Sell in May and go away?
Balderdash.
Summer slump?
Nonsense.
Stocks have had an amazing run through July and August, thanks to ultra-low bond yields driving money into stocks, momentum, and oodles of dollars going straight to Wall Street from the Federal Reserve.
As noted by countless economists, columnists, and stock enthusiasts, the backstops provided by the Fed have servd the interests of Wall Street in glorious ways, sending stocks soaring, the S&P and NASDAQ having made multiple record highs over the past eight weeks.
While the NYSE Composite Index and Dow Jones Industrial Average have not made it yet to new records, they're getting close and the Dow, specifically, will get a significant boost on Monday (the final trading day of August) when Exxon Mobil (XOM), Raytheon (RTX), and Pfizer (PFE) are replaced with Salesforce (CRM), Amgen (AMGN), and Honeywell (HON).
Already within 900 points of its all-time closing high (29,551.42, 2/12/20), it's within similar range of the intraday high of 29,568.57, which was also made on February 12. The added boost from the booting of three laggards with three high-fliers should send the industrials over the top, possibly this coming week.
Just how good the summer has been to investors is illustrated by the weekly closes for the past eight weeks, beginning July 6 and ending this past Friday, August 28. The slowpokes among the indices was the Dow and NYSE. The latter rose from a July 2 close of 11,991.52 to 13,170.96. It closed on the plus side seven of the eight past weeks for a 9.84% gain.
The Dow Industrials gained in five of the eight weeks, rising more than 2800 points from its July 2 close of 25,827.36, a gain of 10.94 percent.
The S&P closed at 3,130.01 on July 2, and added 378 points during the past eight weeks for a solid 12% upside, while the NASDAQ took home the top prize, vaulting from 10,207.63 eight weeks ago to its most recent record close of 11,695.63, a 14.6% gain. The S&P was up in seven of the past eight weeks while the NASDAQ finished in positive territory in six, including the last five straight.
So, whoever said the era of passive investing was over obviously hasn't taken account of the performance of index funds, which have sparkled recently, despite the narrative supplied to the market by the FAANMGs, the six tech stocks that have largely been responsible for the bulk of the gains in the NAZ and S&P. Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), Microsoft (MSFT) and Alphabet, parent of Google (GOOG) account for roughly 25% of the market capitalization of the entire S&P 500. Throw in Elon Musk's Tesla (TSLA) and one could make a very strong point about picking the right stocks over passive investing.
Apple, which recently announced a 4-for-1 stock split, was up 39% over the past eight weeks. Tesla gained a whopping 54%, while Amazon gained only 19%, though it and the other FAANMG components have been steady outperformers for years.
Warren Buffett, who turns 90 today, made news this week when it was revealed he was selling off some banking stocks while picking up shares of Barrick Gold. The information came from the latest 13F filing from Bershire Hathaway, the holding company for Buffett's global portfolio.
The punditry of the investment world made plenty of noise over the move, especially since Buffett had previously claimed to not think much of gold as an investment. One of the most-cited quotes attributed to Buffett's disdain for gold is "[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility."
While Buffett's purchase of some Barrick Gold shares (roughly $600 million) may look like a departure from the Oracle of Omaha's norm, the truth of the matter is that the shares account for a smidge more than 0.2 percent of Bershire's 250 billion stock portfolio. What's interesting about the move was that Berkshire closed its position in Goldman Sachs (GS), eliminating the Vampire Squid entirely from its holdings. It also trimmed positions in JPMorgan Chase (JPM) and Wells Fargo (WFC), but upped its position in Bank of America (BAC), which is now the second-largest holding, well behind #1, Apple.
It will be another three months before we'll know whether Berkshire intends to keep buying Barrick or even other gold-related stocks. For all anyone knows, Buffett could have a secret stash of gold and silver coins buried in his back yard, just in case.
Speaking of reasons to own gold and silver, the second estimate of second quarter GDP was released on Friday, and it was a slight improvement from the initial reading, but not enough of one to matter. The decline, which was estimated to be a record 32.9%, was revised to a 31.7% loss, still the largest on record by far. Making matters more concerning, it's been a fact for some time that the government spending portion of the GDP calculation has been inordinately high, and it now accounts for more than 50% of GDP. The other roughly one-half of GDP is largely consumer spending, people buying things they don't need with credit cards they can't afford to pay.
In the oil patch, the slow, relentless rise in the barrel price of oil continued apace with WTI crude peaking at $43.34 on the 26th - the highest price since March 3rd - before settling at $42.97 on Friday afternoon. Theprice of WTI crude has been below $40 just twice since July 2nd, with the recent prices nearing the top of the recent tight range. With the Labor Day holiday a week off, prices for crude and gas at the pump may begin to decline as the traditional end of summer normally results in lower prices, though these days have been anything but normal.
Treasury yields peaked on Friday, with the 10-year note ending at 0.74% and the 30-year at 1.52%, both the highest since June 16. Shorter-dated maturities were little affected by market noise nor Fed Chairman Jerome Powell's virtual keynote for the Jackson Hole symposium in which he promoted increasing inflationary policy incentives at the Federal Reserve. Powell's insistence that inflation of two percent or more somehow equates to the Fed's mandate of "stable prices" serves to point out what an abject liar he is and what a complete failure the Federal Reserve as a whole has been since its inception more than 100 years ago. The Fed has failed spectacularly in achieving both of its mandates as the dollar has lost 97% of purchasing power since 1913 and full employment - the other mandate - is about as far from the minds of the regional Fed presidents and governors of the FOMC as the Earth is from planet Jupiter.
Gold regained some respect on Friday, up $35 to close out the week at $1,964.83. Since peaking at $2,063.54 on August 6, the trend has been lower, but $1900 an ounce appears to be very strong support. With supply strained and demand still very high, recent dips look more like consolidation than manipulation, even though the spot price is subservient to the eminently exploitable futures market where daily claims on precious metals often exceed a year's production. Eventually, the futures market will face an untenable situation when the punters stand for delivery of real metal rather than a paper equivalent of dollars, yen, or euros. Once the COMEX fails to deliver physical in a timely manner - a possibility that's growing increasingly worrying - it's game over for the paper markets, where the rigging has kept the true price of gold to be discovered for decades.
In order to prevent such an occurrence, the CME has been and will continue to raise margin requirements for futures trading in precious metals until none but the biggest players - central banks, bullion banks, private banks, investment and commercial banks, insurance companies, and sovereign trusts - will be able to afford the buying and selling of futures contracts. Thus, the compression of prices could continue indefinitely while physical premiums soar beyond the rooftops.
Silver also appears to be in a consolidation phase, ranging between $26.45 and $27.67 the past two weeks. It finished up Friday near the top end, at $27.50. Considering the recent smackdown sent silver from a high of $29.13 to $24.79 in the course of one day, the recent close puts the loss at less than six percent, a complete nothing-burger in the highly volatile silver market. The inability of the futures' players to keep a lid on silver indicates that the riggers are losing control. Silver's market is much smaller than gold's, and the demand for physical has bordered on a mania recently due to its affordability and monetary and commercial value.
Here are the most recent prices on eBay (shipping - often free - included) for selected items (numismatics excluded):
Item: Low / High / Average / Median
1 oz silver coin: 31.90 / 48.95 / 39.05 / 37.98
1 oz silver bar: 32.95 / 42.00 / 36.75 / 35.98
1 oz gold coin: 1,985.00 / 2,178.90 / 2,090.41 / 2,107.55
1 oz gold bar: 2,006.16 / 2,114.59 / 2,078.62 / 2,081.75
An historical survey of prices from April, 2020 to the present is available here.
Concluding this edition of the WEEKEND WRAP, a reminder: There are just 65 days until Election Day and 117 days until Christmas. With any luck, we'll all know who the president is by the time we're unwrapping presents.
At the Close, Friday, August 28, 2020:
Dow: 28,653.87, +161.60 (+0.57%)
NASDAQ: 11,695.63, +70.30 (+0.60%)
S&P 500: 3,508.01, +23.46 (+0.67%)
NYSE: 13,170.96, +102.15 (+0.78%)
For the Week:
Dow: +723.54 (+2.59%)
NASDAQ: +383.83 (+3.39%)
S&P 500: +110.85 (+3.26%)
NYSE: +261.89 (+2.83%)
Showing posts with label eBay. Show all posts
Showing posts with label eBay. Show all posts
Sunday, August 30, 2020
Friday, May 29, 2020
Trump Ramps Up Social Media Battle; Argentina Continues Defaulting; Gold, Silver Premiums Persist
Not that anybody should be concerned, but Argentina defaulted on a $500 million interest payment a week ago, on May 22nd. Money Daily had been covering the story but slipped up and missed the breaking news over the Memorial Day Weekend. No excuse. We blew it. 20 lashes.
Anyhow, it's not over down Buenos Aires way, as representatives from both sides - the Argentine government and a gaggle of international creditors - continue to seek a solution, setting a June 2nd date for a plan to restructure $66 billion of the country's debt. Realistically, this being the ninth time Argentina has defaulted on its obligations and the third time this century, hopes of reaching any kind of deal that satisfies both the creditor and debtor seems well removed from the realm of the possible.
President Trump issued another executive order Thursday afternoon, this one coming after Twitter tagged a couple of his tweets with fact-checks.
The order calls for new regulations under Section 230 of the Communications Decency Act "to make it so that social media companies that engage in censoring or any political conduct will not be able to keep their liability shield," Trump said.
The tweets in question concerned Trump's opposition to mail-in ballots in the upcoming November election, which he believes would result in a cascade of fraud. Twitter added some fact-checking language stating that fraud isn't an issue with absentee ballots.
That, and his announcement of a press conference Friday to address growing concerns over China's dispute with Hong Kong (and now India), sent markets tumbling into the red after making small gains in Thursday's session.
