Delivering non-perishable goods is one thing. Making sure you’re happy with the apples and oranges they picked for you and delivered to your door is another thing all together. Americans are picky about their fruits and vegetables. And it’s why the grocery deliver business hasn’t been able to scale. It’s a major endeavor. Amazon announced last week it is opening a handful of grocery stores separate from its Whole Foods operation. The key to groceries is execution. It’s not good business to bet against Bezos, but when you look at Wal-Mart’s footprint, it’s hard not to believe there will be … [Read more...]
Will Democrats Break Up Big Tech Companies?
Rhode Island Congressman David Cicilline (D) has suggested imposing on tech companies a form of the Glass-Steagall rules that have been applied to banks. The rules would seek to break up functions of the tech companies to avoid anti-trust issues. Kiran Stacey reports in the Financial Times: David Cicilline, the head of the House antitrust subcommittee, has suggested imposing a version of the Glass-Steagall rules — which forced banks to separate commercial and investment banking — on the technology industry. His comments add to growing calls from senior figures in the Democratic party to … [Read more...]
Big Brewers Look for New Answers in Flat Beer Market
Big brewers like AB InBev are looking to turn around a market for their products that has been extremely difficult to navigate of late. Saabira Chaudhuri reports on the brewer's efforts to boost growth, writing in The Wall Street Journal: In response to the slowdown, AB InBev has launched pricier, limited-edition or flavored variants of its flagship brands and worked to diversify. Earlier in February, it bought a maker of ready-to-drink canned cocktails and high-end spirits, adding to its growing portfolio of nonbeer offerings, including spiked seltzer and energy drinks. It has also pushed … [Read more...]
The 3 Disturbing Implications of the Fed’s Flip
The Fed was on a good path last year. After nearly a decade of punishing savers with zero and ultra-low interest rates, Chairman Jerome Powell oversaw a move toward more normal monetary policy. From his start in January of last year through December, the Fed hiked interest rates a total of four times and allowed its asset portfolio to fall by about $325 billion. Over Bernanke’s eight years at the helm of the Fed, interest rates were increased a grand total of three times. Yellen wasn’t much better. It took here four years to get in five hikes. Powell did four in one year. Powell’s more … [Read more...]
Tucker Explains: Poverty Doesn’t Cause Instability. Envy Does.
You don’t need to be rich to live the good life. The good life is more a way of life. Not to sound too trippy but “it’s a feeling, man.” Sort of like the peace and love shared by Deadheads swaying to Jerry, or classic rock fans to Hendrix at Woodstock. You can’t always explain why you feel a certain way. You just do. That’s how it was for me growing up. I just felt good about my family. I liked my friends and life was good. But we weren’t rich. And it didn’t matter. We didn’t talk about our place in society. We were middle class and our place was a small single level cape in … [Read more...]
High Barriers to Entry Make for Safer Investments
I have written many times through the years about the benefits of businesses with high barriers to entry. Those barriers often include protection by government regulations, including rights of way, monopoly power, and intellectual property. In November of 1996 I explained the value of intellectual property and how difficult it is to generate. I wrote: Have Mercy!... Back in the spring of 1964, XERF was the most powerful commercial radio station on earth. With a thunderous quarter-million watts of energy pumping from its massive transistor deep in the Mexican Coahuila Desert south of the … [Read more...]
Government’s Fidelity Probe Looks to be a Non-Starter: Part II
Yesterday I wrote to you about the government probe into Fidelity. My view continues to be that this looks to be a non-starter. But unfortunately, when you’re in the headlines, questions are always going to be asked. The thrust of the probe is related to an infrastructure fee Fidelity negotiates with other mutual fund companies for the privilege of listing their funds for sale on Fidelity’s FundsNetwork. The infrastructure rate is agreed upon between the two parties and is listed in the fund prospectus or plan document. A plan document is used by retirement plans such as 401(k)s to make … [Read more...]
Hedge Funds All-In on FAANGs. Strategy Could Come back to Bite Them
Hedge funds have been moving out of most stocks, but the few stock purchases they are making are increasingly concentrated among the big American and Chinese tech names. Bloomberg's Lu Wang and Melissa Karsh write that Goldman Sachs data shows "the top 10 holdings on average made up 70 percent of a fund’s long portfolios, the highest since at least 2002." The narrow band of stocks being traded by the hedge funds are highly correlated and basically constitute one trade. If the sector is hit, the lack of diversification could send hedge funds reeling. Wang and Karsh write: As a group, … [Read more...]
Big Deal: British Air to Replace its Aging 747 Fleet with Boeing 777s
In The Wall Street Journal, Robert Wall details a major purchase of Boeing 777-9 jetliners by British Air (International Consolidated Airlines Group). BA will replace its fleet of aging 747s with the new jets. Wall writes: International Consolidated Airlines Group , ICAGY -1.79% as IAG is formally known, said it would place a firm order for 18 Boeing 777-9s and take options for up to 24 more. The deal has a combined value of $18.5 billion at list price before industry standard discounts. The jetliners will eventually replace BA’s aging 747 jumbo jets in another sign twin-engine long-range … [Read more...]
Government’s Fidelity Probe Looks to be a Non-Starter
There is an article in today’s Wall Street Journal about a government probe into Fidelity regarding a fee charged to some mutual funds. It’s called an “infrastructure fee,” and is charged by Fidelity Investments to certain mutual fund companies (not Vanguard) to list their funds on Fidelity’s FundsNetwork. Most funds on Fidelity’s FundsNetwork are accessed through retirement accounts such as 401(k)s and/or 403(b)s. As such, they are governed by ERISA laws which are overseen by the Department of Labor. The article references a fee of 0.15%, which is misleading because not all companies … [Read more...]
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