Author Archives: Ket Garden

by | June 12, 2014 · 11:01 pm

Brazil and World Cup 2014

Now it is time for some action in Brazil. The opening match is between Brazil and Kroatia later on today. I will watch this match from Sâo Paulo live today and I think the pressure is on Brazil and their new superstar Neymar.

Brazil`s GDP is 4,3% in 2014. In 2010 their GDP was 7,53%, and that`s pretty good. Despite that growth, many people in Brazil is poor. Brazil ranks 49,3 in the Gini coefficient index, with the richest 10% of Brazilians receiving 42,7% of the nation`s income, while the poorest 34% receive less than 1,2%!

Brazil has serious problems with crime and roughly 23,8 homicides per 100,000 residents, muggings, robberies, kidnappings and gang violence are common. Police brutality and corruption are widespread.

We will probably not see much of Brazil`s slums on TV during the World Cup 2014. Poverty in Brazil is most visually represented by the various favelas, slums in the country`s metropolitan areas and remote upcountry regions that suffer with economic underdevelopment and below-par standards of living. Many people in Brazil feel angry about the World Cup 2014, as they belive the Brazilian government should spend money on other things that a World Cup.

This is the dark side of Brazil right now. Brazil has a huge business opportunity, and are among the favorite country`s in the Emerging Markets sector. Let`s see the bright side and sing along with Pitbull ft. Jennifer Lopez and Claudia Leitte and their hit song: WE ARE ONE!

Let`s talk about soccer. The dominant system in 2010 and 2012 was 4-2-3-1, and this will probably be the most utilised formation this time around too. There is a decent amount of variety across the 32 teams, and not everyone will deploy a four-man defence.

Jurgen Klinsmann has been experimenting with a diamond midfield system in order to get the best from the USA`s rampaging central midfielder Michael Bradley. Italy`s Cesare Prandelli could also use a diamond, or a 3-5-2 system, as the Italians remain the masters of tactical unpredictability. USA could be one of the most tactically distinct sides, with the use of a diamond.

Brazil`s Fred scored five goals in five games at the Confederations Cup last year. His role in Luiz Felipe Scolari`s side is to win aerial battles, hold up the ball and create space for Neymar, who cuts inside from the left. Neymar is Brazil`s new superstar and I really look forward to see him live on TV direct from Sâo Paulo later on today.

Leave a comment

Filed under Uncategorized

Tagged as

by | June 11, 2014 · 1:46 pm

McDonald`s is growing

McDonald`s (MCD) is growing but that is slowly. It`s share price moved only 8% in 2013, and McDonald`s rewarded its shareholders with a 10% increase to its dividend. The surged 4% YTD. They delivered a high return on equity and their growth in its top and bottom lines was decent.

MCD

McDonald`s holds a market share of 31% in the fast food industry. How can McDonald`s continue to grow? Because the domestic market is saturated, they are now expanding in emerging markets, particularly China, where they have a great opportunity.

The U.S fast food industry is expected to grow 10% during the period of 2013 – 2018. Emerging markets are attractive to fast food players due to their large populations, fast population growth, concentration of younger consumers and growing demand for Western diets.

China is important for McDonald`s and it is the third largest market for the company after the U.S and Japan. They holds a 15% market share of China`s fast food market. They experience a strong growth in the region.

China`s fast food & takeaway market grew 80% from 2007 – 2012 to RMB 1 trillion ($162 billion). The market is expected to hit RMB 1,8 trillion ($292 billion) by 2017. All this is driven by economic growth in China, and McDonald`s is investing heavily in China to benefit from this growing market.

McDonald`s will open 1,600 new restaurants around the globe and spend $3 billion this year. China will get one of the biggest shares. They will open 300 locations in China, and that`s up from 250 last year and quadruple the number in 2004. Their goal is to have more than 2,000 restaurants in China by the end of 2014.

McDonald`s share price and earnings have underperformed relative to the S&P 500 and restaurants peers over the last 12 months. Have a look at the chart below. I have compared McDonald`s and S&P 500 so you could see by yourself.

MCD vs SPX

(Picture: McDonald`s vs S&P 500)

In my opinion; both McDonald’s and Burger King is now trying to be everything for everyone. Can you imagine Burger King selling you a salad? Or a wrap? Come on; what`s next? For all I know, they will start to sell sushi next week. In-N-Out Burger, Chick-fil-A and Five Guys haven`t changed their menu in years. A big menu is making McDonald`s slower.

Many switch to restaurants perceived as more natural, simple and healthy, like Chipotle Mexican Grill (CMG) or Taco Bell which is built on this trend. McDonald’s franchisees lose out and this will be a slowly process as franchisee satisfaction is driven so largely by cash flow. McDonald’s need to take drastic action on their meny complexity and food integrity. Before that I expect the share price to languish.

Reports today:

10:30 a.m EST Crude Oil Inventories
01:01 a.m EST 10-y Bond Auction
02:00 a.m EST Fedral Budget Balance

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

 

Leave a comment

Filed under Stocks

Tagged as , ,

by | June 10, 2014 · 2:01 pm

What – Is Apple down 85%?

Don`t panic if you think that the price of Apple Inc is down -85%, because it isn`t. It`s just your brokers fault. They have not changed the amount of shares as they were not prepared for the coming share split as we all saw in Apple Inc.

