Manhattan real estate prices are in a standoff. With the tax reform package making owning property in high tax areas less desirable, buyers are looking for lower prices on New York real estate. Sellers don't believe the tax changes should have a large effect, and aren't moving their prices lower. Stagnation has ensued. Josh Barbanel writes: The number of contracts signed from October through January was down 6% from the same four-month period beginning in October 2016, according to figures from brokerage Brown Harris Steven. That was the slowest pace of activity during those months since a … [Read more...]
Will the Powell Fed be Steady-as-she-Goes?
Jay Powell is the new chairman of the Federal Reserve. Janet Yellen's term was marked mostly by her continuance of Ben Bernanke's policies. Now, will Powell be a steady-as-she-goes chairman who continues the plan of rate normalization set in place by Bernanke/Yellen? Or will he chart his own course, either ratcheting rates up faster than expected to fight any potential inflation, or putting the pedal to the metal by lowering rates again to combat any drop in asset prices? The FT's Sam Fleming discusses Powell's future: Jay Powell received a brutish welcome from the stock market on his first … [Read more...]
Is There a Cloud Backlash Brewing in Tech?
Despite what seems to be relentless drive toward cloud computing by most of the major tech companies, including most importantly Microsoft and Amazon.com, there appears to be a backlash coming. The backlash is broken down into two parts: The first part is a backlash against the large cloud computing providers. Smaller firms working on what has become known as "edge" computing, are making their mark in the industry. The second part of the backlash to big cloud computing is a focus on local computing, being pushed most notably by Apple. Richard Waters explains the trend in the … [Read more...]
No Forgiveness for UPS from Wall St.’s Short-term Crowd
UPS has been racing to keep up with demand for home delivery that has exploded with the revolution in e-commerce. Despite the positive attitude given to Amazon.com for its low profit, fast growth strategy, the Wall St. crowd has looked askance at UPS for daring to spend money on investing in its business. UPS is working hard to keep up with the major secular shift in demand, but investing money in expanding its facilities has eaten into earnings. The short-term focused Wall St. crowd is upset. Paul Ziobro writes: United Parcel Service Inc. UPS -2.54% will spend up to $7 billion this year … [Read more...]
Dow Loses 665 Points
The Dow Jones Industrial Average plunged over 665 points today. That equates to a loss of 2.54%. Today’s sell-off ends the longest streak on record without a three percent correction. The drop was sharp, and broad-based. Every sector in the S&P 500 was down today, with about 95% of stocks in the index falling. Energy and tech took the biggest hits. Market pundits attributed the losses to rising bond yields, which were up again today as employment and wage gains exceeded expectations. So, what was good for the economy was apparently not good for the stock market. The TINA market … [Read more...]
Bond Bear Market Picking Up Steam
The bear market in bonds appears to be picking up steam. Strong employment and wage numbers this morning have pushed long-term Treasury yields past 2.8%—their highest level since 2013. Since the start of the year, 10-year Treasury rates have increased by 43 basis points or 0.43 percentage points. From a charting perspective, there isn’t much support for bonds until rates hit 3%. A welcome development in our view, but a not so pleasant development if you are among the investors who have reached for income by taking duration risk in the bond market. As of this morning, the Vanguard Long-term … [Read more...]
Has the World Seen Peak Facebook?
For the first time ever Facebook has reported that daily active users declined in the last quarter. In the last three months of 2017, time spent on the site declined by about 5%. Facebook shares took a hit, but recovered somewhat when Facebook executives outlined their plan to keep revenues up by increasing prices. The lower traffic comes at a time when there is increased scrutiny on the effects social networks and mobile technology are having on children, and even adults. Mark Zuckerberg has begun investigating how to make Facebook users experience better by emphasizing “meaningful … [Read more...]
This is Why We Don’t Recommend Apple Stock
We don’t invest in Apple stock and we probably never will given its current mix of businesses. That may come as a surprise considering that Apple is the largest publicly traded company in the United States. It will come as an even bigger surprise when you learn that Apple pays a dividend, has increased that dividend at a 25%+ compounded annual growth rate over the last five years, has loads of cash on the balance sheet, and trades at a discounted price-to-earnings multiple. For a dividend focused, value conscious investment firm like ours, that sounds like an inside straight. The … [Read more...]
The End of the Great Bond Bull Market
In September of 1981, 10-Year Treasury rates peaked at almost 16%. From that high, interest rates went on a three-and-a-half decade secular decline that colored every asset class in the world. Bond prices benefited from the decline in interest rates, but so did stocks, real estate, private equity, venture capital, and art among other asset classes. In July of 2016, the multi-decade bull market in bonds ended when the 10-year Treasury rate hit 1.31%. Rates moved up following the 2016 low, but only recently have they broken above their three-decade downward sloping trendline. The breakout may … [Read more...]
Is the Quantum Revolution Imminent?
There's a race on in the world of technology to build working quantum computers. The biggest technology companies in the world, including IBM, Google, and Microsoft are working hard to make breakthroughs in the quantum tech that could change computing forever. Now, Microsoft and Google are claiming that they are close to some serious progress. Richard Waters writes in the FT: The two impending milestones, from Microsoft and Google, will highlight how ideas until recently at the frontiers of theoretical physics are quickly taking practical form. Despite beginning work on quantum computing … [Read more...]
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