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Hey Snackers,
Toy-making elves hate trade wars. So Santa's digging the continued enthusiasm for the first portion of the US/China trade agreement.
Markets enjoyed their 4th straight week of winning to hit record highs heading into the holiday week.
Winning
Stocks hit record highs despite impeachment — here's the what, when, and why
Scoreboard... Wondering how US stocks are doing? Check out the S&P 500 — the index reflects the value of America's top 500 publicly-traded companies. Huge companies move the S&P 500 the most (Apple, Microsoft, Amazon), while little guys affect it less (think Gap, Expedia, Kellogg).
- The S&P 500 rose 1.64% last week to 3,221, the highest it's ever been
- It's up 3.5% in the past month
- So far in 2019, it's leapt a giant 28%, nearly tripling the index's average annual increase over the past 90 years
It's the scoreboard every company (and investor) craves to beat... because it reflects the stock market's health as a whole. Shocked Boeing's stock is up 1% this year? That's actually bad compared to the average 28% increase of the top 500 US stocks. The S&P 500 is winning thanks to this hat trick:
- Profits: As the global economy grows, American companies are keeping a much bigger chunk of profits than before, thanks to the tax cut (happy 2-year anniversary, tax cut).
- Trade: Trade tensions with China are easing and Congress just passed a new trade deal for North America — that combo is chicken soup for business managers' souls.
- Rates: The super low interest rates the Fed has set encourage borrowing and spending — it's the soothing CBD-something sprinkled on top.
Politics doesn't always ruin stocks... Deregulation of financial markets in the 2000s led to the '08 financial crisis. But last week's impeachment hasn't — some political drama messes with Wall Street, some stays on Twitter feeds. Impeachment isn't expected to affect corporate profits, trade, or interest rates. Plus, economists aren't expecting a recession next year (like they were last Christmas).
Highs
Who's up...
That data looks good on you... For the 1st time in 4 years, H&M is on track to increase profits — all because of data. The fast fashion icon used to stock the same cookie-cutter styles of clothing in all its 5K stores globally. But Parisians don't shop the same as New Yorkers, so H&M ended up stuck with mountains of unsold clothes it had to discount, recycle, or burn. Now it's using social media, search queries, and other data to make store-by-store clothing choices. And hopefully not folllow Fast Fashion fellow Forever 21's fate (bankruptcy).
The $420 high wasn't only a dream for Elon... Tesla stock soared 12% higher last week to a record $406, more than double where the stock was in June. Investors are gaga for the new gigafactory to start creating Teslas in China, which is strategically important for 2 huge reasons: China is the biggest market for electric cars (by far) and producing there could help it avoid the tariff war. Lower costs there could also help Tesla cut the price of its Model 3 in China by 20%, which could help it achieve mainstream status.
Lows
...And who's down
That's a hard "nein"... Last week, a German court banned Uber because it's not following all of Germany's many rules. Last month Uber lost its license to operate in London (it's still operating in both those countries while it appeals, btw). Now we have news that ex-CEO/co-founder Travis Kalanick has sold over 90% of his stock in the company he once was "super pumped" about. No news is good news for Uber these days. PS: Travis is using the cash to invest more in his new ghost kitchen startup.
Cue the Chief Freakout Officer... FedEx's 40% profit drop last quarter was "horrific" — that's according to its own CFO. Despite breaking up officially with Amazon, FedEx wants to enable your online shopping habits with 7 day shipping operations — but that requires huge spending on a ground game. And the foam roller it needs to deliver to you ASAP is way less profitable for FedEx than its historic profit puppy, air "Express" busines shipments. Despite Wall Street's skepticism (the stock is down 39% since Amazon launched 3rd party shipping), FedEx thinks its ecommerce will "start lapping" Amazon in 2021.
What else we’re Snackin’
- Unwell: The health & wellness industry is worth $4.2 trillion — these are its worst 2019 trends (CBD-infused, raw water-based IV drip, anyone?)
- Invest: The investor's guide to space
- Work: 4 strategies for explaining a complicated concept to an audience (works for family dinners, too)
- Cancelled: The art of flaking gracefully
- Unreal: Real-time, "digital teleportation" could change the world in a big way (if we can make it happen)
This Week
- Monday: Chicago Fed national index, Earnings from Neogen Corp
- Tuesday: Earnings from Pivotal Software
- Wednesday: Markets closed for Christmas
- Thursday: Earnings from Lloyds Banking Group
- Friday: Wall Street's last Friday of the decade
Disclosure: Authors of this Snacks own shares of Uber, Apple, Microsoft, and Amazon
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