Escalating the situation, early Friday morning, Trump tweeted about the ongoing violence in Minneapolis and elsewhere:
Accessing the President's tweet on the Twitter platform brings up the following message: This Tweet violated the Twitter Rules about glorifying violence. However, Twitter has determined that it may be in the public’s interest for the Tweet to remain accessible. Beside it is a button that gives the user the option to display the tweet or keep it hidden. That seems to be an exercise in futility on Twitter's part, possibly drawing even more attention to the tweet in question than had they just left it alone and allowed the public to decide and debate its appropriateness.
Twitter continues to dig its own grave because the President certainly isn't going to back down when he has the complete arsenal of the Department of Justice at his disposal. It's become rather obvious to just about everybody that Twitter, along with their social media counterparts, Google, Facebook, and others, that these companies have abused their free reign over what gets published and where on the internet for a long time without any oversight. Having set up their own rules and guidelines they've often trampled on first amendment rights of users, citing their status as private companies as cover for their subjective agenda.
It would appear that President Trump is serious about limiting their ability to shape opinion. It's certain that the issue will end up in the courts and may take years to resolve. Meanwhile, the mainstream TV networks, ABC, NBC, CBS, CNN, and Fox, and newspapers such as the New York Times and Washington Post continue to spread half-truths, fake news, and outright lies on a regular basis. Whether the president's wrath extends to limitations or punishments for biased reporting in other areas of the media remains to be seen, but there is sure to be intense focus on the media leading up to the November elections.
Elsewhere, confusion reigns supreme in the precious metals space. Since mid-March there has been a schism between the futures price of gold and the spot price, with the gap sometimes great enough to encourage arbitrage in a relatively risk-free trade. Usually, the spot price is a few dollars below the futures bid, but the spread has widened and exhibited volatile behavior recently. Silver has also joined the party, with spot and futures prices deviating sporadically.
Of course, the spot and futures prices are little more than bookmarks these days compared to the premium prices being paid for actual physical metal on eBay. Gold and silver are both sporting heavy premiums, with gold selling at the one ounce level at $120-180 over spot and one ounce silver going for $23-30 when the spot price has been hovering in the $16-17 range. Silver, probably the most undervalued commodity in the world, has approached 100% premiums in recent days.
As more people become aware of the fraudulent nature of futures trading where major players such as JP Morgan Chase are allowed to flaunt size limits and engage in spoofing, naked shorting, and are never forced to stand for delivery, physical markets are becoming the go-to for investors with serious intentions of protecting their wealth with precious metals.
Yields in the treasury space rose across the curve on Thursday, with the 30-year bond hitting 1.47%, a two-month high. The spread between the 2-year note (0.17%) and the 30 is now 130 basis points, 10 points higher than a week ago. Tighter lending conditions may not be in the Fed's best interests at this time, but the present issue is likely one of supply. The Fed has been begging fiscal authorities (congress and the president) to unleash more stimulus spending so as to facilitate the Fed's monetizing of the debt, spreading its largesse to equity market participants.
If the government isn't going to ramp up deficit spending, the Fed will be looking over its shoulder at rising rates with too little supply coming to market. This is just one of the unintended consequences of massive money printing on a global scale. At some point, with all hands outstretched, there's not enough to go around and a struggle is engaged for the scraps thrown to the market. The Fed is committed to buying everything, but if there's not enough everything around, they risk severe impairment of credit markets.
Congress needs to get on the bandwagon with all due alacrity lest the Fed run out of debt to monetize, jeopardizing the massive stock rally they have recently engendered.
Finally, in spite of the price of oil (once again, on the futures market) having roughly doubled over the past month, and with it, rising gas prices at the pump, there's still a massive glut on the supply side and slack demand against it. WTI crude in the $32-36 range is a resistance level the market will find difficult to overcome. Economies aren't roaring back to life following the global lockdowns, rather, they're reengaging in fits and starts, and not nearly at capacity. The major oil producers have done their level best to halt the price decline, but there's only so much production that can be cut from counties whose very existence relies upon regular selling of crude oil.
The summer, if authorities allow free movement, should be affordable, at least as concerns automotive touring.
Friday's trading session opens in a little more than an hour from this posting. With the Dow ahead by nearly 1000 points this week, unless there's a major pullback on Friday, Wall Street will shove another fat week of gains into America's face.
At the Close, Thursday, May 28, 2020:
Dow: 25,400.64, -147.63 (-0.58%)
NASDAQ: 9,368.99, -43.37 (-0.46%)
S&P 500: 3,029.73, -6.40 (-0.21%)
NYSE: 11,804.91, -32.62 (-0.28%)
Anyhow, it's not over down Buenos Aires way, as representatives from both sides - the Argentine government and a gaggle of international creditors - continue to seek a solution, setting a June 2nd date for a plan to restructure $66 billion of the country's debt. Realistically, this being the ninth time Argentina has defaulted on its obligations and the third time this century, hopes of reaching any kind of deal that satisfies both the creditor and debtor seems well removed from the realm of the possible.
President Trump issued another executive order Thursday afternoon, this one coming after Twitter tagged a couple of his tweets with fact-checks.
The order calls for new regulations under Section 230 of the Communications Decency Act "to make it so that social media companies that engage in censoring or any political conduct will not be able to keep their liability shield," Trump said.
The tweets in question concerned Trump's opposition to mail-in ballots in the upcoming November election, which he believes would result in a cascade of fraud. Twitter added some fact-checking language stating that fraud isn't an issue with absentee ballots.
That, and his announcement of a press conference Friday to address growing concerns over China's dispute with Hong Kong (and now India), sent markets tumbling into the red after making small gains in Thursday's session.
Escalating the situation, early Friday morning, Trump tweeted about the ongoing violence in Minneapolis and elsewhere:
....These THUGS are dishonoring the memory of George Floyd, and I won’t let that happen. Just spoke to Governor Tim Walz and told him that the Military is with him all the way. Any difficulty and we will assume control but, when the looting starts, the shooting starts. Thank you!
— Donald J. Trump (@realDonaldTrump) May 29, 2020
Accessing the President's tweet on the Twitter platform brings up the following message: This Tweet violated the Twitter Rules about glorifying violence. However, Twitter has determined that it may be in the public’s interest for the Tweet to remain accessible. Beside it is a button that gives the user the option to display the tweet or keep it hidden. That seems to be an exercise in futility on Twitter's part, possibly drawing even more attention to the tweet in question than had they just left it alone and allowed the public to decide and debate its appropriateness.
Twitter continues to dig its own grave because the President certainly isn't going to back down when he has the complete arsenal of the Department of Justice at his disposal. It's become rather obvious to just about everybody that Twitter, along with their social media counterparts, Google, Facebook, and others, that these companies have abused their free reign over what gets published and where on the internet for a long time without any oversight. Having set up their own rules and guidelines they've often trampled on first amendment rights of users, citing their status as private companies as cover for their subjective agenda.
It would appear that President Trump is serious about limiting their ability to shape opinion. It's certain that the issue will end up in the courts and may take years to resolve. Meanwhile, the mainstream TV networks, ABC, NBC, CBS, CNN, and Fox, and newspapers such as the New York Times and Washington Post continue to spread half-truths, fake news, and outright lies on a regular basis. Whether the president's wrath extends to limitations or punishments for biased reporting in other areas of the media remains to be seen, but there is sure to be intense focus on the media leading up to the November elections.
Elsewhere, confusion reigns supreme in the precious metals space. Since mid-March there has been a schism between the futures price of gold and the spot price, with the gap sometimes great enough to encourage arbitrage in a relatively risk-free trade. Usually, the spot price is a few dollars below the futures bid, but the spread has widened and exhibited volatile behavior recently. Silver has also joined the party, with spot and futures prices deviating sporadically.
Of course, the spot and futures prices are little more than bookmarks these days compared to the premium prices being paid for actual physical metal on eBay. Gold and silver are both sporting heavy premiums, with gold selling at the one ounce level at $120-180 over spot and one ounce silver going for $23-30 when the spot price has been hovering in the $16-17 range. Silver, probably the most undervalued commodity in the world, has approached 100% premiums in recent days.
As more people become aware of the fraudulent nature of futures trading where major players such as JP Morgan Chase are allowed to flaunt size limits and engage in spoofing, naked shorting, and are never forced to stand for delivery, physical markets are becoming the go-to for investors with serious intentions of protecting their wealth with precious metals.
Yields in the treasury space rose across the curve on Thursday, with the 30-year bond hitting 1.47%, a two-month high. The spread between the 2-year note (0.17%) and the 30 is now 130 basis points, 10 points higher than a week ago. Tighter lending conditions may not be in the Fed's best interests at this time, but the present issue is likely one of supply. The Fed has been begging fiscal authorities (congress and the president) to unleash more stimulus spending so as to facilitate the Fed's monetizing of the debt, spreading its largesse to equity market participants.
If the government isn't going to ramp up deficit spending, the Fed will be looking over its shoulder at rising rates with too little supply coming to market. This is just one of the unintended consequences of massive money printing on a global scale. At some point, with all hands outstretched, there's not enough to go around and a struggle is engaged for the scraps thrown to the market. The Fed is committed to buying everything, but if there's not enough everything around, they risk severe impairment of credit markets.
Congress needs to get on the bandwagon with all due alacrity lest the Fed run out of debt to monetize, jeopardizing the massive stock rally they have recently engendered.
Finally, in spite of the price of oil (once again, on the futures market) having roughly doubled over the past month, and with it, rising gas prices at the pump, there's still a massive glut on the supply side and slack demand against it. WTI crude in the $32-36 range is a resistance level the market will find difficult to overcome. Economies aren't roaring back to life following the global lockdowns, rather, they're reengaging in fits and starts, and not nearly at capacity. The major oil producers have done their level best to halt the price decline, but there's only so much production that can be cut from counties whose very existence relies upon regular selling of crude oil.
