AMZN - Amazon.com, Inc.
| Previous close | 1,861.64 |
| Open | 1,820.00 |
| Bid | 0.00 x 1200 |
| Ask | 0.00 x 900 |
| Day's range | 1,815.43 - 1,841.00 |
| 52-week range | 1,566.76 - 2,035.80 |
| Volume | 3,528,509 |
| Avg. volume | 3,053,946 |
| Market cap | 906.485B |
| Beta (5Y monthly) | 1.51 |
| PE ratio (TTM) | 81.01 |
| EPS (TTM) | 22.57 |
| Earnings date | 29 Jan 2020 |
| Forward dividend & yield | N/A (N/A) |
| Ex-dividend date | N/A |
| 1y target est | 2,185.98 |
- Yahoo Finance
Why Warren Buffett's Berkshire Hathaway is a hot stock pick for millennials
Berkshire Hathaway landed on millennials’ top 10 list of investments in the fourth quarter of 2019, according to new research.
- Yahoo Finance
Chipotle, Google, Tesla, Amazon, Berkshire Hathaway: Companies to Watch
Chipotle, Google, Tesla, Amazon and Berkshire Hathaway are the companies to watch
- Bloomberg
Edtech Startup Valued at $110 Million in Tiger, Sequoia Funding
(Bloomberg) -- InterviewBit, a startup that offers online training for a career in programming, has raised $20 million from Tiger Global Management, Sequoia Capital India and others at a valuation of $110 million.The Bangalore-based outfit offers daily live-streamed classes to prepare aspiring software engineers for the notoriously competitive job interviews in their industry. It guides students with the help of remote personal mentors and, upon completion of training, looks to match them with available jobs, with no payment until they are employed. Its six-month coding bootcamp called Scaler Academy has received more than 200,000 applications since it launched in April.“India has a surfeit of engineering graduates but traditional colleges are not equipped to cater to the in-demand skills,” Abhimanyu Saxena, co-founder of InterviewBit said in a phone interview. “Companies face a huge challenge in hiring quality talent.”India has thousands of engineering colleges, but more than 80% of their graduates are deemed “unemployable” by tech companies as they lack the hands-on coding training or exposure to projects, according to a study by recruitment analysts Aspiring Minds last year. The country’s outsourcing industry employs millions, but they also need to be retrained in new skills such as artificial intelligence and mobile app development.Strong global demand for the latest software skills has seeded a novel crop of coding schools around Bangalore that offer to upgrade programming skills on a pay-after-placement basis.InterviewBit’s model makes it accessible to students and engineers without any geographical or financial constraints. Those who get placed pay a portion of their salary from the first two years to the startup. “Our most successful students come from unknown engineering colleges in smaller cities,” said Saxena.Coders from its seven batches, including one cohort in the U.S., have been placed at global technology companies including Amazon.com Inc., Microsoft Corp. and Alphabet Inc.The company will use the $20 million to scale up enrollment and launch in new markets.To contact the reporter on this story: Saritha Rai in Bangalore at srai33@bloomberg.netTo contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Vlad SavovFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Facebook Restricts Employee Travel to China on Virus Concern
(Bloomberg) -- Facebook Inc. started restricting employee travel to China as the deadly coronavirus continues to spread across the world’s most populous country, according to people familiar with the decision.The limits, which went into effect Monday, halt non-essential travel to China by all Facebook employees. If workers have to visit the country, they need specific approval. Facebook staff based in China, and those who recently returned from trips to the country, are also being told to work from home, said the people, who asked not to be identified discussing private communications. The company declined to comment.Honda Evacuates, Starbucks Stores Shut: Virus Impact on BusinessThe travel restrictions at the social media company are likely to impact its hardware division, which sells devices such as the Portal video chat hub and Oculus virtual reality headsets. Hardware requires frequent travel from the company’s Silicon Valley offices to China, where engineers and managers oversee product development, meet with suppliers and transport prototypes.Facebook’s current products likely won’t be impacted, but the move could cause engineering delays on future devices, one of the people said. The company is looking to other facilities that it has in Vietnam to pick up any work that can’t be done in China, the person added.While Facebook is one of the smaller hardware makers among the U.S. technology giants, its plight underscores the potential impact of the virus on the industry. The majority of Apple Inc.’s vast supply chain is in China and other parts of Asia. Amazon.com Inc. and Alphabet Inc.’s Google also make their devices in the region.To contact the reporters on this story: Mark Gurman in Los Angeles at mgurman1@bloomberg.net;Kurt Wagner in San Francisco at kwagner71@bloomberg.netTo contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net, Alistair BarrFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Zacks
Buy Sluggish Amazon Stock Ahead of Q4 Earnings on Possible 2020 Surge?
