Archive for 2019

Starbucks Under Attack In China

Courtesy of ZeroHedge. View original post here.

One Chinese company is going down a road of massive losses in a seemingly megalomaniac attempt to operate more stores in China than market top dog Starbucks by the end of 2019.

Beijing startup Luckin Coffee only officially launched in January of 2018 but, as Statista’s Katharina Buchholz reports, has already managed to open approximately 2,000 stores across the country. The Chinese growth objective of 600 new stores per year of their competitor seems tame in comparison – even though it entails opening a new location every 15 hours.

The attack on the Chinese market that is important to Starbuck’s bottom-line is a calculated one. Luckin even threatened to sue Starbucks for monopolistic behavior as part of a PR stunt. China – traditionally a nation of tea drinkers – is currently the country with the most Starbucks stores in the world after the U.S.

By the end of 2019, Starbucks would run 4,121 stores in China if they reach their goal. Luckin hopes to be operating at approximately 4,500 locations by that time.

Infographic: Chinese startup aims to overtake Starbucks | Statista

You will find more infographics at Statista

This extreme growth strategy comes with a price tag – the company was running at a supposed loss of US$ 123 million in 2018. The company, whose products are currently about 20 percent cheaper than Starbucks, reportedly does not have a profitability objective yet and is bankrolled by Chinese and Singaporean investors.





Earnings Scheduled For January 7, 2019

Courtesy of Benzinga.

Earnings Scheduled For January 7, 2019

Companies Reporting Before The Bell

  • Commercial Metals Company (NYSE: CMC) is projected to report quarterly earnings at $0.36 per share on revenue of $1.33 billion.

Posted-In: Earnings ScheduledEarnings News Pre-Market Outlook Markets





The Fed, China, And The Markets

Courtesy of ZeroHedge. View original post here.

Authored by Chetan Ahya, Morgan Stanley global head of economics

Amid market volatility and continued downside surprises in global growth, investors are focusing on the Fed and China. Regarding the Fed, the issue is whether and when it could signal potential changes in balance sheet normalisation (as it has on the policy rate path). On China, the question is when growth could stabilise. We think policy-makers will take the actions necessary to manage their countries’ respective growth trajectories. We believe that China’s growth will bottom in 1Q19, while the Fed has begun to signal some flexibility on its balance sheet policy, if there is a material deterioration in the growth outlook.

The Fed has altered its policy trajectory on rates, but not yet on the balance sheet. Despite robust trailing consumption growth and strong labour market dynamics, the US economy is unlikely to remain immune to slowing global growth. In addition, the recent tightening in financial conditions has affected capex intentions, and we expect the impact of fiscal stimulus on growth to fade in 2019. Recognising this slower growth environment, the Fed has signalled its flexibility on the policy rate path. However, the Fed has not yet given a clear signal on when the balance sheet reduction would end.

The normalisation process has not been as smooth as assumed. The Fed had anticipated that once it announced the path of balance sheet normalisation, markets would discount that “passive and predictable” pathway and that the process would be akin to “watching paint dry”.

However, we see the challenge as follows:

(1) Even though the Fed communicated the pace of the unwind well ahead of its start, uncertainty remains as regards the final, optimal size of the Fed’s balance sheet. Moreover, we believe investors are concerned that the Fed has remained on a set course, even though the US and global growth outlook has weakened.

(2) The normalisation process also appears to have had a greater-than-expected impact on asset and financial markets via the portfolio balance channel. In his remarks on Friday, Chair Powell indicated that he does not believe that the balance sheet normalisation process “is an important part of the story of the market turbulence that began in the fourth quarter last year”. However, as my colleague Vishwanath Tirupattur noted in this publication a few weeks back,


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US-Backed Syrian Militants Carry Out Rare Surface-to-Surface Missile Test

Courtesy of ZeroHedge. View original post here.

What do US forces in Syria do when the Commander-in-Chief orders a “full” and “immediate” draw down of troops from the country? They conduct a rare surface-to-surface missile test with their “rebel” partners on the ground of course.

Still frame from the missile test video hosted on a Syrian opposition social media account. 

