While the first week back in the new year is always somewhat exciting, 2016 has certainly started with a bang. Unfortunately, not the sort of bang most finance, stock, tech or payments watchers were really looking for — but a bang nonetheless.
The stock market started things off with its worst day of trading in eight years. Many of 2015’s biggest winners — Facebook, Amazon, Netflix and Google (known collectively as FANG) — managed to lose billions of dollars in value in just a few days. Microsoft and Apple, both seen as particularly exposed in China, also took a beating.
And while it might be tempting to just crawl under the covers and hide until the news gets better, those stalwart, dedicated payments players must get up and bravely set forth with the most relevant data insights imaginable.
For all of you who fit that description, this Data Dive’s for you.
China Tanks — Takes The World With It
As most of the world with functioning cable or Internet likely already knows, the latest round of instability originating in the Chinese markets has taken the world on something of an historic roller coaster ride.
While the picture had been extremely grim for much of the week, Chinese stocks fell so hard on Thursday (Jan. 7) that trading was halted for the day — this time, barely a half hour into trading.
And that is not particularly great, especially when one notes that this was the second forced closing in the space of four days for the Chinese markets.
But assuming the Chinese stock market can’t rely indefinitely on its circuit breakers to end sessions prematurely, questions (and concerns) about what else it can do to stem the panic are starting to circulate.
A Chinese stock market winter break? More government injections of liquidity?
Whatever the outcome, the uncertainty, combined with the panic mentality in the Far East, has investors spooked throughout world markets. The Dow was off 2 percent at the close of the week, and the tech-heavy NASDAQ spent the week taking an absolute beating. It’s now down 10 percent from its peak.
Naturally, the big fear in the international markets is a move by China to radically devalue its currency by 10 percent to 15 percent in an effort to stimulate demand for its products and help shore up weakening numbers. A devaluation could potentially give a key boost to one of the Chinese economy’s more disturbing signs of weakness: manufacturing figures, which have been described as “dismal.”
The nation’s central bank set the renminbi exchange rate at about 6.56 to the dollar, which would be the lowest rate in about six years. It’s anyone’s guess whether there will be a near-term floor under the currency. If not, a vicious cycle — where investors send currency out of the country, while also selling stocks — could be exacerbated. There is also a concern that the current governmental large asset sale ban in effect may be a ticking bomb, as it is creating a class of professional investors now chomping at the bit to jump out of the market at the first opportunity.
This is bad news for any firms with goals of global expansion, as sitting out the vagaries of currency valuation may seem like the more prudent course of action at this time.
Established Internet behemoths are also suffering. Alibaba and Yahoo took big hits in the market, as did Apple, Verifone and Microsoft.
And, going into a new trading week, there remains plenty of uncertainty to go around.
“China has a tendency to muddle through, a bit of reform, a bit of growth,” said Oliver Barron, China research director at North Square Blue Oak, an investment bank. “The fact that the stock market has collapsed twice in four days in January signals there’s a lack of confidence.”
And a government that is not sure whether it really likes capitalism all that much makes the future murky at best. The future of players like Alibaba, which need to expand outside of China to literally hedge their bets, make the situation something worth watching. So far, that strategy hasn’t been all that effective.
A Clearer Glimpse Of Apple P2P
The news emerged in November that Apple was eyeing a move into mobile P2P payment services. Since then, more details have emerged that might give us a peek into what that move will look like in the form of a patent filed in early December.
Patents, most of them anyway, aren’t worth much more than the paper they’re printed on and don’t always turn into products. This one in particular suggests that Apple’s P2P plan will be connected to iMessage — no big surprise — but is also designed to allow users to send money through phone calls, emails and even calendar invites.
We can’t wait for the day that people start having to pay each other to attend meetings. Talk about a use case that no one has thought of yet. P2P’s killer app?
But, of course, Apple isn’t the only one with P2P aspirations. There is a long line of tech companies doing P2P. Facebook has a very similar use case for its Messenger service (and has since March), and just a month ago, FB and Uber paired up to allow payments between the apps — powered by PayPal’s Braintree. Google, Square and Facebook also offer P2P payments, and PayPal’s Venmo has grown quickly. PayPal’s most recent figures showed that Venmo users sent $2.1 billion in mobile payments via the service in Q3 2015, more than double the $700 million the year prior.
The remaining question marks: just how Apple’s take on P2P will actually take off, if the service will be done in partnership with the banks (a la Apple Pay) or if negotiations on that front are still ongoing.
What the infamous “sources close to the matter” have said, so far, is that the service would work very much like others do — consumers have options to send payments from their bank accounts to another person via Apple Pay. The service could launch in 2016. The banks reportedly involved in the talks with Apple about this service include JPMorgan Chase, Capital One, Wells Fargo and U.S. Bancorp.
Of course, as Karen Webster pointed out in a late 2015 article, those big bank partners — with P2P platforms of their own in many cases, big holes in their marketing budgets from a sputtering Apple Pay and contracts that force them to pay money on those transactions — don’t have any real incentive to cut Apple any slack but rather a lot of very compelling reasons to stay far, far away.
At this point, Apple needs the banks more than the banks need Apple.
Kanye Runs eBay
With all the somewhat dark and gloomy news in the world of finance and commerce this week, we thought it best to end on something brighter — or at least lighter.
And as always, Kanye West doesn’t fail to deliver.
Sneakerheads of the world who missed their chance to own the 2015 edition of the Adidas-made, Kanye West (AKA Yeezy)-approved sneakers have a second chance on eBay.
If they have a lot of money (and maybe even more money than common sense).
FootwearNews took a look at what the in-demand line has been fetching on eBay.
The most expensive pair of Yeezys found on the site — Yeezy Boost 750 in gray — is available in size 11 for $20,000. FWN also spotted a pair of black 750s, black 350s and tan 350s, all of whose sellers on eBay are looking to fetch $10,000 per pair.
Yeezy fanatics without five figures to part with on such a purchase still have a shot.
FWN shares that the shoes are available at comparatively more reasonable prices (meaning between $1,200 and $4,000) on sneaker consignment websites, like Flight Club and Stadium Goods.
The outlet adds that it has gotten a preview of some of the Yeezys that will go on sale in 2016, featuring colors such as white and red.
Kanye himself shared information about future Yeezys at the outlet’s FN Achievement Awards in December, stating that Adidas designer Nic Galway was working on a new pair.
Underreported is the fact that Kanye was actually at an awards show for sneakers — proving the simple reality that there are literally no events that the Kardashian-Wests will not attend, as long as someone will take a picture of them while they are there.
And monetize in some way.
So, what did we learn about the world this week?
Apple seems extremely serious about P2P, China is seriously making it impossible for some investors to sleep well and Kanye West is a seriously amazing marketer — outdone only by his wife, Kim.
We don’t decide the news; we just write it.