Amazon stock has fallen over 4% in the last six months. It appears that investors are worried about Amazon's profit. But how long will Amazon stock stay stagnant as the e-commerce powerhouse spends to speed up its delivery?
- Zacks
Buy Surging Apple & Microsoft Stock Before Quarterly Earnings?
On today's episode of Full Court Finance here at Zacks, we dive into everything investors need to know about Apple and Microsoft stock to help figure out if either tech giant is worth buying heading into quarterly earnings...
- Zacks
Tech Daily: Intel Results, Netflix Surge, Apple Valuation, Google-ATVI Deal, More
The top stories in this digest are Intel's earnings, Netflix's surging share price, Apple's valuation concerns and the Google-Activision deal.
- Bloomberg
Sonos Should Give Up Hardware-Only Business Model
(Bloomberg Opinion) -- How long should a manufacturer be responsible for maintaining support for legacy products? Consumer devices have increasingly become smart and connected, only to later be abandoned by the manufacturer. Smart suitcases have turned dumb, talking toys gone mute, and wireless security cameras bricked into paperweights. Most recently, Sonos got a lot of grief for announcing that older versions of their smart home speakers would soon lose access to services and functionality. Customers complained that they had spent thousands on their audio systems, with some products still on the market as recently as 2015.A hardware device is a one-time purchase, while software updates require continuous labor. As technology improves and devices last longer, the initial manufacturing cost may end up being a small proportion of the total lifetime cost of production. Many manufacturers have shifted to business models that treat the device sale as a loss leader for future revenue streams. Amazon can afford to underprice the Echo because it enables consumers to buy more stuff from Amazon, Google and Spotify teamed up to give away Google Home Minis, and even Apple recently lowered prices on its iPhones to grow a user base for its subscription services.At the more controversial end of the spectrum, companies like John Deere have used the Digital Millenium Copyright Act to legally prevent users from repairing their own equipment, forcing their customers to continue paying into a lucrative repair market.Sonos boxed itself into a corner early on by promising customers free software updates for life. As CEO Patrick Spence testified at a Congressional hearing earlier this month, “Our business model is simple — we sell products which people pay for once, and we make them better over time with software updates.”The company is in a particularly difficult position because Sonos began as a home audio company before the advent of smart home assistants. Its earliest speakers weren’t designed with the processing power and storage required to take advantage of today’s features. To minimize complexity, Sonos designed its audio system so that all devices in a home network would share the same software. Once one product is no longer eligible for updates, the whole setup would stop receiving updates. Sonos customers lodged public complaints and bullied the company into submission. Sonos promised to keep the updates coming.A better long-term solution for the company might be found by looking to a different coalition of rebellious customers: a group that has been quietly reverse-engineering their speakers to liberate them from the company’s software entirely. It’s not an easy task. A Sonos speaker integrates a speaker and a microprocessor running a proprietary operating system. In order to jailbreak the speaker, a user must gain access to the internal hardware and install their own software.It would no doubt please these customers were Sonos to make their legacy speakers open source. Sonos has already indicated that the company can remotely erase the software; it could similarly perform a remote reinstallation of an open-source operating system like Linux or Android. The company’s tech-savvy fans could then continue to improve the software — which could be downloaded by other users — while Sonos focuses on its core competency of manufacturing high-end speakers.In the future, device manufacturers may be less generous about promising a lifetime of free software support. After all, most technological improvements these days are done in software. When it comes to cars, the internal combustion engine hasn’t changed much since fuel injectors were introduced in the 1980s. The performance improvements seen in recent decades have come from better sensors and smarter software to interpret sensor data.Autonomous vehicles will have an even tougher sell, as it’s inevitable that self-driving technology will continue to improve after initial release. Will further updates be free, or will the vehicle manufacturer hold consumer safety for ransom?While it’s easy to insist that customers should have free access to software updates running on devices they rightfully own, it’s hard to reconcile a sustainable business model with a lifetime of free software. A device that requires a paid subscription or leaves software updates as an exercise for the customer is better than one that turns into a brick.To contact the author of this story: Elaine Ou at elaine@globalfinancialaccess.comTo contact the editor responsible for this story: Sarah Green Carmichael at sgreencarmic@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Elaine Ou is a Bloomberg Opinion columnist. She is a blockchain engineer at Global Financial Access in San Francisco. Previously she was a lecturer in the electrical and information engineering department at the University of Sydney.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Saudi Arabia Outsources Cyber Arsenal, Buys Spyware, Experts Say
