Here’s the weekly rundown – August 16 – 20, 2021
Weekly Summary:
Name the last time you heard “first time since WWII”…we’ll wait.
If you’ve been left with your mouth open to the dazzling rocketship ? of a stock market we’ve been witnessing lately, you’re not alone. That’s because nobody has seen a market rise this fast since, well, WWII. CNBC reported that as of Monday, the benchmark S&P 500 index had doubled in value since the low it set last March marking the fastest recovery since 2 decades before man literally walked on the moon (that’s 1969, for the non-history buffs).
But Neil came back and so did the market this week, at least just a tad. What for? What goes up must come down? Not quite as the reasons are twofold, first retail sales figures (you know like TVs, clothes, cars, stuff like that) showed a decline of 1.1% vs the expected .3%. What this means, is that the US consumer is slowing up their buying which could be a result of increasing prices, availability of goods, or caution towards COVID nobody can be exactly sure.
Yet regardless of the sales figures, retail earnings (that’s the net income retailers are making) from many of the major retailers such as Target and Walmart came in better than expected this week indicating that boom is far from over, probably just catching a breath. But this also leads us to the second reason the market took off steam, “Fed tapering”.
Fed Tapering in normal people talk, is just a fancy way of saying the federal reserve bank (the central bank of the US) is slowing down its easy money/stimulus policy. Essentially, the bank is going to slow down printing money to buy bonds and boost the economy. This has wall street a little off because, hey, now these company’s may have to work harder for the same earnings.
The Biggest Story Not Being Told – China:
Capitalist China is looking more and more like a thing of the past..which means opportunity and danger for investors.
If you’re not paying attention, you may be missing the biggest shift in the way the second largest economy in the world is going to operate in the future. Tech crackdowns in China have done massive damage to US investors in companies such as Alibaba, JD.com, and Tencent, where some of these companies have lost over 50% of their value in the last 12 months.
Why? The story being told is that this is about “anticompetitive practices” according to the CCP along with the CCP’s desire to “protect data privacy”. Ultimately, the CCP is enacting massive laws enabling them far greater control and influence over every aspect of these businesses than they had 18 months ago.
So what’s the shift?
In short, Xi (China’s “president”), is looking to break the established system of succession of power and remain “president” for life. To do so, he needs to eliminate any person or company that poses a threat to his plans. If you shake up the status quo and portray an ominous figure to compete with that should make 2022 go “easier” for Xi.
The kicker here is that Xi’s economic views are way more in line with Mao (anti-capitalist) than the recent leaders of China (more pro-capitalist) which have made China into the economic powerhouse it is today.
The best summary of the unfolding dynamic in china can be found in a George Soros WSJ Oped
The Major Headlines:
? Facebook and the Metaverse
How’d you like to have an avatar version of yourself at work every day? Facebook is betting that this is where the future is going, people working in virtual reality.
? Tesla Robot
Remember the movie I, Robot with Will Smith? Yep, you guessed it Elon Musk is actually building it, or at least trying to. At Tesla’s AI day the company unveiled plans to build a humanoid to “be friendly and help around the house”.
Elon thinks the technology will have a profound impact on the economy.
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