Lillian McKenna

Norway’s sovereign wealth fund will soon have to offload a significant portion of its investment in companies that mine coal or use it as a major source of energy if a new ethical investing law is passed by the Norwegian Parliament on 12th June. The new laws are the result of persistent campaigns by leading environmental groups Greenpeace and Urgenwald, which have pushed the government to adopt ethical investing principles for its investment fund. With over $1 trillion in assets under management, the fund is the largest of its kind in the world. Campaigners at Greenpeace hailed the development, saying that it is a signal to both corporations and governments across the world to stop funding fossil fuel projects. The plan, which came into effect in 2015, also led Germany’s Allianz to adopt sustainable investing principles and divest from similar investments even as a few long-term investors also implemented similar measures in their funds. However, this is just the first step in the journey towards the global adoption of green energy as the majority of the world’s population still relies exclusively on fossil fuels for their energy needs.

Tesla Inc. (NASDAQ:TSLA) stock recently rallied higher as investors expressed confidence in the company ahead of its annual general meeting, which is set to take place on 11th June. Most shareholders are worried that Tesla has fallen back to its loss-making ways having posted back to back profits in Q3 and Q4 2018 before reporting a loss in Q1 2019. Investors and analysts alike will be waiting to receive updates on Elon Musk’s plan to return the automaker to profitability in the second half of this year as promised during the last earnings call. However, Musk is known to set very tough targets for the company each year, only to disappoint investors as the company fails to meet them, which has caused the electric car maker's stock to fluctuate wildly in the past. The company also has to deal with Musk’s unpredictable behavior in public, including the famous tweets that caused him to be fined by the US Securities and Exchange Commission (SEC) amid claims that he was depressed.

The short answer is that the UK Government has not yet issued an official directive prohibiting Huawei from servicing its 5G networks, much to President Donald Trump’s disappointment. However, Huawei is not free to build the British 5G infrastructure as the government is still reviewing the Chinese company’s future role in the UK’s telecoms sector. Recent news reports have claimed that banning Huawei from the British 5G buildout would cost the country upwards of £6.8 billion, which is quite a high price to pay to support the US blacklisting of Huawei. In an interview with MPs on Monday, Huawei’s cybersecurity chief John Suffolk said that Huawei would not have access to any of the data transmitted via 5G networks built with parts supplied by the company as it does not operate the networks. The Chinese company went further to invite any interested party to assess its equipment and report any flaws that could be used for espionage purposes or to illegally access data transmitted via its equipment.

Well, I believe that the Go stores being opened by Amazon.com, Inc. (NASDAQ:AMZN) are a legitimate threat to existing coffee shops given that the stores serve the same products. However, it seems that Starbucks Corp. (NASDAQ:SBUX) does not think so given that it partnered with Amazon in developing the new coffee drinks being offered at some of the Go stores, which are in direct competition with Starbucks’ products. I believe that executives at Starbucks and other restaurant chains are paying attention to the stores given that Amazon has proven its ability to venture into different industries and outdo the incumbents as it did to Walmart (NYSE:WMT). Regardless, given the cashier-less nature of the stores, I believe that normal restaurant chains may have a slight advantage in the form of human touch as most restaurants still employ servers and cashiers to attend to their customers. The existing restaurant chains should study what Amazon is doing and come up with creative ways to implement adaptations of the same strategy at their restaurants or risk losing customers to Amazon.

Apple Inc. (NASDAQ: AAPL) launched a new crypto developers’ kit as part of its iOS 13 operating system, which will allow developers to create crypto apps for Apple devices. The new framework is meant to allow developers to “perform cryptographic operations securely and efficiently” within iOS apps. The new framework dubbed “CryptoKit” will also have a Swift API, which will allow developers to execute fast and secure cryptographic operations. The API can also be used to compute simple hash functions among other advanced authentication protocols. However, the new developers’ kit does not allow iPhones to be used as hardware wallets, which is a major misconception among some crypto enthusiasts. Developers who were using Apple’s previous cryptography framework known as CommonCrypto say that CryptoKit has very similar functions. The main distinction between the two frameworks is the Swift capability, which enables more hash functions, but these expert developers’ claim that CryptoKit is not a massive game changer as a group of ethereum enthusiasts are claiming.

