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.
Hearing on "Fostering a Healthier Internet to Protect Consumers"

Oct 16 10am EDT: Congressional Hearing (witness list and prepared testimony at link) on  "Fostering a Healthier Internet to Protect Consumers" (embed above)including Section 230 of The Communications Decency Act. See Committee memorandum (pdf) for more information.

Oct 15: US Stocks UP on Q3 Earnings.

Made by Google '19

LIVE October 15th at 10am EDT -- see a few new things Made by Google.
The week ahead (Oct 15-18)
  • Oct 15 8pm EDT: fourth Democratic presidential primary debate streamed LIVE via CNN.com and NYTimes.com, featuring 12 candidates on one stagecheek to jowl, including 78-year-old Bernie Sanders, recently released from the hospital after suffering a heart attack, and the other two Democratic Party front-runners, senile 76-year-old Joe Biden, and spry 70-year-old Elizabeth Warren.
  • Oct 16 10am EDT: Congressional Hearing on "Fostering a Healthier Internet to Protect Consumers" (embed above).
  • Oct 16: Q3 Earnings Webcasts IBM $IBM (5pm EDT)Netflix $NFLX (6pm EDT); others of note this week here (graphic below);
  • Oct 18 9:30am EDTCongressional Hearing on AI and the Evolution of Cloud Computing: Evaluating How Financial Data is Stored, Protected, and Maintained by Cloud Providers.
For the Week ending Friday, Oct 11, 2019, US major stock indexes: S&P 500 +0.6%;  NASDAQ Composite +0.9%; and Dow Jones Industrial Average (DJIA+0.9%. US Stocks rose on news of a partial US-China Trade Deal. Also, U.S. consumer sentiment rose to a 3-month high of 96 in October from 93.2 in September, the University of Michigan reported Friday (Oct 11) in a preliminary estimate. Shares of Apple Inc. $AAPL, rose 2.8% to close at an all-time high.

