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.

UPDATE Aug 21: US Stocks Continue Rebound Higher

Aug 20: Should we be concerned about a recession after the brief yield curve inversion last week? Answer "No" (video):

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.

August 16: US Stocks finished a volatile week sharply higher, but for the week the NASDAQ ended 0.8% lower, the S&P 500 ended down 1%, and the DJIA finished 1.5% lower. Editor's note: again, US stocks showed bullish resilience in the face of global headwinds this week.

Week ahead (Aug 19-23): 

Investor Notes:
  • "I think investors need to go to strong balance sheets ... Strong balance sheets are going to be the way to survive during the zigzag of 2019"--Jeffrey Gundlach. ICYMI here and here: "Obviously the US economy is not “overheating”. Many inputs to the Conference Board’s Leading Economic Indicators are worse now than in 2007. And yet, commentary in mainstream media this past week pushed a narrative that the Fed should raise rates due to economy 'overheating.' Wow."--Jeffrey Gundlach, 7 Aug 2019.

China is still the 'Biggest Macro Risk' 

01:38: "the trade imbalance between the US and China was unacceptable, the imbalance was doubling every five years in terms of how much they we export from them and how much they export from us and so it had to be addressed, the industrial espionage, the intellectual property protection, so it is the right thing and it was good that finally somebody [i.e., Trump] stepped up to it ..."--John Chambers, former CEO of Cisco, Aug 13, 2019.

See also Economic Analyst El-Erian: The Era of “De-Globalization” is Here--"Allianz Group chief economic advisor, Mohamed El-Erian, accurately describes what is happening ... The U.S. economy is strong; however, the multinationals on Wall Street invested overseas are exposed.  Thus there’s a disconnect and accompanying market volatility ... There is nothing that China and the EU can do to stop the de-globalization process; and efforts to stimulate their economies, more quantitative easing (pumping money) while the global supply chains are being shifted, are futile. The more a nation's economy is dependent on exports, the more exposure they have to the inherent downsides of de-globalization.   U.S. companies that are invested in these nations will lose their investment over time; some rapidly.  This will keep the stock market volatile, yet the Main Street USA economy is thriving. President Trump has purposefully stalled the process of globalization, and is resetting global supply chains. This is bringing massive amounts of wealth back into the United States. In essence, Trump is engaged in a process of: (a) repatriating wealth (trade policy); (b) blocking exfiltration (main street policy); (c) creating new and modern economic alliances based on reciprocity (bilateral deals); and (d) dismantling the post WWII Marshall plan of global trade and one-way tariffs (de-globalization)." See also Is the Geopolitical Chessboard Now Digital?
  • Bailout #3, Another Chinese bank is nationalized (this one with $200 billion in assets): "... bottom line: Trump now appears to be winning the trade war with China, whose economic contraction is accelerating and between slowing trade, sliding corporate profits (PPI), rising inflation (CPI), a devaluing Yuan, a record debt load, and now a sudden crisis in its banking sector, Beijing has found itself paralyzed and with zero credible options how to kickstart the economy ... China can't cut rates and ease to boost negative PPI as food prices are exploding ... China can't halt soaring pork prices as half of its pigs are dead or slaughtered ... China can't raise the yuan to ease the highest CPI in 16 months as it is currently devaluing in retaliation to Trump ..."
  • Trump Is Making Xi’s Superpower 2050 Plan Tougher by the Day--bloomberg.com.
  • El-Erian Warns: Trade Disruption Is A Symptom (Not The Cause) Of A Deeper Malaise.
Second Biggest Macro Risk: Eurozone
  • Germany Stalls And Europe Craters. Investor morale in the eurozone has reportedly deteriorated in August to its lowest since October 2014, with Germany trending towards a recession, and expectations falling to -20.0 from -13.0, their lowest since August 2012, when the eurozone debt crisis was in full swing.  The ECB’s publication of its Economic Bulletin (Sep 26) may "spook markets" and send investors running into the open arms of the highly-liquid US Dollar. As ECB President Mario Draghi has said, the growth outlook for Europe continues to get “worse and worse.” The Bloomberg Economics Euro Area Uncertainty Gauge is at its highest point since the Eurozone debt crisis.
  • No-Deal Brexit October 31, 2019: A majority of Britons believe Prime Minister Boris Johnson must take Britain out of the European Union “by any means”, even if that involves suspending parliament, an opinion poll conducted for the Daily Telegraph, reported. But Still More 'Remainer' Delusions, Still Confused? Read  Eurointelligence.com: "Today we would like to debunk the myth that the UK parliament can stop the no-deal Brexit. Under EU law - the law that matters in this specific discussion - there are only two technical possibilities for the UK parliament to frustrate an October 31st Brexit. The first and the only certain route is a majority in favour of unilateral revocation of Brexit. No such majority exists. This leaves a less certain pathway: to seek a further Art. 50 extension. Since Boris Johnson refuses to do this, it would have to involve a new prime minister before October ... look at the numbers. They are not there ... This means that parliament cannot stop a no-deal Brexit on its own." Or as Dominic Cummings, UK Prime Minister Boris Johnson's most senior adviser, recently said, "Politicians don't get to choose which votes they respect." Therefore, unless the European Union abandons its arrogance and insistence on the thrice-rejected withdrawal agreement, a no-deal Brexit will happen October 31, 2019Bottom line on Brexitthe UK will adjust and recover. Not so sure about the EU. More on Brexit here.
  • Adding Insult to Injury: "Domestic Argentine Politics have left the IMF [and its former president Christine Lagarde who will now head the ECB] looking stupid."
Other notes:
  • Reliance Industries said it would launch super-fast fibre broadband internet in India next month, and also announced a cloud services partnership with Microsoft, as well as sale of a stake in its oil unit to Saudi Aramco. The plans to launch fibre broadband threaten rivals who are still struggling to keep up with the cheap data plans of Reliance's Jio, which became India’s largest mobile operator by subscribers in just three years. Reliance, India’s second-biggest company by market value, aims to bolster its consumer businesses and diversify from its core oil and petrochemicals operations. Reliance's billionaire Chairman is Mukesh Ambani. Reliance's recent cloud services partnership with Microsoft indicates Ambani’s ambitions to compete with Amazon, which offers cloud services in India and is also one of the country’s biggest online retailers.
  • SeekingAlpha.com: "Technically, Alphabet's (Google) stock price looks clearly undervalued." But note the "growing distrust and disillusionment inside [and outside] Google"--wired.com.
  • Verizon selling Tumblr to owner of Wordpress, Automattic--reportedly paying less than $10 million, perhaps only $3 million--Yahoo under Marissa Mayer (remember her?) bought Tumblr for $1.1 billion in 2013. Easy Come, Easy Go?  
  • Personal tech: Robocall blocker apps are likely collecting personal data on users' devices without explicit consent and sharing it with analytics firms.
Past week's UPDATES:
What to watch NVDA Q2 report / Earnings Preview / Why Nvidia May Surge.
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 alsoDoubleLine 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 TermsInfographic: 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)

    DISCLAIMER

    Domain Mondo archive