The summer, if authorities allow free movement, should be affordable, at least as concerns automotive touring.
Friday's trading session opens in a little more than an hour from this posting. With the Dow ahead by nearly 1000 points this week, unless there's a major pullback on Friday, Wall Street will shove another fat week of gains into America's face.
At the Close, Thursday, May 28, 2020:
Dow: 25,400.64, -147.63 (-0.58%)
NASDAQ: 9,368.99, -43.37 (-0.46%)
S&P 500: 3,029.73, -6.40 (-0.21%)
NYSE: 11,804.91, -32.62 (-0.28%)
Sunday, May 24, 2020
WEEKEND WRAP: Governments Throw $$$ Billions At Drug Companies; Mall Rents Go Unpaid; Unemployment Soaring; Stocks Higher
Spurred by an announcement by Moderna (MRNA) that early trials of a possible COVID-19 vaccine were positive, stocks rode a big Monday rally to better than three percent gains across the major indices. All but the NYSE Composite closed at 11-week highs, the Comp. falling just points short.
The irony of the rally was that Moderna, a company that has never made a single dime of profit (they've lost $1.5 billion since 2016), closed last Friday at 66.68, finished Monday at an even $80 per share, but closed out the week at 69.00. In between, there were some big paydays for insiders. If that wasn't proof enough that the market is a crony capitalist playground, then something's wrong with people's world views.
It was the ultimate slap in the face to the American public by the rich and connected, the one-percenters, who made a show of fake news over something ultimately immaterial. It was a very sad display of fascism in practice.
To make matters even worse, Moderna received up to $483 million in federal funding to accelerate development of its coronavirus vaccine. Governments around the world are throwing money at well-heeled companies working on a vaccine. In the United States, the Biomedical Advanced Research and Development Authority (BARDA), a federal agency that funds disease-fighting technology, has announced investments of nearly $1 billion to support coronavirus vaccine development and the scale-up of manufacturing for promising candidates. Johnson and Johnson, Sanofi, and GlaxoSmithKline are among about 100 companies being funded for research toward a coronavirus vaccine by countries from Canada, to Singapore, to France.
The US government committed up to $1.2 billion to fund Oxford University and drug maker, AstraZeneca, in a race to produce a vaccine by October, it was announced on Friday.
The quickest a vaccine has ever been developed is four years from phase one trials to working vaccine on the market. No vaccine for a coronavirus has ever been successfully developed. SARS and MERS are variants of coronaviruses. There are no vaccines to protect against them.
This is just the common folly of the age in which we live. Instead of spending time explaining to people how to strengthen their individual immune systems - the best defense against all diseases and viruses - world governments spend taxpayer dollars funding companies that don't need any extra money. It's an incredible waste of capital, but you can bet the executives of the Big Pharma companies (one of Washington's biggest lobbying groups) and high-ranking scientists are making bank on your dollar.
Meanwhile, back in the real world, the "official" unemployment figure is 14.7%, with more than 36 million Americans out of work. Wall Street continues to party while Main Street gets the shaft, as usual. Lockdowns and social distancing restrictions have blown a hole in small businesses, many of which will never recover and will be bankrupt within months, if not already.
Malls are going broke. The biggest mall in the country, Minnesota's Mall of America, is two months delinquent on it's $1.4 billion loan. Other mall landlords report collecting less than 25% of rent due from April and May. With June approaching quickly, many retailers will be three months behind on rent payments and subject to lockouts, forced liquidations, and other draconian measures written into their leases.
Bankruptcies are mounting and delinquency notices are flying around everywhere. With retail operations - from clothing stores to hair salons to baseball card shops and everything in between - suffering as a result of the nearly nationwide two-month lockdown, many employees who were furloughed will not have jobs to go back to when everything begins to get back to some semblance of normal. That means extended unemployment for millions, poverty and homelessness set to soar.
The federal government's additional $600 a week in unemployment benefits via the CARES act will run out at the end of July, just in time for back-to-school sales that may not happen because some schools won't be reopening and many colleges are planning to allow only limited on-campus activity, with many classes offered via the internet only.
The world has changed, and is changing, though it doesn't appear to be for the better, at least at first blush.
Gold and silver caught bids on the paper markets this week with gold trading as high as $1756.90 per ounce, closing out at $1732.70 bid. Silver was an even better performer, ripping through the $17 per ounce price on Monday, trading as high as $17.57 per ounce before settling in at $17.19 on Friday.
In the physical market, premiums have begun to ease after an incredible supply-demand tug-of-war. Dealers are still facing shortages of certain items, but on eBay, at least, prices were lower for the week, although still well above spot prices.
Here are the most recent prices (Sunday, May 24) for specific items on eBay:
Item / Low / High / Average / Median
1 oz silver coin / 22.74 / 38.98 / 30.72 / 29.60
1 oz silver bar / 25.45 / 39.50 / 29.84 / 26.98
1 oz gold coin / 1,855.00 / 1,985.00 / 1,894.48 / 1,894.27
1 oz gold bar / 1,839.93 / 1,987.95 / 1,869.38 / 1,855.52
Oil was up, treasuries were fairly flat for the week. It's a beautiful holiday weekend, so we're calling this a wrap, right here.
Get out and get some sun!
At the Close, Friday, May 22, 2020:
Dow: 24,465.16, -8.94 (-0.04%)
NASDAQ: 9,324.59, +39.71 (+0.43%)
S&P 500: 2,955.45, +6.94 (+0.24%)
NYSE: 11,331.97, -19.63 (-0.17%)
For the Week:
Dow: +779.74 (+3.29%)
NASDAQ: +310.03 (+3.44%)
S&P 500: +91.75 (+3.20%)
NYSE: +384.65 (+3.51%)
The irony of the rally was that Moderna, a company that has never made a single dime of profit (they've lost $1.5 billion since 2016), closed last Friday at 66.68, finished Monday at an even $80 per share, but closed out the week at 69.00. In between, there were some big paydays for insiders. If that wasn't proof enough that the market is a crony capitalist playground, then something's wrong with people's world views.
It was the ultimate slap in the face to the American public by the rich and connected, the one-percenters, who made a show of fake news over something ultimately immaterial. It was a very sad display of fascism in practice.
To make matters even worse, Moderna received up to $483 million in federal funding to accelerate development of its coronavirus vaccine. Governments around the world are throwing money at well-heeled companies working on a vaccine. In the United States, the Biomedical Advanced Research and Development Authority (BARDA), a federal agency that funds disease-fighting technology, has announced investments of nearly $1 billion to support coronavirus vaccine development and the scale-up of manufacturing for promising candidates. Johnson and Johnson, Sanofi, and GlaxoSmithKline are among about 100 companies being funded for research toward a coronavirus vaccine by countries from Canada, to Singapore, to France.
The US government committed up to $1.2 billion to fund Oxford University and drug maker, AstraZeneca, in a race to produce a vaccine by October, it was announced on Friday.
The quickest a vaccine has ever been developed is four years from phase one trials to working vaccine on the market. No vaccine for a coronavirus has ever been successfully developed. SARS and MERS are variants of coronaviruses. There are no vaccines to protect against them.
This is just the common folly of the age in which we live. Instead of spending time explaining to people how to strengthen their individual immune systems - the best defense against all diseases and viruses - world governments spend taxpayer dollars funding companies that don't need any extra money. It's an incredible waste of capital, but you can bet the executives of the Big Pharma companies (one of Washington's biggest lobbying groups) and high-ranking scientists are making bank on your dollar.
Meanwhile, back in the real world, the "official" unemployment figure is 14.7%, with more than 36 million Americans out of work. Wall Street continues to party while Main Street gets the shaft, as usual. Lockdowns and social distancing restrictions have blown a hole in small businesses, many of which will never recover and will be bankrupt within months, if not already.
Malls are going broke. The biggest mall in the country, Minnesota's Mall of America, is two months delinquent on it's $1.4 billion loan. Other mall landlords report collecting less than 25% of rent due from April and May. With June approaching quickly, many retailers will be three months behind on rent payments and subject to lockouts, forced liquidations, and other draconian measures written into their leases.
Bankruptcies are mounting and delinquency notices are flying around everywhere. With retail operations - from clothing stores to hair salons to baseball card shops and everything in between - suffering as a result of the nearly nationwide two-month lockdown, many employees who were furloughed will not have jobs to go back to when everything begins to get back to some semblance of normal. That means extended unemployment for millions, poverty and homelessness set to soar.
The federal government's additional $600 a week in unemployment benefits via the CARES act will run out at the end of July, just in time for back-to-school sales that may not happen because some schools won't be reopening and many colleges are planning to allow only limited on-campus activity, with many classes offered via the internet only.
The world has changed, and is changing, though it doesn't appear to be for the better, at least at first blush.
Gold and silver caught bids on the paper markets this week with gold trading as high as $1756.90 per ounce, closing out at $1732.70 bid. Silver was an even better performer, ripping through the $17 per ounce price on Monday, trading as high as $17.57 per ounce before settling in at $17.19 on Friday.
In the physical market, premiums have begun to ease after an incredible supply-demand tug-of-war. Dealers are still facing shortages of certain items, but on eBay, at least, prices were lower for the week, although still well above spot prices.
Here are the most recent prices (Sunday, May 24) for specific items on eBay:
Item / Low / High / Average / Median
1 oz silver coin / 22.74 / 38.98 / 30.72 / 29.60
1 oz silver bar / 25.45 / 39.50 / 29.84 / 26.98
1 oz gold coin / 1,855.00 / 1,985.00 / 1,894.48 / 1,894.27
1 oz gold bar / 1,839.93 / 1,987.95 / 1,869.38 / 1,855.52
Oil was up, treasuries were fairly flat for the week. It's a beautiful holiday weekend, so we're calling this a wrap, right here.