General Electric Co. (NYSE: GE) recently announced that it would no longer do ‘flyby’ meetings for the quarterly reviews of each business division, but would instead spend days reviewing each of them. This is a major shift for the company as confirmed by Jamie Miller, GE’s Chief Financial Officer, who said that the longer reviews are now part of the industrial conglomerate’s organisational culture. The move is part of the changes being implemented by GE’s new CEO, Larry Culp who has been at the company’s helm since October 2018. Other cultural changes being implemented by Culp include ending “skirmishes” among its various businesses as they embrace cooperation and a team spirit among different divisions. Culp is also keen to improve the speed at which new initiatives are implemented, especially in regards to improving the company’s operational efficiency. However, Miller warned that cultural changes take time as people adapt to the new routines, which includes changing the ways in which they think about certain issues and how they approach business challenges.

The Reserve Bank of India announced today that it had cut its base repurchase rate by 0.25% to reach a 9-year low of 5.75%. This was not surprising given that India’s GDP growth rate has shrunk to lows last witnessed in 2014 as the country struggles with massive unemployment. The RBI Governor, Shaktikanta Das said that the central bank’s current focus was to boost investment and encourage consumption in order to improve the country’s inflation rate. We should not forget that higher investment and consumption levels usually lead to improved economic growth and the creation of new jobs for the unemployed. The Monetary Policy Committee voted unanimously for the rate cut as the RBI shifted its monetary policy stance to “accommodative” ruling out any future rate hikes. The RBI was one of the first major central banks to cut rates early this year, and this was the third rate cut driven by the weak GDP growth recorded in Q1. Central banks in other major countries such as New Zealand, Australia, and Malaysia have also started easing their monetary policy stances to spur economic growth in their countries.

The quiet period for the 29 investment banks that underwrote Uber Technologies Inc.’s (NYSE:UBER) IPO is set to expire today, which means that many of these firms will have a lot to say about the ride-hailing company. Most investors are expecting dozens of new research reports from the underwriters since they could not speak about the company immediately after the IPO. However, the analysts might have a hard time convincing investors about the bullish case for Uber’s future given that the company reported a $1 billion loss in Q1 and is currently trading about 8% below its IPO price. Many investors who bought the stock during the IPO have been frustrated by its performance since then, and analysts have their work cut out as they seek to convince investors to hold on to their shares. Some analysts have raised questions about the sustainability of Uber’s business model as they wonder whether the company will ever break even and become profitable given that it is a loss-making entity despite generating billions in revenue.

I believe that Royal Dutch Shell Plc (AMS:RDSA) is a good long-term investment given its consistent dividend payouts as well as its generous share buyback program. However, I believe that things are going to get much better for Shell investors, given that the British-Dutch oil company has just raised its 2025 free cash flow outlook to $35 billion. The oil major recently announced plans to reward shareholders with up to $125 billion via share buybacks and dividends from 2021 to 2025 in a move that portrays the company’s strong financial position. The firm also promised to hike its current dividend payout once it finalises the ongoing $25 billion share buyback program, which has been a major boon for investors. Given that a 5-year investment horizon is a long time, it would be prudent to own shares in companies like Shell that are committed to rewarding shareholders, while at the same time growing the company’s value. This could be a great investment for long-term investors who want the security of a stable dividend, while at the same time benefiting from capital gains as their investments appreciate in value.

The U.S. Federal Aviation Authority (FAA) revealed on Sunday that up to 300 Boeing Co (NYSE:BA) 737 Max planes, which may have defective wing parts, should be repaired. The FAA said that at least 179 Boeing 737 Max planes and at least 133 Boeing 737 NG planes, the previous generation could be affected. Boeing discovered the issue on Friday during a meeting with the supplier as employees noticed that some of the wing parts were not heat treated. This made them realize that there could be a safety issue, which is when they reported the issue to the FAA. The FAA issued an airworthiness directive to airlines to get the parts replaced within 10 days if any were found to be defective. However, the authority allowed airlines to continue operating the NG airplanes within the 10 day period before repairs. The aviation regulator advised airlines to check over 300 planes despite Boeing saying that only 20 Max planes and 21 NG planes could have been affected. NG planes consist of the 737-600, -700, -800, -900 models.