An exclusive report from Middle East news site Al Masdar finds the following based on a video of the missile test uploaded to opposition social media on June 3rd, though it’s unknown precisely when the test was carried out:

The U.S.-backed rebel forces carried out a rare missile test in the Al-Tanf region of southeastern Homs province recently.

U.S.-backed “Revolutionary Commandos” reportedly conducted this missile test in the Al-Tanf Zone that is located along the Iraqi border.

Below is the short video of the rebel group carrying out the missile test in conjunction with American forces:

Despite U.S. President Donald Trump’s announcement regarding the withdrawal of American troops from Syria, the Al-Tanf region of Homs governate still remains under the control of their armed forces and their rebel allies.

The Syrian government has demanded that the U.S. forces withdraw from the Al-Tanf region; however, they have refused to concede this part of the country to Damascus.

* * *

The Head of Russia’s National Defense Control Center, Colonel-General Mikhail Mizintsev, called the US-occupied area “the last stronghold of evil” which continues to fester with militants “on the territory of the independent state”.

He identified a 55 km zone surrounding the base in a desert region along the Syrian-Iraq border, which American special forces and US-backed FSA groups have held since 2016 after taking the key crossing from ISIS. 

Though little of the fate of the American presence at al-Tanf has been discussed related to President Trump’s recent announced complete US exit from Syria, it is presumed that the base will be abandoned to local FSA proxies, as well as potentially ISIS cells known to be in the area. 

The truly rare surface-to-surface missile test documented in the US-backed Revolutionary Commandos’ video released this week suggests the possibility the Americans plan to leave some of these advanced weapons systems behind in a warning to Russia and Damascus. 





Most Expensive Tuna Ever Sold Fetches $3.1 Million At Tokyo Auction

Courtesy of ZeroHedge. View original post here.

As per the traditions of a popular Tokyo fish market, fishmongers every year gather to try and outbid one another for the first Bluefin Tuna of the year. This year, the catch fetched a record-breaking sum of $3.1 million, or 333.6 million yen.

Kiyoshi Kimura, owner if the Sushizanmai chain, won the bidding for the the 278-kg fish which was caught off the coast of northern Japan’s Aomori prefecture – double the previous record sum from 2013, an auction that was also won by Kimura.

Tuna

Speaking to reporters after the annual auction, Kimura said the fish would be served at regular prices at a Sushizanmai outlet in Tsukiji on Saturday. He estimating that the fish would end up costing an average of more than $200 per serving, per Bloomberg.

“The tuna looks so tasty and very fresh, but I think I did too much,” Kimura said.

“I expected it would be between 30 million and 50 million yen, or 60 million yen at the highest, but it ended up 5 times more.”

Saturday’s event was the first New Year auction for Tokyo’s new Toyosu market. Its predecessor, the famed Tsukiji fish market, closed last year to make room for temporary parking for the Tokyo 2020 Summer Olympics.





What Gen Z Learned From Millennials: Skip College

Courtesy of ZeroHedge. View original post here.

Authored by Andrew Moran via LibertyNation.com,

Generation Z is already learning from the millennial generation’s mistakes…

For years, millennials have scoffed at the notion of fixing someone else’s toilet, installing elevators, or cleaning a patient’s teeth. Instead, they wanted to get educated in lesbian dance theory, gender studies, and how white people and western civilization destroyed the world. As a result, student loan debt has surpassed the $1 trillion mark, the youth unemployment rate hovers around 9%, and the most tech-savvy and educated generation is delaying adulthood.

But their generational successors are not making the same mistakes, choosing to put in a good day’s work rather than whining on Twitter about how “problematic” the TV series Seinfeld was. It appears that young folks are paying attention to the wisdom of Mike Rowe, the American television host who has highlighted the benefits and importance of trade schools and blue-collar work – he has also made headlines for poking fun at man-babies and so-called Starbucks shelters.

Will Generation Z become the laughing stock of the world, too? Unlikely.

Z Is Abandoning University

A new report from VICE Magazine suggests that Generation Z – those born around the late-1990s and early-2000s – are turning to trade schools, not university and college, for careers. Ostensibly, a growing number of younger students are seeing stable paychecks in in-demand fields without having to collapse under the weight of crushing debt.

Because Gen Zers want to learn now and work now, they are abandoning the traditional four-year route, a somewhat precocious response to the ever-evolving global economy.