(Bloomberg) -- If it turns out that Saudi Arabia hacked into the phone of Amazon.com Chief Executive Officer Jeff Bezos, as investigators have alleged, the oil rich nation likely utilized its preferred method of cyber espionage: outsourcing.While countries like Russia, China and North Korea have invested in developing powerful, tailored cyber weapons, Saudi Arabia has instead opted to purchase them, according to experts and former government officials.The Middle Eastern nation’s cyber arsenal is believed to be primarily composed of outsourced espionage tools, which it has combined with disinformation tactics on social media, they said.These purchased weapons can be “highly sophisticated, but of limited scope,” according to Jon Bateman, a cybersecurity fellow at the Carnegie Endowment for International Peace. While Saudi Arabia has tools that can be technically complex, countries that have invested in developing indigenous offensive and defensive capabilities -- such as Saudi Arabia’s Middle Eastern neighbors Iran and Israel -- possess a greater range of cyber weapons and tactics, he said.Nevertheless, Saudi Arabia’s purchased tools are an effective way for the regime to exert control, allegedly deploying these tools to spy on Saudi dissidents and journalists, according to experts.The Embassy of Saudi Arabia didn’t immediately respond to a request for comment sent through its website form. Last week the Embassy denied involvement in the Bezos incident.In recent years, as cyber actors have generally grown more sophisticated, so have the tools for sale, said Andrew Grotto, a fellow at Stanford University who served as the senior director for cybersecurity policy on the National Security Council from late 2015 to mid-2017.The purchase of cyber weapons -- including from marketplaces in the Middle East and Europe, and possibly from criminals -- isn’t unique to Saudi Arabia, experts say. Other countries, such as Vietnam and the United Arab Emirates, have also utilized their defense budgets to outsource cyber arsenals.The embassy of Vietnam didn’t immediately respond to a request for comment, nor did the UAE embassy.Estimates for the start of Saudi Arabia’s purchasing of cyber tools range anywhere from half a decade to two decades ago, with the country appearing to focus on surveillance activities. While cyber tools can be used to delete or alter data, hold systems hostage and disrupt traffic, Saudi Arabia has primarily focused on using them for spying, the experts said.As Saudi Arabia has purchased offensive capabilities, the country’s defenses have also been put to the test, experts said. For example, a dramatic cyber-attack -- believed to be sponsored by Iran -- devastated the computers of the state oil company, Saudi Aramco, in 2012.These allegedly weak defenses can be problematic for American interests, as attacks on allies can be used as an indirect way to impact the U.S., said James Lewis, senior vice president at the Center for Strategic & International Studies.“The Saudis are not that sophisticated in their cyber capabilities and that has been a problem for the U.S.,” Lewis said. “What they are sophisticated in is the ability to buy outside capabilities.”In addition to purchasing cyber capabilities, Saudi Arabia has also become adept at deploying disinformation campaigns to promote national interests, according to experts.For example, in August, Facebook Inc. removed hundreds of government-linked accounts and pages engaged in a sophisticated and wide-reaching influence campaign that praised the regime and criticized neighboring countries. Two months later, Twitter Inc. removed thousands of state-backed accounts based in Saudi Arabia -- suspending tens of thousands of others -- which manipulated the platform in order to promote Saudi Arabia’s geopolitical interests and amplify support for its authorities.The spyware allegedly used to hack Bezos’s phone was “developed and marketed by a private company and transferred to a government without judicial control of its use,” according to two United Nations special rapporteurs, in a statement last week. The alleged purpose was to “influence, if not silence,” coverage of the Saudi regime by the Bezos-owned Washington Post, according to the rapporteurs.“The intrusion likely was undertaken through the use of a prominent spyware product identified in other Saudi surveillance cases,” such as tools purchased from Israel’s NSO Group or Italy’s Hacking Team, according to the statement.The allegations come following a December 2018 suit, in which Saudi dissident Omar Abdulaziz alleged NSO Group software enabled Saudi Arabia to hack his phone and track his communications with Jamal Khashoggi, a Washington Post journalist, and Saudi insider-turned-critic, who was slain by agents of the Saudi government, according to the U.S..Memento Labs, which acquired Hacking Team last year, didn’t immediately respond to request for comment; it has previously denied any involvement in the Bezos incident. An NSO Group representative referred to a statement published on its website: “We can say unequivocally that our technology was not used in this instance.” Regarding the lawsuit, a NSO Group spokesman said, “Khashoggi was not targeted by any NSO product or technology.”In a manner typical of Saudi’s digital operations, the murder of Khashoggi was followed by a “massive online campaign” that targeted Bezos’s business interests on social media, according to the U.N. rapporteurs. The following month, in November 2018, “Boycott Amazon” trended as the top hashtag on Saudi Twitter, they said.To contact the reporter on this story: Alyza Sebenius in Washington at asebenius@bloomberg.netTo contact the editors responsible for this story: Andrew Martin at amartin146@bloomberg.net, Molly SchuetzFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Zacks
