Went to the nearby McDonald (NYSE: MCD) yesterday afternoon, and tried out the Iced Latte. Personal opinion: the latte at MCD is not as good as Starbucks ( Nasdaq: SBUX). Two things:
1) McDonald makes this mostly by machine, while in Starbucks the barista used some hand;
2) McDonald serves the latte not in a full cup, this never happened to me in Starbucks.
So in summary the latte McDonald (McCafe) looks cheap, although they can argue in “blind test” their coffee tastes better. As to the regular brewed coffee in MCD, it depends: it tastes better when it was fresh brewed. The coffee beans in those stores are similar, except SBUX are usually overly roasted (looks darker and tastes bitter).
China’s role in the Fannie/Freddie mess
As Fannie/Freddie crisis deepens, people find China in akward postion because China is the largest holder of 2F’s bonds: total $376.3 billion. I don’t know exactly how China got into this mess, but I think one reason is decision maker in China must think 2F bonds are safe because of US goverment implicit gurantee. At least the market thinks so because the rating agency S&P, Moody and Fitch all gave Fannie/Freddie top rating. But wait a minute, didn’t those rating agency give a pass to those toxic MBS and CDOs? One thing I am sure is the China 2F buyers’ job are still safe, because at least they did better than the guys bought Blackstone at IPO, bought Morgan Stanley at $50s couple months ago.
It’s the NBA playoffs season again, and I watched the two games between Phoenix Sun and San Antonio Spur lately. As you may know, I am a big fan of Phoenix Sun/Nash. But they disappointed me again this year: they lost 2 games in a row. The main reason is that Phoenix is pretty much a one-dimensional team: a fast tempo, “Nash passing, Stoudemire dunk” team. After the Spurs sealed the ball from Nash to Stoudemire, Suns lost its touch. I did not see meaningful contributions from other key players (Diaw, Barbosa, Bell), and Shaq is just a bit too old. So what’s my point? In the NBA, the team with the best balance of offense and defense wins (if we exclude referee, luck factor). A team can not win the championship simply by one strategy, one super star,…they need the supporting cast, the defense as well as offense.
Back to the investing. Yesterday we saw a huge disppointment from Starbucks (Nasdaq:SBUX) earning report. It says “it experienced the worst consumer enviroment”.
Last week I had the opportunity to try the latte at a new McDonald restaurant near my home, it was good. The middle size iced carmel latte cost $2.79 ($2.99 after tax), slightly cheaper than Starbucks. One caveats (as I understand), not many McDonald stores offer those espresso at this time, the new ones offering those are called McCafe.
The Coca Cola stock vs. Starbucks stock
In last 10 years (Mar 6 1998 to today Feb 28 2008), according Google Finance, SBUX went up from 4.93 to 18.78 (+280%, split adjusted, SBUX has not paid any dividend). That’s about 14% price appreciation annually.
On the other hand, KO went from 68.66 to 59.56 (-14.44%). But there is a caveat, Coca Cola pays out a cash dividend each quarter, so we should adjust the dividend when calculate Coke’s return.
Obviously most of them don’t know what they are talking about, accoring to Free Money Finance.
This is actually confirmed by Karen Blumenthal, the author of Grande Expectation: a year in the life of Starbucks stock. She said (before wrote the book), she has been financial journalist for more than 20 years, but she did not know what is stock split, what is earning, what is shareholder meeting etc.
I read half of the book, and I’ve learned quite a bit from Karen’s learning experience
(Update noon Jan 18) Opps, the Bush rally only last couple hours Seriously, I do welcome this $1,600 per family tax rebate. Maybe a trip to Europe this Spring? Oh well, that won’t help the US economy directly.
(Original) I mean, to the stock market. Yesterday, after Ben spoke in Congress and painted a bleak picture of US economy, and asked for some sorts of stimulus package. The DOW tanked 300 points, S&P and Nasdaq did no better. Today as Bush is unveiling his economy package: good old things like tax rebate for individuals and business, the US market seems took the cue and is up in the morning. Another amazing thing is the Overseas market (Japan, Korea, Hongkong and Shanghai) also reversed course (last night). So when Bush speaks, the world listens
Just kidding. Seriously speaking, I think US president has little to do with the US economy cycle, nor can a Fed chairman. The US is heading to a recession, period. But see, the problem is people (include myself) don’t want to hear the harsh words, facing the reality. A few days ago in Michigan John McCain did his straight talk “some of the jobs lost (in auto industry) is not coming back, we need to re-train our people for new skills”, while his rival Mitt Ronmey says he will do everything to get back auto jobs. It’s so obvious that US auto industry is losing ground in the US market, but people still elected Mitt: the guy who tells white lies.
Yesterday morning when I went to Panera (St. Louis) Bread to get morning bagel, I noticed they raised the price from 89 cents to 95 cents. I can fully understand the pressure they are facing: the rising wheat, diary, and energy cost.
SBUX and PNRA are hit on two sides: the rising costs of raw materials; and shrinking pockets of US consumers.
Long term, I do believe Starbucks will do very well in China, and other emerging markets; but right now, the sales from China is just too small to overcome the difficulty in the US…So I will NOT try to be hero at this time.
Accoring to Seattle PI: “Up to 1.5 million daily giveaways will begin Oct. 2 and run through Nov. 7 at more than 10,000 company-owned and licensed U.S. stores, Starbucks said. When the promotion ends, Starbucks expects to have given away more than 50 million songs.”
During the promotion, Starbucks will pick an artist each day and provide its customers with a complimentary download card that can be redeemed through the end of the year at the iTunes store. Some of the other artists are Joss Stone, Dave Matthews, Bebel Gilberto, Annie Lennox and Keith Urban.
Lombard declined to say how many cards would be available at each Starbucks store, but he said the company would “make sure every store has more than enough cards to provide to customers.”
Chase Sapphire Preferred (CSP) has 50,000 Ultimate Reward (UR) points for new cardholder (meet spend criteria). 1 UR point is worth roughly 1.25 cent. So bonus is about $625. It does have $95 annual fee. But it also has a bonus category (2% earn on restaurant & travel). And the CSP UR site has good rate for booking travel, also one can transfer points to travel partner. For CSP I have a shameless plug: I'm doing referral for 5 friends for limited time. I'll only need your email and first name, from which I'll sent out referral. As a bonus, I'll split the 10,000 bonus points that I'll receive from Chase, via $50 Amazon GC. So something to think about it. This offer applies to new CSP cardholders. My email is minjie dot xu at gmail dot com
Chase Freedom: it has an offer of $150 cash back for new cardholder spending $500 in first 3 months. I'm doing a referral similar to the CSP card above ($25 Amazon GC, from the $50 I'll receive). Note Freedom card has no annual fee, the kicker for Chase Freedom is 5% bonus category for each quarter (gas, restaurant, wholesale club etc.)