Are we approaching the top of the bull market?

Are we approaching the top of the bull market?

There is no doubt that since Donald Trump was inaugurated as president of the USA investors have taken a more optimistic approach to the US economy. While some believe market outperform is in spite of Donald Trump others believe that his forward-looking policies, many of which are yet to be implemented, could be a game changer. However, some analysts believe we are approaching the top of the current bull market with an array of proposed mergers and acquisitions.

Well-known names

Qualcomm and Mattel are just two of the latest well-known companies in America to have been approached about a possible merger/takeover. While initial approaches have been rebuffed there is a growing belief that Mattel at least is now in play and the proposed merger with Hasbro could create a giant. Only a few years ago it would have been inconceivable to think that these two companies, to take just two recent examples, would be on the receiving end of unwanted attention from potential suitors. Continue reading “Are we approaching the top of the bull market?”

Is Tesla in trouble?

Is Tesla in trouble?

Elon Musk is still the darling of the electric vehicle market but it would appear that his company, Tesla, is in trouble. Just last week the company reported a massive $619 million third quarter loss and despite targeting the production of 5,000 Tesla Model 3 Sedans a week in 2017, the company will be well short of this figure. There are serious concerns that Tesla is struggling, will be left behind by the competition and could ultimately fall by the wayside.

Demand exceeds production

After the company released the first “affordable mass-market” electric vehicle in March 2016, the Tesla Model 3, the pre-orders began to flow. It is believed the company now has in excess of 500,000 pre-orders although hopes of producing 1,500 units in the third quarter of 2017 were dashed when the company confirmed just 260 Tesla Model 3 vehicles had been built. The problem seems to be on the production line with an overreliance on handmade parts prompting the company to spend a rumoured $10 million buying a private machining firm. Continue reading “Is Tesla in trouble?”

Do tax havens impact stock markets?

Do tax havens impact stock markets?

The subject of the so-called Paradise Papers is extremely controversial and complicated to say the least. Aside from the extreme embarrassment it is causing the rich and famous, as well as politicians, around the world, does it have any impact on stock markets? We have seen promises to clamp down on tax evasion, new regulations but are governments around the world really intent on closing the door on these tax havens?

Stock market valuations

The likes of Apple and Google are mentioned on a regular basis in relation to the use of perfectly legitimate and legal company structures as a way to reduce their tax liabilities. First and foremost, remember these are perfectly legal strategies and it is not up to the company’s to address these issues it is up to governments around the world. However, when you bear in mind the billions of dollars of tax savings involved, do tax havens have an impact on stock markets? Continue reading “Do tax havens impact stock markets?”

Could Chinese government block merger of Qualcomm and Broadcom?

Could Chinese government block merger of Qualcomm and Broadcom?

The surprising $103 billion bid for Qualcomm by Broadcom took many in the industry by surprise especially with Qualcomm under pressure from all sides. The company is currently in dispute with Apple with regards to chip prices and royalty fees. A potential merger of Qualcomm and Broadcom would create a $200 billion giant which many believe could reshape the mobile phone hardware industry. However, Donald Trump’s recent attack on the Chinese chip industry could backfire spectacularly.

Blocking Chinese bids

One of the first things Donald Trump did when he gained office was to look at ways of protecting US businesses and in particular technology companies. Under the guise of “national security” new guidelines were issued to the Committee on Foreign Investment in the United States. This led to a number of proposed Chinese acquisitions of US companies being blocked on “security” grounds. There are concerns that the Beijing government could use the Qualcomm/Broadcom merger as a kind of payback. Continue reading “Could Chinese government block merger of Qualcomm and Broadcom?”

Paradise Papers open a can of worms for Donald Trump

Paradise Papers open a can of worms for Donald Trump

The release of 13.4 million files, dubbed the “Paradise Papers“, relating to investors making use of offshore companies and overseas tax havens has opened a potential can of worms for Donald Trump. We now know that at least a dozen of Donald Trump’s administrative advisers, cabinet members or major donors have been mentioned in the “hacked” files. Firstly, we need to make clear that while the use of offshore companies and tax havens is not looked on favourably by governments around the world, it is not illegal. Whether it is immoral is another argument but from a legal point of view these investors and advisers are doing nothing wrong.

