1 October 2019

1) The crown prince of Saudi Arabia, Prince Mohammed bin Salman, has warned of astronomical oil prices if tensions escalate in the Persian Gulf. In a ‘60 Minute’ interview, the Prince called for strong and firm action to deter Iran and lessen the threat to world interests, so as to avoid disruptions of oil exports. The attacks on Saudi oil production facilities caused Brent crude to jump 19.5%, the biggest jump on record. The Middle East provides about 30% of the world’s energy supplies constituting about 4% of world GDP (Gross Domestic Product).

2) In order to avoid a quarterly decline in U.S. retail sales, automakers are offering big discounts to maintain sales growth. For the last three months, auto sales have flattened with average incentive spending rising 6% to more than $4,110 per vehicle, which is a third quarter record.

3) The fashion retailer Forever 21 Inc. has filed for bankruptcy protection and is the latest big fashion merchant who, like many other retailer chains, is unable to cope with high rents and heavy competition from e-commerce. The chain has 800 stores across the world, selling affordable but eye-catching designs, but has falling out of favor with the generation-Z consumers who turn to e-commerce. The bankruptcy will allow the company to reorganize and gain additional capital for operations.

4) Stock market closings for – 30 SEP 19:

Dow              26,916.83    up    96.58
Nasdaq           7,999.34    up    59.71
S&P 500          2,976.74    up    14.95

10 Year Yield:    unchanged   at    1.68%

Oil:    $54.29

9 August 2019

1) Mexico has become America’s largest trading partner as a result of the U.S. – China trade war. For the first half of 2019, trade between America and Mexico was $309 billion dollars worth of goods, just over 15% of all U.S. trade. In comparison, trade with Canada was $306 billion dollars and China at $271 billion dollars. Trade with Mexico has been steadily rising for several decades, while trade with Canada has historically been high it’s always been flat.

2) A battle may be developing between Amazon and FedEx over handling packages, because of surging e-commerce shipments. With their ground delivery deal ending, FedEx is deepening its pullback from Amazon. The ending of two delivery contracts with Amazon means FedEx will have to seek out new major customers for lost sales while Amazon will now depend more on the U.S. Postal Service and UPS. FedEx is seeking to serve major e-commerce companies such as WalMart as the one-day delivery service for e-commerce heats up.

3) Lift, the internet based ride sharing rival to Uber may become profitable sooner than anyone had predicted. It’s growth is accelerating faster than anticipated, which clears the path to profitability. Some are speculating that 2019 might be Lift’s ‘peak loss’ year with losses being less than 2018. Wall Street is acting positive over the news with Lift’s stock rising from an overnight boost of 4%.

4) Stock market closings for – 9 AUG 19:

Dow                26,378.19    up    371.12
Nasdaq              8,039.16    up    176.33
S&P 500             2,938.09    up      54.11

10 Year Yield:    up   at    1.72%

Oil:    up   at    $52.81

1 July 2019

1) Consumer spending increased in May as well as prices creeping up too. Both point to a slowing economic growth and benign inflation pressures. These two facts gives the Federal Reserve more reason to cut interest rates next month. Inflation is under the 2% target for this year with a projected 1.5% verses 1.8% originally expected. Consumer spending is about two thirds the U.S. economy.

2) Consumerism is changing fast, with a push to ‘no cashier checkouts’. Amazon Go stores are pushing the technology where sales payment is made automatically just by picking out items and walking out the door. E-commerce and on-line shopping continue their assault on traditional brick and mortar stores. Another strategy is showrooms in place of stores that allow the customer to try out products prior to purchasing them. Finally, drone delivery allows getting your purchases at home in less time than it takes to drive to and from a store. All these new technologies are coming together with increased profits by reducing labor cost.

3) The weekly jobless claims has increased more than expected, although there is no sign of significant layoffs as the economy slows down. Unemployment claims were 227,000 up by 10,000. The economy is slowing with manufacturing sliding down and the trade deficient widening as consumer confidence ebbs.

4) Stock market closings for- 28 JUN 19: Results from bank stress test edged markets up. Best June performance since 1938.

