The trade deal is an appetizer
Hey Snackers,
You escaped political drama this weekend, sweat-pantsing yourself into some Love Actually, Elf, and Bad Santa.
Markets embraced it. 3 political events brought clarity on 3 major global headaches, pushing the 3 major US stock indices to record highs:
- Congress and President Trump reached a compromise on the USMCA trade deal, finally setting new rules for trade between the US, Mexico, and Canada.
- The Brits made clear that they (still) want to Brexit, choosing pro-Brexit Conservatives in a landslide election.
- The US and China agreed to a Phase 1 trade deal — more on that below...
The US/China Phase 1 trade deal is done — but it's just an appetizer
Excuse me, waiter?... Markets got served some much-needed sustenance Friday — the long-awaited "Phase 1" trade deal was publicly announced by American and Chinese representatives. Here's what the trade adversaries agreed to at the table:
- The US gives China tariff relief: $156B in new tariffs were scheduled to hit yesterday, which would've increased prices on made-in-China stuff you actually buy (iPhones, Nike shoes, InstaPots). Those tariffs got cancelled and some existing ones were cut in half.
- China gives the US some soybean orders: China stopped buying US agricultural goods in response to those tariffs — that hurt American farmers. As thanks for the tariff relief, China committed to "massive purchases" of US agricultural, energy, and manufactured goods.
How's the meal going?... Depends which diner you ask. America's commitments are immediate and specific, while China's are eventual and vague (details to be announced in the future). The Phase 1 pact still hasn't been signed and the official text wasn't revealed, so we're stuck working off public statements from the table of trade negotiators.
This was just the appetizer to the trade deal meal — we're still waiting for the entrée... Investors were happy for the drop in tension, but they want truly harmonious trade relations between the US and China. Phase 2 will need to address these meatier issues, but Trump said it won't come until after the 2020 election:
- China's government forces US companies doing business there to share their biz/tech secrets.
- China's government subsidizes Chinese companies, while banning or limiting American companies' access to the Chinese market.
- America's government is suspicious of Chinese tech, blacklisting made-in-China parts from US infrastructure.
Who's up...
Lyft wants to sponsor your weekend getaway... Shares rose over 3% last week after the ride-share app launched a rental car biz. Starting in LA and SF, carless folks can book Lyft wheels for 1-14 days through the app for a trip to Vegas or Napa. To beat OG rental car companies, Lyft cuts annoying gas fillup fees, offers $20 ride credits for pickup/dropoff, and is available to anyone over 22. The low-cost scheme probably won't be profitable — but just like Lyft's core rides biz, it'll probably try to jack up prices long-term if it wins your loyalty.
Head in the cloud... Adobe already invented Photoshop and the PDF doc — last week its stock jumped 4% to an all-time high after a record $11B in revenue over the last year. It's one of the few ancient software icons that's successfully shifted from old-school CD-ROM licenses to fancy cloud software subscriptions. That's how Adobe can still compete with SaaS-y companies that were "born in the cloud" like Google and Amazon.
...And who's down
Adorable Baby Yoda nightmares... Hasbro's CEO is sweating them. He's Disney's official toy-maker for Star Wars, Marvel, and Frozen. But Hasbro lost out big this holiday season thanks to Mickey's secrecy over The Mandalorian, a Star Wars-ish streaming show with ridiculously cute Baby Yoda cameos. Since November's Disney+ premiere, desperate parents searched Amazon 90K times for Baby Yoda gifts. Hasbro scrambled, but its official version won't hit shelves until May 2020. Multi-million-dollar sigh.
We were only trying to buy some Kleenex in bulk... Costco's online sales growth shockingly slowed last quarter, dropping shares 2% Friday — blame it on the brutally-timed 16-hour outage that hit Costco's site over Thanksgiving and continued into Black Friday. Deal-hungry customers stared at error messages instead of order confirmations, costing Costco big sales. Just a few lost hours can kill the most critical retail quarter of the year.
What else we’re Snackin’
- Hustle: A 36-year-old NYC lawyer makes $270K, but lives off rice and beans to save 70% — it's the FIRE movement to retiring early
- Booked: The 10 most Googled vacay destinations of 2019 (that underwater bedroom in the Maldives should win 2020, too)
- Record: The UK elects a record-number of women to its Parliament, bumping the percentage of female MPs to 34% (FYI, the US House of Reps is 23% women)
- Life: Hulu rolls out an ad experience designed to reward binge-watchers: you get a promo or an ad-free episode when you're light years deep in Seinfeld
- Money: 8 ways to stay on top of your finances without forsaking your mental health
This Week
- Monday: The Empire State Index from the Fed gives us a picture of New York's economy
- Tuesday: Earnings from FedEx, Steelcase
- Wednesday: The US House of Representatives makes a historic impeachment vote. Earnings from PayChex, General Mills, Micron
- Thursday: Earnings from Rite Aid, Nike, Darden Restaurants, AAR
- Friday: Earnings from Carmax, Winnebago, BlackBerry
Disclosure: Authors of this Snacks own shares of Amazon and Disney
ID: 1037205