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6
Feb-18
Tuesday

Bunnings UK business considers next move

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According to Inside Retail, Wesfarmers’ MD commented that all options are on the table for Bunnings UK business.  This follows a $1.3 billion write down related to Bunnings UK/Ireland and Target.  At the time when Bunnings announced their entry into the UK market, it sounded to us like a pretty serious gamble: a concept originally based on Home Depot, refined to work well in Australia, to be implemented in the UK by converting an existing business that operated according to a different formula?  It clearly violated the principles shared by Justin Cohen how NOT to enter a foreign market.
5
Feb-18
Monday

Dow Jones Industrial Average dropped 2.5%

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The Dow Jones Industrial Average dropped 2.5%, its biggest one-day decline since the U.K.’s surprise vote to leave the European Union in June 2016. Meanwhile, the yield on the benchmark 10-year Treasury note climbed to 2.852%, its highest level since January 2014.  It is worth noting that it still remains higher than it was on 1 January 2018.  According to The Wall Street Journal, bond investors have started to take the threat of inflation more seriously, and an anticipated rise in interest rates spooked stock investors.  According to WSJ, many investors still expect the stock market to remain strong due to a brightening earnings picture. Analysts’ projections for U.S. earnings in 2018 have been upgraded significantly over the past month following changes to the U.S. tax code, while results for the fourth quarter have largely exceeded analysts’ expectations.

Bitcoin falls below $US8,000

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The Age reported that Bitcoin has fallen below $US8,000 for the first time since November last year.  It reached a record high of $US19,511 on December 18.  Wall Street Journal commented that three of the largest banks in the U.S. - Citigroup, JPMorgan Chase and Bank of America - said they would no longer permit credit-card customers to buy bitcoin with their credit cards, so Bitcoin is being progressively rendered useless.  The Age compared price graphs for Bitcoin and the infamous schemes from the distant past – such as the 17th century Dutch Tulip Mania, and then the French Mississippi and British South Sea Companies in 18th century.  They all look strangely similar, with Bitcoin even more crazy than its predecessors.  Anyone who lost money on Bitcoin had been warned repetitively.

5G to be offered by Telstra in 2019

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The Australian Financial Review reported that Telstra will start offering 5G network in 2019.  We argued over the years that the NBN was fundamentally an insane proposition, as it aimed to deploy technology of the day, to be used in a distant future.  One of the reasons behind our criticism was the imminent arrival of 5G networks.  Once they arrive, the NBN will become obsolete.  The consecutive Federal governments need to be congratulated on wasting $50 billion of taxpayers funds - just a mere $2,000 per capita.
3
Feb-18
Saturday

Apple, Amazon and Alphabet continue to dominate

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The Wall Street Journal reported that as Apple, Amazon and Alphabet continue to grow their revenues, they face growing scrutiny over their influence on society and their dominance of certain markets. Apple’s revenue rose 13% to a record $88.29 billion in the three months through December. Amazon’s revenue jumped 38% to $60.5 billion. Amazon attributed a large portion of the growth to strong performances by its cloud-computing division and growth in advertising services.  Google’s parent Alphabet posted revenue of $32.32 billion, reflecting growth of 20+%, but the company made a loss after taking a $9.9 billion tax charge. 

Costco Online coming soon?

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According to The Seattle Times, About 40% of Costco’s new members are millennials.   Craig Jelinek, Costco’s CEO, told the annual shareholder meeting that while the focus is still on expanding the store base, Costco is also adding online channels in more markets.  No doubt, Costco online will be coming to Australia too.

Tesla to sell Powerwall batteries and solar panels at Home Depot

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Bloomberg reported that Tesla will create branded spaces within 800 Home Depot stores this year, to sell its Powerwall batteries and solar panels. Interesting to see whether Bunnings will follow.  After all, the Bunnings concept was derived from Home Depot…
2
Feb-18
Friday

Coles falling behind Woolworths

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Sue Mitchel of AFR reflected on comments from Coles’ suppliers that the business lost its way and is falling behind Woolworths.  This doesn’t surprise us.  Over the last few years, we pointed out that Coles’ strategy of making it more like Aldi (generics everywhere) had to backfire.  You can’t be like Aldi if your cost structure is nearly twice as high and the quality of your generics is not top notch.  Once Coles get close to Aldi’s store model, they will have to lose as their net returns will sink.

Half of world’s parcels are delivered in China

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Nikkei Asian Review wrote about e-commerce in China, stating that half of world’s parcels are delivered in China.  This puts pressure on logistics providers, trying to cope with 28% growth since the year before.  Experts suggest to watch Alibaba, which has potential to become another Amazon…

Valentine's Day spending in the US will rise 8% this year

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According to the NRF, Valentine's Day spending in the US will rise 8% this year, driven by spending on… pets.  American consumers are expected to spend 27% more on their pets, to reach $751 million. Katherine Cullen, NRF's director of retail and consumer insights, said that "Millennials are the largest generation of pet owners, and they are doting pet parents."