Cosmetologist, petroleum technician, and respiratory therapist are just some of the positions that this generation of selfies, Snapchat, and emoticons are taking. And this is an encouraging development, considering that participation in career and technical education (CTE) has steadily declined since 1990.

David Abreu, a teacher at Queens Technical High School, told a class of young whippersnappers at the start of the semester:

“When you go out there, there’s no reason why anyone should be sitting on mommy’s couch, eating cereal, and watching cartoons or a telenovela. There’s tons of construction, and there’s not enough people. So they’re hiring from outside of New York City. They’re getting people from the Midwest. I love the accents, but they don’t have enough of you.”

While students feel the pressure
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“Pain, Pain, Pain”: A Distressed Investing Icon’s Dire Take On The Next Credit Crisis

Courtesy of ZeroHedge. View original post here.

Two icons of distressed investing – Bruce Richards and Lou Hanover, who together run the $15 billion Marathon Asset Management – gave a lengthy interview to Barron's last week, in which they laid out their views for 2019, and perhaps surprisingly had a generally sanguine "best case" outlook for the asset class that makes up their bread and butter, namely junk bonds, saying that "high yield should do pretty well, contrary to what most people think. Because growth rates are at 2% and earnings are still improving, default rates will remain low. Spreads are blowing out already; now you’re getting paid 7-7.5% yield. You may not earn the full 7, 7.5%, but we think you’ll earn 3 to 5."

The distressed duo also noted their preferred investment for 2019, saying that while emerging markets are the most volatile of all the credit markets, their "top expected return for this year is playing Argentina" which based on how much it backed up last year, "it’s offering very, very good value."

It’s not until you have some more certainty around Macri and this election [in October] that you want to start to deploying capital aggressively. Right now, for a trade, we’re beginning to buy.

That said, there are distinct risks to their outlook, with Richards and Hanover noting the following four major risk factors:

  • No. 1: Is the Fed moving too aggressively?
  • No. 2, inflation expectations.
  • No. 3, will negotiations with China turn into an all-out trade war, where the impact to the economy could be at least 50 basis points of GDP.
  • No. 4, Europe: is it hard Brexit? Is it Italian recession? Is the transition from Merkel going smoothly? In the latest quarter, German GDP really slowed. Will the yellow jackets in France gain prominence and try for political change? Then there is Mario Draghi and the ECB: one of our top expectations for next year is that European investment grade and high yield become considerably cheaper because the ECB moves from QE to a neutral stance when they begin raising rates. Europe needs an easy policy, but the zero rate environment is creating some other issues, like bubbles in some of the sovereigns.

Also,…
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Is This Why China Went To The Dark Side Of The Moon?

Courtesy of ZeroHedge. View original post here.

China has embarked on an ambitious space program – surpassing the United States in orbital launches last year (primarily for satellites), and now landing their own lunar rover on the dark side of the moon, the Chang'e 4. 

The stated purpose of Beijing's robotic lander is to collect samples and identify what minerals are there. And while the Chang'e 4 is unlikely to find precious metals such as gold, silver or platinum – there may be something up there that could serve as a "lunar fuel station to the stars," as the South China Morning Post puts it; Helium-3

The primary material on the moon is helium-3, which for now is too expensive to haul back to Earth. In theory, the non-radioactive isotope could be used as fuel for the next generations of spacecraft to explore deeper into space.

Imagine driving from “NYC to LA without gas stations along the way”, said Peter Diamandis, the entrepreneur who founded the XPrize to encourage private spaceships. “If you can get the fuel from space, it reduces the cost.” -SCMP

What's more, if China does find anything else of value on the far side of the moon, mining it would be far easier than an asteroid because of its gravity and proximity to Earth. 

The next step, of course, would be what every fan of author Robert Heinlein has been looking forward to since they were a kid; A moon base. The United States has been debating whether to send a mission back to the moon as soon as possible, or build a lunar base that would take quite a bit longer to orchestrate. 

"The US thinks in presidential terms," said University of Notre Dame lunar expert Clive Neal. "China thinks in decades." 

China may be testing its ability for more sophisticated missions, according to Neal of Notre Dame. That poses the question of why China chose its particular landing place, at one of the moon’s oldest and deepest craters.