Apple, Microsoft, Facebook, Amazon and Intel are part of Zacks Earnings Preview
Apple, Microsoft, Facebook, Amazon and Intel are part of Zacks Earnings Preview
- Zacks
FAANG ETFs in the Spotlight Ahead of Q4 Earnings
The FAANG stocks have been outperforming the market over the past three months buoyed by the initial U.S.-China trade deal. Hopes of better-than-expected earnings releases are also adding to the strength.
- Bloomberg
A Healthy Consumer Means More Retail Disruption
(Bloomberg Opinion) -- The most recent retail sales data provides a glimpse into the mind of the U.S. consumer.The latest monthly retail sales report from the U.S. Census Bureau recorded December sales (excluding gasoline, automobiles and restaurants) of $384.6 billion. Compared with the prior year’s $ 360.5 billion, that’s a solid year-over-year gain of 6.7%. Sales in November 2019 were $330.2 billion for a 1.1% gain over 2018’s $325.9 billion. Average these two-monthly totals and you get a 4.1% year over year gain for the holiday-shopping period.Those are strong numbers. Delving deeper reveals several interesting data points:\-- consumer sentiment has fully recovered from the lows after the financial crisis and is back to levels that prevailed in mid-2000s;\-- sentiment is still below the frothy dot-com peak of the late 1990s, suggesting that consumers are confident about the future but not in a reckless or unsustainable way;\-- consumer debt relative to disposable income remains at the lowest level in at least four decades, indicating that there's room for them to spend more:These three data points suggest that the next few quarters of gross domestic product growth, retail sales and durable goods orders are likely to be robust.In the typical election year, these economic positives tend to benefit the White House incumbent. I will let others debate whether this is a typical election year.Two other interesting issues worth mentioning: Online sales measured by point-of-sale credit-card transactions from MasterCard’s SpendingPulse showed that e-commerce in 2019 reached all-time highs. E-commerce now accounts for 14% of U.S. retail sales and likely will continue to claim a growing piece of the pie. Worldwide, online sales have nearly tripled during the past five years from $1.3 trillion in 2014 to more than $3.5 trillion in 2019, according to Statista. Projections are for this to more than double during the next five years.One surprise from the MasterCard data is that online shopping is accelerating, rising 18.8% last year compared with 2018’s 18.4%. There are few signs online retail is slowing. If anything, the generation that grew up online doesn't think of e-commerce as anything special; it's simply retail.One other observation: Perhaps the most intriguing online retail outlet is Instagram’s Checkout. It was named 2019’s Technology of the Year by Mobile Marketer. Fashion site Glossy describes Instagram as the next big sales channel “for direct-to-consumer companies and traditional retailers alike.”More than just promoting a brand or product, Instagram is facilitating the sale of products directly to consumers. The company takes its slice of the transaction. Combine this with the lethally accurate algorithms deployed by parent company Facebook Inc. and you can imagine the sort of sales growth that might lie ahead.To give you an idea of the size of this marketplace, Instagram has more than 1 billion accounts active each month worldwide (Facebook has 2.45 billion active users). Most of them have some form of payment system, including credit cards, Venmo, PayPal or Apple Pay.So far, Instagram Checkout has been rolled out slowly since the platform introduced it in March. It has been testing product tags in posts since 2016. Again according to Glossy, tags came to “Instagram Stories” about two years later. The fashion site, quoting Instagram, reports that 130 million people tap a product tag to shop or see a price every month. Instagram is native to mobile, which is where the new generation of consumers spend most of their connected time. Although Instagram hasn't made a big splash in online retailing yet, the potential is there.To be sure, there are some inklings of problems with counterfeit goods. This has been an issue that has haunted both Amazon.com Inc. and eBay Inc. If Instagram wants to become a serious player in retail, it needs to nip this in the bud.Disruption doesn't sleep. Don’t be surprised if the incumbent stars of e-commerce -- the leading members of the last generation of disruptive technologies — become the new victims of creative destruction.The relative health of the American consumer makes the disruption all the more likely — and sooner rather than later.To contact the author of this story: Barry Ritholtz at britholtz3@bloomberg.netTo contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Zacks
Is iShares MSCI ACWI Low Carbon Target ETF (CRBN) a Strong ETF Right Now?
