Markets & Stocks

Major U.S. stock indices (current trading at links): NASDAQ Composite | S&P 500 Index | DJIA.

FAAMG Stocks: Facebook $FB, Amazon $AMZN, Apple $AAPL, Microsoft $MSFT, Alphabet’s  Google $GOOGL $GOOG.

Week ahead (Aug 24-30): G7 Summit. The 45th G7 summit, August 24–26, 2019, at Biarritz, France. Host country's website: elysee.fr/en/g7; Twitter: @G7. Editor's note: this could be interesting: Merkel & Macron & Tusk vs. Trump & Johnson, sort of like WWE tag teams.
Follow @realDonaldTrump and @BorisJohnson / @10DowningStreet for "the action." Modi may have to "referee."

Read of the Week: The S&P 500 Is A Yield Play Now | datatrekresearch.com.
‘This is insane. The Japanese are going to keep going. The Chinese print money like it’s a national pastime today. Europe is going to restart QE. We’re [U.S.] the only country that has an [positive] integer in front of our bond yields. We have 90% of the world’s investment-grade debt. We actually have rule of law and we have a decent economy. All the money is going to come here.”--Kyle Bass
"Are we poised on the edge of a bond cataclysm? Lots of people think so"--Bill Blain.
For the week ending Aug 23, 2019--NASDAQ Composite -1.8%, S&P 500 -1.4%, and DJIA -1%-- markets have been trying to digest, simultaneously, Trump's tweets, the trade war with China, Hong Kong protests, the Fed Chair's speech, and a slowing global economy.

 Investor Notes:
  • Europe: ECB reportedly "Has Big Bazooka Primed for September, Top Official Says"--The Eurozone's central bank is preparing a ‘very strong package’ of stimulus measures to support the declining eurozone economy; "package" to include bond purchases, further negative interest rates. Watch Wolf Street's "How Negative Interest Rates Screw Up the Economy"--YouTube.com.
Editor's note: how low will the ECB go?--"as low [negative interest rates] as it takes"? What happens when they find out that doesn't work anymore? See also The eurozone's Italian nightmare: An anti-euro party could soon be running a country that owes European banks nearly half a trillion of that currency. An Italian debt crisis would be like Greece on steroids. 
The Eurozone's negative interest rates, toppling bond yields, greater regulation and rising recession signals have destroyed most of the value of European banks, with their shares now at meltdown prices approaching the days of the Berlin Wall. European companies looking for financing will increasingly have to raise it from markets or borrow it from U.S., British, or other foreign banks, Natixis analyst Patrick Artus said.
  • China & Hong Kong: "I See No Future Here" Migration To Taiwan Surges 28% As Hong Kong Residents Flee.  China's Future: "... a 1990’s Soviet-style economic unravelling - constantly chasing the West, never catching up, being out-spent and out-competed by a still thriving US economy.  Already it’s seeing its position at the centre of the new global supply chains being usurped by cheaper and more friendly competitors across Asia: India, Vietnam, Thailand and Indonesia. The unravelling scenario looks a distinct possibility."--Bill Blain.
  • Amazon.com Inc. has opened its largest campus building globally in Hyderabad, India, as it prepares for a furious expansion and a battle with nemesis Walmart Inc. in one of the world’s fastest-growing retail markets. Amazon already has 62,000 full-time employees in India.
  • Walmart Inc. and Target Corp. are both signaling that the all-important American consumer is doing just fine--bloomberg.com.
  • Tesla could increase its gross margin on the Model 3 to more than 30% by the end of 2020 ... Wright’s Law states that for every cumulative doubling of production, costs fall by a fixed percent. For the auto industry, that percent has been roughly 15%.--ark-invest.com.
  • Streaming Wars (video): Netflix, Hulu, Amazon Prime Video and others are about to come head-to-head with the likes of Disney Plus, Apple TV Plus, HBO Max and NBCUniversal. In 2017, 61% of adults 18 to 29 said they primarily watch TV through a streaming service, compared to just 31% who watched cable. See also AT&T's media circus: "AT&T’s plans to launch a new streaming service [HBO Max] to compete with the likes of Netflix and Amazon are off to a rocky start — clashes between HBO staffers and Stankey, who heads AT&T’s new entertainment division, WarnerMedia."
  • AT&T, Comcast, Sprint, Verizon, T-Mobile, and seven other US carriers announce an agreement with 51 attorneys general to implement new tech to block robocalls.
  • The Rise and Fall of AOL (video):  At its peak in December 1999, AOL had a market capitalization of $222 billion dollars. 
  • US Politics: 'People Don't Want To Be Stupid Twice': Foreign Diplomats Betting On Trump Win In 2020--"In 2016, nobody believed he was going to be elected. People don’t want to be stupid twice," former French Ambassador to the US, Gerard Araud, told Politico. "The way it looks to people is it’s going to be another four years," an Arab diplomat said. One Asian ambassador told Politico that every embassy in Washington is operating "on the basis that the president has more than an even chance at being reelected." See also Joe Biden has bigger problems than just gaffes--Biden’s online fundraising has collapsed.
  • Memo to Jeff Bezos (WaPo), Comcast (NBC), AT&T (CNN), et al: The public is not stupid. News media in the U.S. is now "loathed" by most Americans. "The media’s biggest issue is exactly its bubble-ness, and clubby inability to respond to criticism ... The public is not stupid ..."  See also  Memo to mainstream journalists: Can the phony outrage; Bernie Sanders [and Donald Trump] is right about media bias. Mainstream media is shocked at Sanders's suggestion that ownership influences coverage. "I can tell you it's true"--Jeff Cohen in Salon.com.
News Journalist Chris Wallace: "People come up to me at airports or restaurants or whenever I’m out in public and praise me a lot for being fair," Wallace, 71, said in an interview. "While on the one hand I appreciate it, on the other hand it kind of depresses me because when I started out in the business being fair was the baseline — that you tried to be as fair, as objective, as even-handed as you could be."--thehill.com.

