Fed tightening, but not so cold to raise recession fears. Plus, Williams follows Kinder's lead, and more.

Jason Stipp: I'm Jason Stipp for Morningstar and welcome to The Friday Five, Morningstar's take on five stories in the market this week. Joining me with the Friday Five is Morningstar markets editor Jeremy Glaser.

Jeremy, thanks for being here.

Jeremy Glaser: You're welcome Jason.

Stipp: In a surprise move this week, Verizon announced it was buying AOL. What's the rationale behind this deal?

Glaser: Verizon is picking up AOL for $4.4 billion. This is not about AOL's 2 million dial-up Internet subscribers, even though that is probably the first thing that comes to mind. This is really about AOL's ability to serve ads on mobile video. Verizon is getting ready to launch a mobile video service that will feature a lot of different types of programming, and they are looking for an advertising platform that would let them monetize that and serve targeted ads to people.

But Mike Hodel, our Verizon analyst, thinks the success of this deal is going on hinge on if Verizon is able to convince consumers to use their video service. There are plenty of competitors out there, from Google's YouTube to all of the networks. There are lots of people who want to serve mobile video and see it as a growing market. But it's not clear that Verizon itself will be in a position to become a major player there.

Time will tell if this deal is successful, but given its relatively small size compared to the behemoth that is Verizon, the deal doesn't change our fair value estimate; it doesn't make us think about the business any differently. But this is an interesting capstone on what was one of the most interesting stories in American business--the rise and fall of AOL. It's interesting to see it end up in Verizon's hands.

Stipp: In economic news, we got retail sales data this week, and it feels like consumers are still being thrifty.

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