Currently Obsessed With...The Girl Coding Revolution.
COMMENTARY FOR WEEK ENDING June 22, 2018
Supermodel Karlie Kloss codes like a boss and is teaching young women all over the country how to “code like a Kloss” in her free coding Summer camps. Organizations like Girls Who Code and Black Girls Code are also doing their part to bridge the gender gap in tech. While these organizations aren’t public, we believe in investing in girls! Support these organizations and Inve$t In Girls!
Trade, Trade, Trade...anyone got anything else?... We’ll wait.
U.S. stocks ended the week slightly lower as the two biggest kids on the block (the U.S. and China) got into an “I know you are but what am I,” match about who was going to tax who’s products. We’re getting whip lash from the back and forth of these two just like the Willow Smith song or Serena at the U.S. Open. We’re over it...but the stock market isn’t.
Much of the volatility in the market (the ups and downs) is driven by investor perception and the stock market is again feelin’ it. The Dow (Dow Jones Industrial Average), a group of 30 stocks of companies who seem to be twinning with the larger U.S. economy, fell 2% while the S&P Index (index tracking the broad U.S. stock market) fell just under 1% for the week. NASDAQ (an index of 3,000 stocks including the world’s leading tech companies: Apple, Microsoft, Google, Amazon) climbed to a record high on Wednesday along with our good friend Russell 2000 (no relation to Andre 3000). The Russell 2000 is a group of 2,000 stocks that measure the performance of tiny companies (not a new show on HGTV) in the U.S. We’re guessing Russ felt just like Cardi B at the BET Awards last weekend...#Winning. Let’s break down the whip lash.
LET’S BE CLEAR…
On Monday night Trump shared a list of $200 billion worth of Chinese imports that could be subject to a 10% tariff (a lux word for tax). This brings the grand total of the White House trade threats of Chinese products to $450 billion. China said they will fight back if the U.S. puts out another list of tariffs on Chinese goods.
What does this mean for my iPhone, car and soy latte?
Trump has apparently told Tim Cook, the CEO of Apple (APPL) that he’s not going to mess with anyone’s iPhone, which is assembled in China. However, Apple thinks that China may get in their feelings about Trump’s action and still find ways to mess with their money. Cook has tried to play country whisperer between the U.S. and China and ask, “can’t we all just get along?” He feels like he’s made some progress.
Trump is also not playing with the European Union (EU). He plans to place tariffs on steel and aluminum and took to Twitter threatening to put a 20% tax on cars imported from the EU if they don’t take several seats. We’re talking Volkswagen, Audi, BMW and Mercedes. This wouldn’t be encouraging for those of us trying to live our best life...the lux life. The EU is enforcing tariffs on $3.4 billion of American products coming into Europe including bourbon, peanut butter and orange juice... the good stuff. The trade drama is not a good look for auto companies as Daimler (makers of Mercedes-Benz) announced this week that Chinese tariffs on U.S. cars would contribute to a decline in its earnings this year. Their stock fell more than 4 percent Thursday after the announcement. In Germany, shares of BMW lost 1.1 percent. Ford and Toyota also dipped while Peugeot and General Motors rose.
Kinda a big deal...but not really
Trump’s threats on Chinese goods may seem like a lot, but it represents slightly more than 1% of U.S. Gross Domestic Product (the total value of goods produced, and services provided in a country in one year). The U.S. imported $505 billion in goods from China in 2017, while China imported $130 billion from the U.S., which is why most experts think that China will ultimately back off.
PBDs (Pretty Big Deals)
Ford (F) and Volkswagen (VW) are discussing a possible collabo on product development in a bid to cut costs and enhance competitiveness – WSJ
Michael Bloomberg announces his support of Democrats in 2018. Michael Bloomberg, CEO of Bloomberg L.P., a global, financial services, mass media and software company better known to most as that channel where the pretty girls use big words while red and green move across the bottom of the screen, announced that he will be supporting Democrats in the 2018 mid-term elections. Bloomberg, a registered Independent, has equally supported Republicans and Democrats in the past based on the individual and not their gang affiliation. He said he just can’t get past how the Republicans are running things and thinks their clique should be broken up. As of June 18th, Bloomberg is the richest person in the US and the 11th richest person in the world.
Supervalue (SVU), one of the largest grocery wholesalers and retailers in the U.S. entered into a reseller agreement with Instacart, the nationwide grocery delivery service, or as we like to call them, the best thing since Uber! The two will launch a new e-commerce site as part of a multiyear agreement. Instacart has no plans to go public but Supervalue stock was up .40% at $21.23 on Friday.
Google (GOOGL) will invest $550 million in JD.com, the China e-commerce giant as part of a broader partnership between the two companies.
Unilever (UL) has “No Time for Fake Ones.” The company responsible for Dove soap and Hellman’s mayo, says it won’t pay social media influencers that have fake followers. They will call for greater transparency in influencer marketing this week at the Cannes ad festival on the French Riviera.
Bitcoin The price of bitcoin dropped it like is wasn’t hot, all the way to its lowest point since February on Friday. Year to date, the cryptocurrency is down more than 60% since January 2018.
The Lux List
Daimler – The lux auto company whose crew includes Mercedes-Benz and Smart was the first to announce that their stock prices may be affected by the ongoing trade drama
Chanel breaks 108-year silence on earnings. Chanel is a privately held company, meaning that they do not have shares of stock for the public to purchase. Rumors were spreading about a possible takeover from competitor LVMH (the conglomerate owning Louis Viutton, Christian Dior, Sephora, Givenchy, oh my!) earlier this year. Chanel’s Chief Financial Officer, Philippe Blondiaux basically said in a statement and in his best Beyonce voice: hold up, Chanel is able to remain independent; slow down, “it’s time to put our facts (financial) on the table as to exactly who we are;” back up, “we are a $10 million dollar company with very strong financials, plus all the means and ammunition at our disposal to remain independent.” Drop the mic.
We Ask and Our Squad Answers
Our squad is comprised of ten Wall Street experts from the top asset management firms. Each week we ask them a question, and they poll in!
Do you think we are on the brink of a trade war with China?
100% of our Savvy Squad says NO.
Agree with the squad? Tell us on Twitter #SavvySquadPoll
Friday - University of Michigan Index of Consumer Sentiment released
Friday - Personal income and consumer spending, U.S. Bureau of Economic Analysis released
Stay tuned for next week’s episode of Trade Battles