Smart Beta ETF report for CRBN
- Zacks
Should You Invest in the Fidelity MSCI Consumer Discretionary Index ETF (FDIS)?
Sector ETF report for FDIS
- Bloomberg
Jeff Bezos Friended the Wrong Foreign Leaders
(Bloomberg) -- Sign up for Bloomberg’s daily technology newsletter here.The last two weeks have been remarkably eventful for Jeff Bezos. First, the Amazon.com Inc. co-founder’s visit to India was met with street-side protests, a new antitrust investigation into “predatory pricing and unfair trade practices” and hostile comments from the government led by India Prime Minster Narendra Modi.Then last week, Bezos’s yearlong tangle with Saudi Arabia burst into the headlines, with cybersecurity investigators concluding with “medium to high confidence” that Bezos’s iPhone was hacked via a WhatsApp message sent directly from Crown Prince Mohammed bin Salman’s account.Those are two very different situations in two separate parts of the world. But they had something in common—an overly optimistic bet (that Amazon placed, along with its Big Tech brethren) on global leaders whose dispositions turned out to be less open and, to varying degrees, more autocratic than Silicon Valley originally thought.Amazon first bet big on India in 2014, when Bezos stood on the top of a flatbed truck in ceremonial Indian wedding garb and presented the chief of his local operation with an oversized $2 billion check. Bezos met with Modi on that trip and amid mutual goodwill, seemed to believe the prime minister would loosen India’s rigorous restrictions on how foreign-owned e-commerce companies could operate.Since then, regulations in India have actually become stricter, with Modi catering to his party’s base of small business owners by limiting Amazon’s ability to sell items directly and to control its own prices. While gaining market share from Walmart Inc.-owned rival Flipkart, Amazon’s marketplace division reported steep losses in the last full fiscal year. On Bezos’s latest trip, Modi reportedly declined to meet with him.Bezos’s relationship with Saudi Arabia started with similar hopes. According to last week’s reports, Bezos and Prince Mohammed met at a 2018 dinner party in Los Angeles and exchanged phone numbers. Buoyed by the crown prince’s promise of modernizing the desert kingdom and diversifying its oil-based economy, Amazon was angling to close a $2.2 billion deal to put three data centers in the country. But that arrangement was put on ice after Saudi agents killed Jamal Khashoggi, a columnist at the Bezos-owned Washington Post. Saudi officials have said the crown prince had no involvement in the murder of Khashoggi or the cyberattack on Bezos. Now a Twitter account linked to the Saudi government is advocating for an Amazon boycott.In each country, Amazon’s agenda was complicated by the regime’s bellicosity toward coverage in the Post. But the sharp decline of its fortunes in India and Saudi Arabia is also about leaders whose true colors were much darker than they originally seemed. India under Modi recently passed a restrictive citizenship law that prevents many undocumented Muslim migrants from becoming citizens, while allowing for applicants with different religious affiliations. The Saudi government under Prince Mohammed has fueled conflict in Yemen, persecuted religious and political dissidents and unleashed coordinated Twitter attacks and other cyber tactics on its perceived enemies.Amazon wasn’t alone in pinning unrealistic hopes on these leaders. India has proved similarly challenging for Facebook Inc. The country accounts for Facebook’s largest user base, but the government has tried to force the company to identify users of the encrypted WhatsApp messaging service and threatened to introduce restrictive new rules to regulate social media. And in 2018 the Saudi crown prince cultivated many tech leaders who would likely be wary of such photo ops today.It wasn’t too long ago that tech leaders were overly optimistic about China, too. Mark Zuckerberg did a fun run for the cameras in Beijing and a meet-and-greet with President Xi Jinping. Google thought it could sneak back into China, after famously withdrawing from the country in 2010, with its secretive Dragonfly search project.Back in what now seems a simpler time, tech companies thought the world was becoming more receptive to the economic bounties and democratizing halo of the internet. But the world, and these leaders, have veered starkly away from this brand of idealism. It turned out they didn't want to be friends with Silicon Valley after all.If you read one thingWhen tech leaders tried to understand why large companies have trouble embracing new technologies, they turned to Clayton Christensen, author of the seminal book, the Innovator’s Dilemma, and several sequels. Christensen died last week at age 67 of complications from cancer treatment, according to Utah’s Deseret News.And here’s what you need to know in global technology newsYouTube got the streaming rights to some of the biggest esports leagues. Google signed a deal with Activision Blizzard to carry Call of Duty and Overwatch competitions. The Call of Duty league debuted Friday with a