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Monday, November 13, 2017

Early news to start the week ahead of today’s opening bell begins with a dividend cut to one of the U.S.'s biggest companies: General Electric (GE - Free Report) has announced it is slashing its dividend in half, to 12 cents per share. This comes as a surprise to much of the market, although under new leadership — CEO John Flannery replaced Jeff Immelt on August 1st of this year — we see number-crunchers at the company Thomas Edison once helped found seeing too much capital going out the door when it ought to be put to use internally.

An investor meeting at GE commences at this hour to discuss this move, which had actually put GE shares in the green by roughly 1.5% this morning before reversing trend and sending the stock down 1.6%. Year to date, GE shares are down almost 33%. Also, guidance for full-year 2018 have been ratcheted down, from $1.16 per share previously to a range of $1.00-1.07 today.

Singles Day Outperforms

Over the weekend, while Americans celebrated Veterans Day (mostly by watching football and drinking beer), China procured the “single” largest shopping day in history: Alibaba (BABA - Free Report) alone brought in $25.3 billion on Saturday, with other Chinese online merchants such as JD.com (JD - Free Report) now joining in the fun. Compare this with Amazon’s (AMZN - Free Report) Prime Day, which most recently brought in a record amount of revenue for its 30-hour sale: $1 billion.

What began as more or less a protest against commercial holidays like Valentine’s Day, “Singles Day,” which began in 2009, is now more broadly known the world over as the “Global Shopping Festival.” As this marketing bonanza continues to grow year after year, we also see some truly remarkable figures, such as 90% — NINETY PERCENT — of Singles Day purchases having been made via mobile. If this doesn’t inspire retailers to go strong into mobile sales from this point forward, they’re clearly just not paying attention.

Markets Lower on Asia Weakness

Indexes in Asia overnight sold off, including in Japan and South Korea. We also see selling pressure on the British pound as Brexit processes make their way through the python. Calls for U.K. Prime Minister Theresa May to step down after just a year at 10 Downing Street — with the re-emergence of “fringier” characters on the British political scene like former Mayor of London Boris Johnson — now illustrate the possible reality of a “hard Brexit” analysts had been fearing since the surprise EU secession vote a year and a half ago.

Japan’s sell-off continues from what looks essentially like a technical move, following multi-year highs in its market tapping out late last week. The Nikkei index fell by the largest amount since early April, without much to assign blame to but profit-taking and valuation correction. The Japanese yen is increasing in value against virtually al other major currencies, which may create market headwinds as Japanese products and services grow more expensive on the global market.

Qualcomm Rejects Broadcom

As widely expected, Qualcomm (QCOM - Free Report) has rejected rival chip-maker Broadcom’s (AVGO - Free Report) offer to buy the similarly-sized company for $70 per share. Qualcomm naturally considers the offer too low, and also cited present regulatory uncertainties as reasons for the thumbs-down to Broadcom. We await a follow-up move from Broadcom, but without any indication whether the company will make a more generous offer or simply let this go.

Mark Vickery
Senior Editor


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