Get out and get some sun!
At the Close, Friday, May 22, 2020:
Dow: 24,465.16, -8.94 (-0.04%)
NASDAQ: 9,324.59, +39.71 (+0.43%)
S&P 500: 2,955.45, +6.94 (+0.24%)
NYSE: 11,331.97, -19.63 (-0.17%)
For the Week:
Dow: +779.74 (+3.29%)
NASDAQ: +310.03 (+3.44%)
S&P 500: +91.75 (+3.20%)
NYSE: +384.65 (+3.51%)
Thursday, April 2, 2020
6.64 Million Unemployment Claims; Stocks Take a Hit; Gold, Silver Selling at Premium
(Simultaneously published at Downtown Magazine)
Wednesday was April Fool's Day, appropriate for the general public, which is being actively conned into giving up civil liberties at an alarming rate, and also for those who are stuck in passive investments like college or retirement funds, as stocks got hammered again on the day.
Meanwhile, mega banks and major corporations, which gorged themselves on stock buybacks and executive bonuses over the past decade, are being rewarded for their insouciant, self-serving behavior with loans and grants from the Treasury and Federal Reserve, which are rapidly coalescing into a single entity.
Since completing a near-perfect Fibonacci retrace of 38% to the 22,500 level on the Dow (22,552.17), the blue chip index has given up more than 1,500 points over the past two sessions and are threatening to retest the lows of March 23 (18,213.65). ADP private payroll data released Wednesday showed job losses of 27,000, which did not include the end of March when most of the recent layoffs and furloughs occurred. Despite exception of the brunt of a widespread voluntary quarantine imposed by most states the number was the first time ADP reported monthly job losses since 2017. Their next data release is expected to be much more sobering.
With the Federal Reserve firmly in control of the stock and bond markets, equity prices still have a long distance to travel on a downward slope to reach any reasonable level of valuation. While most heavily-traded stocks were wildly overvalued they are still trading at unsustainable levels, especially considering that business and commerce has very nearly ground to a halt globally.
There will be questions about the level of involvement in equity markets by the Fed, especially on days like Wednesday when losses cascaded down the wall of worry. While it's certainly the case that the Fed could buy up all the ETFs, stocks and mutual funds it pleases, their main approach is in the bond market, where they are actively purchasing commercial paper through its proxy, the Treasury. Guaranteeing that the corporations represented in the NASDAQ, Dow, S&P, and NYSE are still able to finance continuing operations is of primary concern. Price levels of individual stocks or even whole indices are of a secondary nature. Massive gains will be available to the Fed and their insider (congress) associates once stocks are reduced to a massive junk heap of debt, enriched management, and damaged operations.
Currently being touted by the financial insiders is the notion that the stock market and the nation will bounce back quickly once the coronavirus is conquered, though that concept is fatally flawed for a number of reasons. First, the goal is to have zero deaths from COVID-19, a near impossibility given that the infection number has not even cracked the one percent level, with the US currently at 217,000 confirmed cases with 5,137 deaths. Second, many small businesses will not reopen when the "all clear" is given, whether that be at the end of April, or some time in July. Third, with most working-age Americans at home or out of a job, the spending level upon the return to some semblance of normalcy will be vastly reduced. GDP growth is likely to be negative for the second and third quarters and the entire year of 2020 will go down as one in which the US economy was running in reverse.
At this point, anyone who has not taken steps to remove money from the stock and bond markets is facing a world of hurt which could have been avoided. The appropriate investment stance at this juncture would likely be 75% cash and 25% in hard assets (real estate, precious metals). Sadly, the gullible American passive investment class has been conditioned to believe stocks will always bounce back and that bonds represent safety. Neither claim can be proven within the present paradigm. Stocks may bounce back, but that bounce may not occur for many years. Bonds may be safe, but at interest rates that are comparable to stuffing matresses with Federal Reserve Notes. And, it's probably not beyond the realm of probability that the almighty dollar will not survive in its current form. At the very least, as severe devaluation is in the cards.
Treasury yields were smashed lower, the curve significantly flattened on the day, with the 30-year bond at 1.27%, the 10-year note at 0.62%, and the full breadth of the curve a mere 124 basis points, down from 130 a day ago and 145 a week prior. These are serious declines, significant moves in a market that is supposed to be stable. The portent is for more dislocation, desperation, and, eventually, negative rates which will obliterate the currency as is happening in Japan and Europe.
Gold and silver are still largely unavailable from regular dealers even though prices on the futures exchanges are dropping, defying the laws of supply and demand. The best place to purchase precious metals in any form is currently ebay, where the market is brisk and one ounce gold coins can be purchased and quickly delivered for prices between $1690 and $1861 while the futures price hovers around $1590.
Silver is in an even better position for sellers, tacking on premiums of up to 100% to the posted price of $14.25 on the futures exchanges. On eBay, the lowest price for a one ounce coin or bar is currently $21.50, with most ranging from $23.00 to $29.00 and uncirculated coins fetching more, up to absurd prices in the $40 and higher range. With mines shut down in many countries, the shortage of bullion is only just beginning. A metal mania is upon us.
Oil prices have caught bids early Thursday morning, with WTI crude priced at $22.37, Brent at $27.19 at the time of this writing. With a supply glut and the Saudis pumping at nearly-full capacity and offering discounts, it's likely that these prices do not reflect reality on the ground nor are they likely to maintain their gains for long.
As another trading day approaches, regular people may be wondering when they will receive their bailout $1200 check or direct deposit from the government and how they will pay their rent or mortgage without a job or some form of assistance. It has been two weeks since Treasury Secretary Steven Mnuchin and President Trump suggested that individuals would receive money within two weeks and nobody has seen a nickel. The bill to provide such assistance was passed last week by the Senate, House, and signed into law by President Trump.
On Wednesday, Mnuchin announced that Social Security recipients who do not regularly file tax returns will receive their checks or direct deposits without having to file "simple returns" as the IRS advised, according to TheHill.com. An actual date for dissemination of the monies was not disclosed, though it may be assumed that these recipients will receive their money along with their regular monthly payments. For the rest of the country, the waiting game continues, despite corporations already having trillions of dollars available to them via loans, loan guarantees or outright purchases of private debt issuance by the Federal Reserve, most of which is outside the Fed's normal chartered activities.
As for rent or mortgage payments, those are individual decisions. It is advisable to contact the landlord or mortgagee to work out payment options. Some landlords are deferring April rent payments while most lenders (represented in the main by servicers) have remained fairly tight-lipped on general guidelines relating to mortgage payments. Deferral is a likely solution, with the principal and interest being added to the end of the amortization schedule.
Just now, the Labor Department announced that unemployment insurance claims for the week ended March 28 doubled over the previous week to 6.64 million.
April and the second quarter is off to a very discouraging start.
At the Close, Wednesday, April 1, 2020:
Dow Jones Industrial Average: 20,943.51, -973.69 (-4.44%)
NASDAQ: 7,360.58, -339.52 (-4.41%)
S&P 500: 2,470.50, -114.09 (-4.41%)
NYSE: 9,844.85, -457.05 (-4.44%)
Wednesday was April Fool's Day, appropriate for the general public, which is being actively conned into giving up civil liberties at an alarming rate, and also for those who are stuck in passive investments like college or retirement funds, as stocks got hammered again on the day.
Meanwhile, mega banks and major corporations, which gorged themselves on stock buybacks and executive bonuses over the past decade, are being rewarded for their insouciant, self-serving behavior with loans and grants from the Treasury and Federal Reserve, which are rapidly coalescing into a single entity.
Since completing a near-perfect Fibonacci retrace of 38% to the 22,500 level on the Dow (22,552.17), the blue chip index has given up more than 1,500 points over the past two sessions and are threatening to retest the lows of March 23 (18,213.65). ADP private payroll data released Wednesday showed job losses of 27,000, which did not include the end of March when most of the recent layoffs and furloughs occurred. Despite exception of the brunt of a widespread voluntary quarantine imposed by most states the number was the first time ADP reported monthly job losses since 2017. Their next data release is expected to be much more sobering.
With the Federal Reserve firmly in control of the stock and bond markets, equity prices still have a long distance to travel on a downward slope to reach any reasonable level of valuation. While most heavily-traded stocks were wildly overvalued they are still trading at unsustainable levels, especially considering that business and commerce has very nearly ground to a halt globally.
There will be questions about the level of involvement in equity markets by the Fed, especially on days like Wednesday when losses cascaded down the wall of worry. While it's certainly the case that the Fed could buy up all the ETFs, stocks and mutual funds it pleases, their main approach is in the bond market, where they are actively purchasing commercial paper through its proxy, the Treasury. Guaranteeing that the corporations represented in the NASDAQ, Dow, S&P, and NYSE are still able to finance continuing operations is of primary concern. Price levels of individual stocks or even whole indices are of a secondary nature. Massive gains will be available to the Fed and their insider (congress) associates once stocks are reduced to a massive junk heap of debt, enriched management, and damaged operations.
Currently being touted by the financial insiders is the notion that the stock market and the nation will bounce back quickly once the coronavirus is conquered, though that concept is fatally flawed for a number of reasons. First, the goal is to have zero deaths from COVID-19, a near impossibility given that the infection number has not even cracked the one percent level, with the US currently at 217,000 confirmed cases with 5,137 deaths. Second, many small businesses will not reopen when the "all clear" is given, whether that be at the end of April, or some time in July. Third, with most working-age Americans at home or out of a job, the spending level upon the return to some semblance of normalcy will be vastly reduced. GDP growth is likely to be negative for the second and third quarters and the entire year of 2020 will go down as one in which the US economy was running in reverse.