three-day event in Minneapolis.Salesforce encouraged employees to buy and expense a copy of the co-founder’s new book. The software company sent a memo to its 48,000 workers last fall promoting the book, Trailblazer, and offering reimbursement. On its website, Salesforce describes the book as an “instant” bestseller.Airbnb sued a real estate developer it partnered with to build apartments. The suit accuses NDG and its chief of stealing at least $1 million. The venture has long been a source of controversy for Airbnb, which is expected to go public this year.To contact the author of this story: Brad Stone in San Francisco at bstone12@bloomberg.netTo contact the editor responsible for this story: Mark Milian at mmilian@bloomberg.net, Anne VanderMeyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Zacks
Will Amazon's (AMZN) Q4 Earnings Benefit From Prime & AWS?
Strengthening Prime-enabled services and expanding AWS services portfolio are likely to reflect on Amazon's (AMZN) fourth-quarter results.
- Zacks
These Tech Bigwigs Are Set to Beat Earnings This Week
We have highlighted four red-hot tech stocks positioned to surpass earnings expectations as they gear up to announce their last round of financial results for calendar year 2019.
- Bloomberg
Socially Conscious ETFs Have Some Baffling Holes
(Bloomberg Opinion) -- Exchange-traded funds that cater to environmental, social and governance principles are being pitched as a way for investors to sleep with peace of mind, but they better be prepared to wake up with something less than dreamy returns.Consider the iShares MSCI USA ESG Select Social Index Fund (SUSA), one of the oldest and largest ESG ETFs on the market. SUSA, which tracks the 100 stocks with the highest ESG ratings, has trailed the S&P 500 Index by 37 percentage points during the past 10 years.(1) (I honed in on SUSA because it has a long-term track record. Most ESG ETFs are very new.) The reason it lagged taps into one of the most important yet underreported aspects of ESG funds: surprising exclusions. While some of the stocks excluded from SUSA are obvious, such as Exxon Mobil Corp. and Lockheed Martin Corp., some are less obvious, such as Amazon.com Inc., Netflix Inc., Ross Stores Inc. and Mastercard Inc. — all of which are up more than 1,000% during the past 10 years. Not having stocks like these is why SUSA couldn’t keep up with the overall market. Not to pile on here, but SUSA’s underperformance also came with a higher standard deviation, or level of volatility.This potential for underperfomance is why I think investors should take what I call “The Amazon Test” before buying an ESG ETF. It has two parts. The first is to simply ask whether you are willing to miss out on the next Amazon to “clean up” your portfolio. Or even better, if you want to do the leg work, compare the ESG ETF’s holdings to the appropriate broad index and comb through the differences. You may be surprised by what is included in the ETF. (In SUSA’s case, it does hold Facebook Inc. and Nike Inc., which many may find questionable.) I can guarantee investors will probably be a bit baffled.Of course it’s possible that the next Amazon is already in your ESG ETF and that the fund outperforms the market and everyone’s happy. SUSA could very well beat the market during the next 10 years. But investors need to be ready in case it doesn’t.I was curious how people would respond to this question, so I ran an informal Twitter poll and found that only a fifth of people were both interested in ESG and satisfied with missing the next Amazon. That means more than half of ESG-interested investors did not want to miss out on an Amazon, which tends to be excluded from ESG funds because of working conditions that put it on a worker-rights group’s “Dirty Dozen” list of the most dangerous employers in the U.S. Of course, not only highfliers are excluded from many ESG ETFs; so are some of the country’s most revered companies, which many people probably want to own. The best example is Warren Buffett’s Berkshire Hathaway Inc., which is included in fewer ESG ETFs than Exxon and is practically excluded from all of them. It’s the second-lowest-ranked company by Sustainalytics(2) among the S&P 100 Index. Essentially, investors can have ESG or Buffett, but not both. So why is Buffett, one of the greatest investors and philanthropists the world has ever seen, not in these funds? One big reason is Berkshire’s board is only 57% independent, well below the 86% average. Buffett has signaled no intention of changing the company’s business practices. He implied the independent board is a poor metric, saying many such boards he has been on are independent on paper only, with many directors just looking for a payday and typically following the CEO’s lead. Buffett has also said he doesn’t want to burden subsidiary companies, one of which operates coal-fired plants, with unnecessary rules and costs.