Dow            26,599.96    up    73.38
Nasdaq         8,006.24    up    38.49
S&P 500        2,941.76    up    16.84

10 Year Yield:    down   at    2.00%

Oil:    down   at    $58.20

18 June 2019

1) Traditional retail stores, who have been suffering the ravages of e-commerce, are worried about another coming blow. The new tariffs on Chinese imports, which President Trump threatens to impost, could have a disastrous effect on retailers such as Walmart and Target. These next round of tariffs will be specific to consumer goods, which these retailers sell, and will start to force price increases and so most likely will result in decline of sales revenue.

2) While President Trump has been pressing for a cut in the interest rate, the U.S. Federal Reserve is expected to defer and leave the interest rates unchanged. However, the board may possibly lay the groundwork for a rate cut later this year. While the economic outlook has become less clear, there still isn’t sufficient indication of a slow down to warrant cutting interest rates yet.

3) The Pfizer pharmaceutical company is buying Array BioPharma for $10.6 billion dollars for a price 62% above the company’s closing price this last Friday. Pfizer will gain medical technology for new drugs to treat cancer that limit or suppress the effects of chemotherapy. The drugs target a mutation that’s found across many tumor types in those patients who carry the mutation. Two of Array BioPharma drugs have been FDA approved for use in advanced melanoma. There are other drugs which are in the development pipeline.

4) Stock market closings for- 17 JUN 19:

Dow               26,112.53    up    22.92
Nasdaq             7,845.02    up    48.37
S&P 500            2,889.67    up      2.69

10 Year Yield:    down   at    2.09%

Oil:    down   at    $51.90

14 June 2019

1) Two tankers have been attacked near the Iran coast, which has caused oil prices to surge with fears that Iran may try to close the Gulf of Oman, which transports oil out of the Middle East. The choke point of the Strait of Hormuz is only 21 miles wide and handles 80% of the oil destined for Asia. Last month four other tankers were attacked near Fujairah using sabotage, which further fueled fears that Iran may become very aggressive in the region and against exports of oil.

2) With voters no longer showing a strong concern for the federal debt, the political support for reining in Federal spending and controlling the growing national debt is melting away with Republicans willing to accept a large deficit in exchange for tax cuts and Democrats making big spending promises in the 2020 campaigns. Some experts, who had once augured against the government growing debt, now say it may not be as critical a problem as they once thought.

3) The mega-retailer Target is upping the ante for e-commerce by offering same-day delivery on thousands of items for just $9.99. Using the delivery startup Shipt, which Target purchased nearly two years ago, the retailer is positioning itself to compete against Walmart and Amazon in what is becoming a ‘delivery time’ war of the major maga-retailers. The one day service will cover 65,000 items from 1,500 stores out of 1,800 stores in 47 states.

4) Stock market closings for- 13 JUN 19:

Dow               26,106.77    up    101.94
Nasdaq            7,837.13    up      44.41
S&P 500           2,891.64    up      11.80

10 Year Yield:    down   at    2.09%

Oil:    down   at    $52.11

10 June 2019

1) Many consider that it is no longer a question if the Fed will cut interest rates, but rather when. With the apparent softening of the job market, many investors firmly believe the Federal Reserve  will move to cut interest rates this year possible as soon as this July. The markets bounced up on the expectation.

2) The job numbers are in for May, with job creation slowing dramatically. There were just 75,000 new jobs added to the economy, about 100,000 less than economist expected. Both March and April job numbers were lower than expected leading experts to conclude a downward trend in the American economy is beginning. There are fears that we may see a recession as early as next year.

3) The book seller Barnes & Noble has closed a deal to sell itself to Elliott Management Corp, a hedge fund based in New York. The news sent Barnes & Noble stock surging upward as much as 36%. Like many other retailers, Barnes & Noble has struggled with little success to counter the power house e-commerce giant Amazon. It’s Nook e-book device was a bust, which the company had heavily invested in. Barnes & Noble has 600 brick and mortar retail stores.

4) Stock market closings for 7 JUN 19: The Dow has had its best week since November.

Dow                   25,983.94    up    263.28
Nasdaq                7,742.10    up    126.55
S&P 500               2,873.34    up       29.85

10 Year Yield:    down   at    2.08%

Oil:    up   at    $54.04

6 June 2019

1) The trade war continues to escalate as China takes action against American companies operating in China proper. China is levying fines on Ford’s joint venture for antitrust violations. Changan Ford Automobile Co. will be fined $23.6 million dollars for restricting retailers sale prices. Fed-Ex has recently come under Chinese scrutiny for ‘wrongful’ deliveries. China has threaten to blacklist foreign firms which damage domestic companies’ interests. Chinese citizens are being warned against travel to America, thereby restricting income from tourism and business reaching America.

