Today's big stories

Newly escalating tensions between the world’s largest economies seem to have left investors rattled
Our analysts check out the damage regulators could be about to do to tech companies' earnings – Read Now
Vodafone announced the upcoming initial public offering of its towers business

1/3

Hotting Up

What’s Going On Here?

The temperature crept up again between China and the US last week, and investors certainly weren’t playing it cool.

What Does This Mean?

The brouhaha this time around mostly surrounds a few government buildings in one another’s countries. First, the US shut China’s Houston consulate last week, alleging China was using the base to steal intellectual property. Then China hit back by shutting the US’s Chengdu consulate, accusing Americans there of meddling in its internal affairs.

Tensions between the two countries have been rising for years. And while they looked like they might be easing up after a partial trade war truce earlier this year, things kicked off again after a new Chinese security law against Hong Kong led to retaliatory action from the States.

Why Should I Care?

For markets: This time, it’s personal.
Public spats between the US and China are par for the course these days. But investors do seem to be more worried than usual by the latest developments: on Friday, they sold off Chinese, European, and US stocks and bought into safe havens like gold, which hit its highest price in eight years. America’s struggle to manage coronavirus might be compounding investors’ concerns this time around, and so might its government’s apparent inability to decide exactly how to support the economy. That’s particularly bad news given that, late last week, the number of Americans newly filing for unemployment benefits unexpectedly rose for the first time since March.

The bigger picture: Eyes front, America.
The US could learn a thing or two from the eurozone: the bloc agreed an $860 billion fund last week to help the region survive the pandemic. If the US can reach a resolution of its own soon, it might restore investors’ confidence in the country. Some have, after all, already been selling off the dollar and looking instead to European stocks, arguing they’re poised to climb more than those Stateside now the region’s on surer financial footing.

Spot opportunity: How you can profit from ongoing US-China tensions.

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2/3 Premium

How Do You Plead, Big Tech?

What’s Going On Here?

Competition regulators on both sides of the Atlantic may want to break up the tech giants, and this week’s earnings could shed more light on what exactly is at stake.

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3/3

No Mast, No Entry

What’s Going On Here?

Looks like Vodafone might’ve misheard the latest coronavirus guidance: the telecoms giant said on Friday it’s planning an initial public offering (IPO) for its communication towers segment.

What Does This Mean?

Vodafone’s telecom towers unit owns and operates 68,000 communication masts across Europe. They’re vital infrastructure for the supply of communication services, and Vodafone charges service providers fees for their use.

All in all, that makes it a relatively stable business – and not one Vodafone would necessarily want to hand over to investors. But it might be planning to do just that next year, as it tries to take advantage of the higher multiple of profits investors are willing to pay for telecom tower companies than telecom service companies. Spanish tower company Cellnex, for instance, is currently worth about 25 times last year’s “profit” – a multiple that would make Vodafone’s tower business worth around $20 billion. Vodafone as a whole, meanwhile, is only worth nine times last year’s profit (tweet this).

Why Should I Care?

For markets: Call me, maybe?
Next year’s split between Vodafone’s service and towers businesses will leave Vodafone awash with cash it’ll probably use to pay off part of its debt. And while that could reassure some investors, it may not be the game-changer Vodafone wants: the company announced quarterly results on Friday that were damaged by lower revenue from roaming fees – unsurprisingly, given the dramatically reduced international travel – and its shares fell 5%.

The bigger picture: Let’s see other people.
Seeing as it’s based in the UK, Vodafone might’ve been expected to list its towers business locally. But the company instead surprised investors by announcing it’d IPO the business in Germany, meaning the country’s stock exchange – Deutsche Börse – will profit from increased trading activity at its UK rival’s expense. Just as well, then, that the London Stock Exchange is buying market data provider Refinitiv to help set it apart from other stock exchange businesses.

Take action: Where to find opportunities in the telecoms sector.

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💬 Quote of the day

“I’m not in the business of reading tea leaves. I don’t have a crystal ball.”

– Christine Lagarde (President of the European Central Bank)

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🤔 Q&A · RE: Comfort Food

“Why do people care about Unilever’s results?”

– Tahlo in Croydon, UK

“Unilever’s now the most valuable public company in the UK, Tahlo, so investors the world over follow it even more closely than before. And even if you’re not an investor directly, chances are you’ve got a pension somewhere that includes some of the biggest British stocks and that’s now increasingly affected by Unilever’s fate. The company’s performance also gives an insight into how consumers’ shopping behavior has changed during the pandemic, as well as how it might change again as things return to normal in Western countries. Lastly, Unilever’s updates might offer clues about how much you’ll have to spend on similar goods going forward. US chocolatier Hershey, for instance, said it’ll raise prices over the next six months – and if Unilever follows suit, your Ben & Jerry’s ice cream might be about to get more expensive.”

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🇬🇧 UK: How the Pros Pick Stocks – 6pm UK Time, July 27th
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🇬🇧 UK: What’s Next For The Global Economy? – 6pm UK Time, July 29th
🇬🇧 UK: The Bright Future for Renewable Energy – 12pm UK Time, July 30th
🇺🇸 USA: Money Behaviors 2020 – 1pm New York Time, July 30th
🇿🇦 South Africa: The Impact of COVID-19 on Cryptocurrency – 7pm South Africa Time, August 6th
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🇭🇰 Hong Kong: Is Fashion Going Out Of Style? – 9pm Hong Kong Time, August 11th

📚 What we're reading

Green tech is more than just electric cars (Inverse)
How do you pandemic-proof a beach anyway? (Atlas Obscura)
What we talk about when we talk about weed (Hedgehog Review)

Finimize - 😨 US investors fear China

Today's big stories

Hotting Up

What’s Going On Here?

What Does This Mean?

Why Should I Care?

How Do You Plead, Big Tech?

🍰 Start with a Schwab Stock Slice™

No Mast, No Entry

What’s Going On Here?

What Does This Mean?

Why Should I Care?

🎯 Start small, aim big

🐐 Efilkrap!

Older messages

🎟️ New Events: Financial Stability, Finimize AMA, & What's Next For The Global Economy?

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📈 Microsoft saves tech stocks

🇪🇺 Europe's 860 billion rescue package

💰 Alibaba just got richer

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