At this point, anyone who has not taken steps to remove money from the stock and bond markets is facing a world of hurt which could have been avoided. The appropriate investment stance at this juncture would likely be 75% cash and 25% in hard assets (real estate, precious metals). Sadly, the gullible American passive investment class has been conditioned to believe stocks will always bounce back and that bonds represent safety. Neither claim can be proven within the present paradigm. Stocks may bounce back, but that bounce may not occur for many years. Bonds may be safe, but at interest rates that are comparable to stuffing matresses with Federal Reserve Notes. And, it's probably not beyond the realm of probability that the almighty dollar will not survive in its current form. At the very least, as severe devaluation is in the cards.
Treasury yields were smashed lower, the curve significantly flattened on the day, with the 30-year bond at 1.27%, the 10-year note at 0.62%, and the full breadth of the curve a mere 124 basis points, down from 130 a day ago and 145 a week prior. These are serious declines, significant moves in a market that is supposed to be stable. The portent is for more dislocation, desperation, and, eventually, negative rates which will obliterate the currency as is happening in Japan and Europe.
Gold and silver are still largely unavailable from regular dealers even though prices on the futures exchanges are dropping, defying the laws of supply and demand. The best place to purchase precious metals in any form is currently ebay, where the market is brisk and one ounce gold coins can be purchased and quickly delivered for prices between $1690 and $1861 while the futures price hovers around $1590.
Silver is in an even better position for sellers, tacking on premiums of up to 100% to the posted price of $14.25 on the futures exchanges. On eBay, the lowest price for a one ounce coin or bar is currently $21.50, with most ranging from $23.00 to $29.00 and uncirculated coins fetching more, up to absurd prices in the $40 and higher range. With mines shut down in many countries, the shortage of bullion is only just beginning. A metal mania is upon us.
Oil prices have caught bids early Thursday morning, with WTI crude priced at $22.37, Brent at $27.19 at the time of this writing. With a supply glut and the Saudis pumping at nearly-full capacity and offering discounts, it's likely that these prices do not reflect reality on the ground nor are they likely to maintain their gains for long.
As another trading day approaches, regular people may be wondering when they will receive their bailout $1200 check or direct deposit from the government and how they will pay their rent or mortgage without a job or some form of assistance. It has been two weeks since Treasury Secretary Steven Mnuchin and President Trump suggested that individuals would receive money within two weeks and nobody has seen a nickel. The bill to provide such assistance was passed last week by the Senate, House, and signed into law by President Trump.
On Wednesday, Mnuchin announced that Social Security recipients who do not regularly file tax returns will receive their checks or direct deposits without having to file "simple returns" as the IRS advised, according to TheHill.com. An actual date for dissemination of the monies was not disclosed, though it may be assumed that these recipients will receive their money along with their regular monthly payments. For the rest of the country, the waiting game continues, despite corporations already having trillions of dollars available to them via loans, loan guarantees or outright purchases of private debt issuance by the Federal Reserve, most of which is outside the Fed's normal chartered activities.
As for rent or mortgage payments, those are individual decisions. It is advisable to contact the landlord or mortgagee to work out payment options. Some landlords are deferring April rent payments while most lenders (represented in the main by servicers) have remained fairly tight-lipped on general guidelines relating to mortgage payments. Deferral is a likely solution, with the principal and interest being added to the end of the amortization schedule.
Just now, the Labor Department announced that unemployment insurance claims for the week ended March 28 doubled over the previous week to 6.64 million.
April and the second quarter is off to a very discouraging start.
At the Close, Wednesday, April 1, 2020:
Dow Jones Industrial Average: 20,943.51, -973.69 (-4.44%)
NASDAQ: 7,360.58, -339.52 (-4.41%)
S&P 500: 2,470.50, -114.09 (-4.41%)
NYSE: 9,844.85, -457.05 (-4.44%)
Friday, November 8, 2019
Scam Alert: PayPal Credit, Synchrony Bank Playing Hide and Seek With Special Financing Purchase Offers
by Fearless Rick Gagliano, editor, Money Daily
When it comes to banking in general, most Americans (Europeans and Asians, as well, we might assume) are skeptical about institutional sincerity and customer care. After all, it was just a decade ago that some of the biggest banks in the world were caught up in a messy triage with overzealous rating agencies and absent regulators that sent global finance to its knees.
Since the Great Financial Crisis (GFC) of 2008, there have been more than few dubious practices entertained by major banks. Wells-Fargo comes to mind, whose employees, paragons of virtue all, no doubt, opened accounts in people's names without their knowledge, among other scandalous activity.
Certainly, the annals of banking history are rife with examples of financial trickery, pandering and assorted crimes and misdemeanors carried on by monied institutions, all in the name of profit and greed.
With the advent of the internet age, banking has become more streamlined, varied and accessible to anyone with a smartphone, tablet or computer. Offerings from non-bank institutions abound. The leader among transactional vendors being PayPal, the the online business-consumer, peer-to-peer middleman company founded in part by Elon Musk, Max Levchin, and Peter Thiel made its name by offering online accounts to anybody who could "fog a mirror" and with a few nickels to rub together.
With an IPO in 2002 and subsequent acquisition by online auctioneer eBay, PayPal became the de facto standard for online payments. Reacting to a squabble from investor Carl Ichan, eBay divested itself from PayPal in 2014 and since then PayPal has been a stand-alone company. It was late in 2008 and early 2009 that PayPal, after acquiring the company known as Bill Me Later, began to offer credit to consumers. Aptly named PayPal Credit, a complete credit and debiting system aimed at the massive consumer audience worldwide was established.
Among their many marketing tactics, PayPal Credit offered a wildly popular option called special purchase financing, bearing zero interest for six months on purchases of $99 or more if paid in full during the allotted time. That promotion still exists today, but the present and recent past are where the issues of dubious claims and incomplete disclosure of terms begins.
Enter Synchrony
PayPal partnered with consumer credit giant, Synchrony Financial, to offer credit cards to PayPal account holders in 2004 and took the relationship even further in 2017, when it sold $5.8 billion in consumer credit receivables to Synchrony Financial, effectively yielding control over the operation of PayPal Credit to Synchrony.
It was around that time in 2017 that how payments on PayPal Credit accounts were allocated was altered. When parent company PayPal was operating PayPal Credit, allocations of payments on accounts were handled roughly as anything over the minimum required payment on the entire account was then allocated to the special purchase financing.
For example, a PayPal Credit account holder, with, say, $1000 existing outstanding balance and a minimum monthly payment of $40, makes a purchase for $500 and takes advantage of the Zero Interest for Six Months if Paid in Full Special Financing Purchase. When the account holder makes a payment, say $100, $40 would cover the outstanding minimum credit payment and the remaining $60 would be applied to the Special Financing Purchase. That was pretty standard, and logical.
No more. Now, when that same account holder (or any account holder) with an existing outstanding balance makes the same transaction, the entirety of his or her payment goes toward the account balance and NONE is allocated to the Special Financing Purchase until the final 60 days of said Special Financing Purchase. In the meantime, interest accrues on the Special Financing Purchase at the full amount, in our case, $500. If the Special Financing Purchase balance is not paid off in full at the expiration of the six months, all of the accrued interest becomes part of the account balance due.
Nowhere in the terms and conditions of Special Financing Purchase is this made obvious or even mentioned to consumers. It is only revealed when (as our Editor found out) one questions PayPal Credit customer support by phone or by online chat. The response to why this devious practice is maintained, is that PayPal Credit and/or Synchrony Financial uses best practices in allocating funds in this manner. It's almost a certainty that said best practices are what's best for the bank, not the consumer, and here's why:
Beyond the failure to disclose this in-house allocation rule, the bank (Synchrony, in this case), has interest accruing on that Special Financing Purchase (remember, ZERO interest for six months if paid in full) at the full amount of the purchase, not at a lesser amount if account holder payment allocations were done the old way, in a moral, reasonable, and logical manner. It also sets up the casual account holder for a shock, when he/she looks at the Special Financing Purchase and realizes that with two months left to pay off the Special Financing Purchase at Zero Percent he or she still owes the full amount.
Unless one is careful enough to scrutinize the monthly statements generated by PayPal Credit, this poor or mis-allocation of payments - done in the name of best practices - can easily go unnoticed, especially if one makes automatic or automated monthly payments, a practice which all banks and credit card companies strongly encourage.
There is some relief, maybe.
Calls to PayPal Credit on this or any credit account issue result in referral to Synchrony. The supervisor with which Money Daily spoke on Thursday, November 7, elicited the response that payments can be allocated to the Special Financing Purchase if one calls Synchrony at 1-844-373-4961 and requests the payments be directed according to the wishes of the account holder, and NOT in the manner usually employed by the BANK (Synchrony). Synchrony says they will honor such requests and process them, but allocations will not show up on online accounts for "a few days."
Additionally, none of this would apply to anybody who isn't carrying a balance (the wise and fortunate 20-30% of account holders) with PayPal Credit and the only purchase made was a Special Financing Purchase. In that case, all of the monthly payment would be applied to the deferred interest financing because that's all there is.
Therein lies the problem. Instead of doing business in a morally correct, logical, reasonable, responsible, and customer-friendly manner, Synchrony Financial has chosen the usual path of 21st century bankers: deceit, incomplete disclosure, "gotcha" terms and "special financing" with in-house rules designed to maximize the bank's profitability, the customer be damned. To do business in what would normally be considered the "best practice" for the consumer, the account holder has to go out of his or her way to make a special phone call, jump through hoops, listen to all of the recordings and prompts to get what should have been done automatically. This is, after all, the age of high-speed communications and the internet, not Ma Bell's twisted copper.
