With profits racing ahead of economic growth in America, Mike Bird of The Wall Street Journal suggests replicating recent American stock market success will be difficult. He writes: The S&P 500 is back at a new record high, while stocks in most of the rest of the world are yet to return to 2018’s peaks. But the rampant outperformance of U.S. equities can’t last forever. Low interest rates and eye-watering valuations have been credited with driving the U.S. bull market, but financial conditions haven’t been so different elsewhere. The big reason why U.S. stocks have beaten those in … [Read more...]
Just Four Stocks Have Generated Half of the NASDAQ 100’s Gains in April
So far in April, half of the gains generated by the Nasdaq 100 were produced by the stocks from just four companies, Apple, Amazon, Microsoft and Facebook. The equal weight version of the index has been in decline. That implies relative weakness in the overall index, masked by strength in a few very large companies. Vildana Hajric and Sarah Ponczek report for Bloomberg: The Nasdaq 100 is on a tear, hitting record after record. But the upward push is being driven by just a handful of familiar names, with four adding half its gains this month. Apple Inc., Amazon.com Inc., Microsoft Corp. and … [Read more...]
Will Every Recession Now Demand Extraordinary Fed Intervention?
After the Great Recession unleashed never before seen Federal Reserve powers, there seems to be an expectation setting into the mind of markets that not only will the Fed lower rates to meet any new recession, but that it will also deploy extraordinary intervention. At Bloomberg, Brian Chappatta has an idea for the next level of Fed intervention, buying muni bonds. He writes: Almost 10 years after the Great Recession ended, the growing threat of a new economic slowdown raises a troubling question: When the next recession strikes, what can the world’s central banks do? With interest rates low … [Read more...]
IBM Plans to Make Great American Mainframes Again
IBM plans to shut down its mainframe manufacturing facility in Singapore and move the business to Poughkeepsie, New York. The Straits Times reports: Global tech giant IBM is shutting its $90 million technology park in Tampines, costing up to 600 jobs in Singapore, and moving production of its high-end computer systems to the United States. The move comes as analysts expect IBM to report weaker earnings, down around 3 per cent for its first quarter, after the close of trading in the US yesterday, in part due to an ageing mainframe product cycle. The US firm will move the manufacturing of … [Read more...]
Is the Socialist Bent of the 2020 Presidential Race a Threat to Markets?
As the 2020 presidential primary election season heats up, some of the nearly 20 Democratic contenders are suggesting proposals that are more than a bit socialist in nature. One of the leading contenders, Sen. Bernie Sanders, has proposed Medicare for all. The proposal would displace the massive private insurance industry, and his suggestion led to market volatility. The proposal rocked markets, and sent share prices of healthcare stocks dropping. Sanders isn't the only candidate offering up such economy-shifting proposals. In his rhetoric however, Sanders is going after individual … [Read more...]
Do You Want the Fed to Raise Prices?
Fed Chairman Jerome Powell is poised to make raising American prices a priority for the central bank. The questions that must be asked is, do Americans want that? Despite low inflation, there doesn't seem to be a public outcry for raising the prices of consumer goods. With both unemployment and inflation low, the Fed would seem to have hit a sweet spot in achieving its dual mandate. Powell seems determined however, to raise inflation a few basis points, no matter what policy levers he must pull. Bloomberg's Rich Miller and Craig Torres write: Federal Reserve Chairman Jerome Powell and his … [Read more...]
As Disney Moves to Consolidate Hulu, AT&T Prepares its Own Netlflix Competitor
After many delays and false starts, it seems as though the big media companies are finally prepared to offer Netflix some real competition. Disney now owns 60% of Hulu, and could soon own more. Hulu has purchased AT&T's 9.5% share (acquired when the telecom purchased Time Warner). Now Disney and Comcast, the only two large remaining owners of Hulu will have to negotiate on how much of the purchase each receives. Disney is preparing to use Hulu as the counterpart to its family streaming offering, Disney+. Hulu will host shows with more adult themes. Meanwhile, AT&T is preparing its own … [Read more...]
Americans Did Actually Get a Tax Cut, Despite the Spin
Despite what most Americans may have heard in the news, the vast majority of taxpayers did get a tax cut from the 2017 Tax Reform signed by President Trump. Sahil Kapur and Laura Davison report for Bloomberg: When the law passed, McConnell said, “If we can’t sell this to the American people, we ought to go into another line of work.” He added that the GOP merely needed to tell the public “that you have more money in your pocket.” Perceptions But an NBC/Wall Street Journal poll this month showed that just 17 percent of Americans believe their taxes have been cut. A Reuters/Ipsos poll in … [Read more...]
Early Signs of Stress in the Private Equity Market
At The FT, Patrick Jenkins sounds a warning about the private equity market. He suggests that the recent flurry of retail failures is a sign that all is not well in private equity. He writes: Few commentators today are forecasting an imminent housing crash. But something similar may be threatening a segment of the global economy — with potentially more serious consequences. The private equity market, which relies on leveraged borrowing much like a mortgage on a house, is showing some early signs of stress — and you do not have to look far to spot it. The UK high street is under pressure … [Read more...]
Are You Retired? Have You Seen These Six Tax Changes that could Affect You?
At The Wall Street Journal, Anne Tergesen explains six changes to the tax code in the 2017 tax reform law that could especially affect retirees. She writes (much abridged): 1. Higher standard deduction: Many retirees, especially those who have paid off mortgages, take the standard deduction. For them, one positive change is the near-doubling of this deduction, or the amount taxpayers can subtract from their adjusted gross income if they don’t itemize deductible expenses including state taxes and charitable donations. 2. A tax break for charitable contributions: Retirees who take the … [Read more...]
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