Tag Archives: US-China trade war

Home Depot is the largest home improvement retailer in the United States and the best run retailer in the world

So far, it has been a good earnings season with a higher than average seventy-five percent of S&P 500 companies that have reported beating expectations. That was strong enough to push the stock market to record highs.

On Tuesday 19, Home Depot will report earnings before market open. The report will be for the fiscal Quarter ending October 2019, and the consensus EPS for the quarter is $2,52, which is up from the same quarter last year at $2,51.

The Home Depot is the largest home improvement retailer in the United States, and considered to be the best run retailer in the world. I have been watching this stock for years and it`s interesting and funny to see that they beat estimates time after time.

Home Depot opened up two stores 40 years ago. In 1979, the first two stores, built in spaces leased from J.C Penny that werw originally Treasure Island «hypermarket». As of October 20, 2019, they have 2,285 locations and 413,000 employees.

The founders created a company to keep alive the values that were important to them; Values like respect among all people, excellent customer service and giving back to communities and society.

In December 2006. the Home Depot announced its acquistion of the Chinese home improvement retailer The Home Way. The acquisition gave the Home Depot an immediate presence in China, with 12 stores in six cities.

But the Home Depot didn`t succeed in China. They lack of success in China has been attributed t o the disconnect between The Home Depot`s do-it-yourself ethos and Chinese culture. The market in China is more of a do-it-for-me culture.

So, as of April 2011, Home Depot shut its last Beijing store, the fifth Home Depot to close in China in the previous two years. As of September 16, 2012, all seven of the box stores in China had been shut down, and they has no immediate plans to further expand its specialty stores in China.

The US-China trade war is risky but the impeachment is even more risky. They want to impeach a president that have done so much for its own people, and tax cuts and many reforms have boosted to U.S economy.

Strong consumer activity and low interest rate is helping companies like Home Depot, and this is why they beat earnings all the time. At least for the last two years. But according to DM Martin`s Research, the RMI (remodeling market index) and future bid activity have come off their 2017 peaks in the past several quarters.

The management doesn`t seems to be concerned about the demand. Last quarter they said; «Current health of the U.S consumer and a stable housing environment» was postive for them. Its difficult not to be bullish, and share repurchase can push the EPS higher.

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.
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The United States are growing faster than China

The world`s biggest economy is the United States followed by China, and sooner or later, China will replace the locomotive and be the biggest economy in the world. You can delay it, but it will happen in this century anyway.

They are both in conflict with each other with tariff tensions and a trade war. A strategy that is bad for both of them in the long run. The U.S is waiting for China to come to the table and make a fair deal. Today is the first day of talks to renegotiate the trade dispute between them. A deal that President Donald Trump repudiated.

Take a look at the chart above. Surprisingly, the U.S is more productive than China. Twice as much. The US economy advanced an annualized 3,4 percent on quarter in the third quarter of 2018 while the Chinese economy grew by “only” 1,6 percent quarter-on-quarter in the three months to September last year.

The Chinese economy is slowing and this has been going on for a while. But it`s not because of the trade war. China obviously have some problems and the China-U.S tension is one of them, but this is not the first time China and the U.S are in conflict with each other.

Deng Xiaoping and President Jimmy Carter signed a historic accord in 1979 and then reversed decades of China-U.S tension. Deng Xiaoping was a Chinese revolutionary and veteran of the Communist Party and he was eager to adopt capitalist methods and reforms in order to stimulate economic growth and restore confidence in the party.

Today, China has embraced capitalism but remains Leninist at heart. The founder of the Soviet Union, and his Bolshevik revolution, Vladimir Lenin changed China`s economic and political landscape.

Lenins Russian revolution in 1917 have a causal relationship with the birth of Chinas Communist Party in 1921 and the founding of the People`s Republic of China in 1949. As Mao Zedong once said: “The salvoes of the October revolution brought Marxism-Leninism to China.”

Lenin has played a much bigger role in China than Karl Marx and Friedrich Engels. The wholesale execution of enemies inspired Mao`brutal dictatorship and his launch of the Cultural Revolution under the theory of “continuous revolution under the dictatorship of the proletariat.”

Now, China has changed dramatically since Deng Xiaopings free-market reforms and Maos terrifying Leninist experiment in utopia. Now, China is the world`s second largest economy. 70 percent of the “socialist” economy is privately owned and nobody have more billionaires than China right now.

China is more a Leninist capitalist state than a Marxist socialist one. 800 million people in the middle class has jumped on the consumerism train in only a couple of decades under the stewardship of communist totalitarianism. Leninism`s lasting legacy.

On the other side, China has a debt crisis and a real estate bubble, so the question is; when will China collapse, and will it cause a global crisis? China is declining and it will continue to do so. Lending money to Kenya or Venezuela to name a few, are putting them all in a debt trap and it remain to see that Beijing can afford it. I`m in doubt.

Xi Jinping and his leaders know that they are in a very weak position, so they have to come to the table and make a deal with the U.S.

The stock market is in a correction territory at the moment. Investors have priced in two rate hikes this year and some U.S-China tension fear, but Trump reports “Big Progress” in trade talks with China were top trained negotiators came to the table earlier today.

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.

 

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