If this practice isn't illegal, it would be no shock today. Financial institutions have been afforded wide latitude in their dealings with the public, to encourage loans, credit, and debt in a wide array of products and offerings.
In a world in which sanity, fairness, and reasonableness would be the norm, this kind of operation might be considered fraud at worst, bait-and-switch at best. But today, in our world of glorification of all things money and financial, where the dollar sign is revered and worshipped, it barely registers a "lookie here." It's a sad commentary on the state of morality and banking when gigantic, faceless institutions are able to run roughshod over consumers. It goes against the public interest, an interest, incidentally, that nobody - from bankers to consumer credit agencies to politicians - seems to be even remotely interested in protecting.
So, what do you think? Is this practice just run-of-the-mill deceit and standard underhandedness by PayPal Credit and Synchrony Financial, or does it rise to or border on criminal mischief, something banking regulators or congress should address? Comments are open, and are moderated.
Anybody experiencing issues such as those outlined above should call Synchrony at 1-844-373-4961 and complain loudly.
Be polite, but overall, be careful.
UPDATE: Found a thread on the PayPal boards dealing with this very issue. Many are fuming about it.
See here: https://www.paypal-community.com/t5/PayPal-Credit/PayPal-Credit-Promotional-Payment-Allocation/m-p/1553309/highlight/false#M8392
UPDATE 11/27/19: This issue will remain, as the actions of Synchrony are guided by Regulation Z. See the updated blog post:
https://moneydaily.blogspot.com/2019/11/weekend-wrap-paypal-creditsynchrony.html
At the Close, Thursday, November 7, 2019:
Dow Jones Industrial Average: 27,674.80, +182.24 (+0.66%)
NASDAQ: 8,434.52, +23.89 (+0.28%)
S&P 500: 3,085.18, +8.40 (+0.27%)
NYSE Composite: 13,395.55, +43.98 (+0.33%)
When it comes to banking in general, most Americans (Europeans and Asians, as well, we might assume) are skeptical about institutional sincerity and customer care. After all, it was just a decade ago that some of the biggest banks in the world were caught up in a messy triage with overzealous rating agencies and absent regulators that sent global finance to its knees.
Certainly, the annals of banking history are rife with examples of financial trickery, pandering and assorted crimes and misdemeanors carried on by monied institutions, all in the name of profit and greed.
With the advent of the internet age, banking has become more streamlined, varied and accessible to anyone with a smartphone, tablet or computer. Offerings from non-bank institutions abound. The leader among transactional vendors being PayPal, the the online business-consumer, peer-to-peer middleman company founded in part by Elon Musk, Max Levchin, and Peter Thiel made its name by offering online accounts to anybody who could "fog a mirror" and with a few nickels to rub together.
With an IPO in 2002 and subsequent acquisition by online auctioneer eBay, PayPal became the de facto standard for online payments. Reacting to a squabble from investor Carl Ichan, eBay divested itself from PayPal in 2014 and since then PayPal has been a stand-alone company. It was late in 2008 and early 2009 that PayPal, after acquiring the company known as Bill Me Later, began to offer credit to consumers. Aptly named PayPal Credit, a complete credit and debiting system aimed at the massive consumer audience worldwide was established.
Among their many marketing tactics, PayPal Credit offered a wildly popular option called special purchase financing, bearing zero interest for six months on purchases of $99 or more if paid in full during the allotted time. That promotion still exists today, but the present and recent past are where the issues of dubious claims and incomplete disclosure of terms begins.
Enter Synchrony
It was around that time in 2017 that how payments on PayPal Credit accounts were allocated was altered. When parent company PayPal was operating PayPal Credit, allocations of payments on accounts were handled roughly as anything over the minimum required payment on the entire account was then allocated to the special purchase financing.
For example, a PayPal Credit account holder, with, say, $1000 existing outstanding balance and a minimum monthly payment of $40, makes a purchase for $500 and takes advantage of the Zero Interest for Six Months if Paid in Full Special Financing Purchase. When the account holder makes a payment, say $100, $40 would cover the outstanding minimum credit payment and the remaining $60 would be applied to the Special Financing Purchase. That was pretty standard, and logical.
No more. Now, when that same account holder (or any account holder) with an existing outstanding balance makes the same transaction, the entirety of his or her payment goes toward the account balance and NONE is allocated to the Special Financing Purchase until the final 60 days of said Special Financing Purchase. In the meantime, interest accrues on the Special Financing Purchase at the full amount, in our case, $500. If the Special Financing Purchase balance is not paid off in full at the expiration of the six months, all of the accrued interest becomes part of the account balance due.
Nowhere in the terms and conditions of Special Financing Purchase is this made obvious or even mentioned to consumers. It is only revealed when (as our Editor found out) one questions PayPal Credit customer support by phone or by online chat. The response to why this devious practice is maintained, is that PayPal Credit and/or Synchrony Financial uses best practices in allocating funds in this manner. It's almost a certainty that said best practices are what's best for the bank, not the consumer, and here's why:
Beyond the failure to disclose this in-house allocation rule, the bank (Synchrony, in this case), has interest accruing on that Special Financing Purchase (remember, ZERO interest for six months if paid in full) at the full amount of the purchase, not at a lesser amount if account holder payment allocations were done the old way, in a moral, reasonable, and logical manner. It also sets up the casual account holder for a shock, when he/she looks at the Special Financing Purchase and realizes that with two months left to pay off the Special Financing Purchase at Zero Percent he or she still owes the full amount.
Unless one is careful enough to scrutinize the monthly statements generated by PayPal Credit, this poor or mis-allocation of payments - done in the name of best practices - can easily go unnoticed, especially if one makes automatic or automated monthly payments, a practice which all banks and credit card companies strongly encourage.
There is some relief, maybe.
Calls to PayPal Credit on this or any credit account issue result in referral to Synchrony. The supervisor with which Money Daily spoke on Thursday, November 7, elicited the response that payments can be allocated to the Special Financing Purchase if one calls Synchrony at 1-844-373-4961 and requests the payments be directed according to the wishes of the account holder, and NOT in the manner usually employed by the BANK (Synchrony). Synchrony says they will honor such requests and process them, but allocations will not show up on online accounts for "a few days."
Additionally, none of this would apply to anybody who isn't carrying a balance (the wise and fortunate 20-30% of account holders) with PayPal Credit and the only purchase made was a Special Financing Purchase. In that case, all of the monthly payment would be applied to the deferred interest financing because that's all there is.
Therein lies the problem. Instead of doing business in a morally correct, logical, reasonable, responsible, and customer-friendly manner, Synchrony Financial has chosen the usual path of 21st century bankers: deceit, incomplete disclosure, "gotcha" terms and "special financing" with in-house rules designed to maximize the bank's profitability, the customer be damned. To do business in what would normally be considered the "best practice" for the consumer, the account holder has to go out of his or her way to make a special phone call, jump through hoops, listen to all of the recordings and prompts to get what should have been done automatically. This is, after all, the age of high-speed communications and the internet, not Ma Bell's twisted copper.
If this practice isn't illegal, it would be no shock today. Financial institutions have been afforded wide latitude in their dealings with the public, to encourage loans, credit, and debt in a wide array of products and offerings.
In a world in which sanity, fairness, and reasonableness would be the norm, this kind of operation might be considered fraud at worst, bait-and-switch at best. But today, in our world of glorification of all things money and financial, where the dollar sign is revered and worshipped, it barely registers a "lookie here." It's a sad commentary on the state of morality and banking when gigantic, faceless institutions are able to run roughshod over consumers. It goes against the public interest, an interest, incidentally, that nobody - from bankers to consumer credit agencies to politicians - seems to be even remotely interested in protecting.
So, what do you think? Is this practice just run-of-the-mill deceit and standard underhandedness by PayPal Credit and Synchrony Financial, or does it rise to or border on criminal mischief, something banking regulators or congress should address? Comments are open, and are moderated.
Anybody experiencing issues such as those outlined above should call Synchrony at 1-844-373-4961 and complain loudly.
Be polite, but overall, be careful.
UPDATE: Found a thread on the PayPal boards dealing with this very issue. Many are fuming about it.
See here: https://www.paypal-community.com/t5/PayPal-Credit/PayPal-Credit-Promotional-Payment-Allocation/m-p/1553309/highlight/false#M8392
UPDATE 11/27/19: This issue will remain, as the actions of Synchrony are guided by Regulation Z. See the updated blog post:
https://moneydaily.blogspot.com/2019/11/weekend-wrap-paypal-creditsynchrony.html
At the Close, Thursday, November 7, 2019:
Dow Jones Industrial Average: 27,674.80, +182.24 (+0.66%)
NASDAQ: 8,434.52, +23.89 (+0.28%)
S&P 500: 3,085.18, +8.40 (+0.27%)
NYSE Composite: 13,395.55, +43.98 (+0.33%)
Wednesday, January 22, 2014
Market Direction Is Decidedly Indecisive; Ebay, NetFlix Report, Soar
For the second straight session, the Dow was down while the S&P and NASDAQ sported small gains.
A bifurcated market is often one which is about to change direction, so, since the general direction has been up, up and up, a change would indicate, what, lower prices for stocks?
Bernanke, Yellen and company simply cannot have that, thus, like everything else since 2008, everything depends solely upon the whims of the central bank. So sad.
Aftre the bell, eBay announced 4Q earnings, which were decidedly upbeat, with revenues up 14% from a year ago, and earnings per share of 81 cents, a decisive beat. Additionally, the company announced a $5 billion stock buyback program and also received a proposal from meddling Carl Icahn, who wants to see PayPal split out and an independent company, a move which would make a good deal of sense, since PayPal is the company's main profit driver. Shares soared more than eight percent in after-hours trading.
Netflix also announced fourth-quarter earnings after the bell and absolutely blew out the estimates. The company earned $48 million, or 79 cents per share, during final three months of 2013, compared to $8 million, or 13 cents per share, at the same time in 2012.