Link between Twitter, Facebook and the Russian government

We now know that a major investor with links to the Russian government has significant interests in Twitter and Facebook both of which were accused of peddling “fake news” during the US presidential election. This is something which will surprise many in the investment markets and perfectly illustrates how overseas tax havens can be used to effectively “hide” the true identity of investors. Continue reading “Paradise Papers open a can of worms for Donald Trump”

Follow small company collective investments for the next big shot

Follow small company collective investments for the next big shot

Whether looking at unit trusts, investment trusts or some other kind of collective investment, you can gain exposure to any area of the market and any specific type of share. As these funds are managed by heavily funded groups they can very often offer an insight into the next big shot. Yes, rather than researching small companies yourself why not look towards the small company collective investment vehicles available today?

Research, research, research

We all have a different style of researching but the main problem is finding the best companies to research. Do we look at companies hitting their 52-week highs, do we look at companies oversold and perhaps hitting their 52-week lows or do we simply stick a pin in a list of small companies and research that particular company? It is difficult to find the best company to research even if you do have the best research system. Continue reading “Follow small company collective investments for the next big shot”

US jobs data continues positive trend

US jobs data continues positive trend

Stock markets are expected to open higher after the release of US jobs data. This showed an additional 261,000 jobs in October and while below Wall Street expectations of 310,000 it still continues the positive trend. Unemployment overall fell from 4.2% to 4.1% as markets continue to return to some kind of normality in light of the storm season which heavily impacted September’s figures.

There are many different ways of calculating employment and unemployment in the US but one of the broader measures, including discouraged workers and those in part-time employment, continued the downward trend. This rate fell from 8.3% in September down to 7.9% in October which is impressive bearing in mind 12 months ago the figure was 9.5%. Continue reading “US jobs data continues positive trend”

Is there still value in the darling stocks of yesterday such as IBM?

Is there still value in the darling stocks of yesterday?

Over the years we have seen stalwarts such as IBM and Walmart replaced by the likes of Apple and Amazon as indicators of US economic activity. These giants have become the bellwethers of the US stock market leaving the likes of IBM and Walmart in their wake. Interestingly, having fallen back from around $180 last year to a low of $140 in September 2017, IBM shares then rallied to touch just over $160 in October. So, is there still value in the darling stocks of yesteryear?

IBM share price

Recent figures from IBM surprised market analysts on the upside for the first time in “many moons”. The shares initially rallied to $160 but have since fallen back to $152. The problem for stocks such as IBM, and other darlings of yesterday, is the fact that there are so many “stale bulls” still holding stock from the good old days. As we saw the IBM share price, any short-term rally is seen as an opportunity to bail out and use funds better elsewhere. So, until these “stale bulls” have fallen by the wayside perhaps we can expect selling into any kind of strength. Continue reading “Is there still value in the darling stocks of yesterday such as IBM?”

Facebook on the back foot despite profit growth

Facebook on the back foot despite profit growth

On a day when Facebook announced third-quarter profits up 79% at a whopping $4.7 billion on the back of a 49% increase in turnover up to $10.1 billion why was Mark Zuckerberg so downbeat? Surely this was the time to push home growing profits momentum and expansion plans which seem to be progressing perfectly? However, testifying to legislators in Washington, Facebook was on the back foot, under pressure over the rise in fake news and alleged Russian interference in the US presidential elections.

The facts

Even though Facebook CEO Mark Zuckerberg was able to separate the facts from the fiction, confirming that so-called Russian agents spent just $46,000 advertising on Facebook, compared to a combined expenditure of $81 million by the Trump and Clinton campaigns, this is not the whole story. It turns out that the Russian adverts reached a staggering 126 million Facebook users and may or may not have influenced the outcome of the US presidential elections. There is also the issue of terrorism, and several types of abuse which still appear on Facebook, even though the company spent millions of dollars in additional security measures. Continue reading “Facebook on the back foot despite profit growth”

Will new issues take a breather in light of economic volatility?

Will new issues take a breather in light of economic volatility?

Over the last few days we have seen a number of high profile companies pulling their listings on the London stock exchange. While the situation in the UK is slightly different to that in the US, with Brexit and this week’s interest rate rise, there is a perception that maybe markets have peaked in the short term. So, will new issues in the US take a breather as they are in the UK?

US forecasts still strong

While we know US interest rates will continue to tick higher in the short to medium term this already seems to be factored into the stock market. Economic growth is picking up, the employment market is relatively strong and despite Donald Trump’s attempts to meddle with business, aside from the odd mess such as Bombardier, things could be a lot worse. We have not seen an awful lot of high profile new issues in the US over the last few weeks with Snapchat perhaps the biggest this year. Continue reading “Will new issues take a breather in light of economic volatility?”