Yesterday, President Trump ordered his administration to consider tariffs on an additional $100 billion in Chinese imports on top of the $50 billion already implemented. The extra $100 billion is punishment for the $50 billion in tariffs China announced in response to the initial $50 billion the U.S. put on Chinese goods. While many globalists, including some in Congress are wringing their hands over Trump’s tariffs, strong action against China is long overdue. China hasn’t played fair for decades. This is a single party system we are talking about, an economy that is far from the type of … [Read more...]
Ackman Faces the Flight of his Investors
Famous hedge fund manager Bill Ackman of Pershing Square Capital Management is watching his investors flee his fund. It may take them some time to leave due to rules allowing the withdrawal of only an eighth of their investment each quarter, but even that slow rate of withdrawal is reducing the fund's assets under management. Scott Deveau writes at The Globe and Mail: Bill Ackman’s Pershing Square Capital Management is facing more bad news as many of the institutional investors in its private funds have asked to redeem their money. About two-thirds of the capital that investors could … [Read more...]
Signs of Trouble in Chinese Economy?
Despite national reporting that details steady-as-she-goes growth in China's economy, the FT's Confidential Research team suggest there may be signs of trouble. Deteriorating wages and possible new fervor in government to reign in spending could be hard on the economy going forward. The team writes: Our readings, based on monthly surveys of 1,000 consumers and nearly 1,000 businesses, suggest the widely expected economic slowdown is yet to take hold. But the devil in the details of our survey results does suggest that underlying conditions may be softening. Tightening credit conditions and a … [Read more...]
New York Real Estate Sales Plunge
Buyers faced with the twin realities of high prices and high real estate taxes are stepping back from the New York City real estate market. After being fully exposed to the state's high tax rates after the federal tax reform bill passed last year, buyers are taking recoiling from what has been one of the world's hottest real estate markets for at least a decade. Lindsay Fortado writes in the Financial Times: The number of co-op and condominium sales in Manhattan fell nearly 25 per cent during the first quarter compared to the same period last year, according to new research by Miller … [Read more...]
How to Make Money in a Falling Market
The S&P 500 sold off sharply yesterday breaking through a key technical level (its 200-day moving average) and falling back into correction territory—a decline of 10% or more from its prior high. Ten percent corrections are not uncommon. We see about one 10% correction per year. On average, corrections last for about four months. This correction is about two and half months old. Stocks were lower on an intra-day basis during the initial stages of the correction in February, but yesterday was the lowest closing price this year. More interesting than the performance of the overall market, … [Read more...]
Can Musk Pull off a Miracle?
Tesla CEO Elon Musk has made a lot of promises. With the first quarter ending and an earnings report now due, this is when the rubber meets the road. Can Musk deliver on the plans he's sold his faithful shareholders? Or will the report simply detail his failure to get the job done? Dana Hull reports at Bloomberg: Tesla’s Fremont, California, delivery hub was packed with people Saturday evening as the last hours of the quarter drew to a close. Red couches and tall white tables were set up outside, a DJ played music and a truck selling Vietnamese food was on hand. Behind the scenes, a company … [Read more...]
Should Mark Zuckerberg Lead One of America’s Largest Companies?
In the spirit of kicking somebody while he is down, check out the Facebook chart below. Facebook has been on the hot seat for a number of reasons, as you are likely aware. Chief among those reasons, but unsaid explicitly by the media, is that Facebook is responsible for the Donald Trump presidency. Take away the emotion of the issue and it is obviously far-fetched. But the recent Cambridge Analytica issue has provided more oxygen for the fire. Facebook’s response to the scrutiny has been embarrassing. Watch some of Zuckerberg’s CNN interview and ask yourself if this is a guy who should be … [Read more...]
OPEC Wants More
Despite oil prices sitting at post-2014 highs around $70/barrel, OPEC is aiming to keep production curbs in place. Reuters reports that while no immediate action is being contemplated by the cartel to increase production, the conversation has begun on the sidelines about a possible boost. Alex Lawler and Rania El Gamal write: OPEC, Russia and several other non-OPEC producers have curbed output since January 2017 to erase a global glut of crude that had built up since 2014. They have extended the pact until the end of 2018, and meet on June 22 to review policy. The deal has boosted oil … [Read more...]
Falling Short on Retirement: Should You Save More or Work Longer?
The WSJ reports today on a new paper from the National Bureau of Economic Research illustrating the trade-off between working longer and saving more. NBER finds that delaying retirement and social security by just three to six months has the same impact on retirement income as saving 1% of your salary for 30 years. Sounds powerful. A couple of words of caution on the results though. Most of the benefit from working longer comes from higher social security payments. For each year you delay social security passed your full retirement age, your social security benefit can rise as much as … [Read more...]
Netflix Now Bigger than GE
The market capitalization of Netflix shares is now greater than those of America's most storied blue chip industrial company, General Electric (GE). For comparison's sake, in 2017 GE generated free cash flows of $5.6 billion, and Netflix had negative free cash flows of $2 billion. Despite that disparity in actual business success, GE is going through management and legal turmoil, while Netflix is riding high on its status as one of the FAANG stocks. Time will tell whether investors care more about potential future cash flows, or those that actually exist today. … [Read more...]
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