Tag Archives: DER Touristik

Updates

First of all

So whilst Microsoft is trying to rephrase their weak position through: ‘We are continuing to look at engagement as our key metric for success and are no longer reporting on total console sales‘, yes try to sell that whilst you have been all aggro on boasting boosted numbers for decades. Now that Xbox is about to become the number THREE system, they are running scared. The Nintendo Switch is now at 32 million, which surpasses the previous total number of Xbox One consoles sold, but they are currently allegedly at 41 million consoles sold, which means that there is only a 9 million gap until the most powerful console in the world degrades to the bronze position. Nintendo sold 14 million consoles in the last quarter alone, so that gives light that this is the last quarter with Xbox in the number two position, optionally the last month. Yet, I admit, my expectation of passing Microsoft by January 31st was not met, I was wrong. Yet the total number of consoles sold in the last quarter is still an amazing feat by Nintendo and it also shows that even as I was not correct in the end, my view was a lot better than all the market analysts.

The writing is on the wall.

I personally believe that some analysts have been setting the stage for shorting the stock of Nintendo. The question becomes what the law states. You see, when we look at the definition of shorting stock, the most generic version is: “he or she borrows shares of a company from an existing owner through his brokerage, sells those borrowed shares at the current market price, and pockets the cash“, yet in this case, the premise is not entirely that clear, with ‘he or she borrows‘ we need to consider that shorting the stock was done as a service for a third party, giving rise to the sale at tremendous profits. At present I seem to be wrong, there is no evidence of a setting to allow for a short sell. Yet the predictions that were made last year were so wrong, in so many ways that the overall findings would lead me to this path (there are others too). So is it just me? I would actually agree with this, was it not for the fact that the level of wrongness regarding Nintendo was so profound.

The state last year (Oct 2018) was given with ‘Nintendo Delivers Record Quarter, But Misses Estimates‘, so the stock tumbled a little less than 2%, in all this, whilst within a year the total lifetime sales of the Microsoft Xbox One were completely by 67% at that time, in addition, the software sales were almost globally ruling software top ten lists all over the place. We can argue that the ‘missed estimates’ were so ludicrously unrealistic that the entire matter had to be looked at, now we see the last quarter alone delivered 14 million consoles, which is almost 50% of what Microsoft achieved in sales between 2012 and 2016, four years versus three months, so how were estimations missed?

The puzzlement is supported even further with: “That’s Nintendo’s most profitable Q2 in eight years and a solid increase from the $211 million it booked last year.” It is in that light that I had an issue with the predictions in the last year. From my point of view Nintendo smashed almost every record, yet the stock is not reflecting that, giving rise to a few issues, but as a non-trader and a non-economy educated person, I cannot give the weight to that thought, yet the thought remains.

And now that we are treated to: ‘Nintendo cuts Switch sales forecast despite strong holiday season‘ the matter should be set, yet I am not convinced. Even as we see 14.5 million consoles up to now the last two months are unlikely to give them the 5.5 million consoles they need, they expect to get 2.5 million consoles and that seems achievable. I am not convinced that the 5.5 million consoles cannot be met, merely because Microsoft is on the ropes and there is no marketing, no advertising to reflect that. In this aggressive expansion universe it seems odd that Nintendo is not taking up the gauntlet to that degree.

They drastically improved visibility, especially compared to the WiiU. They have the titles that have a large appeal across the board and the people who do play the Switch love the interactions. In addition the shock news of Marvel Ultimate Alliance 3 and the fact is that it is exclusively to Nintendo Switch is not merely news, it is equally a shocker to Sony as well, as this was the kind of stuff that Sony needed to prevent from happening. The fans (including me) loved the first one on Xbox 360 and as we see the foundation of the original Gauntlet added to the DC and Marvel Universe, we get a game any comic book fan would love to play and nearly everyone that was one did and loved it. So to get this exclusively to Switch is a dealmaker as well as a record breaker. I doubt that this game will be out in time to get the next quarter sales up to the degree it needs to be upped, but it will soar sales of Nintendo yet again (optionally not in time to make the 20 million marker).

So did Nintendo do it wrong? I am not convinced, they made huge mistakes in the WiiU era and seemingly repaired all those flaws in the Nintendo Switch stage, no matter what estimates were not met, we now see that Nintendo Switch has gotten to 45% mark of the PlayStation 4 lifetime sales in under 2 years which is quite the feat as Microsoft got nowhere near that result, ever!

