Week of Oct 21 2016 Weekly Recap & The Week Ahead
‘If you are going to be wrong, be wrong quickly with a de minimis loss of capital’.” — unknown
1. Shakeout Comes To U.S. Restaurant Chains — in just one recent week alone, three restaurant companies filed for Chapter 11 bankruptcy protection – Cosi (OTCPK:COSIQ), Rita Restaurant (Don Pablo) and Garden Fresh Corp. (Souplantation, Sweet Tomatoes). At least five other operators have done the same this year. Rattled by so many filings in such a short time frame, industry experts now say to expect more bankruptcies, closings, consolidations and management shake-ups. Famous Dave’s of America (NASDAQ:DAVE) is in the midst of closing many of its barbecue restaurants, and last week named its fourth new CEO in four years. Late this summer, Ruby Tuesday (NYSE:RT) announced plans to close almost 100 locations, and Bob Evans (NASDAQ:BOBE) in April shuttered 27 restaurants on top of 20 closed last year.
2. Disney Dropped Interest in Twitter — Disney decided against buying Twitter recently partly due to concerns that the hate speech that’s rampant on the social network would undermine Disney’s (NYSE:DIS) family friendly image, Bloomberg reports. Another reason is that although Twitter (NYSE:TWTR) has a market cap of almost $12B. Other potential suitors to end their interest in Twitter were Salesforce and Google.
3. Chinese Growth Holds Steady at 6.7% — China’s GDP growth remained at 6.7% on year in Q3, as expected, boosted by yet more government spending, record bank lending and an over-heating property market, all of which are adding to the massive debt in the country. Industrial production slowed to +6.1% on year in September from 6.3% in August and missed forecasts of +6.4%. However, Economists Question China’s Consistent Growth Numbers.
4. Saudi Arabia Issues $17.5B Worth of Debt Amid High Demand — Saudi Arabia has raised $17.5B in the largest ever bond sale by an emerging-market country as it looks to reduce its $97B budget deficit. The government could have raised even more, with Bloomberg reporting that it received orders of $67B. The debt issue is part of Saudi Arabia’s plan to open up its $650B economy and lower its massive reliance on oil.
5. Japan Bank of Japan Governor Kuroda Puts Back 2% Target Again — Bank of Japan Governor Haruhiko Kuroda has said that the BOJ may once again push back its 2% inflation target, which currently sits somewhere in fiscal 2017. Kuroda started his job in early 2013 and began his turbo-charged asset-purchase policy that continues to this day, he originally hoped that inflation would hit 2% by late 2014 or 2015. Almost four years later, inflation has disappeared after an initial rise.
The week ahead — Economic data from Econoday.com:
Tags: BOJ