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Today's big stories

China’s economy shrank in the first quarter for the first time since records began
Our analysts look for the few hedge funds that made money in March, including one that could've netted you an 18% return – Read Now
Procter & Gamble reported a higher quarterly profit than expected

1/3

Little Ol’ Xi

What’s Going On Here?

Data out on Friday showed China’s normally imposing economy shrank by 6.8% in the first quarter versus the same time last year – its first decline since records began.

What Does This Mean?

Economists predicted China’s economy would shrink, sure, but not by as much as it did. Turns out consumers were slow to splash their cash when some businesses reopened in March: retail sales, for instance, were down 16% last quarter versus a year ago. Still, it wasn’t all bad news: the country’s industrial production shrank by a better-than-expected 1% as its factories sprang back into action, and its unemployment rate in March fell from February’s record high.

Why Should I Care?

For markets: Life’s little luxuries.
Chinese consumers typically account for a third of the world’s luxury purchases, so the country’s return to business – slow though it is – bodes well for the world’s biggest luxury conglomerate, LVMH (tweet this). The company said as much late last week, revealing that sales of some of its brands were up by more than 50% in late March and early April. That influx of luxury shoppers is a rising tide which is lifting several boats: not only did LVMH’s shares climb on Friday, those of Gucci-owner Kering and cosmetics brand L’Oreal did too – with the latter saying that despite falling global sales last quarter, China’s recovery will mean this quarter’s are stronger.

The bigger picture: Just add government support.
There are limits on how quickly China’s economy can grow in the next few months given that international buyers of its wares – including major customers in the US and Europe – are still effectively closed for business. It’s probably no bad thing, then, that the Chinese government has said it’ll cut interest rates further in order to encourage domestic spending, as well as help banks lend more to companies that are getting less international business than they’re used to.

Spot opportunity: How you can profit from China’s economic slump.

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2/3 Premium

Survival Mode

After revealing that March was their worst month ever on Friday, some of the world’s biggest hedge funds are just trying to make it through the pandemic in one piece. But there were some successful – and publicly accessible – funds up for grabs…

Get the full story in the Finimize app

3/3

Toilet Humor

What’s Going On Here?

Consumer goods giant Procter & Gamble (P&G) – the maker of Charmin toilet paper – announced a higher-than-expected quarterly profit on Friday, and relieved investors really seemed to give a... hoot.

What Does This Mean?

As you’d probably expect given consumers’ panicked stockpiling ahead of coronavirus-driven lockdowns, P&G’s healthcare, home care, and family care items proved incredibly popular last quarter: it sold about 8% more of them than the same time last year. And while the company fell just short of investors’ (arguably over-optimistic) revenue expectations, it did manage to deliver a prediction-beating profit thanks to the high profit margins of its in-vogue products.

What’s more, with one quarter left in P&G’s financial year (it thumbs its nose at the Gregorian calendar), the consumer products giant was able to do something most others couldn't: maintain its profit forecast for the remainder of its year. Hallelujah.

Why Should I Care?

For markets: 3-ply investments.
Stocks in so-called “defensive” industries – like consumer staples – have been recommended by analysts and favored by investors lately, since their everyday essentials attract buyers no matter the economic weather. And those investors were rewarded: P&G announced a 6% increase to its dividend and on Friday said it might keep repurchasing its shares. So far the company’s bought back $7.4 billion of stock – and it’s said it’s prepared to buy up to $8 billion worth.

The bigger picture: Dollar ills.
Of all the defensive companies, major American ones are particularly appealing to investors in times of uncertainty. But be warned: so is the US dollar, and investors looking for safety pushed its value up last quarter. That means any money a company earns abroad is worth less when it’s brought back Stateside – which is bad news for the likes of P&G, whose sales come all over the world. And it was that very phenomenon that knocked 2% off the company’s sales growth last quarter, much to some analysts’ disappointment.

Take action: How to recession-proof your portfolio.

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🙋 Ask a question

💬 Quote of the day

“Love with your mouth shut, help without breaking your ass or publicizing it: keep cool, but care.”

– Thomas Pynchon (an American novelist)

Tweet this

🤔 Q&A · RE: Fancy Banks

“If enough people and companies defaulted on their debts at once, would big banks need a bailout reminiscent of the global financial crisis?”

– Matt in Texas, USA

“Never say never, Matt, because there is some level of missed repayments that can leave banks on their knees and in need of rescue. But banks’ riskiest activities have been curtailed since the last financial crisis, and they now pose far less of a threat to their survival than they did. What’s more, banks are now required to have much more emergency cash on hand to cover losses in case of a downturn, and regulators check each year to make sure that’s the case. So if there are mass defaults and banks do need extra support, it shouldn’t cause as much economic damage as it did last time.”

🙋 Ask a question

😶 “This could be the mother of all recessions”

That’s seasoned telecoms exec Jens Schulte-Bockum on what’s waiting for us around the corner. Our analysts sat down with him to find out why he’s so worried: check out our interview

📚 What we're reading

Facebook’s building a secret platform (The Verge)
Cormac McCarthy is socially distant (McSweeney’s)
Cinema ain’t dead (IndieWire)

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Image credits: U.S. Department of State - Flickr, Sean P. Aune - Shutterstock | Charmin Tissue, Skylines, VanoVasaio, Africa Studio - Shutterstock

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Finimize - 💩 China breaks records

Today's big stories

Little Ol’ Xi

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Survival Mode

Toilet Humor

What’s Going On Here?

What Does This Mean?

Why Should I Care?

😶 “This could be the mother of all recessions”

Older messages

👨‍⚕️ Stay home, save Apple

🏦 Earnings from Goldman, Citi, and Bank of America

🤕 JPMorgan beat the virus

🇺🇸 US jobs get worse and worse

💰 Airbnb's 1 billion richer

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