Revenue rose 24 percent from the previous year to nearly $1.2 billion and the US subscriber base grew by 2.3 million in the quarter. The stock was up more than 17% in the after-hours.
Look for NASDAQ futures to be up about 25 points prior to Thursday's open.
DOW 16,373.34, -41.10 (-0.25%)
NASDAQ 4,243.00, +17.24 (+0.41%)
S&P 1,844.86, +1.06 (+0.06%)
10-Yr Note 99.02, -0.06 (-0.06%) Yield: 2.87%
NASDAQ Volume 1.88 Bil
NYSE Volume 3.36 Bil
Combined NYSE & NASDAQ Advance - Decline: 3467-2224
Combined NYSE & NASDAQ New highs - New lows: 424-43
WTI crude oil: 96.73, +1.76
Gold: 1,238.60, -3.20
Silver: 19.84, 0.031
Corn: 426.00, +1.25
A bifurcated market is often one which is about to change direction, so, since the general direction has been up, up and up, a change would indicate, what, lower prices for stocks?
Bernanke, Yellen and company simply cannot have that, thus, like everything else since 2008, everything depends solely upon the whims of the central bank. So sad.
Aftre the bell, eBay announced 4Q earnings, which were decidedly upbeat, with revenues up 14% from a year ago, and earnings per share of 81 cents, a decisive beat. Additionally, the company announced a $5 billion stock buyback program and also received a proposal from meddling Carl Icahn, who wants to see PayPal split out and an independent company, a move which would make a good deal of sense, since PayPal is the company's main profit driver. Shares soared more than eight percent in after-hours trading.
Netflix also announced fourth-quarter earnings after the bell and absolutely blew out the estimates. The company earned $48 million, or 79 cents per share, during final three months of 2013, compared to $8 million, or 13 cents per share, at the same time in 2012.
Revenue rose 24 percent from the previous year to nearly $1.2 billion and the US subscriber base grew by 2.3 million in the quarter. The stock was up more than 17% in the after-hours.
Look for NASDAQ futures to be up about 25 points prior to Thursday's open.
DOW 16,373.34, -41.10 (-0.25%)
NASDAQ 4,243.00, +17.24 (+0.41%)
S&P 1,844.86, +1.06 (+0.06%)
10-Yr Note 99.02, -0.06 (-0.06%) Yield: 2.87%
NASDAQ Volume 1.88 Bil
NYSE Volume 3.36 Bil
Combined NYSE & NASDAQ Advance - Decline: 3467-2224
Combined NYSE & NASDAQ New highs - New lows: 424-43
WTI crude oil: 96.73, +1.76
Gold: 1,238.60, -3.20
Silver: 19.84, 0.031
Corn: 426.00, +1.25
Wednesday, April 17, 2013
Wall Street is Becoming a Falling Stock Zone
Is anyone other than the Fed governors and CNBC hosts convinced that ZIRP and QE aren't exactly working?
For the second day out of the past three, stocks suffered severe, across-the-board losses, extending the pullback that began on Friday.
The worst performing index has been the NASDAQ, which has dropped nearly 100 points since the close on Thursday (1300.18).
Dow stocks, predominated by high-yielding, dividend-producing income companies - the creme de la creme - have fared better, though the index is still down 247 points and there are still two days remaining in the trading week.
While the recent moves may be described as a precursor of the time-honored tradition of "sell in May and stay away," the directionality is troubling, because the US is supposed to be in a recovery.
Not helping matters much are the oddities coming out of Boston in the aftermath of Monday's bomb strikes, and Washington, where packages containing ricin have been showing up with increasing frequency.
Larger issues loom in Europe, where data continues to deteriorate, even in Germany, thought to be the bastion of strength.
Corporate earnings have been less-than-encouraging as well. Today's numbers from Bank of America (BAC) were notably weak, spurring the drop at the opening bell.
Still, the losses have not reached even three percent, so it may well be too early to make a call that direction has changed, though, as has been pointed out repeatedly here and elsewhere, bull markets do not last forever, and this one is heading into its 50th month.
Key data this week has included a wicked drop in the Empire State manufacturing index, from 9.2 to 3.1, a negative reading (-0.2) on CPI for March and a drop-off in building permits, suggesting that the housing sector may not be quite as healthy as the pundits have been preaching.
Volume on the day was particularly heavy, a signal not lost on both bulls and bears; decliners outpaced advancing issues four-to-one; new lows, for the first time this year, superseded new highs, and by a rather large amount, another key metric.
After the bell, both American Express (AXP) and eBay (EBAY) missed gross revenue targets and just barely beat (each by a penny) the per share earnings forecasts.
Commodities continue to be beaten down as deflationary forces appear to be winning at the present time. Depending upon which side you butter your bread, that may be good or bad news.
There is good news in oil, which hit a multi-month low. If prices for crude continue to depress and remain so, it won't be long before driving Americans finally get a break at the gas pump.
Gold and silver continue to be on sale, though shortages in physical metal are widespread and premiums over spot prices are ranging anywhere from 16 to 35 percent. If that condition persists, forget the gold and silver ETFs, they will eventually break down as the backers are unable to deliver physical metal on contracts.
LATE BREAKING: Senate votes down gun control "compromise" measure. Long live the 2nd amendment!
and...
Europe's leading parliamentarian, Nigel Farage:
Dow 14,618.59, -138.19 (0.94%)
NASDAQ 3,204.67, -59.96 (1.84%)
S&P 500 1,552.01, -22.56 (1.43%)
NYSE Composite 8,955.47, -130.96 (1.44%)
NASDAQ Volume 1,889,783,125
NYSE Volume 4,579,846,000
Combined NYSE & NASDAQ Advance - Decline: 1382-5083
Combined NYSE & NASDAQ New highs - New lows: 87-178 (this could be huge!)
WTI crude oil: 86.68, -2.04
Gold: 1,373.10, -14.30
Silver: 23.24, -0.383
For the second day out of the past three, stocks suffered severe, across-the-board losses, extending the pullback that began on Friday.
The worst performing index has been the NASDAQ, which has dropped nearly 100 points since the close on Thursday (1300.18).
Dow stocks, predominated by high-yielding, dividend-producing income companies - the creme de la creme - have fared better, though the index is still down 247 points and there are still two days remaining in the trading week.
While the recent moves may be described as a precursor of the time-honored tradition of "sell in May and stay away," the directionality is troubling, because the US is supposed to be in a recovery.
Not helping matters much are the oddities coming out of Boston in the aftermath of Monday's bomb strikes, and Washington, where packages containing ricin have been showing up with increasing frequency.
Larger issues loom in Europe, where data continues to deteriorate, even in Germany, thought to be the bastion of strength.
Corporate earnings have been less-than-encouraging as well. Today's numbers from Bank of America (BAC) were notably weak, spurring the drop at the opening bell.
Still, the losses have not reached even three percent, so it may well be too early to make a call that direction has changed, though, as has been pointed out repeatedly here and elsewhere, bull markets do not last forever, and this one is heading into its 50th month.
Key data this week has included a wicked drop in the Empire State manufacturing index, from 9.2 to 3.1, a negative reading (-0.2) on CPI for March and a drop-off in building permits, suggesting that the housing sector may not be quite as healthy as the pundits have been preaching.
Volume on the day was particularly heavy, a signal not lost on both bulls and bears; decliners outpaced advancing issues four-to-one; new lows, for the first time this year, superseded new highs, and by a rather large amount, another key metric.
After the bell, both American Express (AXP) and eBay (EBAY) missed gross revenue targets and just barely beat (each by a penny) the per share earnings forecasts.
Commodities continue to be beaten down as deflationary forces appear to be winning at the present time. Depending upon which side you butter your bread, that may be good or bad news.
There is good news in oil, which hit a multi-month low. If prices for crude continue to depress and remain so, it won't be long before driving Americans finally get a break at the gas pump.
Gold and silver continue to be on sale, though shortages in physical metal are widespread and premiums over spot prices are ranging anywhere from 16 to 35 percent. If that condition persists, forget the gold and silver ETFs, they will eventually break down as the backers are unable to deliver physical metal on contracts.
LATE BREAKING: Senate votes down gun control "compromise" measure. Long live the 2nd amendment!
and...
Europe's leading parliamentarian, Nigel Farage:
Dow 14,618.59, -138.19 (0.94%)
NASDAQ 3,204.67, -59.96 (1.84%)
S&P 500 1,552.01, -22.56 (1.43%)
NYSE Composite 8,955.47, -130.96 (1.44%)
NASDAQ Volume 1,889,783,125
NYSE Volume 4,579,846,000
Combined NYSE & NASDAQ Advance - Decline: 1382-5083
Combined NYSE & NASDAQ New highs - New lows: 87-178 (this could be huge!)
WTI crude oil: 86.68, -2.04
Gold: 1,373.10, -14.30
Silver: 23.24, -0.383
Thursday, February 23, 2012
Is the Crisis Deepening?; Meg Whitman, Prototypical CEO Failure
Well, the PPT must have gotten up early today, because no sooner did the Dow dip 50 points off the open than it was boosted to a 50 mark to the positive.
Was there a reason, a rationale? Sure. Stocks must go up to bolster the perception that all is well in the good old US of A.
Naturally, once the market was back on a solid we're-going-to-13,000 footing once again, the HFT momo-chasers went to work, keeping the abhorrent, clumsy, no-volume rally going for the remainder of the lackluster session.
With stocks just screaming higher and higher virtually every day, some elements on the general tenor of the stock market rally vis-a-vis the real world economy need to be scrutinized.
