Corporate News

(San Francisco)

The new Apple iPhone X has gotten a lot of hype in media. Aside from all its new features, which are admittedly extensive, its ~50% price hike to $1,000 has received a great deal of attention. That price hike is testing a long-held economic principle which says that as prices for a good rise, demand falls. However, for the last 100 years there has been a view that rising prices could raise demand for certain goods because they amounted to “conspicuous consumption”, or saw their demand rise as prices did because owning them signaled wealth and status.


FINSUM: Apple’s new iPhone X, with a lofty $1,000 price tag, may just prove conspicuous consumption true.

(Seattle)

Amazon taking over Whole Foods (the deal is now finally closed) has put an unprecedented level of fear into grocers. The reason why can be encapsulated in one sentence: because Amazon does not need to make money on groceries. The company is set to try to grab traffic from rivals by lowering prices at Whole Foods, but at the same time it can afford to do it by using loss-leaders extensively. Since Kroger and Target make the bulk of their money from groceries, they do not have that same luxury. Once insightful commentator says “Amazon’s using the same playbook they always have when competing with booksellers and other retailers … They take out their revenue stream by killing them slowly on price”.


FINSUM: This is really scary if you are a pure grocer because it means Amazon has pockets deep enough to go way lower on price and still come out on top. It is sort of like an investor betting against the Fed.

(New York)

So one of the things that was very hard to figure during the Trump Rally, especially in bank stocks, was to what degree banks may actually benefit from the deregulation that Trump’s administration was proposing. Well, that may now be starting to change as Bloomberg has just put out a comprehensive set of new estimates for how much each bank would benefit from various types of deregulation. JP Morgan and Morgan Stanley would be the biggest beneficiaries, seeing their pretax profits jump a whopping 22%. Goldman Sachs would see the smallest percentage increase, up 16%. The calculations are based on conversations with banks as well as their own disclosures.


FINSUM: These are pretty big gains. Frankly, they are larger than we would have anticipated. Now to the pesky part about actually enacting deregulation.

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