From a Twitter hoax to another chapter in the “Greek Debt Crisis” saga and questions surrounding Trumps fading rally, this week was nothing if not eventful. Get all the details in this edition of Steady Investor’s Week…
Greece Woes, Again – another year, another Greek bailout scare. Like clockwork, Greece missed yet another deadline for unlocking bailout funds this week, which brings it closer to re-entering the “Greek debt crisis” saga we nearly saw in 2015. The Greek sovereign debt problem has been a factor for Europe since 2011, as the country grapples with outlandish entitlement programs coupled with slow economic growth. In 2011, we suggested that the Greek debt crisis was a concern but not one that we thought could bring down global financial markets with it, and that is still our view today. Investors are likely to see more on this story in the coming weeks and even months, but should still think of it as a marginal impact event.
Twitter Hoax – a research study from the University of Southern California and the University of Indiana indicated that up to 48 million Twitter accounts were actually robots – not real people. If true, that would mean that 15% of Twitter users are fake, which has a serious impact on the company’s valuation. Since users are treated as potential consumers and advertising dollars are allocated accordingly. The stock did not feel too much pressure on the news, but the company continues to struggle in convincing the street that it’s a viable long-term play. The stock is down close to 10% on the year while the S&P 500 is up 5%. Meanwhile, pressure is mounting on the CEO Jack Dorsey to step down.
Target Innovation – the colossal retail giant, Target, has a difficult road ahead as the era of online shopping dawns. ‘Competing with Amazon’ will probably be the focus of many board meetings in the next decade. That’s why Target’s new innovation is one that feels like a positive step in the right direction. Amazon’s great appeal is convenience shopping at a low cost, and so Target is moving to create the same feeling in its brick and mortar stores. They are rolling out a store in Houston which will include two separate entrances: one for time-crunched grocery shoppers, and another for shoppers there to hit the furniture, fashion, home goods, or beauty sections. Target is investing $7 billion in the upgrade, and the company plans to implement the designs in 500 stores over the next two years if it works. The design also includes a new feature of the internet era – a “pickup” kiosk with separate parking spots.
Trump Rally Fading? – much has been made over the S&P 500 rally since the Trump election, as stocks have climbed around 10% since November 8 (as of this writing). The policy objectives of tax cuts, infrastructure spending, and trade deals meant to favor American corporations has led many investors to go along with the U.S., in hopes that the policies turned to law would lead to better growth and more profit. But, the rally was tested this week as the market watched some pressure mount over the passage of the new health care bill. It remains to be seen just how tightly Republicans will unite behind the health care law, which could be indicative of how lawmaking goes from here.
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