China Goes Viral; Tesla Hits the Accelerator; Roku Waxes Brazil
Down With the Sickness
I hope you have some snacks and a comfy chair ready … the Senate impeachment trials begin today!
We all know that this trial will be a great big nothing-burger, and Wall Street is treating it thusly. I mean, 20 Republicans would have to vote against their party for anything to happen. (As if…)
If nothing else, though, the trial should at least provide some entertainment while we wait for the Super Bowl in two weeks.
But, while we all make popcorn and prepare for Senate reality TV, there’s something more sinister brewing in China that could actually impact the market … and it’s not the trade talks.
I’m talking about the new coronavirus outbreak in Wuhan, China. Officially, more than 300 cases have been identified, and six people have died so far. But the virus is spreading quickly. The Chinese government tried to cover up person-to-person transmission last week.
This week, that cover was blown. No longer able to keep the spread under wraps, China admitted that the coronavirus could be transmitted between people and not just from animals.
With millions traveling (or about to travel) for the Lunar New Year holiday, this is a really big deal with the potential to impact markets around the globe.
Around the globe? Really, Mr. Great Stuff? Weren’t you just talking about overhyped doom-and-gloom headlines?
And as far as doom-and-gloom headlines go … I’m sure that more than a few of you remember severe acute respiratory syndrome (SARS). Back in 2002 to 2003, the SARS epidemic peaked at about 8,098 cases, resulting in 774 deaths in 37 countries.
SARS “also led to billions of dollars of losses and hit Chinese GDP growth by up to 1 percentage point,” says Neil Wilson, Markets.com’s chief market analyst.
It’s no secret that the Chinese economy is already struggling, in part due to the country’s trade war with the U.S. A massive SARS-like epidemic is the last thing anyone needs right now — least of all China.
Furthermore, the ripple effects throughout the global economy could be significant. I’m not talking about an end to the bull market rally or anything, but a sizable correction is certainly a possibility.
Keep in mind that stocks are trading at or near all-time highs right now. Some sectors are even quite a bit frothy … like FAANG stocks. These sectors have been largely bulletproof for the past year, but a new virus epidemic could be just the excuse some investors need to take profits, resulting in a cascade across the entire market.
Again, I’m not saying this will happen for certain. But it’s much more likely for a market correction to kick off from the Chinese virus epidemic than from the Senate impeachment hearings.
As Great Stuff always says, make sure you’re prepared … and hardly anyone prepares like Banyan Hill’s Jeff Yastine.
Whether we’re in for a mild correction or a sustained rally, you’ll want to be ready to buy at the right time. And unlike the “Chicken Littles” on MarketWatch or CNBC, Jeff doesn’t cry about the sky falling every time the market drops.
Instead, Jeff sees corrections — even short, tame drops — as a fire sale to grab tomorrow’s roaring stocks on the cheap. In his 15-plus years reporting for PBS’ Nightly Business Report, Jeff knows firsthand how markets behave … and how to find chances to profit regardless.
Before the next doom-and-gloom headline sends you panicking, click here to see the details on one stock that Jeff recommends you buy today — market downturn or not!
Good: Bolly Would Not
OK, it’s not leaving completely (also much like Britain). Unable to curry favor with Indian consumers, Uber announced today that it sold its Uber Eats India food delivery service to local rival Zomato.
But Uber isn’t completely out in the cold. The deal gives it a 9.99% stake in Zomato, one of the largest food delivery apps in India. In fact, Zomato was recently valued at $3.55 billion.
What’s more, the move is part and parcel for Uber’s recent consolidation strategy. In the past year, Uber sold off ride-hailing services in China, Russia and Singapore, taking stakes in local companies with each move.
All in all, this strategy should work out in Uber’s favor over the long run. It allows the company to retain regional exposure while pulling back resources to focus on its core markets.
Better: Sparks Fly at Tesla
Last week, independent investor and short seller Brian Sparks filed a defect petition with the National Highway Traffic Safety Administration (NHTSA). The petition cited 127 consumer complaints of unintended acceleration of Tesla Inc. (Nasdaq: TSLA) electric vehicles (EVs).
In a blog post this morning, Tesla fired back at those allegations. The company said it reviewed all of those complaints with the NHTSA and found that, in every case, “the data proved the vehicle functioned properly.” Tesla went on to argue that its EVs are designed to avoid just such a problem, claiming that independent sensors will cut off motor torque if either the accelerator or brake pedals register errors.
“We also use the Autopilot sensor suite to help distinguish potential pedal misapplications and cut torque to mitigate or prevent accidents when we’re confident the driver’s input was unintentional,” Tesla said.
TSLA shares are already up more than 26% in 2020, more than doubling since the start of September.
It’s clear Sparks is worried about unintended acceleration, but I guess he’s more worried about TSLA’s price acceleration and not the carmaker’s EVs. Pleading to the NHTSA won’t help him out there.
Best: A Brazilian Roku
So just how far down do you wanna go? We could talk it out over a cup of Joe, and you can look deep in my eyes like I was a supermodel. Uh huh…
Roku Inc. (Nasdaq: ROKU) is heading south of the border in a big way. We’re talking waaaay down south. This morning, the company sambaed its way into Brazil, the third-biggest streaming country in the Americas (and among the top 10 biggest streaming countries by revenue in the world).
As part of its Brazilian debut, Roku announced a partnership with electronics maker AOC International to roll out AOC Roku TVs in the South American country. AOC will offer up two Roku-integrated TVs: a 32-inch HD model and a 43-inch FHD model — both with wired and wireless technology.
But wait, there’s more! Roku also announced that Brazil’s largest streaming platform Globoplay will debut on Roku devices at the same time.
With a $294.2 million streaming market, Brazil ranks behind only the U.S. ($11.9 billion) and Canada ($366.9 million) in terms of revenue. What’s more, Brazil’s market is bigger than many European markets, including Spain and Sweden, and it even tops Australia in streaming revenue.
In short, this is a big win for Roku with key backing in a major new market. It’s no wonder the shares are rallying today.
I know it’s a shortened holiday week, but that’s doesn’t mean either of us can slack off!
That’s right, it’s time once again to feed the beast!
Write in to GreatStuffToday@banyanhill.com and let us know how you’re doing. Let me start you off with some hot topics:
- What are your thoughts on the Senate impeachment trials?
- Are you worried about the virus outbreak in China?
- What stock or sector do you think will outperform this year?
- Are you keeping your New Year’s resolutions? (I’m still keeping mine! Haven’t vaped in a week … it’s a struggle to be sure.)
Now, you know the drill. You have about two days to drop me a line at GreatStuffToday@banyanhill.com to make this week’s edition of Reader Feedback.
Until next time, good trading!
Great Stuff Managing Editor, Banyan Hill Publishing