WHAT YOU NEED TO KNOW THIS WEEK
A weekly recap to keep you informed on the most important events this week impacting markets, business, tech and the global economy.
KRAFT HEINZ STOCK DECLINES AS MUCH AS -30% ON “KITCHEN SINK” QUARTER
With a myriad problems mounting, Kraft Heinz threw out as much bad news as possible in a disastrous fourth quarter report. The four major disclosures included a $15 billion write-down of brands, a $12.6 billion operating loss, a 36% dividend cut and an SEC investigation into its accounting practices. Kraft faces a tough slog ahead as consumers make healthier eating choices instead of the company’s processed foods.
BARRICK GOLD CONFIRMS INTEREST IN UNSOLICITED BID FOR NEWMONT MINING
In a battle of the egos, Barrick Gold announced that it was considering a hostile takeover of Newmont Mining. The rub? A zero-premium bid, which likely stands a zero chance of success. Newmont is currently trying to close its own friendly acquisition of Goldcorp. Now Barrick is looking to become an interloper by breaking that deal so that it can once again become the world’s largest gold miner.
PRIME MINISTER’S PRINCIPAL SECRETARY RESIGNS AS SNC-LAVALIN SCANDAL SPIRALS OUT OF CONTROL
The bombshell departure of Justin Trudeau’s right hand man, Gerald Butts, comes in the wake of the resignation of former justice minister Jody Wilson-Raybould. The former justice minister recently resigned due to alleged inappropriate pressure from the Prime Minister’s Office for Wilson-Raybould to help SNC-Lavalin avoid criminal prosecution on bribery and fraud charges in relation to contracts in Libya. This scandalous example of crony capitalism has the potential to negatively affect Trudeau’s re-election bid in October.
WALMART REPORTS BETTER THAN EXPECTED Q4 RESULTS
Walmart’s banner fourth quarter results, in which the retailer disclosed its largest rise in domestic sales for the holiday period in 15 years, sent its stock up as much as 4 percent. The positive sales number for America’s largest retailer stands in stark contrast to the poor December retail sales report released by the government last week. Perhaps the economy is better than what last week’s retail sales report alluded to? Some investors remain skeptical regarding the accuracy of the government’s retail sales data, which showed monthly U.S. retail sales declined the most since 2009.
FEDERAL RESERVE SIGNALS IT WILL END BALANCE SHEET REDUCTION THIS YEAR
The minutes to the Fed’s latest policy meeting indicated that policymakers at the central bank want to announce a plan soon to end the Federal Reserve’s balance sheet runoff this year. The Fed had been reducing its balance sheet, built up to $4.5 trillion by purchasing treasuries and mortgage-backed securities during the global financial crisis, in a bid to increase market liquidity and put a floor in the stock market and economy. In ending its balance sheet runoff earlier than expected, the Fed is indicating that it is sensitive to any stock market declines and will do whatever is necessary to support stocks, including utilizing its balance sheet to underpin market liquidity. The Dow Jones Industrial Average is now up for 9 straight weeks.
RECOMMENDED ARTICLES, PODCASTS, BOOKS AND TWEETS
Listen to Green Acre Capital Co-founder (and Accelerate Advisor) Tyler Stuart on cannabis investing on The Insider’s Guide to Finance.
A story about the greatest investor you’ve never heard of: How optometrist Herbert Wertheim managed to build a $2.3 billion fortune through entrepreneurship combined with intelligent, long-term investing in the stock market.
A recent study of actively managed mutual funds concludes that “there are virtually no funds on the U.S. market that actually hold only cheap stocks, even among the funds that label themselves as value investors”. The value factor, which indicates that stocks with low valuations tend to outperform, tends to not get used as the funds become either too large or become enthralled with high-profile growth stocks.
The German financial regulator banned short selling in Wirecard shares, blaming recent volatility due to accusations of accounting fraud at the company by financial publications and short sellers. In my opinion, short sale bans are always bad and lead to inefficient market pricing due to lack of accurate price discovery. And the short sellers tend to be right.
Pension fund consultant Cambridge Associates recommends that institutional investors should consider dipping their toes into cryptocurrency investing. Perhaps this recommendation comes two years late.
Transparency pays off. Alternative investment funds that offer higher transparency tend to significantly outperform.
The ETF fee war has ended has investors focus on better performing strategies.
- The Accelerate Team
See more at https://accelerateshares.com/