Displaying items by tag: stocks

(New York)

Okay, so there is a lot to be gloomy about with the stock market right now. Stocks had a terrible run last week and are off to a poor start today. However, looking in the longer-term, there is some heartening news. That news is that despite some forecasters saying the demographic backdrop for stocks looks weak as Baby Boomers begin to withdraw money as they retire, all that slack, and perhaps more will be taken up by the Millennial generation, which is the largest in the US.

FINSUM: Here is an additional argument we found interesting—that compared to market history, stock returns for the period from 2000 to 2016 were very weak on a relative basis. Coupled with the demographics, it makes one think there may some long-term potential left for this market.

(New York)

So those following the news will have noticed that Bank of America’s key stock market indicator, the “Bull & Bear”, has been flashing red for the last couple of weeks. Now, the brightness is getting stronger. The recent rush out of Treasuries and into stocks has been the fastest ever, which has BAML worried that markets are about to crash. The rotation amounted to $102 bn flowing into stocks in January alone, which BAML calls “massive”.

FINSUM: The move has been more of a stampede than a flow, but then again, there are a lot of reasons to be worried about rising rates, especially as new Fed leadership is coming in.

(San Francisco)

One doesn’t quite know how to feel about the news, but the gut instinct is that it is negative. Apple’s earnings came out yesterday, and the company reported its greatest profit ever. But guess what, sales came in weaker than expected for the new flagship iPhone X. iPhone sales dropped 1% in the fourth quarter (the most important time of year), which has scared many into thinking the new phone has not sparked the next replacement “super cycle” that the company and analysts hoped. Apple did mention that the quarter was a week shorter than in the previous year, and that iPhone sales would have been 22% higher had they been equivalent.

FINSUM: Okay so the note about the length of quarter is relevant, but the overall impression is that the iPhone X has failed to live up the hype. And it makes sense to us—have you heard any friends raving about the new iPhone? We certainly have not.

(Houston)

So oil has staged a slow and cautious recovery over the last year powered largely by OPEC’s oil cuts. That said, prices are still ~35% below the $100 per barrel threshold. But guess what, it does not matter. In an absolutely eye-watering piece of data that is a testament to both management and technological innovation, Shell oil company is making as much profit barrel with oil at $60 as it did when oil was $100. Exxon performs even better.

FINSUM: Oil companies have done a truly commendable job rejigging their business models and cutting costs to maintain profitability.

(Seattle)

The Whole Foods acquisition by Amazon has been somewhat of a mystery for markets. While the move sparked a great deal of fear and excitement, it is still not readily clear what Amazon will do with its new asset. That said, prices at Whole Foods are falling, and the company’s in house basic brand, 365, is pushing forward. Whole Foods 365 is the company’s new low price chain of stores. Many thought it would be shuttered under Amazon’s leadership, but it is moving ahead. The first store just opened in Brooklyn and will expand to five more locations this year.

FINSUM: We think a Whole Foods sub brand of lower priced items with the same general theme could work very well in attracting more Millennial shoppers.