Tesla Inc. (NASDAQ:TSLA) recently announced that it had chosen its Fremont factory as the manufacturing base for its Model Y SUV. The company had been debating whether to make the crossover SUV there or at its Gigafactory in Reno, Nevada. Elon Musk said that even though Tesla manufactures its other vehicle models in Fremont, it had second thoughts about making the SUV in Fremont mainly due to the high cost of living in the Bay area. However, the automaker had to go with Fremont due to logistical factors, given that the facility is strategically located close to where Tesla manufactures most vehicle parts, which makes it easier and faster for the company to make the car in California. Tesla is one of many California-based companies that are considering moving some or all of their operations out of the state given the high taxes and the high cost of living. More companies are likely to consider a similar course of action given the tough global macroeconomic conditions.

Coinbase’s Earn Rewards program is an initiative that allows Coinbase users to earn crypto rewards after watching educational videos about different crypto protocols. The program’s main aim is to equip crypto users with knowledge about blockchain protocols and the inner workings of crypto networks. The program’s founder Balaji S. Srinivasan recently said: “We think a large number of people will obtain crypto not by buying it or mining, but by earning it.” Srinivasan is the outgoing Chief Technology Officer at Coinbase. He also founded Earn.com which was acquired by Coinbase, who then recruited him to the role. Coinbase has expanded the program to over 100 countries with the goal of getting more people to understand blockchain technology and the unique protocols that underpin cryptocurrencies. The crypto exchange recently added EOS to the Earn program, which now has five redeemable cryptocurrencies including ZEC, XLM, ZRX and BAT. Coinbase users can now earn EOS tokens worth up to $10 under the program.

A group of Facebook (NASDAQ: FB) shareholders have asked Mark Zuckerberg to step down from one of his roles given that he is both CEO and Chairman of the social media giant. The shareholders, led by Trillium Asset Management, feel that Zuckerberg should not have both roles and that he should step down as chairman and focus solely on running the company. The group has pushed for a shareholder vote on this issue at the company’s annual general meeting today, but Zuckerberg is likely to win. This is because he owns 60% of Facebook’s outstanding shares, which means that the only way he would lose is if he voted against himself. However, both analysts and investors will be monitoring the results to determine the percentage of shareholders who support the motion, as this would reveal their confidence in his leadership, particularly following the Cambridge Analytica scandal and other privacy concerns that have recently plagued Facebook.

Well, apart from a slate of new movie releases over the next few months, it is exciting to know that Disney plans to open another Galaxy’s Edge park at its Disneyland location in Florida later this year. The company appears focused on its theme parks as it tries to supplement falling revenues from its media division. Disney’s profits from its media business peaked in 2015 and have since fallen 15%, while profits from its theme parks have risen 47% over the same period. Reports indicate that the company spent up to $1 billion building the Galaxy’s Edge park, a theme park with the sole aim of transporting fans to an environment similar to that seen in “Star Wars.” The company is also set to launch its streaming service in the North American market later this year where viewers will be able to watch most of its shows. However, blockbuster movies will have a theatrical release before being added to the service after they have hit the big screen. Disney’s future looks promising and it seems like both shareholders and customers will benefit immensely going forward.

McDonald’s Corp. (NYSE: MCD) plans to finish upgrading all its U.S. stores by the end of 2022, having pushed back the date from 2020. However, this did not stop the fast food franchise from spending $1.4 billion on remodeling approximately 4,500 U.S stores last year. The restaurant chain plans to upgrade at least 2,000 stores this year at a total cost of about $1 billion and will keep upgrading its stores until 2022. Now that we know when this massive project will be completed, let’s take a look at exactly what features the company is adding to its new stores. A perfect example of its remodeled stores is the new flagship store opened today in Times Square, New York, which is expected to be its busiest U.S. store once it is operational. The new store has digital menu boards, wireless mobile charging equipment on each table and self-order kiosks. This shows that its remodeled stores boast of an array of high-tech equipment as the restaurant chain tries to win back customers. The company has been dealing with falling customer numbers at its stores for a few years now.