Reads of the Week: 
"... [T]he market is now discerning between overvalued unicorns ... those that could lose more than 80 percent of their value or disappear ... the central nervous system stimulant here is cheap capital ... [via] SoftBank, whose $100 billion Vision Fund was disruptive, on several levels ..."--MDMA by Scott Galloway. Also Wolfstreet video: "How the SoftBank Scheme Rips Open the Tech Bubble."
Is 'Hillaryland' The Saddest Place On Earth? by Daniel Greenfield: "... Hillaryland is the sad successor to Clintonworld networks like the Clinton Foundation which connected world leaders, foreign criminals and a prospective president. The alumni network is now a jokeThe Clintons will never hold public office again. Hillaryland isn’t an alumni network, it’s a political leper colony run by “volunteers” too dumb to realize ... Jeffrey Epstein is dead, Ed Buck is in jail, and Harvey Weinstein is tapped out ..." See also: Will the Clintons Destroy the Democratic Party?
Trumpsters vs. the Deranged Dems' 'impeachment inquiry mess' -- "A very large number of Americans don’t have high levels of trust and respect for the government, and they’re generally OK with Trump being the junkyard dog who digs it all out."--by Jake Novak, CNBC.com.
The New York Fed "is controlled by the New York banks, and it’s performing a public function,” says John Coffee, a securities law professor at Columbia Law School. That’s the tension” ... William Poole, former president of the Federal Reserve Bank of St. Louis, who otherwise vouches for New York Fed president John C. Williams’s bona fides as an economist, says: The question is whether he continues to make mistakes” ... "The annual salary for the New York Fed president was just $486,600 in 2018, according to the Federal Reserve. That's for running a bank, arguably the keystone of the Federal Reserve System, with 2,462 full-time employees as of year-end."--A Secretive Committee of Wall Street Insiders Is the Least of the New York Fed’s Concerns by Richard Teitelbaum.
Investor Notes: 
  • US: Investor positioning not stretched heading into October, economists see recession as avoidable amid limited imbalances--JPMorgan Chase & Co. analysis
Fiscal Stimulus? The federal budget deficit for 2019 is estimated at $984 billion, a hefty 4.7 percent of gross domestic product (GDP) and the highest since 2012, said the CBO -- Congressional Budget Office -- on Monday.
  • Eurozone: a "no deal" Brexit is a threat to the eurotaking out some kind of insurance for euro assets looks a smart course of action--"Bhanu Baweja, a strategist at UBS, is advising clients to take cover. If a no-deal Brexit were to happen, the euro could sink to $1.05 against the dollar, he reckons, with more room to fall after an initial shock." Brexit updates here.
German economic forecasts plunge: German industry is in recession, and this is now also impacting the service providers catering to those companies,” said Claus Michelsen, head of forecasting and economic policy at the German Institute for Economic Research (DIW Berlin), adding, “Risks arising from an escalation of the trade war are particularly high. But a disorderly Brexit would also have costs: it would cause German gross domestic product, taken by itself, to be 0.4 percent lower in the coming year than if there was an orderly exit.” The German economy shrank by 0.1% in the second quarter.  A recession is defined by most economists as two straight quarters of contraction.
Double Your Trouble, the More, the Merrier: outgoing ECB president Mario Draghi backs calls for eurozone fiscal unionMeanwhile, a group of former senior European central bankers published a memo attacking the NIRP & QE monetary policy of the European Central Bank, which they claim is "based on the wrong diagnosis" and risks ending its independence. Memo here.
  • UK: At $3.7 trillion per day or 56% of all global trades in OTC derivatives markets, even after three years of regulatory tussles with its biggest trading partner, the EU, the UK has not only maintained its grip on the vast and fast growing OTC derivatives markets, it’s strengthened it, pulling away from New York and leaving Paris in the dust. Meanwhile, M&G Prudential is proceeding with its $1.1 billion ‘Gotham’ Project in London's financial district, consisting of 905,000 square feet (about 84,000 square meters) of office space at 40 Leadenhall Street. Brexit news and updates here
  • China: An Overdue Reckoning--"Chinese companies aren’t a trivial amount of American stock exchanges, amounting to about $1.2 trillion of their $43 trillion market capitalization. This reckoning has been a long time coming for a country that refuses to be transparent and reciprocal — its companies unsurprisingly don’t fall far from the treeSEC investigations and claims of fraud directed at Chinese companies have been going on for decades. From reverse-merger scams to cooking two sets of books, Chinese companies are notoriously opaque and misleading with their accounting practices. Even well-known behemoths like Alibaba are questioned for accounting methods that obfuscate critical pieces of information from American investors. Jim Chanos of Kynikos Associates casts doubt on the authenticity of the cashflows of this $430 billion company: “What the company is really earning we don’t know. ... My experience with Chinese companies is that what you don’t know is generally not good news”--more here.
China Hit by EU Tariffs as High as 66.4% to counter alleged below-cost imports, and marking the preliminary outcome of an EU dumping investigation.
  • Huawei’s imperfect, but viable, backdoor to add Google Services to its devices has been killed off by Google"This virtually guarantees that [Huawei's] market share in smartphones outside of China is going to 0%. Samsung is in pole position to pick up most of this ceded share."--seekingalpha.com.
  • Arm made some important announcements at its annual Arm TechCon developer conference in San Jose this week, concerning mass customization of the primary computing components and software powering IoT devices
  • Last week Tesla acquired DeepScale, "an AI startup working on perception for autonomous vehicles. DeepScale is creating power efficient deep learning systems. While the terms of the deal were not disclosed, sources claim that Tesla purchased the firm outright, with Deepscale’s 40 employees as an “aquihire” for its Autopilot team. DeepScale also professes that its technology can enable faster over-the-air (OTA) updates."--ark-invest.com.
  • Google’s new competition cop, the Texas Attorney General, says everything is ‘on the table’--in an interview, Ken Paxton vows to get to the bottom of Google’s business practices.
  • Oracle Shelves Larry Ellison’s Dream of Cloud Dominance -- Oracle’s goal is no longer to dethrone Amazon Web Services but to remain competitive in databases and applications.
  • Fintech: Affirm, Afterpay, and Klarna need true moats against competitors--Section4.com video
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, Aug 14, 2019, 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.

Quarterly earnings list:
(company names below link to investor relations for report date; 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 &  Separate the Narrative from the Noise.

    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: 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."


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