In second place

This is given to us by the Guardian (at https://www.theguardian.com/world/2019/jan/31/italy-slips-into-recession-for-third-time-in-a-decade-economy) it is in the setting of the same wall with more writing. It was to be expected as Italy has a whole range of economic anchors and downfalls. Yet I had hoped that Italy would have been able to stagnate their economy; alas they do not get to be that lucky and recession is the result. The problem is that this could also adversely affect France at present. It is (according to the Business Insider) yet at present the recession there is most likely, yet not a certainty. No matter how it wields, the French President will have to make a few committing jumps on several levels and as the stage between the US and the EU is polarising France will be on the side of the French needs, which by the way is not on par with American needs, so the Europeans have that to look forward to in the next 5 weeks. It is also the Italian part where we see failings, the Guardian gives us: “The deputy prime minister Luigi Di Maio, the head of the Five Star Movement, said the recession was proof that Europe’s budget rules should be relaxed to allow Italy to stimulate its economy back to growth“, which is the larger mistake. That approach did not work for the ECB and now the EU nations have a 3 trillion Euro anchor around their necks, adding debt will not have any true influence on the economy. the entire spending spree is now to be the anchor that drowns the 27 EU nations sooner rather than later and that is the overbearing part why Brexit was essential, the moment the UK is cut form that, the entire mess evolves too fast for anyone to correct for. The entire mess on four economies, where the one (UK) leaves and two (France and Italy) have merely a recession to offer, which means no options at all leaving it all to Germany who has enough for the ace of spades to be handed to them again and again. Germany avoided recession as it grew by 0.1%, which means that they only defeated the recession on the academic principle. It still means that the German economy is stagnating and that is not a good feeling when you are a German. So whilst we now see a whole parade of blaming the UK on making matters worse through a chaotic Brexit, I merely state that these idiots only have themselves to thank. If they had done something about the lack of transparency at the ECB as well as muzzle Mario Draghi from spending 3 trillion euro’s, money they never had, the situation would not be this dire (as I personally see it). The fact that the Business Insider also reported: (at https://www.businessinsider.com.au/europe-economic-gdp-growth-data-heading-to-recession-2019-1) “Junk bonds went through the roof. Total issuance of junk bonds from non-financial companies (rated BBB) went parabolic, according to Bank of America Merrill Lynch, as more highly rated bonds declined“, it is directly linked to the problem, that market went up by €100,000,000,000 in the last year alone, so this time if there is another meltdown (like 2008) and it happens, Europe will not see the fallout as it happened in Wall Street. No, this time around Europe will be the cause of it all to a much larger extent, so the impact on Europe will be beyond disastrous. Whatever quality of life there is, the Europeans can kiss it goodbye for decades. They could quite likely desire the time of harsh austerity, how is that on forecasting quality of life?

In combination

The EU is in a bad place and it has been reflecting all over the place. You see, last November we were treated to: ‘CPPIB is shorting $750 million worth of EU stock, making it one of the most active short-sellers in Europe, data show‘, more important, it gets an added “Unusual in that Canada’s biggest pension plan also tends to hold ‘rather long-term’ positions“. It seems a perfectly valid place to be in, especially when we see that so far that pattern seems valid. We see the additional “the CPPIB has nearly doubled the number of its disclosed short positions since last year, to 23 from 14. That places CPPIB 14th on the list of the most active short sellers in Europe“, as stated before, I can see the presence, and in this case I cannot explain it (merely because I am not knowledgeable enough to do so). Now, as we see the recession hitting Italy, followed by France soon enough, we might see the reflection on how the gains for the CPPIB could be one of the most profitable ones they have ever had. Even as there is still a little doubt, the firm holding ‘$356.3 billion in assets’, might soon be growing to a half a trillion wealth management colossal. With the positions becoming winners as Talend SA, Wirecard and PostNL falling like a brick in free flight, we see that the CPPIB is lunging forwards through growth (for now).

When we see the impact markets where the fun of wealth comes through the investing towards the gloom of failure, there we see profits soar, profits for those selling short that is. This is not the end or the beginning of the end. As France is setting the stage to move directly into a recession we will see more and more short selling profiteers and as France stumbles, the eyes of all will focus on Greece. Even as we are given ‘Greece moves towards ending austerity with rise in minimum wage‘, it is hard to predict the outcome. It makes perfect sense to do this and when you realise it is significantly less than half of what an Australian would get over that same period. It makes us wonder how the Greeks had been able to keep themselves alive. I personally hope that the view of Alexis Tsipras works out the way he thinks it will, the case is viable, and will it work? Only time will tell at present. Yet it is also a dangerous place. That is seen with: “A glimmer of light emerged on Monday as borrowing costs on 10-year bonds dropped to a four–month low and Tsipras announced that the government would imminently be issuing a five-year bond“, we get the logic of essentially needing to borrow, but Greece is in a much too dangerous place and those bonds could backfire in a terrible way, I believe that the bond issuing was done too early, in a time when there is still too much to lose. In that I actually hope that I am wrong, yet my track record towards predicting these events have been too often on the nose and that worries me to no end.

In this Bloomberg view supports mine (at https://www.bloomberg.com/news/articles/2019-01-07/all-the-risks-besieging-europe-bonds-are-spilling-over-into-2019), the headline ‘All the Risks Besieging Europe Bonds Are Spilling Over Into 2019‘ gives that. Even as the view does not include Greece, the overall risk will be hitting all EU nations (as well as the UK). There are two parts to this, the first opposing me is the view “The risk of spillover from Italy is in our view overestimated,” by Arne Lohmann Rasmussen, head of fixed-income research at Danske Bank A/S. Both that as well as the positivity that he thinks that Spain brings is set on realism, the man is a professional, let’s not forget that. Yet on my side we see: “What happens in Italy is still likely to be felt in its Mediterranean peer, albeit not to the extent of the euro-area debt crisis earlier this decade” this is the Goldman view and I believe t is more accurate, more important the doubt and worrying nature of these investors will make them sketchy and shift happy on a few levels, so when Italy is hit, France will get a beating as will Greece and it will affect Spain too, depending on their economy optionally a lot less and there we get back to the academic non recession of Germany, that 0.1% in the plus, when that gets hit negatively it will escalate the Mediterranean issues by a lot more hitting Spain for certain and hitting the others harder. It is merely my view, yet I believe it to be the correct one. For how much is unknown, I have no idea and I am not willing to guess. We will see a lot more by the end of March. It is at that point where we see what the actual impact will be, at the point the people will decide to either enjoy a little sunshine or make sure that they can avoid the winter of their bank accounts, in Europe these options have become mutually exclusive, an impact that will hit tourism in Greece and Spain in more ways than one. At least the Greek prediction that their tourism will level off in 2019 is decently realistic, which opposes the view: ““2019 will be Greece’s year,” according to DER Touristik, the largest travel company in German-speaking countries” one that is wishful thinking at best.

 

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