Good afternoon everyone. In case you missed it, here's what happened in the markets this week. It was a short trading week with the markets closing early on Wednesday and closed all day Thursday for the Fourth of July holiday. But fireworks weren’t the only thing going off with a bang as an explosive jobs report showed the U.S. created 224,000 new jobs in June (well above the expected 170,000).
In a nutshell: Under normal circumstances, this would be cause for celebration. However, when you’re Wall Street, and when you are expecting the Fed to cut interest rates in July, a strong job market is the last thing you want to see. And while the worst-case scenario around China trade and tariffs has been avoided to this point, as investors we must prepare for the fact that it could occur at any time.
Meeting of the minds. World leaders from 19 countries and the European Union met this past weekend at the annual G20 summit in Osaka, Japan. Perhaps the biggest news to come from the weekend was the temporary truce agreed upon by President Trump and Chinese President Xi Jinping. President Trump said he will postpone additional tariffs on China while trade negotiations are underway. And, that he will allow the sale of American technology to Chinese company Huawei.
For his part, President Xi agreed to buy massive amounts of agricultural goods from the United States while also accusing rich countries (such as the United States) of, “destroying the global trade order.”
Thirsty for new markets. Speaking of China…The Asian Pacific division of AB InBev has an IPO set to debut on July 19th on the Hong Kong exchange. The IPO, valued at $63.7 billion, will be the largest so far this year. And possibly the largest food and beverage IPO ever. This decision is a combination of two trends. The first being the move by consumers in North America away from beer to wine, spirits, and non-alcoholic drinks. The second being the prediction that by 2021 China will become the world's largest beer market by sales.
Just don’t do it. Nike, no stranger to footwear controversy (see: Market Wrap-Up 2/17/2019), pulled their special edition Air Max 1 Quick Strike Fourth of July's after former NFL quarterback Colin Kaepernick announced that he, and others, felt the shoe evoked a symbol connected to an era of slavery. This prompted Arizona Governor Dough Ducey to withdrawal financial incentives from a proposed Nike facility in Arizona, Senator Martin Trevor Heinrich of New Mexico to off his state as a replacement, and an entire nation to voice their opinion on this topic through social media. It seems the only thing not affected by this issue is Nike stock, which is still up over 15% year-to-date.
Nike has made its decision, and now we’re making ours. I’ve ordered the Arizona Commerce Authority to withdraw all financial incentive dollars under their discretion that the State was providing for the company to locate here. 7/— Doug Ducey (@dougducey) July 2, 2019
And last but not least. Music label Big Machine, the owner of Taylor Swifts first six albums, was just bought by celebrity talent manager Scooter Braun. Taylor issued a statement saying this was a "worst case scenario" due to the bullying Braun has subjected her to for years. Selfishly, we look forward to seeing how she will turn this latest heartbreak into another chart-topping single. Rolling Stone has more on this here.
Have a great holiday everyone. We’ll see you next week!
*These are the general views of Stanton Burns and they should not be construed as investment or financial advice for any individual. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Stanton Burns does not maintain positions in any securities mentioned as of the writing of this article. Past performance is historical and does not guarantee future results.