Markets & Stocks

Major U.S. stock indicesNASDAQ Composite | S&P 500 Index | DJIA (Dow).

FAAMG Stocks: Facebook $FB, Amazon $AMZN, Apple $AAPL, Microsoft $MSFT, Alphabet’s  Google $GOOGL $GOOG.
Markets & Stocks 2020 Jan 16-17: US Stocks SurgeBenchmarks Hit All-Time Highs on Trade Deals, Earnings & Data, Year-to-Date Returns: Dow +2.84%, S&P 500 +3.06%, NASDAQ +4.64%.
2019 Best Year for US Stocks Since 2013, S&P 500 UP 28.9%, Dow (DJIA) UP 22.3%, NASDAQ  UP 35.2%.  The S&P 500 Index tends to produce an annual return of 11.2% after a year in which it climbs at least 20%.

Why the S&P 500 Has Beaten Other Indices over the Past Decade:

Three 'experts' who got the 2019 Stock Market Totally Wrong: Jeffrey GundlachStanley Druckenmiller, and Larry Summers.

For the week ending Dec 27, 2019, the NASDAQ UP +0.9%, the S&P 500 UP +0.6% and DJIA (Dow) UP +0.7%Dec 26: US Stocks continue End-of-Year Rally, S&P 500 & NASDAQ Hit New Record HighsAmazon $AMZN Leads S&P 500 After Reporting ‘Record’ Holiday Sales!  Dec 23: US Stocks S&P 500, Dow, NASDAQ close at record highs again -- NASDAQ books longest streak of record closes since 1998 as Boeing CEO’s exit lifts Dow.

Investor Notes for the Week ending Friday, Dec 27, 2019:  
Most Important Oil Market Trends For 2020: #4 Oil and gas prices will remain range-bound in 2020.
  • Read of the Week FckdEx by Scott Galloway: "... A powerful algorithm for happiness is to be wealthy but anonymous ... FedEx is in the midst of being featurized by Amazon, who can make investments across their vertical stack that FedEx can’t match ..." Editor's noteMorgan Stanley estimates the Amazon delivery network will move 6.5B packages by 2022, more than UPS at 5B and FedEx at 3.4B.
Swiss Timepiece Shipments Hit Three Decade LowFrance fines Google $167 million  for engaging in anti-competitive behavior.
  • Antitrust 2020: the FTC is pursuing several antitrust investigations into online platforms, including Facebook and others, and the U.S. Justice Department Antitrust Division and multiple state attorneys general are also investigating whether large tech firms, such as Facebook and Google, are abusing their market power. Stay tuned for more in 2020.
  • SOL: sources told Reuters on Monday that SoftBank's bailout for WeWork just got complicated, warning that there's no bailout money
  • Google: according to a regulatory filing, Alphabet Inc’s (GOOGL) new CEO Sundar Pichai will receive $240 million in performance-based stock awards over the next three years, the highest ever promised to any executive of the search giant, plus $2 million in annual salary starting 2020. 
Year 2019's 13 Worst #FAILs in Tech: 13. Samsung Galaxy Fold;12. Facebook privacy & Libra; 11. Apple FaceTime bug & butterfly keyboard; 10. Amazon Ring & local police; 9. Huawei in US; 8. Uber IPO; 7. Amazon HQ2;6. Airbnb bedbugs; 5. Vaping4. Jeff BezosAmazon CEO & Washington Post owner's mid-life crisisdivorce tweetdick picssexts to skanky girlfriend(s)3. ICANN, Internet Society & Ethos Capital re: .ORG2. WeWorkneed we say more? #1. The Worst of the WorstBoeing 737 MAX. Congrats to Google, Microsoft, and Elon Musk, for missing this year's list of "13 Worst #FAILs in Tech." See also Boeing CEO Finally Fired.