The answer could be simple, he said. From the far side of the moon, Chinese scientists can see farther into space because Earth’s radio waves can’t get in the way. -SCMP

Nasa's…
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“This Is Going To Get Extremely Ugly”: Azealia Banks Reignites Feud With Elon Musk

Courtesy of ZeroHedge. View original post here.

The feud between Elon Musk and Azealia Banks first emerged while Musk was under fire for his famous "funding secured" tweet that later led to him being sued by the SEC for securities fraud. Banks was a guest in Musk's home around the time Musk sent out the Tweet, reportedly invited by Musk's then girlfriend, Grimes.

Lately, however, Banks had been relatively quiet about Musk – until last Friday.

Shareholders are trying to subpoena Banks as part of a lawsuit against Musk surrounding the "funding secured" fiasco. When Musk's lawyer, Dean Kristy, filed a motion to argue against the subpoena, the contents of the filing set Banks off again. 

The post has since been deleted. Banks also seemed to allude during a post on Instagram that Musk had hacked her phone, hacked her computer, had a PI follow her and even tried to poison her. 

Shareholder attorneys are trying to place Banks in Musk's house during the fallout from Musk's famous tweet. Banks had previously posted in depth about her time staying at Elon‘s home, claiming that while there, Grimes was comforting Musk about “being too stupid not to go on Twitter while on acid”.

So naturally, those suing Musk are trying to get subpoenas for all parties involved: Banks, Grimes and even media names that interviewed both of them about their dispute directly after it happened.

But Musk's attorneys fired back, stating that "It is evident that this is really more of an effort to sensationalize these proceedings than a legitimate attempt to preserve evidence". They then stated that Banks has a “history of making bold and sometimes unverified claims”.

Musk's attorneys also brought up a story about Twitter CEO Jack Dorsey allegedly mailing his shaved beard hairs to Banks, so she could make him an "amulet to protect him from evildoers", prompting amused questions if this is what goes on in the lives of billionaires and the Hollywood elite in California?

Citing this story, Musk's lawyers argued that Banks is “…simply not the type of witness, or actual record, that could justify the required finding of exceptional circumstances necessary”.

“I’m now even more angered by the fact that his lawyer is falsely stating I lied after being vindicated in both incidents with Russell Crowe and Jack Dorsey,” Banks responded.





Last Year Was Not An Anomaly. Outlook For 2019: Trapped by Liquidity

Courtesy of ZeroHedge. View original post here.

Via DLacalle.com,

Watch my entire interview at Real Vision here.

For 2019, the key factors that we need to think about are what is going to be the outlook on three levels: monetary, macro, and earnings.

In general, considering where expectations are right now, we are still in a stealth downgrade mode, Industrial production, and ISMs are slowly descending from the  high levels while rising global debt is also an important factor.

Monetary factors are also very important.

If we look at the way in which most investors are positioned right now, the vast majority of us are expecting that the improvement for next year is going to come from central banks not doing what they have said that they will do, which, in general, is a pretty dangerous position to take.

However, even if they did ease, and I believe that they will definitely slow down the pace of normalization, we need to understand that the placebo effect of central bank policy on markets has stopped working as a tool to expand multiples and asset valuations. We have seen it in Japan and in Europe. Despite ongoing easing, it does not transfer into further multiple expansion and financial asset inflation. It only helps yields remain low. It only helps valuations remain where they are.

On earnings, the problem that I see continues to be in the next two years’ estimates because I continue to believe that those have not come down enough. You still see in consensus expectations double-digit EPS growth. That is very, very, very unlikely.

In an environment in which central banks continue to be accommodative, but macro and earnings are not supportive, cycles become very short. So we need to be a lot more active.

The Chinese, Japanese and Eurozone slowdown are all happening in the middle of massive stimuli and deficit spending. We cannot fool ourselves and say that the markets and macro disappointments this year are due to trade wars or the normalization of the Federal Reserve. Those are subterfuges that we use to avoid reality. And the reality is debt saturation. More debt generates less growth and higher risk.