Past Week's UPDATES:

 Aug 23: Fed Chair Powell spoke at the Jackson Hole Economic Policy Symposium.  His remarks are here, excerpt:
"The current U.S. expansion has entered its 11th year and is now the longest on record .... Today I will explore what history tells us about sustaining long, steady expansions ... The outlook for the U.S. economy since the start of the year has continued to be a favorable one. Business investment and manufacturing have weakened, but solid job growth and rising wages have been driving robust consumption and supporting moderate growth overall. As the year has progressed, we have been monitoring three factors that are weighing on this favorable outlook: slowing global growth, trade policy uncertainty, and muted inflation .... The three weeks since our July FOMC meeting have been eventful, beginning with the announcement of new tariffs on imports from China. We have seen further evidence of a global slowdown, notably in Germany and China. Geopolitical events have been much in the news, including the growing possibility of a hard Brexit, rising tensions in Hong Kong, and the dissolution of the Italian government. Financial markets have reacted strongly to this complex, turbulent picture. Equity markets have been volatile. Long-term bond rates around the world have moved down sharply to near post-crisis lows. Meanwhile, the U.S. economy has continued to perform well overall, driven by consumer spending. Job creation has slowed from last year's pace but is still above overall labor force growth. Inflation seems to be moving up closer to 2 percent. Based on our assessment of the implications of these developments, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective ..."
Can Powell soothe markets and counter current FUD (fear, uncertainty, doubt):


Salesforce Announces Record Second Quarter Fiscal 2020 Results: Raises FY20 Revenue Guidance to $16.75 Billion to $16.90 Billion--Second Quarter Revenue of $4.0 Billion, up 22% Year-Over-Year, 23% in Constant Currency--Salesforce shares trading UP after hours Aug 22, 2019.
"Following an outstanding quarter, we're raising our FY20 revenue guidance to $16.9 billion at the high-end of the range," said Marc Benioff, Chairman & co-CEO, Salesforce. "With our Customer 360 vision, Einstein AI and the millions of Trailblazers innovating on our platform, Salesforce has never been better positioned for the future." 
"An enormous wave of digital transformation is sweeping across every industry, and major brands, like FedEx, AXA and Unicredit, turned to Salesforce in the quarter to propel their growth," said Keith Block, co-CEO, Salesforce. "The trust our customers have in us to drive their digital transformations is reflected in our strong quarterly results across our clouds and regions."

