4/2/20
Two months ago a short selling research firm alleged that there was misreporting of financials at the Chinese coffee giant, Luckin Coffee. The company denied the report as unsubstantiated speculation with malicious intent.
This morning the company reported that it has suspended its COO and several other employees for misconduct related to fabricating transactions. These are precisely the claims that were made two months ago.
The stock was down more than 80% this morning.
Who was the biggest loser?
It’s the top shareholder and angel investor in Luckin, the Chinese billionaire Lu Zhengyao.
Zhengyao is a serial entrepreneur. He founded the rental car company Car Inc. in 2007 and took it public in 2014 on the Hong Kong Stock Exchange. His former COO is credited with founding the Starbucks competitor, Luckin Coffee in 2017. In 2019, the company IPO’d on the Nasdaq.
Zhengyao was the angel investor behind the company and holds 484 million shares. At yesterday’s close, that stake was valued at over $12 billion. At the lows this morning, it was valued at $2.2 billion. Learn more about the stakes of billionaire investors here.
November 27, 2017, 4:30 pm EST
U.S. stocks printed new record highs again today, as numbers come in for the Black Friday period, which carries through Cyber Monday.
The National Retail Federation has projected about 4% growth in the number from last year, which is better than the past two years, but a bit softer than 2014, 2011 and 2010.
But it’s a safe bet we’ll see better than expected numbers before the shopping season is over. If we take the Atlanta Fed’s GDP forecast for the fourth quarter (which admittedly changes like the wind), we’re on pace to have the second hottest growth for the year, since the Great Recession. And, of course, consumers are in as healthy a position as they’ve been in a long time—housing prices are nearing pre–crisis levels, household net worth is on record highs, consumer credit is on record highs, but so is consumer credit worthiness.
Add to that: The stock market is at record highs. The unemployment rate is 4.1%. Inflation is low. Gas is cheap ($2.38), and stable. Mortgage rates are under 4%, and stable. And you can borrow money for five years at 2% to buy a car.
And then there’s the confidence the economy is improving and that a raise is coming (through tax cuts and a corporate tax cut which should ultimately drive wages higher). Here’s a look at the Conference Board’s Consumer Confidence Index—at 17–year highs…
Later in the week we’ll hear from OPEC on their plans to extend their production cuts to keep the upward pressure on oil prices. We’ve talked about the case for an explosive move higher in oil prices, given the impact the oil price crash of last year has had on supply. Meanwhile demand has picked up, and OPEC has been cutting production into this scenario. As we sit about 20% higher in oil prices since OPEC announced its first production cut in eight years (last November), there are now some building voices for much higher oil prices as we head into this week’s meeting.
November 23, 2017, 7:00 pm EST
Yesterday we talked about the comeback underway in Wal-Mart and the steps it has made to challenge Amazon, and to challenge the idea that Amazon will crush everyone.
It’s beginning to look like the “decline of the retail store” may have bottomed too.
And it so happens that it may have bottomed precisely when a new ETF launched to capitalize on that story. ProShares launched it yesterday, and that is the name of it –ProShares Decline Of The Retail Store ETF. It gives you short exposure to bricks and mortar retailers.
It’s off to a bad start–down 3% in the first day of trading.
For retail, the week started with a big earnings beat for Advance Auto Parts (the stock was up as much as 20% on Tuesday). Then it was Wal-Mart. And today we had earnings beats in Foot Locker and Abercrombie and Fitch.
With this, while the Dow and S&P 500 were down on the day, the small-cap (Russell 2000) was up nicely. Here’s why …
As bad as retail has been, the energy sector remains the worst performing for the year–down 11% year-to-date as a sector and the only sector in the red. This, as oil has reversed from down 22% on the year, to up around 5%, with a very bullish outlook.
This sets up for a big year ahead for energy stocks. And if you believe the worst of the economic challenges are behind us, the survivors in retail could have quite a revival–especially if Amazon begins to see more regulatory scrutiny.
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August 7, 2017, 4:00 pm EST Invest Alongside Billionaires For $297/Qtr
| James Bullard, the President of the St. Louis Fed, said today that even if unemployment went to 3% it would have little impact on the current low inflationevironment. That’s quite a statement. And with that, he argued no need to do anything with rates at this stage.And he said the low growth environment seems to be well intact too — even though we well exceeded the target the Fed put on employment years ago. In the Bernanke Fed, they slapped a target on unemployment at 6.5% back in 2012, which, if reached, they said they would start removing accomodation, including raising rates. The assumption was that the recovery in jobs to that point would stoke inflation to the point it would warrant normalization policy. Yet, here we are in the mid 4%s on unemployment and the Fed’s favored inflation guage has not only fallen short of their 2% target, its trending the other way (lower).
As I’ve said before, what gets little attention in this “lack of inflation” confoundment, is the impact of the internet. With the internet has come transparency, low barriers-to-entry into businesses (and therefore increased competition), and reduced overhead. And with that, I’ve always thought the Internet to be massively deflationary. When you can stand in a store and make a salesman compete on best price anywhere in the country–if not world–prices go down.
And this Internet 2.0 phase has been all about attacking industries that have been built upon overcharging and underdelivering to consumers. The power is shifting to the consumer and it’s resulting in cheaper stuff and cheaper services. And we’re just in the early stages of the proliferation of consumer to consumer (C2C) business — where neighbors are selling products and services to other neighbors, swapping or just giving things away. It all extracts demand from the mainstream business and forces them to compete on price and improve service. So we get lower inflation. But maybe the most misunderstood piece is how it all impacts GDP. Is it all being accounted for, or is it possible that we’re in a world with better growth than the numbers would suggest, yet accompanied by very low inflation?
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