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What I think I learned last week #4

Leading off this week is a news item from which I learned nothing: As was widely reported, research group eMarketer produced a study that prompted headlines like « Facebook is Facing a Demographic Time Bomb » because they claim that more teens are leaving Facebook. Why did I learn nothing from this? Because this is an annual story:

However, my favorite Facebook doomsday prediction has to be the January 2014 story regarding Princeton University researchers who said « Facebook is heading for a catastrophic decline and could lose 80% of its users by 2015, researchers warned today. The team from Princeton claim the social networking site spread ‘like an infectious diseases.’ They predict its ‘decline phase’ has already begun – and will be swift. » If you would like to read the actual « research » paper where the stated conclusion is « Extrapolating the best fit model into the future suggests that Facebook will undergo a rapid decline in the coming years, losing 80% of its peak user base between 2015 and 2017 » you can click on this link. According to the prediction, Facebook should have 151 million daily active users today instead of its actual 1.32 billion daily active users. Sorry Princeton, that was an epic fail.

 

At the central bank conference in Wyoming, neither Yellen nor Draghi said anything to change the direction of the euro or the dollar. So the currencies did not change direction and the euro kept going up, returning to a level against the dollar not seen since early 2015. The euro also hit an eight-year high against the pound.

 

European equity funds saw their first outflow in seven weeks with $231 million of redemptions in the week ending August 23, according to EPFR.

 

En Marche! Unexpectedly showing its fastest pace of expansion in more than six years, Markit’s France purchasing managers’ index rose to 55.8 in July, well ahead of last month’s 54.9 and expectations of 54.5. Business confidence was also up in August improving to reach its highest level since April 2011.

 

En Marche, encore! They call him the « fresh face of French politics. » We just didn’t know how much it cost to keep a face fresh. Doing his bit to stimulate the French economy in his first three months, President Macron has spent approximately $30,000 on makeup services, or $10,000 per month.  Looking good Mr. President!

 

Actually, for a French President, this is fairly reasonable. Former President Hollande, a Socialist, reportedly spent $11,000 per month on haircuts, which by my count worked out to be about $500 per strand.

 

It’s not just France. According to the OECD, all 45 countries that it tracks are looking to grow this year, with 33 of them accelerating growth from last year. This is the first time in a decade, and one has to go back to the late 1980s and early 1970s to find similar cases of the world’s largest economies all growing in sync.

 

Even Japan is regularly showing good economic news, like the Reuters Japanese Business Survey showing business confidence at a 10-year high.

 

Brexit might be starting to hurt the UK, though, as a survey from the Confederation of British Industry showed UK retailers having their worst month since the immediate Brexit vote aftermath. This survey came on the heels of a worse than expected decline in household expenditures.

 

The world’s largest advertising agency WPP plunged more than 10% after issuing its second sales warning this year. This follows the warning from Dentsu Aegis, Japan’s largest advertising agency, that it would not meet revenue and profit targets for the year. WPP CEO Martin Sorrell said that among advertisers’ biggest worries is the increasing dominance of Amazon over traditional retailers.

 

Definition of a bad day: Celebrity fund manager Neil Woodford saw his fourth largest holding (as of end of June reporting), Provident Financial, drop 66% on Tuesday after yet another profit warning and canceling its dividend. And that was the good news! Sphere Medical, which Bloomberg data shows Woodford’s funds are the company’s largest shareholders, dropped 80% on the same day.

 

US stocks rallied on renewed hopes of a tax reform package. But then President Trump threatened a US government shutdown if the US Congress does not approve funding from US taxpayers to build a wall that he promised would be paid for by Mexico and stocks fell back.

 

US retailers continue to suffer. Sears stores had comparable-store sales that were down by more than 13%. Discounter Kmart’s comparable-store sales were down 9.4%. Abercrombie & Fitch’s comparable-store sales were down 1%, the 19th decline out of the past 20 quarters.

 

And I said, what about, Breakfast at Tiffany’s? The upscale retailer Tiffany’s reported its 7th straight quarter of declining same store sales, shrinking by a more-than-expected 1%.

 

US crude oil inventories fell for the eighth straight week and HUrricane Harvey disrupted operations in and along the Gulf of Mexico coast, with 22% of Gulf oil output going offline, causing a bounce in oil prices. In other oil news, Maersk sold its oil business to Total for $7.5 billion.

 

US home prices grew at their slowest pace in more than 3 years in June with a 0.1% increase, missing Wall Street expectations. Additionally, US new home sales fell by the most in nearly a year during July and existing home sales fell for the second straight month, the first time this has happened since November 2015.

 

 

*Les informations sont fournies à partir des meilleures sources en notre possession. Elles ne sont pas constitutives d’un conseil en investissement ou d’une incitation quelconque à opérer sur les marchés financiers. Les opinions émises dans cet article ne sauraient en cas engager la responsabilité de LFDE.
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