Aug 20 Yahoo Finance video: Should we be concerned about a recession after the brief yield curve inversion last week? Answer "No" Delta Derivatives Lead Option Strategist Tim Biggam discusses global factors contributing to the momentary 10yr/2yr yield curve inversion last week and why it is not a recession indicator in this historically unprecedented era of negative interest rates in Europe and elsewhere outside the U.S. Yahoo Finance video above published Aug 20, 2019. Track the 10yr/2yr yield curve here. See also Former Fed Chair Janet Yellen's and El-Erian's comments further below, that the recent momentary yield curve inversion is not a recession indicator for the U.S. economy.

Editor's note: Ignore MSM's "Recession FUD Political Agenda Narrative"--Mainstream Media Suddenly Full Of Stories About Imminent Recession. BofA’s CEO says Biggest Recession Risk Is the Fear of Recession--BofA CEO says yield curve driven more by global concerns, as U.S. consumer spending remains strong, delinquencies are low--bloomberg.com. How much of U.S. GDP is exposed to "trade risks"? Only 1.5%. China's GDP exposure to trade risks? 4.3%.

 Aug 19: US Stock Market rebound continues--"Resilient US earnings buck recession fears, Corporate America still going strong as Goldman estimates surprise growth in Q2 EPS"--Financial Times | ft.com.
Inverted Yield Curve T10yr/2yr:
Aug 14, 2019: Former Federal Reserve Chair Janet Yellen said the markets may be wrong this time in trusting the yield curve inversion as a recession indicator. "Historically, it has been a pretty good signal of recession, and I think that's why markets pay attention to it, but I would really urge that on this occasion it may be a less good signal," Yellen said, adding, "The reason for that is there are a number of factors other than market expectations about the future path of interest rates that are pushing down long-term yields."  
UPDATE Aug 15: Mohamed El-Erian agrees with Yellen (CNBC video): Inverted yield curve recession signal is 'distorted' this time around--Mohamed El-Erian, the well-known economist for Allianz who used to run investment giant Pimco, told CNBC on Thursday the inverted yield curve recession signal that made all the headlines this week is not as reliable as it has been in the past--"There are two realities, the European Central Bank has negative rates and it's going to take them lower ... and it's going to restart QE" [quantitative easing, which is an accommodative measure that would involve the ECB buying government bonds from eurozone countries to further boost lending and stoke inflation]. "So all that is going to distort our yield curve. And it's going to weaken the traditional signalling mechanism" for a U.S. recession, said El-Erian who also added that the U.S. should not have such low policy interest rates from the Federal Reserve or market rates in the bond market because the U.S. economic data are not pointing to a recession. But as he said Wednesday, the Fed has "no choice" but to cut rates again at its September policy meeting. "The bond market is distorted. It is distorted by what's happening outside the U.S.," said El-Erian, adding, "If you live in an interconnected world, you have no choice but to import the effect of negative policy rates in Europe." 
Yield on the benchmark 10-year Treasury note was at 1.623% on Wednesday, below the 2-year yield at 1.634%, causing the yield curve to invert, historically a signal of a recession within the next 2 years.  When asked if the United States is headed into a recession, Yellen said "I think the answer is most likely no. I think the U.S. economy has enough strength to avoid that ...." See also Goldman Sachs CEO says Recession Odds Still Relatively Low.
Other recent videos:
  • Aug 7, 2019, CNBC video of Josh Brown, CEO of Ritholtz Wealth Management, John Miller of Nuveen Asset Management and Liz Young of BNY Mellon Investment Management: "I don't see a recession."
  • Why Hong Kong is struggling to maintain control Aug 6, 2019 video: The FT.com's Asia Editor Jamil Anderlini reports on how police are struggling to maintain order in clashes with protesters in Hong Kong. The general strike has brought Hong Kong to a standstill as the political crisis deepens. The transport network was crippled and flights cancelled as police clashed with protesters.
China Blinks, Devalues Its Own Currency Aug 5, 2019:
See also: DoubleLine Webcasts / DoubleLine.com / DoublineLineFunds.com / YouTube
  • “The Case For Trump” by Victor Davis Hanson--YouTube.com: Hoover Institution video published May 6, 2019, recorded April 1, 2019. Martin and Illie Anderson Senior fellow Victor Davis Hanson addresses that question and more in his newly released book, The Case for Trump. He sits down with Peter Robinson to chat about his motivation to write a book making a rational case for those voters who chose Donald Trump over Hillary Clinton.

