Weekend Reading

15 December 2018 | by Ensemble Capital

A summary of this week’s best articles. Follow us on Twitter (@INTRINSICINV) for similar ongoing posts and shares.

This is one of the biggest market risks that investors aren’t giving enough attention (Keris Lahiff, @kerisalison, CNBC)

Uncertainty over a trade war, Brexit, and interest rates have all been contributors to stock market volatility as of late but what about corporate debt?  In this article Lindsay Bell, investment strategist at CFRA Research speaks about rising levels of corporate debt on the balance sheet. “What investors really need to do is make sure they’re starting to look at balance sheets and cash flows. Look at those levels of debt and their ability to pay off the interest expense,” she said.

Normal Accidents in the Stock Market (Ben Carlson, @awealthofcs, A Wealth of Common Sense)

The market has seen increased volatility following the end of the third quarter and concerns about a correction have been rising.  Ben Carlson talks of historic market pullbacks, market complexity, and that craziness in the market can be thought of as normal.  Todd Wenning also recently wrote about valuation models and explored the thought: why bother forecasting cash flows?

Luckin Coffee: Starbucks Challenger or a New Breed of F&B for the 21st Century? (Ying-Ying Lu and Rui Ma, @supchinanews, Sup China)

Coffee is big business globally and the Chinese market is no exception.  With a large presence from Starbucks, Luckin Coffee is looking to gain market share throughout China.  Launching in January of 2018 they have already launched more than 1,500 stores across 21 cities in China.”Ying-Ying Lu and Rui Ma talk about Luckin Coffee, the hybrid online-offline coffee chain unicorn startup that’s turning heads in China with its rapid expansion and innovative business model.”

Moving into the Mall (Alby Gallun, @agallun, Crain’s Chicago Business)

As the shift to online shopping has been increasing over the years, many malls and large department stores are getting less and less foot traffic leaving them with the thought: what do we do with all this space?  For some owners, the thought of replacing it with apartments or houses is sounding like a good option.  “As the brick-and-mortar retail business shrivels, a growing number of shopping center owners are betting apartments could be the solution to their vacancy problems.”

People are Attacking Waymo’s Self-driving Cars in Arizona by Slashing Tires and, in some Cases, Pulling Guns on the Safety Drivers (Graham Rapier, @g_rapier, Business Insider)

Self-driving vehicles are continuing research and development efforts to improve technology but not everyone agrees that autonomous vehicles are the way of the future.  Graham Rapier discusses the frustration of some Arizona residents and how they’re taking it out on Waymo’s self driving vehicles.

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