Displaying items by tag: Amazon
The best US stock sector of 2018 is also now the market’s most risky. Consumer discretionary stocks have been on a run this year (as they often do when rates are rising), but that may be about to change. According to Morgan Stanley, consumer discretionary, which is composed of retail, apparel companies, and automakers, may be set for a big fall. “An early-cycle sector trading at peak valuations in a late-cycle environment”, is the way Morgan Stanley describes the sector. The average P/E ratio for consumer discretionary stocks is 35% above the S&P 500’s average.
FINSUM: Amazon is disproportionately responsible for the consumer discretionary’s gains this year, but the other stocks in the sector could be good shorting opportunities.
Amazon has just taken a big step to improve the welfare of its enormous mass of workers. The company has raised the minimum wage across all its businesses to $15 per hour. The wage will apply to the company’s 250,000 employees and 100,000 holiday workers and will begin on November 1st. Amazon also says that it will now push for an increase to the federal minimum wage of $7.25 per hour.
FINSUM: This is a good move for Amazon’s workers, but it might be even better for Amazon’s reputation. The company has recently come under scrutiny for its labor and monopolistic practices, and this is one way to offset those concerns.
Amazon has announced the launch of a new store in New York city. So far, most of Amazon’s brick and mortar aspirations have been unfulfilled, with only a handful of physical stores across the country. However, the company will launch a new store in New York that will feature the top-ranked and trending items from its website. The company is seeking to offer the items New Yorkers buy most directly in its store. Everything in the store will be a 4-star or higher item. The store is called 4-star and will launch in the SoHo neighborhood of Manhattan today.
FINSUM: We think this is an excellent theme for Amazon stores and could be a concept for the company to launch many more physical outlets across the country.
A provocative headline, we know. But it turns out there are some good reasons why Amazon should consider splitting itself up before regulators do. There are two big reasons the company should consider cleaving itself. The first is that if regulators eventually do it, it will likely be much more messy and painful. But secondly, and perhaps more interestingly, Amazon’s web services business has become so large that it is starting to negatively impact its retail business. Amazon web services (AWS) accounted for more than 100% of the company’s operating income, and analysts estimate it would be worth $600 bn on its own, versus just $400 bn for the retail business. Its might is now getting in the way, however, as former AWS customers like Target have now moved away from using it because the don’t want to share information with Amazon’s retail business, which is a major competitor.
FINSUM: We are quite sure this won’t happen any time soon, but it is beginning to be easier to see the value in doing so.
The market has periodically started to worry about the regulation of the tech industry. For a while that felt a bit premature, but given recent events, it is starting to feel more real. For instance, the FTC has just begun a marathon of hearings, which will run through November, into the state of competition and consumer protection in the digital economy. The hearings are about more than tech though, as they are fundamentally about inequality and worker’s rights across the whole of the economy. The head of the FTC said “In my view, basing antitrust policy and enforcement decisions on an ideological viewpoint (from either the left or the right) is a mistake”.
FINSUM: These hearings seem like the first stage of what might prove to be big changes for anti-trust policy in the US. If changes do happen, we believe they will be much more far-reaching than just for tech.