Well, given that Sears just opened its first three small-format stores on Friday, it is too early to tell whether they shall be a hit with millennial consumers. However, we could assess the probability of millennials loving the new stores based on their common shopping habits and preferences. Firstly, given that the new Home & life stores will exclusively stock home appliances and mattresses, which means that its main target would be consumers looking for such items. This narrows their target market to consumers who are upgrading home appliances or those starting new homes. This means that its target millennial consumers are those who are moving into their first homes, starting families or even buying new homes. This is a sizeable group who could be potential customers, but let's not forget that most millennials prefer to shop online. The new stores will be facing stiff competition from companies such as Wayfair, a furniture retailer and Casper, a mattress maker both of which appeal to digital natives such as millennials. I believe that if Sears combines a strong online presence and advertising with its physical stores, it would appeal to most millennials.

Well, it is quite hard to pinpoint the buyers and sellers of any cryptocurrency unless they voluntarily provide such information, but many crypto analysts are convinced that institutions are behind the recent Bitcoin rally. This thesis is supported by recent polls by reputable organizations such as Fidelity Investments, which published a report indicating that institutions were looking for ways to ad cryptocurrencies to their portfolios given their uncorrelated performance in relation to other asset classes. Further evidence that institutional investors are taking position in Bitcoin emerged from the massive uptake of the CME Bitcoin futures, which are regulated and highly preferred by institutional investors due to this fact. Large institutional players in the crypto space have also been building out infrastructure to support the flow of institutional funds into the asset class and it seems like this is bearing fruit given the recent Bitcoin rally. Some of the key infrastructural projects that are now operational include Coinbase’s custody solution and Fidelity’s digital asset trading service, which have seen impressive uptake by institutional investors. Many crypto bulls are predicting a Bitcoin rally bigger than 2017’s massive rally.

The approval of Novartis AG’s (SWX: NOVN) gene therapy drug that costs $2.1 million set a new standard in terms of cost for gene therapy medications and made headlines across the globe. However, the drug achieved another milestone in that it is the first time that a drug can treat a complicated illness using a single dosage at such a high cost. While the drug’s cost is quite prohibitive, it treats a disease that most other drugs simply manage and treat over a long period of time. This is first in the industry, which is probably why the drug costs millions, but it is my hope that over time other drugs may enter the market at a friendlier price point. There is a lot of research being done on the CRISPR gene editing technology, which could drastically revolutionize the medical industry, but the technology is yet to pass clinical trials. However, while most people wait for the CRISPR technology to become available on a large scale and at a cheaper price, many infants affected by spinal muscular atrophy may have no option but to use the world’s most expensive treatment.

Fiat Chrysler (NYSE: FCAU) today expressed its intention to pursue a merger with Renault based on a 50/50 ownership structure given the tough economic environment, but the merger may be complicated given the long-standing alliance between Renault and Nissan. Analysts have said that executing a merger of the two automakers would be very complicated while a strong alliance would be the easier choice for both companies. However, despite the complexities involved in a potential merger, analysts predicted that the stocks of both companies would rally on the news, which they did earlier today. It is not yet clear whether Renault’s board shall approve the merger proposal given that they were set to discuss it later today and probably announce their decision later this week. However, it is evident that the merger might face significant challenges, which could have a negative impact on the stock prices of both companies over the short to medium term.

The European Union Parliamentary elections had a mixed result in the UK with pro-EU and pro-Brexit parties making massive gains at the expense of the dominant Labour and Conservative Parties. The recently Formed Brexit Party headed by Nigel Farage secured 28 EU Parliamentary seats, while the Liberal Democrats won 15 seats, which meant that the two parties now had a combined 53% of the 78 UK EU seats. The Labour Party bagged only 10 seats, while the ruling Conservative Party came in last with 3 seats having been beaten by the Greens who secured 7 seats in the elections. The election results are likely to throw the ongoing Brexit process into disarray as it is clear that voters are tired of the current stalemate created by the two dominant parties, but are still divided on Brexit given that pro-Brexit and pro-EU parties both secured equal support. The pending resignation of Theresa May on June 7 may increases the likelihood of a messy no-deal Brexit in October with May’s potential successors Boris Johnson and Dominic Raab both calling for a hard Brexit as a viable option.

