What I think I learned last week #57
I will start off with an international investing tip: « Everyone should invest in Ireland, because your capital is always Dublin. »
However, despite Ireland being in Europe, investors have been leaving Europe at the fastest pace since the Brexit vote in 2016 as $5.9 billion left European equity funds. This was the second largest amount on record, going back to 2000.
Where was the money going? Try China. Foreign investors invested $9 billion in Chinese equities during January, the largest monthly inflow on record.
It’s not just stocks. US crude oil prices are having their best start to the year since 1984 by rebounding 25% from the beginning of the year through February.
Germany came close to entering its first recession in six years in the final quarter of 2018.
Car news remains pitiful as the number of borrowers in the US who are seriously behind on their car loans rose to the highest level on record in 2018, with more than 7 million Americans now 90 days behind on their car payments and considered “seriously delinquent.” This is more than 1 million more than the previous peak in 2010.
Visteon CEO Sachin Lawande says there’s a « new realization » it could take until 2025 or longer for truly driverless vehicles.
It might take that long for the auto industry to recover. Three of the world’s largest carmakers warned that 2019 might be even worse than expected since there has been no improvement in China and commodity prices are going up. And then Nissan followed by cutting its sales targets everywhere, including Japan, China, Europe and the US.
Interesting fact: in 1970, China’s median age was nearly 10 years younger than that in the US. By 2015, China was older.
Another interesting fact: Capital spending by Amazon, Microsoft , Google and Facebook totaled $77.7 billion for 2018.
Don’t expect Facebook’s spending to drop anytime soon. They just announced plans to develop their own artificial intelligence computer chips to provide faster computing for such things as digital assistants that have common sense.
Rafael Reif, President of the Massachusetts Institute of Technology, better known as MIT, wrote that universities must equip tomorrow’s leaders to be “AI bilingual”.
In other AI news, Germany and France pledged to become world leaders in artificial intelligence. Don’t worry. That was not an earthquake; what you just felt was what happens when 7 billion people simultaneously fall down rolling in laughter.
Meanwhile, the robotization of the human race has begun. At the Mobile World Congress, a man volunteered to have a chip inserted under his skin live on stage and another man who had already undergone the procedure showed off how he could make a payment with it using his smartphone.
OPEC significantly reduced its crude oil production in January as Saudi Arabia cut its production by 350,000 barrels per day. They had agreed to a 250,000 barrel per day cut.
The US Dollar, better known as “King Dollar”, had its longest rally in three years.
It was reported that Amazon’s advertising business may be growing faster than originally thought as research firm eMarketer increased its estimates for Amazon’s ad revenue for both the past and the future. By 2020, Amazon is expected to have 10% of the digital ad market.
Germany’s Beiersdorf has warned that the European consumer sector is “in turmoil.”
They say bad news comes in threes. It sure did for an American consumer company having its own turmoil. Kraft Heinz saw its shares fell more than 20% on a troika of bad news. The company wrote down the value of its Kraft and Oscar Mayer brands by $15.4bn, disclosed an investigation by federal securities regulators and slashed its dividend. They obviously did not cut the mustard. After this, it will be difficult for them to ketchup. Not something to relish.
And that’s what I think I learned last week.