Fourth Quarter GDP was released this morning and the first estimate came in short of 3%, but the details of the report were positive. Inventory drawdowns detracted three quarters of a point from GDP in the fourth quarter. Personal Spending rose at a 3.8 percent annual rate with durable goods soaring double digits. Look for upward revisions to fourth quarter GDP when new numbers are released next month and in March. The durable goods orders numbers that came out today also showed strength. This is a separate series from GDP. Durable goods orders were up 2.9% in December vs expectations of a … [Read more...]
Is there a Private Equity Bubble?
The FT points to conditions of froth in the private equity market. Is private equity in a bubble? It may be, but private equity isn’t the only equity market where bubble conditions are dominant. Check out the U.S. stock market for example. It is an indication of the feverish conditions in private equity that buyout groups are not only setting new records for fundraising, they are also turning money away at their fastest ever rate. CVC identified demand of €25bn-€30bn from investors while raising its new €16bn fund last year: more recently Bridgepoint, the private equity owner of Pret A … [Read more...]
Main Street Comes Alive, Demands Lending after Tax Cuts
Regional banks are noticing a big boost in demand for borrowing from manufacturers, retailers and distributors who have been missing in action since the financial crisis hit. The tax cuts are causing optimism that is fueling businesses' desire to expand. Jenny Surane writes: After struggling with slowing loan growth throughout much of 2017, U.S. regional bank executives said the promise of lower taxes spurred a pick-up in commercial loan demand in the fourth quarter, as well as a rise in consumer spending on credit and debit cards. That, along with increased interest rates, prompted many of … [Read more...]
Companies Make “The War on Plastic” Part of Their Marketing Plan
With a growing anti-plastic sentiment among consumers, companies are trying to reduce the amount of plastic they use and increase the amount of recycled materials they use. A big announcement by Coca-Cola last week that the company would "collect and recycle the equivalent of all its packaging by 2030," is just the latest sign that this is a trend companies are going to be promoting as part of their marketing. The FT reports: Makers of everything from crisps and drinks to shampoo and laundry detergent are responding to growing public alarm about pollution as a younger generation, deemed to be … [Read more...]
How Much Bitcoin Has Been Stolen?
Apparently hacking crypto currencies is a $200 million annual revenue industry. That's according to Lex Sokolin, who was asked by Bloomberg's Olga Kharif. Kharif writes that in less than a decade, $1.2 billion worth of bitcoin and ether have been stolen from their legitimate owners. She continues: All told, hacks involving cryptocurrencies like Bitcoin have cost companies and governments $11.3 billion through lost potential tax revenue from coin sales and illegitimate transactions, according to Susan Eustis, chief executive officer of WinterGreen Research. The blockchain ecosystem -- … [Read more...]
Expect Very Modest Returns from Equities
In an interview with Bloomberg, Vanguard’s former CEO and current chairman F. William McNabb cautioned that investors should expect very modest returns from stocks over the next decade. Vanguard doesn’t have an axe to grind here so it wouldn’t hurt to listen what Mr. McNabb has to say. The meat of his comments are below. You can read the full story here. F. William McNabb, Vanguard Group’s chairman, cautioned investors to consider reducing their stock exposure before the nearly 9-year-old rally ends. “We would expect the next decade to actually be very modest on the equities side in the … [Read more...]
Companies Celebrate Tax Reform
American companies are celebrating the completion of the long-needed tax reform that was signed in November. Many are raising their profit targets, and some are even raising wages and handing out bonuses in anticipation of the windfall. Theo Francis writes: The announcements come as companies begin to report what are expected to be strong fourth-quarter financial results. A major focus will be executives’ expectations for how their operations and results this year will be affected by the tax law, which lowered the corporate rate to 21% from 35% and ended U.S. taxes on most future foreign … [Read more...]
Is a 3.5% 10-Year Treasury Yield in your Future?
FOMO (fear of missing out) seems to be the dominant theme in the stock market YTD. Stocks are already up 4.2% in only 9 trading days, and on only one of those days has the stock market fallen. And fallen may be an overstatement. One of the major factors (though not the only one) that has enabled such a strong start to the year is the abnormally low level of long-term interest rates in the face of a domestic and global economy that looks to be humming. The 10-year Treasury rate remains below its 2018 high of 2.62%. Chasing return in stocks because bond yields are low has been an ongoing … [Read more...]
Has Facebook Peaked?
Mark Zuckerberg announced this morning that Facebook is going to be making significant changes to its social media site. A growing number of Americans are disengaging from the platform because they are being bombarded with ads and auto-play, not to mention the feelings of anxiety and depression. Facebook’s answer is to feed more content from friends and family and less from advertisers and public sites. The changes are expected to decrease engagement, but Facebook maintains they will be good for the company long-term. Bloomberg has more. In a note earlier this week, Wieser reported … [Read more...]
Is Korea Crackdown the Beginning of the End of Bitcoin?
The Korean government is preparing to ban the trading of crypto-currencies on exchanges. The country's Minister of Justice, Park Sang-ki announced “Cryptocurrency trading is looking similar to speculation and gambling. South Korea’s [cryptocurrency] trade is considered abnormal abroad.” We have written skeptically about crypto-currencies many times at Youngresearch.com (see here, here, here, and here for a sample). Despite structural issues facing the use of cryto-currencies as a normal means of transaction, the biggest threat to the currencies has always been regulatory. China was the … [Read more...]
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