Last Week's Important Business Stories and a Look Ahead

In short this week was another mixed week for FANG (Facebook, Amazon, Netflix and Google) stocks and it was far more mixed than I anticipated. Facebook broke a record for the largest one day fall on Wall Street, losing $120bn in market value after it announced slower subscriber numbers. That said, let’s remember that the value of the company had bounced back by $230bn from the lows of the Cambridge Analytica scandal. The company remains no different in structure, growth and user popularity than the previous week, so the correction shows how much volatility there in this sector. Worth noting that Facebook now gets 91% of its revenue from its mobile app. 

Twitter suffered the same fate, dropping 19% on Friday after they announced a dramatic clean-up of fake accounts. It also lost some users due to the introduction of the European General Data Protection Regulation. Revenue of $711 million, mostly from advertising was up 24 percent from last year. One wonders if social media companies are trying to clean up their practices, data inflows and outflows before the regulators catch up with them. 

Then there was Amazon on its relentless growth and march to become the first trillion-dollar company, producing earnings that was double market expectations ($5.07 v $2.51). Consider this, the FT reported that it took Amazon 20 years to reach a market value of $1bn and in the last six months it doubled that. Serious growth!

And finally, there was Google, with its share price rising 4%, adding $50bn dollars to its market cap, after advertising results exceeded street expectations. The company brought in $33bn in revenue in one quarter, with an $8bn profit (less $5bn for the EU fine).

American growth surged to 4.1% GDP in the 3 months to June 30th. Trump claimed victory for his American first approach and the rest of the world economists and investors threw caution on this, illustrating a list of one-time factors, including panic buying of soya beans. 

Earlier in the week, Trump announced he was going to bail out farmers ($12bn) negatively impacted by the trade war he started. This was a blatant attempt to placate the rising disappointment of farmers as we get closer to the Nov mid-terms.

The US dollar remained strong, if not overvalued. Much of the impact comes from Trump’s fiscal measures (tax cuts), pushing up interest rates.

Overall, investors remain positive on US company and stock market growth with Friday’s GDP numbers. Talk to your advisor about it!

In Ontario, Premier Ford announced sweeping changes in the Toronto City Council. What got more of the business community attention was the idea of a freer market approach on the point of sale for marijuana. Great news for this sector. 

The Swiss bank, UBS announced a better than expected quarter which was positively impacted by their investment banking division. Wealth Management decreased as outflows picked up, reflecting investor anxiety about trade wars.

Fiat Chrysler announced strong results and stated its goal of doubling profits by 2022 through the development and sale of electric cars. Ford and GM, two of the other larger automobile makers announced poorer numbers.

BP bought up US Shale assets from BHP as energy companies look to push into this sector. Through technology, this sector has driven down production costs, making it an attractive oil producing segment.

Brexit talks faltered again, with the EU rejecting the latest UK proposal for break-up. Alarmingly, the UK is now starting to prepare for emergency measures for what could be a messy divorce on March 29th, 2019. One report showed a motorway being shut down to act as a car park for refrigerated trucks and the stock piling of food!

Payment companies had a good week and this is marked by strong share price performance. Mastercard and Paypal (stock up 100% this year) all performed well. Starbucks and Chilpolte also announced good results.

The FT reported Wednesday that in China, tech giants Ant Financial and Tencent have veritably upended the financial establishment, creating digital ecosystems that bring together social media, e-commerce and payments. In the process, they've left traditional banks behind in the dust. For instance, Ant Financials’ Alipay handles more than half of the country's $15.5trn online payments market, reporting half a billion active users. 

In Australia, Nine Entertainment and Fairfax Media merger to create the largest integrated media player in the country. They own major brands in newspapers and Sydney Morning Herald. 

Scotiabank has announced it will share bank-developed applications with the open-source software community. This week we will see results from Apple, Tesla and Westjet, with US farm payroll reporting end of week.

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