Investor Notes for the Week ending Friday, Dec 20, 2019: US Stocks S&P 500, Dow, NASDAQ Composite close at All-Time Highs: For the week, the Dow (DJIA) closed up 1.1%, the S&P 500 up 1.7% and the NASDAQ up 2.2%
On the 2020 presidential election, Gundlach, founder of DoubleLine Capital, said his base case is that President Donald Trump will get re-elected. DoubleLine actively manages clients’ money and has more than $140 billion in assets under management, according to the firm’s website. The Federal Reserve is also in the midst of a buying T-bills in a process that it has insisted is not QE but instead is an effort to keep its benchmark overnight funds rate within the 1.5%-1.75% target range. “It’s a near perfect record — when the Fed grows its balance sheet the curve steepens,” Gundlach said. Full CNBC interview video.
Trump's popularity actually rose during the House Democrats' impeachment proceedings:  US President Donald Trump received his highest approval ratings ever in a new Quinnipiac University survey released this week. "The latest figures show a progression indicating support growing for Trump."  According to Bloomberg News, not exactly a Trump-friendly outlet, recent polls have shown weakening support for Trump’s removal from office, and in states including Wisconsin, Michigan and Pennsylvania, data and interviews suggest impeachment has only galvanized support for President TrumpWatch Tulsi Gabbard (video): Why I voted 'Present' on impeachment.
Video of the Week: Krystal Ball on Why Democrats should follow Tulsi Gabbard's lead on impeachment (video):  "I think most people reading through that transcript are not going to find that extremely compelling cause to throw out a president that won an election in 2016 and instead what I think most people will see is hey this is another move by Democrats to get rid of Donald Trump."
Big Tech Employees & the 2020 Election: Who's their favorite candidate? All (except Netflix employees) prefer Bernie Sanders (I-VT) by a wide margin of around 30%, while senile Joe Biden is getting donations ranging from 0% at Netflix to only 2.6% at Microsoft. 😲
See also The Japanization Of The European Union "And now, the final blow ... Stunned and disconcerted, central bankers see that they are achieving none of their objectives and are simply turning their economies into drug addicts ..." and Europe's Age Of Humiliation.
 El-Erian: "Many countries are facing structural uncertainties that could have far-reaching, systemic implications for markets and the global economy. For example, over the next five years, the European Union will seek to establish a new working relationship with the United Kingdom, while also dealing with the harmful social and political effects of slow, insufficiently inclusive growth. The EU will have to navigate the perils of a prolonged period of negative interest rates, while also shoring up its economic and financial core. As long as the eurozone’s architecture is incomplete, consistent risks of instability will remain."
  • Google Antitrust Case: in a court filing, Texas says Google is trying to hamstring investigation backed by 51 (50 states + DC) attorneys general.
  • Ford Motor Co. announced this week it plans to invest more than $1.45 billion at two of its manufacturing facilities in Detroit to make electric, autonomous and sports utility vehicles, and add 3,000 jobs.
  • Ucommune IPO: Citigroup and Credit Suisse dropped out of the U.S. initial public offering (IPO) of Chinese shared workspace provider Ucommune, reportedly over valuation issues.
  • Global TV Advertising Suffered Worst Drop Since 2009: In the US, although TV viewership has steadily declined since 2014, advertisers continued spending money on TV advertising, until now. Research firm Magna Global reports global television advertising is expected to drop 4% this year, the most significant decline since the global financial crisis in 2009. MeanwhileAmazon's advertising revenue is set to triple by 2025.
Dec 19: US Stocks S&P 500, Dow, NASDAQ Close at Record HighsDissing Deranged Dems' Impeachment of Trump.

Trump Effect: Deranged Dems' Impeachment Proceedings #FAIL With Voters
photo of Democratic Congressman Adam Schiff
Democratic Congressman Adam Schiff "gets away with distorting the truth for political purposes ... because
he has a willing echo chamber in the Washington press corps ..."--Wall Street Journal;
"... the pathologically dishonest Rep. Adam Schiff ..."--Glenn Greenwald in The Intercept
Do the Deranged Dems Know They Have Failed?  "As public support for impeachment continues to fade, Democrats appear to be coming unglued - with rabid outbursts in public, and privately threatening anyone who might derail their ill-advised gambit." See also Andrew Yang's dire warning for Democrats on impeachment (video). Quinnipiac poll released Dec 10, 2019"... more than half of all registered voters, 51 percent, think that President Trump should not be impeached ... Did Pelosi just ensure Trump's re-election? (video) and Impeachment isn't the way forward (video).

Read How Should the Senate Deal with an Unconstitutional Impeachment by the House? by Harvard Law Professor Alan M. Dershowitz, December 11, 2019.  US Senate Majority Leader Mitch McConnell will reportedly move to acquit Trump if he's impeached by the US House of Representatives, not merely dismiss charges

U.S. Department of Justice Inspector General Report On FBI Conduct (pdf), found "Clear Abuse" of FISA Process by the FBI began while Obama was President. Attorney General William Barr said the report "now makes clear that the FBI launched an intrusive investigation of a U.S. presidential campaign on the thinnest of suspicions that, in my view, were insufficient to justify the steps taken."

Read of the Year 2019The Inspector General’s Report on 2016 FBI Spying Reveals a Scandal of Historic Magnitude: Not Only for the FBI but Also the U.S. Media by Glenn Greenwald:
"If it does not bother you to learn that the FBI repeatedly and deliberately deceived the FISA court into granting it permission to spy on a U.S. citizen in the middle of a presidential campaign, then it is virtually certain that you are either someone with no principles, someone who cares only about partisan advantage and nothing about basic civil liberties and the rule of law, or both. There is simply no way for anyone of good faith to read this IG Report and reach any conclusion other than that this is yet another instance of the FBI abusing its power in severe ways to subvert and undermine U.S. democracy. If you don’t care about that, what do you care about?"

Survivorship Bias: "Most businesses fail. Most people do not become rich or famous. Most leaps of faith go wrong. It does not mean we should not try, just that we should be realistic with our understanding of reality."
Dec 6 9:30 EST: Task Force on Artificial Intelligence: Robots on Wall Street

Dec 6 Robots on Wall Street: The Impact of AI on Capital Markets and Jobs in the Financial Services Industry. House Financial Services Committee Task Force on Artificial Intelligence.
The stock market is designed to transfer money from the active to the patient -- Warren Buffett.
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.
Goldman Sachs Oct 7: 'US Is Not Close To Recession' - Economic Run 'Not Over'.

Quarterly earnings webcasts 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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