Last Friday, August 31st, Runnymede managing partner Andy Wang returned to The Reuters Building in Times Square to chat with news anchor Fred Katayama. In this segment, Fred asks Andy about a variety of subjects including trade talks, emerging markets, and why Runnymede likes service sector companies.
Warren Buffett believes that the corporate tax reform is very bullish for the US stock market, and more importantly, isn't fully priced in to stock prices.
"The tax act is a huge factor in valuation," he said on CNBC's "Squawk Box" on Wednesday. "You had this major change in the silent stock holder in American business who has been content with 35 percent... and now instead of getting 35 percent interest in the earnings they get a 21 percent and that makes the remaining stock more valuable."
Starbucks is opening its biggest outlet ever on Wednesday in Shanghai and the company is expecting huge crowds to experience the 30,000 square foot store. The "Starbucks Reserve Roastery" is on Nanjing Road West, the city's most famous shopping street and has been heavily promoted for months on social media. Starbucks has big ambitions in China and this puts the exclamation point on its intentions.
Black Friday and Cyber Monday are famous in the US for the big discounts and therefore big spending. In China, they created their own version called Single's Day -- on November 11 or 11/11, which began as a protest of sorts against Valentine's Day, propelled by college students in the 1990s. To show the incredible buying power of the Chinese consumer, in just the first two minutes of shopping, over $1 billion was spent at Alibaba alone and by the end of the 24 hours, Alibaba's sales hit a record of $25.3 billion, more than 40 percent higher than Singles Day 2016. Yes 40 percent growth! JD.com, the #2 retailer in China, sold $19.1 billion!
On June 15th, Costco stock was trading at $180. The next day Amazon announced its deal to acquire Whole Foods which sent supermarket stocks and Costco shares tumbling. Investors feared that Amazon would destroy the supermarkets much like it did with bookstores and electronics retailers. If retailers don't adapt or have some kind of advantage, then they very well may fall by the wayside. However others will adapt and thrive. One such case is Costco who carries a huge value proposition that Amazon will struggle to combat.
Today almost all of the headlines are about Apple's iPhone launch and that is well deserved. I've been a iPhone user myself for 10 years and am excited for the new phone (but not the rumored $1000 price tag). Since the iPhone news will be covered by a million different sites, let's look at the other side of the globe where China is a very different market and one changing at breakneck pace. Did you know that last year, Chinese consumers spent $5.5 trillion (yes Trillion) through mobile payment platforms? To put that in perspective that's about 50 times more than their American counterparts where Apple pay just hasn't caught on. So why is China succeeding where Apple is not? Let's take a look at China's mobile payment market.
Every year, analyst Mary Meeker delivers her internet trends report and it is a must watch for all those interested in technology. Her report is 335 slides with tons of information.
While many of us in America look to Silicon Valley for innovation, perhaps we need to look even further west as China's e-commerce giant JD.com is leading the way in drone delivery. The company has already delivered packages via drone and last month announced plans to build 150 drone launch facilities for unmanned aerial vehicle delivery (UAV) parcel delivery. They have already secured government approval (which Amazon has had trouble with in the US) in select provinces in China to make deliveries.
'Tis the season. Yesterday, I read this WSJ article Consumer Keeping Growth Afloat. It's not surprising at this time of year where the lion share of retailers' fortunes are made that we are reminded that 70% of spending in the USA is consumer-based. Yet, we also read about a manufacturing slump. This got me to thinking about Santa and the Elves.
The US service sector slowed more than expected in October, marking the second straight month of slower growth and its lowest level since June. However employment hit a new nine-year high. The survey showed the key service sector, which accounts for roughly two-thirds of US GDP, remained solidly in growth mode.
The Institute for Supply Management (ISM) reported that its service index fell to 57.1 from 58.6 in September. This was slightly below economists' forecasts of 58. This marks the 57th consecutive month of growth. A reading above 50 indicates the sector is expanding.
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