It is a sad day for General Electric. The Dow Jones Industrial Average index committee has decided to give GE the boot. GE was an original member of the Dow and had been part of the 30-stock index continuously since 1907. It was the Dow’s oldest constituent. Once America’s most venerable industrial company, GE stumbled badly at the hands of former CEO Jeff Immelt. Mr. Immelt should have been shown the door years ago, but the board kept him around. GE is now a shadow of its former self and the current CEO was pushed into cutting the dividend (another poorly handled decision) and selling-off … [Read more...]

After posting its first two profitable quarters, Twitter's share price has been soaring, but Ben Eisen reports for the Wall Street Journal that short sellers have the social media network in their sights. He writes: Now, as optimism about the company prompts a slew of analysts to lift their price targets, some short-sellers are betting on a reversal. They have amassed positions worth more than $2 billion this month through Thursday, according to s3 Partners, a financial analytics firm. “Shorts have been selling into this rally, backing up their original bets and looking to double up on … [Read more...]

The NYSE FANG+ Index has been on a tear that rivals the dotcom era mania. The chart below shows the relative performance of the NASDAQ composite from year-end 1997 (about 26 months prior to peak) through its collapse and the relative performance of the NYSE FANG+ index from April of 2016 (nearly 26 months ago). Both rose parabolically over these time periods and strongly outperformed the broader S&P 500. The good news, if you are growing tired of hearing about how much money your nephew is making in Netflix shares, is peak greater fool (or peak stupid if you prefer plain language) may … [Read more...]

MSCI unveiled a list of 234 Chinese A-share stocks that will be added to its emerging markets index. The MSCI Emerging Markets index is used as a benchmark for over $1.5 trillion in assets. MSCI had proposed adding A-shares to the Emerging Markets index three times since 2013, but was rebuffed by stakeholders — primarily large asset managers — concerned about their ability to move money more freely in and out of the country. The turning point came with the growth of the stock connect programme, which was created in 2014 but has expanded rapidly over the past few years. The dual trading … [Read more...]

Steve Eisman, whose prediction of the 2008 subprime mortgage collapse was subsequently immortalized in book and film as "The Big Short," is telling investors they should short Deutsche Bank shares. Deutsche Bank is one of Europe's top five largest banks by assets. Mr. Eisman calls Deutsche Bank a "problem bank," and says it needs to shrink. Bloomberg's Peter Vercoe and Yvonne Man report: “Deutsche Bank is a problem bank,” Eisman said in a Bloomberg Television interview in Hong Kong. The German lender has “profitability issues,” and will probably have to raise capital next year, he said, … [Read more...]

A partnership between Walmart and Uber (and Lyft in Denver, CO), has been broken according to Reuters reporting. Nandita Bose and Heather Somerville write: The end of the Walmart partnerships, which has not been previously reported and was confirmed by Walmart and Uber, undercuts a vision the ride-hailing companies laid out: a service that can efficiently deliver anything on-demand, including people and cargo, at the touch of a smartphone app. “It is incredibly hard to deliver people and packages together,” said a source with a delivery company that works with Walmart and has direct … [Read more...]

The world's largest food company, Nestle, and the world's largest coffee retailer, Starbucks, have made a $7.15 billion deal that will allow Nestle to sell Starbucks branded coffees around the world. Starbucks announced: As part of the alliance, Nestlé will obtain the rights to market, sell, and distribute Starbucks®, Seattle’s Best Coffee®, Starbucks Reserve®, Teavana™ , Starbucks VIA® and Torrefazione Italia® packaged coffee and tea in all global at-home and away-from-home channels.  Nestlé will pay Starbucks $7.15 billion in closing consideration, and Starbucks - with a focus on … [Read more...]

Fore years Wall Street has ceaselessly promoted Elon Musk and Tesla. But last night, on a quarterly earnings conference call the already strained bond between analysts and the Tesla CEO may have been broken beyond repair. After being asked some questions he didn't like, Musk said "Next. Next. Next. Boring bonehead questions are not cool. Next." The FT reports what happened next. The next 20 minutes of the call was devoted to questions from Galileo Russell, who hosts a YouTube channel called HyperChange TV and had campaigned via Twitter beforehand to be able to field questions to “give … [Read more...]

Famed emerging markets fund manager, Mark Mobius thinks so. Even if you think Mobius is off base in his timing, be sure your portfolio is properly positioned for a 30% correction. If you are invested in the stock market long enough, a 30% correction is a near certainty. Proper preparation is essential for all investors, but it holds doubly true for retired investors and those approaching retirement who don’t have the time to recover from a big stock market drawdown. Mark Mobius, the 81-year-old investment guru, believes the U.S. stock market is set for a 30% correction that would essentially … [Read more...]

The WSJ is reporting that the big consumer brand companies are struggling to raise prices. P&G reported that prices fell by 2% in the first quarter of 2018—primarily driven by its Gillette razors. Unilever too reported that it was only able to raise prices by 0.1% in the first quarter. A combination of Amazon and a decline in brand loyalty are blamed for the lack of pricing power. A lack of meaningful innovation and a shifting ad market may have more to do with the pricing issues at the big brands than Amazon or brand loyalty. Pricing power, innovation, and quality go hand in hand. … [Read more...]