With equity valuations at or near record levels by many measures, publicly traded corporations are racing to sell shares into the market. Karen Langley reports at The Wall Street Journal: Public companies have been taking advantage of a hot stock market by issuing shares at record pace in January. U.S.-listed companies have conducted 57 follow-on stock offerings this year through Wednesday, raising $12.35 billion. Both numbers are records for this point in the year, according to Dealogic data going back to 1995. Many of the offerings have been from small pharmaceutical and other … [Read more...]
About Jeremy Jones, CFA
Investors Are Being Conditioned Not To Recognise the Danger
The Financial Times reports on comments by Seth Klarman comparing investors to frogs in slowly boiling water who can't feel the change in temperature until it's too late, writing: Seth Klarman, the founder of hedge fund Baupost Group, has told clients central bank policies and government stimulus have convinced investors that risk “has simply vanished”, leaving the market unable to fulfil its role as a price discovery mechanism. The private letter to investors in his fund, seen by the Financial Times, amounts to a damning critique of market behaviour by one of the world’s foremost value … [Read more...]
What Is the Stock Market’s Link to the Economy?
At The Wall Street Journal, Justin Lahart examines the stock market's link to the economy, and whether the market could fall even during strong economic growth. He writes: We keep being reminded that the stock market isn’t the economy. But then, is it possible for the market to go into a long bear run even if the economy booms? Yes, although there is little record of it ever happening. U.S. stocks’ performance over the past year has been more than breathtaking. Even though the U.S. economy is in decidedly worse shape than it was before the Covid-19 crisis started, with millions of … [Read more...]
Whether Through Audacity or Ignorance, Stock Fundamentals Are Being Ignored
James Mackintosh reports at the Wall Street Journal that stock fundamentals are being ignored by investors. It's not clear whether the cause is an influx of new investors who are ignorant of fundamental analysis, or heightened appetite for risk. Whatever it is, it's probably unsafe for the market. Mackintosh writes: Sometimes it’s hard to argue that market capitalism has any chance of correctly allocating money to the companies that can use it best. Case in point: Stock-market performance this year has been driven by the raw share price, with lower-priced stocks doing better and higher-priced … [Read more...]
Jim Simons’s Renaissance Technologies vs. Internet Forum Traders
This story is a familiar one if you have been active in the markets for a few decades. It starts with the WSJ reporting on Jim Simons's decision to step down as Chairman of his firm, Renaissance Technologies. As the Wall Street Journal so kindly points out in this morning’s article, Renaissance Technologies public funds had a real ugly year in 2020. They were down 20-30%. Simons is one of the most successful hedge fund managers on Wall Street—ever! Nothing like a parting gut-punch from the most widely read financial newspaper in the U.S after an otherwise brilliant career. Classy … [Read more...]
Biden Plans to Spend Trillions More on COVID-19 Stimulus
The Biden team has announced that they plan on spending trillions of dollars (in addition to the trillions already spent) on COVID-19 stimulus and recovery. The New York Times reports: With millions still struggling, the initial stimulus package that Mr. Biden will unveil is expected to include money to complete $2,000 direct payments to individuals and aid to small businesses and local and state governments, Mr. Deese said. Others briefed on Mr. Biden’s thinking said he would also call for the first piece of legislation to include extending the duration of benefits for the long-term … [Read more...]
Overtaken By Nvidia, Intel Fires Bob Swan
The Financial Times reports on the firing of Bob Swan by Intel, writing: Intel is replacing its chief executive Bob Swan after a series of manufacturing setbacks and competitive blunders that lost the veteran Silicon Valley company its crown as the top US chipmaker. Mr Swan, its former finance chief who held the top job for just over two years, will be succeeded on February 15 by former Intel veteran Pat Gelsinger, who is currently chief executive of VMware, the infrastructure software group. The company made the move just days before Mr Swan was expected to unveil Intel’s new … [Read more...]
Downcast Small Business Owners Prepare for a Difficult Four Years
The NFIB's measure of small business optimism shows that owners across America are not hopeful about the near-term future. Jeffrey Bartash reports for MSN: The numbers: Small-business owners turned more pessimistic in December than they have been at any time since the onset of the coronavirus pandemic after a record new stage of the viral outbreak and Democratic electoral victories that promise a potentially dramatic shift in economic policy in Washington. The closely followed optimism index compiled by the National Federation of Independent Business fell by 5.5 points to 95.9 last month, … [Read more...]
Business Owners Must Reassess Relationship with Big-Tech
If you own a business that relies on big-technology companies or if you work for a firm whose business relies on big-tech, it's time to start looking for alternatives. Apple, Amazon, Google, Facebook, and Twitter, to name the big ones, can literally put you out of business overnight. Apple and Google banned Parler from their app stores over the weekend, following an influx of new users. Parler is an alternative to Twitter. No big deal, right? Apple is a private company and can ban businesses from its app store if it so chooses. Indeed, it can, but Apple also prevents users from … [Read more...]
Corporate Bond Yields: What You Can Earn Today
Corporate bonds are a good place to pick up yield in the bond market. With yields on government bonds in much of Europe and Japan in negative territory, corporate bonds offer a higher-yielding alternative. Corporate bonds are a broad universe, though. There are investment-grade corporate bonds, junk bonds, foreign corporate bonds, hybrid corporate bonds, and floating-rate corporate bonds among other variations. Investment-grade corporate bonds are the largest part of the corporate bond market. How Much Do Corporate Bonds Yield Today? We break the investment-grade corporate bond … [Read more...]
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