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Young Research & Publishing Inc.

Investment Research Since 1978

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Here Comes the Tax Man for Amazon’s Third Party Sellers

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Amazon sellers are being hit with tax bills for merchandise they may have sold over a decade ago. Tripp Baltz reports for Bloomberg: Steve Jenson of Logan, Utah, thought he had a good business selling books through Amazon.com Inc.—then he got hit with a $200,000 tax bill from the state of Washington, alleging he had failed to collect and remit sales taxes from customers dating back to 2011. It was a rude awakening for Jenson, who, like many other Amazon sellers, says he wasn’t even aware that he was supposed to collect the tax in the first place. He is now paying off the bill at a rate of … [Read more...]

Walmart Prime?

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Matthew Boyle reports at Bloomberg that Walmart is developing its own membership program to rival Amazon Prime. He writes: The world’s largest retailer is developing a paid membership program to challenge the internet giant’s Prime offering -- which has become the default online shopping option for millions around the globe. The service, called Walmart+, will expand on the retailer’s existing grocery-delivery subscription service, which it introduced last year. Chief Customer Officer Janey Whiteside will spearhead the service’s development and rollout. A Walmart spokeswoman confirmed the … [Read more...]

You Have to Read This

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This is a beauty from Bloomberg Businessweek. If you want insight into what has (or had until a few days ago) been driving the speculative fervor in stocks like Tesla and Virgin Galactic, look no further than 2020’s version of the Yahoo Finance or Raging Bull message boards. Bloomberg's Luke Kawa reports (emphasis is ours): In a dingy corner of the internet is a message board, soaked in profanity, bro-speak, and greed, where posters with handles such as OverthrowYourMasters and yolo_tron campaign for their favorite stocks, putting up screenshots from their online brokerage accounts of their … [Read more...]

Large Downgrades Test High Yield Debt Market

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Joe Rennison reports for the Financial Times that "fallen angel" downgrades could test the high yield debt market. He writes: When S&P withdrew General Motors’ top-quality credit rating in May 2005, sending $41.5bn of debt crashing into junk territory and creating the largest ever “fallen angel”, it triggered the biggest sell-off in corporate bond markets since the dotcom bust. Along with the simultaneous downgrade of Ford, which remains the second-largest fallen angel after its $40.8bn of debt was docked, the bedrock of corporate America shook. “It is not just they that have a … [Read more...]

Is Commission Free Trading Feeding the Frenzy in Speculative Stocks?

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Lu Wang and Vildana Hajric suggest at Bloomberg that commission free trades are driving an explosion of trading from retail investors. They write: Their fingerprints are on Apple Inc.’s staggering rally. They piled into Tesla Inc. as it tripled, and turned speculative fliers like Virgin Galactic Holdings Inc. into some of the most heavily traded shares in the country. Why the enthusiasm? Some see a link to decisions by brokerages to cut commissions on trades to nothing. While it’s tough to know what’s causing what -- bull markets are fueled by new converts but also lure them -- trading … [Read more...]

Is there a Bubble in Socially Responsible Investing (ESG)?

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Patrick Temple-West reports on the wide premium being given to the best ranked "environmental, social and governance" stocks. He writes: Companies with the best environmental, social and governance scores have opened up what one analyst calls a “monstrous” valuation premium, in a sign of rampant demand for the hot investment theme. Investors last year ploughed a record $21bn into socially-responsible investment funds in the US, almost quadrupling the rate of inflows in 2018, according to Morningstar, the data provider. Now, companies with strong ESG credentials are starting to show the … [Read more...]

A Bird in the Bush is Worth Two in the Hand

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Yeah, you read that right. In today’s stock market where tall tales can ignite a speculative frenzy in individual names reminiscent of the dotcom bubble, companies that return cash to shareholders have been eschewed. Generating revenue and profits and paying dividends is apparently out of fashion in 2020. The chart below shows the YTD performance of three different groups in the Russell 1000 index (largest 1000 stocks). The first group is the highest 50% of dividend payers not counting companies that don’t pay dividends. The second group is the bottom 50% of dividend payers not counting … [Read more...]

Germany Preparing for Hit from Coronavirus

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Myles McCormick explains in the FT that Germany, Europe's largest economy, is preparing to take a hit from the effects of the coronavirus on China's economy. He writes: Investor sentiment in Germany dropped sharply in February as the effects of the coronavirus outbreak weighed on exporters, a survey revealed, adding to an increasingly gloomy picture for Europe’s biggest economy. The Zew survey of financial market experts found that sentiment about the outlook for the German economy fell 18 points this month to a reading of 8.7. This is well below January’s score of 26.7 and significantly … [Read more...]

The Fed is Slowly Strangling Insurance Industry Profits

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The prolonged low interest rates fostered by the Federal Reserve are slowly strangling the insurance industry. Nicole Friedman and Leslie Scism report for The Wall Street Journal: Insurance is a cyclical industry. During periods without catastrophic claims, insurers compete for customers by lowering prices. Following large natural disasters or other big losses, they typically raise prices or reduce exposure to certain risks. The current price increases are partly due to hurricanes, wildfires and other catastrophes in 2017 and 2018 that cost the global industry more than $200 … [Read more...]

Here’s Why Most Americans Don’t Even Know They Got a Tax Cut

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In every income category surveyed recently by the New York Times collaborating with the Tax Policy Center, a majority of Americans thought they had not received a tax cut from the Tax Cuts and Jobs Act of 2017. The reality is, the majority of Americans in nearly every category received a tax cut. Bill Bischoff at MarketWatch explains why so many Americans haven't noticed their tax cuts. He writes: An online survey conducted for The New York Times and published in April of 2019 (after most returns for the 2018 tax year had been filed) found that only 40% of Americans believed they had received … [Read more...]