Alibaba Is A Headache For China, And Not In The Way You Think
There is a crisis brewing in China that doesn’t involve the words shadow, property or credit: everyone is hugging. Just kidding! Everyone is protesting (alt). “Chinese officials are walking a fine line as they try to ensure workers are paid and treated well enough to mimimise labour unrest without exacerbating factory flight and the strain this puts on the local tax base.” Furthermore, “the potential for unrest is only increasing. Chinese employees have been emboldened by demographic trends that are creating labour shortages — especially for skilled positions.” Also, “the proliferation of smartphones and workers’ use of social media services…has made it easier to mobilise protests.” Speaking of which, there is a ton of chatter out there about Alibaba right now; it seems to be the hottest thing since Bitcoin. This article makes some great points about Alibaba and investing in China in general: “investors are looking at a very Chinese business: huge and fraught with the dangers of working under a protectionist, paranoid government and within a murky legal framework.”
To Own Or Not To Own?
“All-cash deals hit a record 43% of home sales during the first three months of 2014, according to RealityTrac. That’s up from 19% a year earlier…the jump is due to two main factors: strict lending standards that make it difficult to get a mortgage and intense buyer competition…interestingly, the increase in cash sales is occurring despite a downturn in purchases by institutional investors — firms that have been active in buying foreclosures and short sales with cash.” Meanwhile, “more seniors today are carrying mortgage debt in retirement than ever before, rising from 22% to 30% from 2001-2011…Over the same period, the median mortgage balance for older Americans has nearly doubled from $43,400 to $79,000.” Furthermore, “nearly 60% of 4.4 million retired homeowners in the U.S. today spend more than 30% of their household income on housing alone.” In case you can’t tell, there’s a debate brewing over the costs and benefits of homeownership, probably fueled by the frustration felt by those who were (are) expecting a housing-driven recovery in the United States. Furthermore, as the growth in Americans migrating to the city continues, and single-family homebuilding is replaced by apartment construction, people are speculating on the exodus from the suburbs: “People want closer access to health care facilities and culture…gas prices are a factor…it’s a socially conscientious generation and they are interested in driving less and walking more…it’s the perfect storm of economic, social and environmental issues that are driving the suburbs into extinction.”
Getting Bullish On Utilities, Dividends
“Bull markets don’t get tired, run out of steam, or stop going up because people feel good about stocks. Lousy economies are what kills bull markets, period…So, where do we currently stand? We have never seen a recession without the yield curve first inverting and we’re not even close there. ISM is in expansionary territory — ditto for average weekly hours [and] capacity utilization.” Meanwhile, as “the previously high-flying social media, internet and biotech stocks have taken it on the chin amid concerns about pricey valuations…investors should position themselves to take advantage of a rotation in leadership toward dividend-paying stocks, which could gain steam in the coming months.” Says one chief investment strategist: “In this environment where stocks trade for 50 times eyeballs or something like that, we like to sit in more conservative trenches of the market.” Some are pointing to “the sharp reversal of fortunes in the energy and retail sectors” as a sign of defensive positioning happening already: “retail is the ultimate terminus for all input cost increases in an industrial (or agricultural) economic chain…the question is always whether the retailer can then pass on these costs to the consumer…the sudden deterioration of retail equity valuations would therefore be consistent with the early stages of an inflation cycle.” By the way, “what’s happening in the stock market today isn’t exactly greed and it surely isn’t fear. Instead, it appears to be a rally built on a lack of attractive alternatives…a rally built on rallying. Why not?”
I’m only including this because the trend of “organic going mainstream” is getting a lot of attention by the financial media these days, and this story somewhat epitomizes what is happening: “There’s a lot more competition, a lot more entrants into the marketplace as well as conventional supermarkets copying and imitating a lot of what we’re doing.”