MCHI

In the News: Expensive Energy, China’s Trade Surplus and Auto Market, and Big Tobacco Developments

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The IEA is concerned about the impact of rising energy prices on global economic growth, and both it and OPEC have lowered near-term oil demand growth expectations. The impact of the US-China trade dispute continues to be sized up by a number of industries, including automakers, and big tobacco companies may be looking to the cannabis market for future growth as the space remains sensitive to potentially increasing regulations.  By Kris Rosemann US stocks bounced back early in the October 12 trading session thanks in part to encouraging earnings reports from the likes of JPMorgan Chase (JPM) and Citigroup (C) and a slight reversal of the yield curve’s recent flattening move. Simulated Best Idea Newsletter portfolio idea Visa (V) gained … Read more

In the News: Sears Nears Bankruptcy, Luxury Apparel Weakens, Fastenal Reports, and Financial Tech Stocks Take Hit

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In what was a long-time coming, Sears looks to finally be succumbing to the pressures of the brick-and-mortar retailing business. It won’t be the last big-name retailer to fail, and it certainly wasn’t the first. Luxury stocks are reeling as a result of worries in China. Financial tech stocks gave back a fraction of their huge gains more recently, as investors size up credit risk at this stage of the economic cycle. We continue to believe financial tech is the place to be, however, with PayPal and Visa as two of our top considerations. By Brian Nelson, CFA Sears Holdings (SHLD) is now nothing more than a penny stock, trading at about $0.40 per share, as CNBC reported that the … Read more

Economic Data Recap in 3 Minutes

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Image Source: CreditDebitPro via Flickr There’s a lot happening to impact the markets these days. Let’s cover some key economic data, stocks that may see a fundamental boost from Hurricane Florence, and we’ll reiterate our view that trade tantrums between the US and China will likely not amount to much of a negative impact on global economic activity, despite huge headline numbers. By Kris Rosemann Famed investor Peter Lynch has been attributed with the quote, “If you spend more than 13 minutes analyzing economic and market forecasts, you’ve wasted 10 minutes,” so let’s take a quick look at some recent economic data releases and what they might mean for the markets moving forward. Most market observers continue to expect the … Read more

In the News: Brexit, Unilever Simplification, and Geopolitical Uncertainty

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Uncertainty related to Brexit continues to loom over the outlooks of multinational companies operating in Europe, and other geopolitical issues are making their presence known on global markets as well. By Kris Rosemann The British pound hit five-week highs against the dollar on the morning of September 11 as EU chief negotiator Michel Barnier said it was “realistic” to think the United Kingdom and European Union will reach a Brexit (EWU) deal within two months. The UK is scheduled to leave the EU on March 29, 2019, and Barnier’s comments have helped ease some concerns that the UK would leave the bloc without a formal trading agreement. President Trump’s silence regarding tariffs on the region has also fostered some cautious optimism, but … Read more

In the News: More Tariff Talk Keeps Markets Volatile

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Many market observers were caught by surprise after President Trump continued down a path of escalating trade tensions late July 10. By Kris Rosemann As with many developments surrounding the Chinese (FXI, MCHI) economy, metals have found themselves at the fore of the discussion. After the Trump Administration threatened additional 10% tariffs on $200 billion in Chinese imports July 10, copper (COPX) and other metals prices plunged as the newest list of targeted goods includes manufacturing export industries, electronics, textiles, metal components, and auto parts. It is worth noting that the US imports far more Chinese goods than vice versa, suggesting China would not be able to match US tariffs dollar-for-dollar if a full-on trade war ensues, though such a … Read more

In The News: Facebook, China and the Semiconductor Complex

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Facebook gets a new Street high price target, while news ebbs and flows regarding US-China tech relations. By Brian Nelson, CFA There’s a new Street high price target on one of our favorite ideas, Facebook (FB), and it’s $275 per share. Facebook has been the most recent 10 on the Valuentum Buying Index, and despite ongoing “noise” with respect to the Cambridge Analytica scandal, we value shares at $250 each. We’re also reiterating our view that our discounted-cash-flow-based valuation only considers ongoing trends on an advertising-only business model, not incremental upside from processing payments on its platform or innovation at Instagram, which recently put together a new product called IGTV, a You-Tube-like offering. We think the Facebook “story” is still … Read more

Trade Worries Back on the Table

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Image Source: Michael Vadon We think investors shouldn’t overreact, but we didn’t have two world wars in the last century because leaders of superpowers “got along” nicely. By Brian Nelson, CFA News that President Trump is asking to identify $200 billion worth of Chinese goods on which to levy a 10% tariff has the markets a bit jittery. China’s Ministry of Commerce responded that if the US moves forward with the tariffs, it would take “comprehensive quantitative and qualitative measures and retaliate forcefully.” We expect news regarding trade tensions between the US (SPY, DIA) and China (FXI, MCHI) to only intensify in the coming weeks, as the White House seeks to pursue what is likely game theory to achieve better … Read more

Solar Not So Hot

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Image Source: zak zak Though First Solar stands alone as one of the stronger players in the solar space, we think the industry backdrop is among the weakest in our coverage universe. We’re huge fans of clean renewable energy but separating what we want to be a good industry like solar from an industry that actually has strong structural characteristics is a key component of being a good investor. Oftentimes, it is better to own an average company in a great industry than a good company in one of the worst industries out there. By Brian Nelson, CFA Sometimes it is too easy to invest with your heart and overlook opportunities across “sin” stocks. For example, you may dislike tobacco, … Read more

Tiffany Rallies 20%+ on 1Q’18 Report; Positive Read-Through for China, High-End Retail Margins

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Tiffany’s first-quarter 2018 results were from another planet! Strong increases in comparable store sales almost across the board, blowing by consensus estimates, and the company’s free cash flow outlook has only improved. The read-through is significantly positive for aspirational and luxury players, in our view, and Ralph Lauren’s gross-margin improvement during its quarterly release bodes well for many brands across most of the high-end apparel space. Foreign tourism and high-end consumer spending remain very strong on the basis of Tiffany’s quarterly results, and geopolitical concerns did not impact the breakneck pace of jewelry sales in China or the Korean Peninsula. It’s hard to imagine Tiffany having a better first quarter than it did. By Brian Nelson, CFA On May 23, … Read more

JD.com Set to Take on Amazon Head On

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Image source: JD.com fourth quarter presentation Chinese e-commerce giant JD.com has grown at a tremendous rate in recent years, and it is expected to continue taking advantage of a ripe opportunity in its home nation. However, management has more grandiose plans for its burgeoning e-commerce platform as it expects to make its US debut before the end of 2018. By Kris Rosemann When you think of the Chinese Internet space, probably Alibaba (BABA), Tencent (TCEHY) and Baidu (BIDU) are among the first to come to mind, but there is another giant in the Chinese Internet space. You may not be aware of this, but ranked by revenue, JD.com (JD) is one of China’s largest e-commerce companies. Through its website, www.jd.com, … Read more