🍨 Daily Scoop: Who Killed Black Friday
By Mon, Dec 9, 2019
Hello Scoopers,
No trade deal until the 2020 election … steel tariff… 100% tariffs on French wines … tariffs here, tariffs there, tariffs everywhere. That’s what brought down the stock market for the second day in a row. It’s a political game of carrots and sticks.
Beyond the overall market, in a very-under-reported piece of news, co-founders, one of the largest technology companies on earth, resigned, and investors celebrated the news. In other news, one of the largest shipping companies in the world is finding it hard to compete against others, and even harder to convince financial analysts of its ability to do so.
Oh, and by the way, someone (or something) is killing Black Friday. Who is it? — more on that in the “Water Cooler” section.
Also, don’t forget to scroll down to the “Overall Market,” “What’s Up?” and “What’s Down?” sections to read more.
MARKETS
- U.S. markets: Bitcoin’s price dropped to lower than $7,000 mark for a few moments and recovered quickly. Potentially, the stock market’s negative sentiment was passed over to the crypto market.
- Cryptocurrency: Bitcoin’s price is in the mid- $7,000 range. Technical analysts are talking about the possibility of a $5,000 floor and a sky-high ceiling. For now, the world’s largest cryptocurrency is fluctuating as bulls insist on a rapid price increase, and bears predict sudden price falls. As we all know, “extreme” is the middle name of all cryptocurrencies.
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OVERALL MARKET
Carrots and Sticks
All three indices finished Tuesday in the red again, and tariffs are to blame. It wasn’t only the new round of steel tariffs we discussed on Tuesday (Read More). It wasn’t even the expected new round of tariffs on Chinese goods that are coming on December 15th. Neither, it was the possibility of 100% tariffs on French wines. This time, it was the possibility of delaying the trade deal until after the 2020 election by President Trump.
Why is this happening?
Trade decisions are as much political as they are economy-related. We’ve seen this story playing several times in the last few months. It has gone something like this: Announce tariffs to trigger talks. Pull back tariffs to give hope. Announce delays to scare the other side. Talk about a deal to give hope…
In other words, here is a carrot … watch the stick … carrot … stick…
WHAT’S UP
Bye Bye, Larry, and Sergey …
So, what happened?
Shares of Alphabet (Ticker: GOOG / GOOGL) were up more than 1% on Tuesday. Larry and Sergey, co-founders of the company, announced their resignation and left the company at the helm of it’s Google division CEO Sundar Pichai.
In three letters to their employees, they revisited the history of the company and announced the resignation. There were no other reasons to explain the resignation. It’s now a guessing game as to what happened? And where they are going? It could be that Larry and Sergey are just tired, or it can be related to cultural backlashes the company is experiencing over the firing of employees who spoke against the company’s conflicting policies and actions.
Stock market investors didn’t really care and sent the stock up as they gave Sundar their nod of approval.
WHAT’S DOWN
Tough to compete, tougher to convince analysts.
So, what happened?
Shares of FedEx (Ticker: FDX) were down more than 4% on Tuesday. The decline came after a financial analyst from KeyBanc Capital lowered his price to earnings ratio forecast for the company. Since departing ways with Amazon (Ticker: AMZN), FedEx has been struggling to control its costs. Going head to head with the world’s largest e-commerce player with the aspiration to own the logistics market has proven to be much harder than FedEx has assumed.
FedEx is going to report its quarterly earnings report in two weeks. It’s always interesting to see how fair these financial analysts score against the company’s actual results. In most cases, they are not that accurate in their forecast. This is something to watch in the next two weeks. But, for FedEx, convincing financial analysts of its ability to succeed has proven to be even more difficult than actually competing with Amazon.
WATER COOLER
Who is killing Black Friday?
So, what happened?
Sales on Black Friday amassed to $7 billion, almost $2 billion lower than it’s digital rival Cyber Monday. Cyber Monday was an even bigger success. You, America, grew your online shopping by 19% year-over-year to more than $9 billion, and, in the process, you may have unknowingly killed Balck Friday.
It’s understandable. Who wants to get kicked in the eye when shoving through Best Buy’s doors, when he can sit home in his pajamas and order a 70″ TV while sipping coffee. Not us, neither many other Americans. Cyber Monday is killing Black Friday. It’s inevitable.
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