Quarterly earnings list Q2 2019:
(company names below link to investor relations; stock symbols to stock charts)
Others of note:
    Economic Calendar, Earnings Results Calendar:
    Markets | cnbc.com | Stock Exchange Trading Hours (24 hour format / local time):
    • NASDAQ and NYSE (New York Stock Exchange)  09:30-16:00

    Twitter: @ReutersTech @techreview @fastFT @technology @markets @business @WSJ @NAR

    How to Read Financial News Redux: Process Determines Priorities & Understanding Consensus.

     Other stock & investor links:
    SEC.gov | Company Search Page; see also Full Text Search (advanced)

    SEC.gov | How Investigations Work - The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. Here the SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud. Crucial to the SEC's effectiveness in each of these areas is its enforcement authority. Each year the SEC brings hundreds of civil enforcement actions against individuals and companies for violation of the securities laws. Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them. One of the major sources of information on which the SEC relies to bring enforcement action is investors themselves — another reason that educated and careful investors are so critical to the functioning of efficient markets. To help support investor education, the SEC offers the public a wealth of educational information on this Internet website, which also includes the EDGAR database of disclosure documents that public companies are required to file with the Commission.

     Profits explained | Finance Decoded

    FT.com video series: Finance Decoded, Jonathan Guthrie explains how companies calculate their profit, what investors should be wary of and the different measures used to gauge how a company is really performing (video published Feb 17, 2016).

    Peter Lynch on investing:
    Still following the market at age 71--(he has no plans to abandon the stock market for other leisure pursuits, “It’s a fun exercise, beats the hell out of golf" ... Lynch spends time calling companies, listening to earnings calls and reading transcripts)--investor Peter Lynch explains his philosophy this way: Use your specialized knowledge to home in on stocks you can analyze, study them and then decide if they’re worth owning. The best way to invest is to look at companies competing in the field where you work ... "If you’re in the steel industry and it ever turns around, you’ll see it before I do.” The popular-wisdom version of his ideology is mistakenly often cited as “invest in what you know,” which leaves out the role of serious fundamental stock research. “People buy a stock and they know nothing about it,” he says. “That’s gambling and it’s not good.” Lynch’s advice for small investors: Picking individual stocks is hard even for the professionals--"if you can’t understand the balance sheet, you probably shouldn’t own it.” Source: Peter Lynch, 25 Years Later: It’s Not Just ‘Invest in What You Know’ - WSJ Dec. 6, 2015

    Where Markets Fail: Visible Hands | CFA Institute Enterprising Investor

    Memos from Howard Marks

    Shortcuts to Factor Investing 101 | blogs.cfainstitute.org: "Smart beta and factor investing are just fashionable marketing labels for a wide range of risk-based approaches that sit somewhere beyond active and passive investment management but possess attributes of both. In essence, smart beta and factor investing combine the disciplined rules-based approach of market-cap weighted passive funds with the discretionary selection of whichever chosen factors or index series those who use them hope to replicate."

