Still No Brexit deal, China Growth slows, WeWork IPO Fails
In this week’s Steady Investor, we look at key stories and the questions surrounding their market impact such as:
- The clock is ticking on Brexit, will a deal be reached?
- WeWork fails to go Public. What does this say about tech IPOs?
- Q3 corporate earnings growth is weaker than what was expected. What does this mean for the market?
- How is the trade war affecting China’s growth?
China Flirts with Sub-6% Growth – For as long as anyone can remember, China has consistently posted growth comfortably above the 6.5% range. Those days are over. In Q3, China reported economic growth of 6%, which falls squarely on their government’s baseline target for expansion. Indeed, this GDP reading marks the slowest growth for the world’s second-largest economy since 1992. 1 The effects of the trade war are no doubt taking a toll, as business activity slowed and tariffs have eased demand. To be sure, China’s growth has been decelerating over the past few years, but a breach of the 5% growth mark could send worrisome signals across the global economy.
WeWork’s Roller Coaster Ride Ends in Takeover – The office space and tech startup, WeWork, was just days away from issuing an initial public offering (IPO) at a nearly $50 billion valuation. But as Wall Street started to scrutinize the books and management practices, it became abundantly clear that WeWork was, in the classic tech startup sense, a cash-burning and money-losing bubble. This week, the private equity firm and WeWork’s primary financier, SoftBank Group, moved to secure a deal to take control of the company and wrest control from embattled CEO, Adam Neumann. SoftBank’s takeover terms ended with a generous payout for Neumann of over $1 billion, with the company being revalued at $8 billion. 2 WeWork never ended up going public, which may ultimately be a good sign for how markets are operating – investors are keen on avoiding high flying tech IPOs that are overvalued and burn cash.
Know where you stand in terms of your long-term investment goals!
While you cannot predict exactly how these stories will pan out or how they could affect the market, you can try to prepare for what’s to come. And, knowing your net worth is a great place to start as it is critical to your financial well-being and can help you prepare for what’s ahead.
If you have $500,000 or more to invest and want to understand how to measure your net worth, download our guide, Measuring Your Net Worth. Simply click on the link below to get your copy today!
Download Zacks Guide, Measuring Your Net Worth3
Brexit Deadline Approaching Fast with No Deal in Place – As we go to print, there are only 3 days left until Britain is set to leave the European Union, but there is still no agreed-upon deal in place to do so. While the United Kingdom and the EU have reached a deal in principle, Prime Minister Boris Johnson is still tasked with selling the deal to Parliament – something he has yet to accomplish. This week, U.K. lawmakers endorsed a Brexit deal but they still need time to review the 100-plus page document.4 As such, they rejected Johnson’s plan to swiftly move the deal through Parliament. The clock is ticking.
S&P 500 Corporate Earnings Update – Earnings continue to hit the tape daily, and as of this writing, we have Q3 results from 124 S&P 500 companies, which account for 29.3% of the index’s total market capitalization. Total earnings, or aggregate net income, for the 124 companies are down -2.4% from the same period last year on +3.1% higher revenues, with 82.3% beating EPS estimates and 63.7% beating revenue estimates. Earnings growth is weaker than what we saw from this group in recent periods, but revenue growth is tracking modestly higher and a bigger proportion of companies are beating EPS estimates at this stage of the reporting cycle – a silver lining. We had expected challenging earnings results in Q3 and the results show it – but better-than-expected performance is arguably what’s leading to the stock market’s fairly warm reception thus far.5
While we may not know how all these stories will pan out, or how they could affect the market in the long-term, knowing your net worth can be critical to your financial well-being and can help you prepare for what’s ahead.
Calculating your net worth may give you a better idea of where you stand in terms of your long-term investment goals. If you do not currently know your net worth, then now may be a great time to calculate it.
If you have $500,000 or more to invest and want to understand how to measure your net worth, download our guide Measuring Your Net Worth.6 Simply click on the link below to get your copy today!
2 The Wall Street Journal, October 23, 2019. https://www.wsj.com/articles/wework-employees-feel-sting-as-ex-ceo-stands-to-reap-11571870011?mod=hp_lead_pos11
3 ZIM may amend or rescind the “Measuring Your Net Worth” guide for any reason and at ZIM’s discretion.
4 The Wall Street Journal, October 22, 2019. https://www.wsj.com/articles/boris-johnsons-brexit-deal-clears-vital-hurdle-in-parliament-11571768188?mod=djem10point
5 Zacks.com, https://www.zacks.com/commentary/insight/bio.php?auname=sheraz-mian
6 ZIM may amend or rescind the “Measuring Your Net Worth” guide for any reason and at ZIM’s discretion.
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