International News (Issue 384) – 29 January 2016

It was a big week for investment markets given ongoing volatility, corporate earnings reports and central bank meetings in the US and Japan.

Amongst a list of major names to report, Apple (AAPL) and Amazon (AMZN) made for disappointing reading.

Though much was made of Apple’s slowing franchise sales, the guidance for future profits still underwhelmed. So-called ‘screen fatigue’ is proving a genuine factor in slowing sales of tablet and smartphones and it seems this slowdown is unlikely to turn around any time soon.

You’ll note a few analysts and journalists making comments to the effect that in spite of the slow-down Apple is ‘cheap’ on 11x P/E and with some $70bn of net cash (fully-taxed) on its balance –sheet and perhaps at a headline level that sounds such.

I’m certainly not well enough informed to know if Apple is cheap or dear, but I would simply observe that mobile-technology device shares (think Nokia, Ericsson, Blackberry, HTC, Sony & SAMSUNG) ALWAYS TRADE SUPER-CHEAP on a headline basis.

The simple reason is that technology and customer preference moves and changes so quickly in this industry, that what is a hero brand/product one day is a zero product the next.

Does anyone have a Nokia or Ericsson or HTC phone anymore? Even SAMSUNG’s hugely successful Android smartphone product suite is up against increased competition from low-cost Chinese handset makers such as Huawei & ZTE.

Just thought I’d share that with you.

Amazon (AMZN) disappointed the market and is down 15% in the US after-market as I type. That said, AMZN are an incredible company and you have to go and check out some of the businesses they are entering in right now that you might not even know they are in (parcel delivery, food service).

Facebook (FB). Wow. Well they did post strong profits.

Get this – Facebook mobile advertising is now 80% of all FB advertising and yet the business only launched 4 years ago.

Secondly, if you strip out China, 30% of the world’s population aged 15-65 connects with Facebook every day (1.04 billion people) – no one wonder their advertising sales are sky-rocketing since this platform is one of the most efficient means for advertisers to target consumers.

On the central bank side, the US Federal Reserve this week seemed to acknowledge the darkening clouds over growth posed by China’s devaluation. I have to say however, the FOMC meeting had little impact on markets this time around.

Obviously there were other bits and bobs, but none so overly pertinent to remark on.

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