2) The video game retailer GameStop, with over 5,700 retail outlets, is in decline, and was the place to go to buy video games and virtual reality products. But their sales have been in significant decline, with attempts to use e-commerce to counter the downward slide being of no help. Their forecast for next year show little improvement to its deteriorating business as their business migrates over to Amazon.

3) Bernie Sanders has made good his promise to take his fight for the common worker to Walmart’s annual stockholders meeting, to demand that Walmart workers be given a place on their board of directors. He introduced a shareholder proposal which would make roughly 1.5 million hourly workers eligible for board nominations. Sanders’ consider this move a way to separate himself and his policies from the democratic presidential nomination pack. Walmart is one of the huge American retailers pushing for new robotic technology to use in their stores.

4) Stock market closings for 5 JUN 19:

Dow             25,539.57    up    207.39
Nasdaq          7,575.48    up      48.36
S&P 500         2,826.15    up      22.88

10 Year Yield:    up   at    2.12%

Oil:    up   at    $51.69

Big Retail Stores In China Are Losing To E-commerce

People walk past a Suning store, one of the largest home appliance retailers in China, in Hong Kong August 26, 2013. REUTERS/Bobby Yip Thomson ReutersPeople walk past a Suning store, one of the largest home appliance retailers in China, in Hong Kong

SHANGHAI (Reuters) – It took China’s biggest retail chain Suning all last year to generate sales of about $17 billion. Last month, e-commerce giant Alibaba saw sales worth more than half that amount pass through its Tmall website in just one day.

Big retailers like Suning Commerce Group Co Ltd and foreign rivals Wal-Mart Stores Inc and Best Buy Co Inc are struggling to attract customers to their traditional stores in China, where online shopping is booming.

“The trend is definitely towards e-commerce because that’s where the consumers are,” said Frank Lavin, CEO of Export Now, which helps global firms launch their business in China.

“The ‘big box’ model here is already crowded. You need to invest a lot and be here on a large scale to make it work.”

This month, Best Buy sold its Chinese business, which had struggled to fend off local rivals.

Other firms have also complained that operating in China has become more challenging. This week, Wal-Mart said it had found pricing discrepancies on its China books, which reportedly were made to make its retail business look better at a time when transactions were slowing and unsold inventory was piling up.

French hypermarket operator Carrefour SA has also reported weak China sales.

best buy chinaIceNineJon on flickrA Best Buy store in China.

One of the main challenges facing retail chains is the shopping habits of Chinese consumers.

Most prefer the convenience, and often lower prices, offered by online shopping and when it comes to food, many people would rather go to local grocers than big supermarkets. Showrooming, or visiting a physical store to check out an item and then buying it online, is also common.

“I usually go to offline stores to check the real products, then I will go online to compare the price and services of different online stores,” said Lena Chen, 31, a university professor in Shanghai.

“That means I rarely buy in stores such as Suning or Best Buy, though they do help me decide what to buy,” she said.

Traditional retailers have taken note.

Sun Art Retail Group Ltd, China’s largest hypermarket operator, launched an online store this year and said its e-commerce business would help drive future sales.

Suning and rival Gome Electrical Appliances Holding Ltd are also trying to boost online sales to help revive profit growth.

The competition between traditional retailers, as well as their e-commerce rivals, means firms spend more on marketing and discounts, giving those with the deepest pockets an advantage.

Alibaba, which recently raised a record $25 billion in an initial public offering, saw more than $9 billion of trade on its online Tmall platform on its annual “Singles Day” shopping event last month, while JD.com Inc, China’s second largest e-commerce firm, said revenues rose 61 percent to $4.73 billion in the third quarter of the year.

“E-commerce just amplifies competition and some players in the consumer space will get squeezed out,” said Torsten Stocker, Hong Kong-based partner at consultancy firm A.T. Kearney.

(Additional reporting by SHANGHAI newsroom; Editing by Miral Fahmy)

Read more:http://www.businessinsider.com/r-mega-retailers-battle-to-survive-as-e-commerce-booms-in-china-2014-12#ixzz3LjILd8FC