Author: Snippet.Finance

Macroeconomics

Dividend Futures

  • The dividend futures market has been crushed.
  • This chart (from ML) on the left shows the futures curve for S&P 500 dividends compared to 2019.
  • The blue line is how the market looked at the top (21st Jan 2020) and the orange how it looks today.
  • The market is pricing in -42% in dividends by 2021.
  • The right hand side shows the situation in 2008 – the actual reality (dark orange line) was far better.
Stocks

Covid Impact 8 – BofA

  • “March was really different each week. From the beginning of March to the end of March, the amount of money that flowed through the company by our consumers went from around $60 billion a week to $mid-40 billion a week and that can bounce around depending on the week runs and where it is in the monthly cycle. But you saw it slow down.” Bank of America CEO
Tools

Tracking Retail Money

  • Robinhood is the popular (read free) though glitchy trading app.
  • Robintrack is a service that tracks the number of Robinhood users that hold a particular stock over time against the share price.
  • Pictured below are the shares of Carnival Cruises, which have collapsed due to coronavirus. Yet retail investors have been buying.
  • Something similar but less informative exists for the UK – Top of the Stocks at Hargreaves Lansdown.
Stocks

Vodafone

  • Interesting slide pack from Vodafone about how digital is transforming their business.
  • The figure shows their goals – the virus impact likely accelerates this change and the cost savings are massive.
  • Getting digital to 40% of sales channels could save on the €2.5bn spent on commissions per year.
  • Less than one human interaction per year by next year could cut into the €1.2bn spent on customer operating costs.
  • VOD also built the Dreamlab app – which connects mobile phones during the night to a powerful network to aid research.
Stocks

Ad tracking

  • Apple have taken a big step – entirely banning third-party cookies in Safari browsers by default.
  • This is the final step since introducing Intelligent Tracking Prevention (ITP) which started to severely restrict cookies.
  • This could have serious ramifications for online advertising businesses but likely strengthens the big giants – FB and GOOG.
  • Other browsers are likely to follow suit (likely MSFT new improved Edge browser).
Macroeconomics

Covid Impact 7 – Mobility

  • A cool dataset from Google on community mobility due to COVID-19.
  • Just type in your country.
  • Similar to Foursquare data.
  • The one for UK is interesting. Figure shows Greater London.
  • Probably the starting point for this.
  • In the end Covid could prove to be a huge boon for analysis. The level of data generated is unprecedented.
  • It is also arguably the closest we have come to macro-level natural experiment – an economists dream.
Stocks

Tesco

  • Tesco results and slides are worth reading.
  • Fascinating that the presumed beneficiary is actually struggling.
  • “if customer behaviour were to return to normal by August it is likely that the additional cost headwinds incurred in our retail operations would be largely offset by the benefits of food volume increases, twelve months’ business rates relief in the UK and prudent operations management.”
  • There are clearly huge operational challenges.
  • Interestingly – the initial spike in volume (pictured) was driven by 30% of customers buying 60% of the volume (slide 23). Certain items flew off the shelves (slide 24) – you can guess which.
  • General merchandise, clothing, and fuel have been hit hard (FT suggests the latter two by -70%).
  • Staff has seen a massive spike in absence and they have had to recruit 45,000 people since 20th of March.
  • Scaling online has proven very difficult.
  • Additionally Tesco Bank will swing from £193m profit to a loss this fiscal year (due to bad debts and fall in income).
Stocks

Online Advertising Tactics

  • Interesting to see tactics online.
  • On 11th of March Amazon put a halt to almost all of its spending on Google Ads.
  • “Amazon seems to have completely removed itself from the competition for essential goods, effectively leaving one million daily visits on the table for other competitors to take.”
  • Paid search traffic to the site fell 90% almost immediately costing 11.2m visits.
  • Ebay has capitalised to a certain extent on this by bidding on high volume keywords – you guessed it – “toilet paper”, “n95 mask” and “hand sanitizer”.
Stocks

Credit Lines

  • Companies are quietly drawing credit lines and revolvers down.
  • This has caused banks to push borrowers away from this activity – it is a lot less profitable than a new loan.
  • There is obviously liquidity concern – companies want as much liquidity as possible but banks can’t satisfy it all.
  • Interesting pull and push.
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