“We’re not going to spend the time of the people at Berkshire Hathaway Energy responding to questionnaires or trying to score better with somebody that is working on that. It’s just, we trust our managers and I think the performance is at least decent and we keep expenses and needless reporting down to a minimum at Berkshire.”Some have pushed back, saying that “surprising exclusions” are nothing new and exist in other areas such as smart-beta and theme ETFs. This is true, but there is one crucial difference: Those ETFs aren’t generally seeking to replace an investor’s entire equity portion of the portfolio. Because if the goal is to “sleep at night,” then what’s the point of putting a small allocation into an ESG ETF while still investing in other funds, like the Vanguard 500 Index Fund, which hold those “bad” companies you don’t want?(3)For those who are interested in ESG and don’t mind missing out on the next Amazon, the next part of my test is to ask whether they are willing to curb their consumption of the goods and services provided by those excluded companies. For example, are you going to continue to shop at Amazon, drive an SUV or take airplanes 10 times a year? If so, then what’s the point of not owning those stocks? You are just going to rob yourself of profits you helped create. I did an informal poll on this, too, and found only a fifth of those who were willing to miss out on Amazon were also willing to not shop there. Now, I’m not saying you need to live in the woods and eat bugs to be pure enough to be an ESG investor, but you should probably be willing to make some inconvenient choices as a consumer — because, let’s be honest, that’s where investors can truly make a company pay attention. Otherwise, a lot of this is demand trying to demonize supply to soothe its guilt and feel good inside. At the end of my little screening system here we are left with 5% of the investing world that I’d argue has the stomach and commitment to be messing around with ESG ETFs.(5) The rest either just don’t want ESG or are slacktivists — people who want to feel as if they are doing something but are unwilling to make any inconvenient sacrifices such as lagging the market or curbing parts of their lifestyles. These investors should probably just stick with owning the broad market. And while 5% may seem like a small amount, it would actually be a pretty solid base of investors for these ETFs. To convert that into dollars, 5% of ETF assets would equate to $200 billion, a respectable category. Currently, ESG ETFs have only about one-tenth of that amount. And yet there are about 100 products on the market. That’s $200 million per ETF, which is five to 10 times below the average of many other popular areas. Supply has so far outpaced the hype and demand in a way that’s never been seen in the ETF market.And it doesn’t look as if product proliferation will be slowing anytime soon. BlackRock’s Larry Fink recently announced a doubling of the company’s ESG ETF lineup, which means due diligence will be that much more cumbersome. And while this may come off as a bit of a downer to all the excitement around ESG, that’s not my intention. I’m not anti-ESG at all, but I am anti-nasty surprise. I just want to help make sure investors wake up with peace of mind, too.(1) SUSA has also lagged since inception in 2005 by 33% and by 4% over the past 5 years, though it is outperforming by 1% over the past year. And to show I'm not cherry-picking, the other veteran ESG ETF, the iShares MSCI KLD 400 Social ETF (DSI), has lagged the market by 30 percentage points over the past 10 years.(2) An equal-weighted basket of the 20 stocks in the S&P 100 with the lowest Sustainalytics Ranking outperformed the S&P 500 Index by 41% over the past seven years. Sustainalytics is an ESG research and ratings platform whose scores are used on the Bloomberg Terminal.(3) Now, if investors are seeking ESG ETFs because they think there is some premium to capture that can add alpha to their portfolios and they are only allocating a little, then there is less need for this test (although you can never go wrong with looking under the hood of a fund). But largely, ESG ETFs are being pitched and talked about as a “sleep at night” replacement, or a way to support companies that align with investors’ values.(4) Add in the fact that most people don’t know what ESG even stands for, let alone how the scoring systems (which all vary by the way) work, and you get a situation where the product proliferation and hype has far outpaced the education needed to use them.To contact the author of this story: Eric Balchunas at ebalchunas@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Eric Balchunas is an analyst at Bloomberg Intelligence focused on exchange-traded funds.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Reuters - UK Focus
Trump's 'massive' U.S.-UK trade deal faces big hurdles
Britain is the United States' closest ally but their long friendship may be sorely tested as the two countries try to forge a new trade agreement after Britain's exit from the European Union. U.S. Treasury Secretary Steven Mnuchin said on Saturday in London that he was optimistic that a bilateral deal with Britain could be reached as soon as this year. Javid has insisted that Britain will proceed with a unilateral digital services tax, despite a U.S. threat to levy retaliatory tariffs on British-made autos.