    See also on Domain Mondo:  Investing, Jack Bogle, Warren Buffett, S&P 500 Index, US, China

     Common Terms: Infographic: Here's 40 Stock Market Terms That Every Beginner Should Know | visualcapitalist.com

     Operating Profits
    "The basis for all sustainable shareholder returns is operating profits, not, repeat NOT revenue. Profit is the source of all future dividends, it is the basis for increased book value via retained earnings. The art of investing involves buying future levels of profitability at a significantly low price to make the whole venture worthwhile. Thus, one of the first things we look at when considering an investment is the level of operating profits the firm manages to generate relative to the capital provided by owners and creditors ..."--Web.com And The Problem With Growth Investing | Seeking Alpha, Nov 8, 2015.

    "Accounting games are also making the profits reported by companies much less trustworthy which, in turn, means P/E ratios are even more out of whack. Ciesielski, who writes The Analyst’s Accounting Observer ... [says] accounting manipulation has become very widespread and companies are using gimmicks to make profits look better. Company executives ...“all have a huge incentive to puff their numbers”... much of their compensation [is] tied to their stock’s performance. ... companies used to report profits according to Generally Accepted Accounting Principles — called GAAP for short. That meant all companies had to follow certain rules so that investors were able to compare apples to apples ... companies are now using creative accounting. GAAP has fallen between the cracks. The use of so-called “extraordinary items” and “non-cash charges” has made corporate earnings reports incomprehensible. “Non-GAAP earnings are more akin to anarchy,” says Ciesielski. ... How many companies are pulling these accounting tricks? Ciesielski says that, in 2009, 232 of the 500 companies in the S&P index were using tricks — thus straying from GAAP. Last year, 334 companies were doing so. Hundreds of billions in extra corporate profits were being reported simply by razzle-dazzle. It’s not that profits were actually higher — they were just made to look so."  source: The secret stock market accounting trick | New York Post

    EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization - essentially net income with interest, taxes, depreciation, and amortization added. Often used to analyze and compare profitability between companies and industries, minimizing effects of financing and accounting decisions.

    Revenue is the income (before deducting expenses) that a business has from its normal business activities, usually from the sale of goods and services to customers. Revenue is also referred to as sales or turnover. Profits or net income generally imply total revenue minus total expenses in a given period. Source: Wikipedia

    Risk Assets generally refer to assets that have a significant degree of price volatility, such as equities, commodities, high-yield bonds, real estate and currencies.

    Market liquidity | Wikipedia.org: "In business, economics or investment, market liquidity is a market's ability to purchase or sell an asset without causing drastic change in the asset's price. Equivalently, an asset's market liquidity (or simply "an asset's liquidity") describes the asset's ability to sell quickly without having to reduce its price to a significant degree. Liquidity is about how big the trade-off is between the speed of the sale and the price it can be sold for. In a liquid market, the trade-off is mild: selling quickly will not reduce the price much. In a relatively illiquid market, selling it quickly will require cutting its price by some amount. Money, or cash, is the most liquid asset, because it can be "sold" for goods and services instantly with no loss of value. There is no wait for a suitable buyer of the cash. There is no trade-off between speed and value. It can be used immediately to perform economic actions like buying, selling, or paying debt, meeting immediate wants and needs."

    Fungibility | Wikipedia.org: "Fungibility is different from liquidity. A good is liquid if it can be easily exchanged for money or another different good. A good is fungible if one unit of the good is substantially equivalent to another unit of the same good of the same quality at the same time and place."
    Addendum:
    Stock Market Links for 2 new gTLD Registry Operators:
    Exchange Link | Company | Google search link:
    *MMX and CNIC priced in GBX: Convert Pence Sterling (GBX) to US Dollars (USD)

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