Finimize - 🎄 SMIC's nightmare before Christmas

You shouldn't have, America | FedEx is on the right tracking number |

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Hi Reader, here's what you need to know for December 21st in 3:04 minutes.

☕️ Finimized over a chai tea at Appalachian Java in Burnsville, North Carolina (16°C/60°F ⛅️)

Today's big stories

  1. The US blacklisted China’s biggest chipmaker
  2. The economist who predicted the dotcom crash reckons record-high stocks are a bargain – Read Now
  3. FedEx reported better-than-expected earnings

Naughty List

Naughty List

What’s Going On Here?

The US added Semiconductor Manufacturing International (SMIC) to its trade blacklist late last week, and investors sent the Chinese chipmaker’s shares down 5% – after checking everything twice, obviously.

What Does This Mean?

This whole saga kicked off earlier this month when the US Department of Defense accused SMIC of having ties to the Chinese military. And now the US Department of Commerce wants its pound of flesh: it’s adding SMIC to its export blacklist, which will restrict the company’s access to US goods and services. That’s a blacklist that includes around 300 Chinese-based firms and affiliates, and while the US will soon have a new administration in charge, it’s still not clear how many – if any – of the current orders will be unwound.

Why Should I Care?

For markets: From bad to worse.
Blacklists are, unsurprisingly, bad for business: not only will SMIC now struggle to get its hands on the US technology it needs to make its chips, it might have difficulty holding onto American investors too. The US government, after all, has banned folks from investing in any company it says is helping China’s military. And to make matters worse, one of the biggest stock index companies in the world announced last week that it won’t include SMIC in any of its indexes anymore – the latest of several index companies to impose the crackdown.

The bigger picture: You can’t blacklist love.
All this friction comes at a time when appetite for Chinese stocks among US investors is reaching record highs. Chinese-based companies raised almost $12 billion through initial public offerings (IPOs) in America this year – the most since ecommerce titan Alibaba listed in 2014. And US investment banks won’t want to see the countries’ relationship deteriorate either: they’re bagging record fees for holding Chinese companies’ hands through their IPOs.

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2. Analyst Take

Why The Economist Who Predicts Crashes Thinks Record-High Stocks Are… A Bargain?

What’s Going On Here?

With several major stock markets scoring fresh record highs, company share prices are by most measures looking expensive – very expensive.

But Robert Shiller – the economist who famously preempted the dotcom crash and the last US housing crash – has released a new study which updates one of those measures entirely.

Apply Shiller’s updated measure to historical data, and it does a good job of predicting returns from stock investments over the following decade.

And by his calculations, stocks are actually at their cheapest in 40 years – if not their cheapest ever in places like Japan and the UK.

So that’s today’s Insight: you get to see Shiller’s new measure for yourself, and find out how – if you agree with his take – you can make the most of it.

Read or listen to the Insight here

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Transitting Pretty

Transitting Pretty

What’s Going On Here?

US logistics group FedEx really is the full package, reporting better-than-expected quarterly earnings late last week even though it’s been rushed off its feet.

What Does This Mean?

It’ll surprise no one to hear that FedEx has been delivering a lot more parcels lately, which might be why its revenues and profits both mopped the floor with analysts’ expectations. It reported its highest quarterly sales on record thanks to the millions more parcels than usual it handled – not least because online shoppers kicked off their holiday shopping even earlier this year. Its profit for the quarter doubled, in fact, making FedEx one of this year’s biggest corporate winners. Still, investors are a hard crowd to please: they were put off by the company’s reluctance to say what next year might have in store – both because the future’s still uncertain, and because the pandemic’s pushed up its costs – and they sent its shares lower.

Why Should I Care?

Zooming in: Supercharged.
This year’s lockdown-driven ecommerce boom has essentially forced FedEx to work like every day is peak season, but the official peak season only started last month. That means it’s finally been able to raise its delivery prices, which it’s now said it’ll extend for as long as it needs to. That might not necessarily translate into its profits, mind you: FedEx will need to hire more people, buy more trucks, and generally up their costs if they’re going to keep operating at such high capacity.

The bigger picture: Special delivery.
If the online shopping craze isn’t enough to send FedEx’s profits higher, the vaccine craze might do the trick. The delivery of billions of doses all around the world has been dubbed one of the most complex logistical exercises ever – and one that only established delivery companies like FedEx and UPS will be able to manage (tweet this).

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💬 Quote of the day

“Far away in the sunshine are my highest aspirations. I may not reach them, but I can look up and see their beauty, believe in them, and try to follow where they lead.”

– Louisa May Alcott (an American novelist)
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