- Bloomberg
A New Type of Bond Could Help Japan Utilities Cut Emissions
(Bloomberg) -- Japanese power producers have been emitting more carbon dioxide since a nuclear disaster in 2011 led to an increased reliance on fossil fuels, but a new kind of bond could help them reverse that trend.So-called transition bonds can pay for not-so-green companies to move toward cleaner business models, and Japanese electrical utilities could issue them to help reduce carbon emissions, according to Mana Nakazora, chief ESG and chief credit analyst at BNP Paribas SA. Companies overseas such as Hong Kong’s Castle Peak Power Finance Co. and Brazil’s Marfrig Global Foods SA have already sold such notes.Read a QuickTake about transition bondsThe introduction of transition bonds in Japan could provide investors with more opportunities to put their money in environmentally-friendly debt at a time when its Japanese market is expanding fast. Japan aims to reduce emissions from fossil-fuel generated power 34% by 2030, as part of a broader commitment to cut total emissions by 26%, according to BloombergNEF. However, those cuts are being measured against the highest levels in decades, set in 2013.In the meantime, companies abroad are pushing ahead with issuance of debt they call transition bonds.Castle Peak, a subsidiary of CLP Holdings Ltd., issued $500 million of notes in July 2017 to pay for a natural gas plant that it said was critical to Hong Kong’s efforts to cut emissions. Marfrig, the world’s second-largest beef supplier, sold $500 million of bonds last year that it said will fund the purchase of cattle from ranchers in the Amazon region who comply with non-deforestation and other sustainable criteria.Read more: Europe’s ‘Taxonomy’ May Set Global Standards for Green: Q&A(Updates with link to story on one-day record bond sales in Japan)To contact the reporter on this story: Ayai Tomisawa in Tokyo at atomisawa@bloomberg.netTo contact the editors responsible for this story: Andrew Monahan at amonahan@bloomberg.net, Ken McCallumFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Amazon Employees Escalate Climate Challenge to Management
(Bloomberg) -- More than 350 Amazon.com Inc. employees contributed public statements focused on the company’s climate practices, defying company policy and escalating a feud between management and a coalition of concerned workers.The employees’ comments, posted to Medium on Sunday, come a few weeks after it emerged that Amazon had threatened workers who had talked to the Washington Post with disciplinary action or termination if they continued to speak publicly about the company without authorization. The employees are members of Amazon Employees for Climate Justice, an organization that has been campaigning for more than a year to get Amazon to cut ties with fossil fuel companies and commit to limiting its contribution to greenhouse gas emissions.Among the newly published contributions, each of them from named Amazon workers, the shared sentiment is summed up by the comment of Amanda Seyfer, a software development engineer: “Amazon has the scale to be a bold leader in the move toward clean energy, or a significant contributor to climate change. We know we’ll have to deal with this eventually, so why wait?”Amazon Threatens to Fire Climate Activists, Group SaysAmazon Chief Executive Officer Jeff Bezos in September announced an initiative aimed at making his company a net-zero carbon emitter by 2040 and to court other companies to join a pledge to do the same. The next day, thousands of Amazon employees walked off the job in a show of support for student-led climate marches around the world. Some Amazon employees there took credit for their executives’ new public commitment to the environment and asked for more.An Amazon spokesperson, in an emailed statement, said “of course we are passionate about these issues.”“While all employees are welcome to engage constructively with any of the many teams inside Amazon that work on sustainability and other topics, we do enforce our external communications policy and will not allow employees to publicly disparage or misrepresent the company or the hard work of their colleagues who are developing solutions to these hard problems,” the statement said.To contact the reporter on this story: Matt Day in Seattle at mday63@bloomberg.netTo contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Vlad SavovFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