Apple

This is happening many times and I have seen that in stocks I have owned many times. So, what is going on here? Apple stock is cheaper because its 7 for 1 split went into effect. The Apple`s share price is back to a 2006 level, trading above $100.

In a traditional 2 for 1 split, all owners of common stock have their share counts doubled while the price is simply cut in half. Shares are now worth half as much as they were before, but there are twice as many available and the percent ownership of each shareholder is unchanged.

Most of the data surrounding stock splits seems quite bullish. In a study by Dr. David Ikenburry of Rice University, he found that stocks which split 2-1 on average outperformed the control group he created by 8% after a year and by up to 12% after three years. The study looked at stocks between 1975 and 1990.

Dr. David Ikenburry did another research including data from 3-1 and 4-1 splits and found that the results from 1990 to 1997 were practically identical to the findings from the original study. A study from 2003 from the Chinese and City Universities of Hong Kong and the Hong Kong Polytechinic University corroborates Ikenburry`findings with similar evidence from the stock market in Hong Kong.

The reason why stocks is performing better after a stock split is probably because they become more affordable to smaller individual investors. They simply look cheaper. People are probably not willing to sink $600 into a single share of Apple, but they may be amenable to spend $400 on 4 shares after the 7-1 split. It`s more a psychological thing.

The Wharton School of Business found that institutions have increased their percent ownership in stocks from 34% in 1980 to 67% in 2010, and its widely believed that institutions like mutual funds are less perceptible to psychological biases like a lower sticker price than non-professionals.

Ikenburry belive that the stocks perform well when they split because the split itself is a signal of bullish sentiment from management. Apple hasn`t had a new product catalyst to ignite its fundamentals since the iPad was released in 2010.

This year CEO Tim Cook has promised several new types of products and that may be the reason Apple`s management has the confidence to split the stock. What could be worse for a CEO than taking a high value stock, splitting it into pieces, then see the face value fall even further sending investors into a panic?

Apple`s acquisition of Beats Electronics can make the stock go higher, but I don`t understand that Apple was so interested in their headphones. They could make their own at a cheaper price. Dr. Dre must, for all i know, have another plan with a new product we don`t know yet.

The music streaming business can be a good business, but so far it isn`t. They may be changing the strategy to make the $3 billion acquisition of Beats a boost and give Apple new income. Anyway; the acquisition of Beats Electronics is a sign of things to come. They have competitors. Google`s Youtube is the world`s largest music streaming service, and Youtube disclosed that 40% of its total users are coming from mobile devices.

 
Reports today:

10:00 a.m EST JOLTS Job Openings
10:00 a.m EST Wholesale Inventories m/m

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Leave a comment

Filed under Stock market

Tagged as , ,

by | June 7, 2014 · 9:05 am

Weekend

Shinybull will be back on june 10.

shinybull_for_sitesite-7

Leave a comment

Filed under Uncategorized

by | June 6, 2014 · 1:20 pm

Strong Jobs report is on the way

Mario Draghi is the man. What a stock rally  yesterday, and all this thanks to one single man: Mario Draghi from the ECB (European Central Bank). He started to cut all three rates, and said he will also start a new QE program if necessary.

 

All this is done because they want action in the markets. As you know, there are millions of people in the EuroZone which is unemployeed. It`s not good for the economy because their buying power remain weak.

 

But what about the U.S? Later today, we will se important reports about Nonfarm Payrolls and Unemployment rate. All investors are waiting for those reports at 8.30 a.m. This is very important news, so what can we expect?

 

Several surprisingly healthy economic indicators reported within the past month including auto sales figures and the most recent jobs numbers indicate that commerce may be picking up. The really big question that will be answered later today is whether growth in the laber market kept up its pace through May.

Nonfarm1

 

According to AutoData, the car sales spiked to an annualized rate of 16,8 million units in May. This is the fastest rate of growth seen in the auto market in 7 years! GM doubled sales growth and reported a 12,6% gain compared to estimated 6,4%.

 

The automotive data is encouraging, but the nonfarm payrolls change is the indicator investors really keep a close watch on later today. The change in nonfarm payrolls may be the most influential economic indicator (other than perhaps GDP) because it`s reflective of two key factors for the national economy.

 

The jobs number tells us both about the strength of corporations and their willingness to spend cash to expand their businesses. It also gives insight into the number of newly added employees which may bolster consumer spending with their freshly minted paychecks.

 

Todays jobs report also contains supplementary information about employee earnings levels and the unemployment rate, which isn`t considered to be as clear of a signal because it is positively influenced when job-seekers drop of out the labor force in what is known as the discouraged worker effect.

 

The U.S change in nonfarm payrolls unexpectedly climbed from 203k jobs added in March to 288k in April. The markets around the world rallied after those news. Later today we will see the May jobs data.

Unemployment rate2

 

On todays report Morningstar has the nonfarm payrolls change consensus at 220k jobs added while the consensus from Estimize is 10% higher at 243k. Morningstar also indicate that the unemployment rate may rise slightly to 6,4% while Estimize are forecasting that unemployment will remain unchanged at 6,3%.

 

The Estimize community is expecting the number of jobs added in May to be considerably less than the number added in April, but the community is still optimistic that the labor market will outperform predictions from the majority of economists.

 

All eyes on the Labor Department`s report today at 8.30 AM EST.

 

Reports today:

08:30 a.m        Nonfarm Payrolls

08:30 a.m        Unemployment Rate

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Leave a comment

Filed under Stock market

Tagged as , ,