Occidental Petroleum (NYSE: OXY) made a huge bet acquiring Anadarko Petroleum (NYSE:APC) in a major deal that saw it outbid Chevron (NYSE: CVX), a much bigger competitor. However, Occidental’s stock price did not reflect the victory as it has dropped about 20% since rumors emerged that it would submit a hostile offer that would beat Chevron’s. Although shareholders have witnessed the erosion of $8.1 billion in the total value of Occidental’s outstanding shares, they have benefited from a spike in the dividend yield on their shares. Occidental shares currently yield 6.1%, which is 2.5% higher than the industry average, but the oil company is not very attractive given that it took a $10 billion loan from Berkshire Hathaway to fund the Anadarko acquisition. The oil major now has to integrate Anadarko’s global portfolio into its current assets, which is not an easy task as it will involve a substantial number of disposals. It is not yet clear when the acquisition will become accretive, but this will definitely take a while given the complexity of the disposal process and Occidental’s debt-laden balance sheet.

U.S. activist hedge fund, ValueAct Capital today wrote a public letter to Merlin Entertainments PLC (LON: MERL) asking the U.K. Legoland operator to go private in order to stabilize the company. ValueAct stated that it was difficult for public investors to properly value Merlin’s stock, which has made its share price struggle to rally as public markets do not appreciate its full value. The activist investor argues that Merlin went public a bit too early, which means that its current shareholders including ValueAct may never realize the company’s full potential. I believe that the reasons outlined by the activist hedge fund have merit in and of themselves given that many retail investors may not see Merlin’s intrinsic value. Finding a private buyer may be the best course of action for Merlin as it would likely be acquired at a premium to its current valuation by an investor with deep pockets. However, the company has to get its current shareholders to agree to such a plan as it will mean that they have to give up their shareholding in the company for good.

IG Group Holdings Plc (LON: IGG) today predicted that its revenues and profits for fiscal 2019 would be lower than last year’s largely due to lower market volatility. The company attributed the lower revenues and profits to reduced levels of volatility in the markets during the 2019 financial year, but outlined a plan to grow its revenues. IG Group, which runs an online trading platform, has seen its profits being eroded by tough regulations in the EU and UK on various forms of online betting in the region. However, given that it is one of the oldest and most respected online trading platforms, the company has set out a growth plan with a new focus on Asian markets. The company predicted that its operational costs will rise as it invests heavily to meet its medium-term target of growing its revenues 30% by fiscal 2022. The company started operating the first spread-betting platform in 1974 and is currently a market leader. It plans to use its excellent reputation to attract more clients in Asia and a cross the world.

MGM Resorts (NYSE: MGM) yesterday announced that it had ended talks to buy Wynn Resorts’ (NYSE: WYNN) $2.6 billion Encore casino located in Boston, Massachusetts. The company said that it had listened to multiple concerns raised by different stakeholders regarding the potential purchase and the impact it could have on the company and decided not to finalize the transaction. Wynn had continued building the new casino at a huge risk after having its state casino license under review for 15 months following the scandal surrounding the company’s founder Steve Wynn. However, the casino operator had its gaming license reinstated by the Massachusetts Gaming Commission, which allows it to operate the Encore casino once it is completed later this year. The termination of talks could mean that Wynn now wants to operate the casino given that Steve Wynn left the company and is no longer a shareholder, which has helped repair the casino’s image. It is not yet clear when the casino shall open, but investors will be watching keenly to see its reception by clients in Massachusetts where MGM Resorts already operates several popular casinos.

The U.S. has threatened to impose new sanctions on Turkey if the country finalizes its multi-billion order for Russian S-400 missile defense systems. However, the Turkish government has defended the purchase saying the Russian systems are affordable and that it has already made a substantial payment to Russia. Turkey also risks being booted from the F-35 Joint Strike Fighter program if it buys the Russian S-400s, but the country’s administration has remained adamant that it will buy the S-400 air defense systems. Turkish President Tayyip Recep Erdogan has insisted that the U.S. cannot kick the country out of the F-35 program because Turkey’s involvement is crucial to the program’s success. Both houses of the U.S. Congress are extremely opposed to Turkey’s purchase of the Russian S-400s and given Turkey’s recently announced cooperation with Russia on the new S-500 system, Congress is likely to approve further sanctions on Turkey. Turkey has a grace period of slightly over two weeks to cancel the S-400 deliveries, or risk facing very punitive U.S. sanctions as well as repercussions from NATO.