Alchanati Campbell & Associates
We will be off tomorrow for Good Friday and Passover, so please enjoy the longer read.
End of Q1, still in the meeting, mergers and acquisitions, Amazon you do you, the one-eyed man is king in the land of the blind.
Could it be…? S&P500: (1.38%), DOW: (1.07%), NASDAQ: (1.64%), RUSSEL: (1.08%), 10 YEAR: (-1.23), CRUDE OIL: (0.84%), GOLD: (0.06%). Pardon all the capital letters, we're just excited to see the other half of the Christmas lights again. It feels like we haven't had a green market day in weeks. That seems to be what happens when we, as consumers, are so accustomed to continuously gaining markets. After all, that’s what happens when the Dow Jones Industrial Average sees 9 consecutive quarters of positive growth. However, all good things must come to an end, and that is exactly what occurred as of today. YTD (year to date), the Dow is down just over 2%. With the markets closed Friday 3/29 due to Good Friday (Happy Easter to all who celebrate!), today was officially the last day of trading in the first quarter of 2018.
What. A. Quarter. It was extremely chaotic (or exciting, depending on your view…shorters). It started off great for investors. Everything was running smoothly. The Dow was setting record after record, soaring to over 26,000 in late January. Then it all came crashing down. Could it have been the uncertainty of the Trump Administration, foreign tension, or monetary policy changes? While nobody knows the true reason for the sudden drop, it was likely the result of a volatility spike. The VIX (-12.68%) spiked to 37 on February 5th. Also known as the fear gauge, it climbed 115% that day. Mayhem ensued. The only thing to be known for certain is that investor expectations of volatility based on the S&P 500 rose. Its impossible to know for sure if the VIX itself caused the drop, or if there was a change in the underlying perspective of volatility. Afterwards, the market was forced to fight off days of red with some green sandwiched in between. There were slugfests (Walmart stepping into the online retail ring with Amazon), rollercoaster sectors (looking at you, tech) and just a touch of heartbreak (Toys "R" Us going under, along with our childhood). Either way, we are glad the market ended the eventful quarter on a high note.
Elon Musk is put on suicide watch. Tesla recalled 123,000 Model S cars over potential power steering failure. Concerns of not hitting Model 3 production target. Credit ratings cut for Tesla debt. Tesla having problems raising capital. Recent fatal accident in California involving Tesla’s Autopilot system. Elon, I hope it gets better soon. I really do.
Cyber-attacking personal health. We’ve talked about Facebook. You've most likely heard everyone else talk about Facebook. So instead of burning you out on Facebook (because we're going to be talking a lot more about them as new events transpire), we are going to talk about a different type of data breach. Today's cyber victim is Under Armour (1.13%). In late February, an anonymous company stole the data of roughly 150 million users of the "MyFitnessPal" application. Fortunately, the data stolen only included usernames, passwords, and emails. We say only because it could have been much worse had credit card information or social security information had been stolen. Still, 150 million is a lot of people, and that magnitude alone should be cause for concern.
So if they didn’t get my payment or SS information, what's the point? Usually, information of this type is illegally sold on the internet. It can prove valuable to robot-generated emails. Such emails include phishing attacks, in which the offender will try to lure the victim into releasing more sensitive information about themselves. Due to the fact that this information was stolen from an app about personal health, the attackers can be sure that the email addresses and information they are getting is legit.
Meet me half way. On April 27, both Korean (North and South) presidents will be meeting at a summit. Kim Jong Un, North Korean’s president, will make history and become the first North Korean leader to enter South Korea. This is a major step towards peace on the Korean Peninsula.
Renault-Nissan merger. Renault and Nissan are in talks of a merger. Renault currently owns 43% of Nissan, Nissan currently owns 15% of Renault, and the French government owns 15% of Renault. It might get complicated… Renault closed at $98.50/share, up 5.79% from it’s opening, and Nissan Motor Co. closed at $20.68/share, down .65% from it’s opening.
Trump sets sights on Amazon. Despite the recent Cambridge Analytica scandal that has shrouded Facebook in controversy, the president set his sights on Amazon today. In a tweet, Trump criticized Amazon for paying “little or no taxes”, using the Postal Service as the companies “Delivery Boy”, and putting “thousands of retailers out of business”. When compared to Amazon’s taxes paid and its effect on the Postal Service, Trump’s tweet does not hold true. In 2016, Amazon paid $412 million dollars in taxes and last year’s revenue for the Postal Service increased 11% to $19 billion, largely due to Amazon’s success . Trump's third point, however, is cause for concern. In late January, Amazon announced it would enter the healthcare market with help from Berkshire Hathaway and JP Morgan. Since then, CVS stock has fallen 30%. Toys R Us also blames the e-retailer for its bankruptcy with recent news that Amazon is looking to buy Toys R Us locations. While most of Trump’s tweet can be taken with a grain of salt, his critique of Amazon as a disruptor shouldn’t be dismissed.
Mr. Disruptor. Amazon is at it again. Last month they disrupted the healthcare industry with their partnership with JPMorgan Chase and Berkshire Hathaway towards the goal of cutting health costs and improving services for employees. Now they are going after the $16 billion housekeeping industry. Their new service will be called “Amazon Home Assistants” and trials just started in Seatle at an estimated cost of about $156 for a 1,500-square foot home.
I see you by Jutty Ranx. Eyes thicken, stiffen, and even calcify the more we use them. Now by using them, I mean checking your phone on an average of 75+ times per day, reading in the dark, watching YouTube videos into the early hours of the morning, etc. Then something starts to occur. You start to squint when watching those YouTube videos and you have to change the size of the font on your phone to a preschool level size to be able to read the text. Your presbyopia is then treated by reading glasses and you continue your calcifying habits furthermore. Ice fisherman can go snow-blind. Welders can suffer arc eye. But we, the texters, have smartphone blindness. We are long Allergan, Inc. (a pharmaceutical company that specializes in the development of ophthalmology products).
Your daily dose of sports. Results from Wednesday’s nights game went a little something like this: the Cavs lost to the Heat by 19 points. This win pushes the Heat to the seventh seed in the East. On the other side of the country, the Lakers played last night and beat the Dallas Mavs by 10 points (103 - 93). They are finishing their season with 8 of the last 9 at home, officially out of the playoffs. They will most likely look to develop their youth in the remaining contests.
The Alchanati Campbell and Associates Team
WHAT'S UP FRIDAY? is a weekly newsletter that will give you a summary of "What's up?" on Wall Street, in the US and around the World written by The Alchanati Campbell and Associates Team. What makes us unique is we focus on long-term knowledge; knowledge that will still be useful to you 10 years from now.