Central banks care a lot about asset prices. The Central Bank of Japan would not be buying equities if they didn’t care about asset prices. Buying equities has absolutely nothing to do with inflation or with unemployment or economic growth. It’s because they care about asset price…
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Zero Hedge

Explosion Hits Russia's Largest Virus Lab Which Houses Plague, Smallpox, Ebola And Other Deadly Viruses

Courtesy of ZeroHedge View original post here.

A sudden explosion at a Siberian virus research center on Monday reportedly left the facility engulfed in flames, according to several Russian news outlets. 

Firefighters and other emergency personnel were dispatched to the "Vector Institute" located several miles from Novosibirsk - an emergency which was upgraded "from an ordinary emergency to a major incident," a...



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Phil's Favorites

The future of work will still include plenty of jobs

 

The future of work will still include plenty of jobs

Even though the future is unknown, Canada’s employment rate has risen steadily from 53 per cent in 1946 to more than 61 per cent today. (Shutterstock)

Courtesy of Wayne Simpson, University of Manitoba

There is now widespread anxiety over the future of work, often accompanied by calls for a basic income to protect those displaced by automation and other technological changes.

As a labour economis...



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Lee's Free Thinking

Is The Drone Strike a Black Swan?

Courtesy of Lee Adler

Pundits are calling yesterday’s drone strke a “black swan.” Can a drone strike on a Saudi oil facility, be a “black swan.”

According to Investopedia:

A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, their severe impact, and the practice of explaining widespread failure to predict them as simple folly in hindsight.

I seriously doubt that no one expected or could have predicted a drone strike on a Saudi oil facility.

Call Me A B...

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Insider Scoop

New Relic Cuts 2020 Sales Guidance, Announces Changes In Management

Courtesy of Benzinga

New Relic (NYSE: NEWR) has reaffirmed its second-quarter guidance and cut its sales guidance for fiscal year 2020 from $600 million-$607 million to $586 million-$593 million.

The company’s chief technology officer, Jim Gochee, and chief revenue officer, Erica Schultz, have resigned. New Relic also named board member Michael Christenson as its chief operating officer. Christenson joins from his ...



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The Technical Traders

Metals are following downside sell off prediction before the next rally

Courtesy of Technical Traders

It is absolutely amazing how the precious metals markets have followed our October 2018 predictions almost like clockwork.  Our call for an April 21~24 momentum base below $1300 followed by an extensive rally to levels above $1550 has been playing out almost like we scripted these future price moves.

Now that the $1550 level has been reached, we are expecting a rotation to levels that may reach just below the $1490~1500 level before attempting to set up another momentum base/bottom formation.  And just like clockwork, Gold has followed our predictions and price is falling as we expected. Just look at our October 2018 chart where we forecasted the price of gold...



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Chart School

Crude Oil Cycle Bottom aligns with Saudi Oil Attack

Courtesy of Read the Ticker

Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

These are the questions before markets on on Monday 16th Aug 2019:

1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

We shall see. 

...

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Kimble Charting Solutions

Bond Yields Due For Rally After Declining More Than 1987 Stock Crash

Courtesy of Chris Kimble

U.S. Treasury Bond Yields – 2, 5, 10, 30 Year Durations

The past year has seen treasury bond yields decline sharply, yet in an orderly fashion.

This has spurred recession concerns for much of 2019. Needless to say, it’s a confusing time for investors.

In today’s chart of the day, we look at a longer-term view of the 2, 5, 10, and 30-year treasury bond yields.

Short to long term bond yields are all testing 7 to 10-year support levels as momentum is at the lowest levels in a decade.

A yield rally is likely due across the board after a recent decline that was bigger than the stock crash in 1987!

If yields fail to ral...



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Digital Currencies

China Crypto Miners Wiped Out By Flood; Bitcoin Hash Rate Hits ATHs

Courtesy of ZeroHedge View original post here.

Last week, a devastating rainstorm in China's Sichuan province triggered mudslides, forcing local hydropower plants and cryptocurrency miners to halt operations, reported CoinDesk.

Torrential rains flooded some parts of Sichuan's mountainous Aba prefecture last Monday, with mudslides seen across 17 counties in the area, according to local government posts on Weibo. 

One of the worst-hit areas was Wenchuan county, ...



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Biotech

The Big Pharma Takeover of Medical Cannabis

Reminder: We are available to chat with Members, comments are found below each post.

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

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Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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