Oil continues to rocket higher, up over $108 per barrel in electronic trading late today. The Euro/Dollar trade continues to be the creepiest, most cynical lie to the world. How does the Euro, with most of Europe already in a recession and the rest of it teetering on one, continue to ramp higher against the US dollar? Aren't we supposed to be in better shape than the various countries making up the Eurozone? Apparently not, because the EUR/USD hit another high today, closing above 1.33. It simply makes no sense, except if you have significant positions (like Goldman Sachs does) long the Euro and the stock market.
Last we checked, GDP was still growing at less than 3% in the US, though in Europe, minus signs and fractions of one percent dot the landscape. America still has more than 14 million unemployed people, wages have been stagnant to lower for more than a decade and the real estate market is officially in depression-like throes.
Something is definitely not right, when the Euro is up while most of the continent is in recession, oil is ramping to record levels for this time of year despite all manner of data showing rampant demand destruction, gold and silver are ripping, yet the stock market continues to rise and rise and rise without so much as a 3% pull-back. The Dow Jones Industrials are up a wicked, unbelievable 2339 points since October 1, an incredible gain of 21.95% in less than five months. Yep, the rich are getting richer... again.
Watch retail analyst Howard Davidowitz rip apart the notion of "growth" in the video below:
Hundreds of stores closing from a handful of retailers; the rest, Davidowitz calls "train wrecks."
A couple of lines gleans from Hewlett-Packard's (HPQ) newly-minted CEO, Meg Whitman, aptly demonstrate what's wrong with corporate and political America. First, Ms. Whitman, who, after a stint as the CEO of eBay, launched an unsuccessful bid for the governorship of California. Out of luck and out of a job, Meg was pegged to lead HPQ out of the abyss.
Good luck with that, you clueless board members. Whitman is uniquely suited to drive Hewlett Packard even deeper into an already well-dug hole. Her "success" at eBay can more or less be summed up in one line: A trained monkey could have done as well, and probably without alienating as many people, buyers and sellers alike.
Ebay was one of the few dotcom companies that fit the new paradigm of the internet perfectly, allowing small businesses and individuals to buy and sell just about anything under the sun. Ms. Whitman had, in reality, little to do with making the company a household name. It was all about eBay's near-monopolistic position in the online retail space that made the company a success. It would have actually been more of a surprise had she not succeeded. Meg Whitman didn't start the company. She got in when the getting was good.
In any case, here's some of the cliche claptrap that Whitman spewed on her CNBC interview this morning:
It's a shame Ms. Whitman's on-the-job training as CEO of a real company didn't include lessons in humility, because the market provided some for her after the company beat (lowered) expectations narrowly this quarter, but was short on revenue and even shorter on guidance. Traders punished HPQ to the tune of a 6.5% decline upon the occasion of the release of its most recent quarter's numbers. That's a pretty impressive drop, considering the company had already lost a two-fifths of its value in just the past year. Meg Whitman is your gal, especially if you ascribe to the Peter Principle.
There isn't a day of reckoning coming. There will be many days of many reckonings over the coming years because the entire global financial and commercial system is being kept afloat on dreams, lies, cronyism and hype.
Dow 12,984.69, +46.02 (0.36%)
NASDAQ 2,956.98, +23.81 (0.81%)
S&P 500 1,363.46, +5.80 (0.43%)
NYSE Composite 8,135.98, +41.60 (0.51%)
NASDAQ Volume 1,723,876,625
NYSE Volume 3,726,037,500
Combined NYSE & NASDAQ Advance - Decline: 4040-1606
Combined NYSE & NASDAQ New highs - New lows: 243-24 (Wowser! Only one new low on the NYSE.)
WTI crude oil: 107.83, +1.55 (up 10% in February)
Gold: 1,786.30, +15.00 (closing in on all-time highs)
Silver: 35.56, +1.30 (about to break out)
Was there a reason, a rationale? Sure. Stocks must go up to bolster the perception that all is well in the good old US of A.
Naturally, once the market was back on a solid we're-going-to-13,000 footing once again, the HFT momo-chasers went to work, keeping the abhorrent, clumsy, no-volume rally going for the remainder of the lackluster session.
With stocks just screaming higher and higher virtually every day, some elements on the general tenor of the stock market rally vis-a-vis the real world economy need to be scrutinized.
Oil continues to rocket higher, up over $108 per barrel in electronic trading late today. The Euro/Dollar trade continues to be the creepiest, most cynical lie to the world. How does the Euro, with most of Europe already in a recession and the rest of it teetering on one, continue to ramp higher against the US dollar? Aren't we supposed to be in better shape than the various countries making up the Eurozone? Apparently not, because the EUR/USD hit another high today, closing above 1.33. It simply makes no sense, except if you have significant positions (like Goldman Sachs does) long the Euro and the stock market.
Last we checked, GDP was still growing at less than 3% in the US, though in Europe, minus signs and fractions of one percent dot the landscape. America still has more than 14 million unemployed people, wages have been stagnant to lower for more than a decade and the real estate market is officially in depression-like throes.
Something is definitely not right, when the Euro is up while most of the continent is in recession, oil is ramping to record levels for this time of year despite all manner of data showing rampant demand destruction, gold and silver are ripping, yet the stock market continues to rise and rise and rise without so much as a 3% pull-back. The Dow Jones Industrials are up a wicked, unbelievable 2339 points since October 1, an incredible gain of 21.95% in less than five months. Yep, the rich are getting richer... again.
Watch retail analyst Howard Davidowitz rip apart the notion of "growth" in the video below:
Hundreds of stores closing from a handful of retailers; the rest, Davidowitz calls "train wrecks."
A couple of lines gleans from Hewlett-Packard's (HPQ) newly-minted CEO, Meg Whitman, aptly demonstrate what's wrong with corporate and political America. First, Ms. Whitman, who, after a stint as the CEO of eBay, launched an unsuccessful bid for the governorship of California. Out of luck and out of a job, Meg was pegged to lead HPQ out of the abyss.
Good luck with that, you clueless board members. Whitman is uniquely suited to drive Hewlett Packard even deeper into an already well-dug hole. Her "success" at eBay can more or less be summed up in one line: A trained monkey could have done as well, and probably without alienating as many people, buyers and sellers alike.
Ebay was one of the few dotcom companies that fit the new paradigm of the internet perfectly, allowing small businesses and individuals to buy and sell just about anything under the sun. Ms. Whitman had, in reality, little to do with making the company a household name. It was all about eBay's near-monopolistic position in the online retail space that made the company a success. It would have actually been more of a surprise had she not succeeded. Meg Whitman didn't start the company. She got in when the getting was good.
In any case, here's some of the cliche claptrap that Whitman spewed on her CNBC interview this morning:
- On the timing of HPQ's turnaround: "Fundamental change... will take some time."
- On the challenges facing the company: "There are three 'buckets' of challenge: 1) basic execution, 2) each business has it's own unique challenges, 3) there have been changes in our business."
- On HPQ's structure: "We have to zero-base the bureaucracy..."
- "We have to save so we can invest and compete more effectively."
- "We're not where we want to be in China." (Meg should know. Ebay shuttered its China operations under Whitman after years of abject failure and lack of traction.)
- On when HPQ's metrics will show some change: "We'll know a lot by the end of 2012. Revenue acceleration in 2013."
It's a shame Ms. Whitman's on-the-job training as CEO of a real company didn't include lessons in humility, because the market provided some for her after the company beat (lowered) expectations narrowly this quarter, but was short on revenue and even shorter on guidance. Traders punished HPQ to the tune of a 6.5% decline upon the occasion of the release of its most recent quarter's numbers. That's a pretty impressive drop, considering the company had already lost a two-fifths of its value in just the past year. Meg Whitman is your gal, especially if you ascribe to the Peter Principle.
There isn't a day of reckoning coming. There will be many days of many reckonings over the coming years because the entire global financial and commercial system is being kept afloat on dreams, lies, cronyism and hype.
Dow 12,984.69, +46.02 (0.36%)
NASDAQ 2,956.98, +23.81 (0.81%)
S&P 500 1,363.46, +5.80 (0.43%)
NYSE Composite 8,135.98, +41.60 (0.51%)
NASDAQ Volume 1,723,876,625
NYSE Volume 3,726,037,500
Combined NYSE & NASDAQ Advance - Decline: 4040-1606
Combined NYSE & NASDAQ New highs - New lows: 243-24 (Wowser! Only one new low on the NYSE.)
WTI crude oil: 107.83, +1.55 (up 10% in February)
Gold: 1,786.30, +15.00 (closing in on all-time highs)
Silver: 35.56, +1.30 (about to break out)
Wednesday, September 7, 2011
The Beginning of a Bear Market
Today was yet another example of the wickedness of having computer algorithms doing what humans used to do. The momentum play was on the upside after German court ruled that Germany's participation in the bailout of Greece and other cash-strapped European nations was constitutional, meaning, for the investing class, that the party of low interest rates, cheap money and free spending without responsibility would continue on the continent without interruption from annoying laws or moral hazard.
The rest of the day-long rally in equities was the work of machines, following the momentum flow of the day.
But what do these sharp rallies really mean? Are they signs of health in US equity markets and the global economy or are they false flag events designed only to be sold off minutes, hours or days later as a bear market commences?
The answer to those questions probably lies somewhere in the recent charts of the major indices, which all show the same pattern of a sharp drop-off at the end of July, followed by a series of volatile rallies and sell-offs, leaving the indices well below their 50 and 200-day moving averages (which have all already crossed over). The high bar for markets is to get back to those July levels, which seem like distant specs on the horizon from where the market now resides.
These high water marks are roughly 12750 for the Dow, 2875 for the NASDAQ, 1350 for the S&P and 8490 for the NYSE Composite. Just take a look below to see just how far stocks would have to rally to regain those levels and your thinking about whether or not this is a good time to invest in stocks might be changed radically because if they don't get there, technicians will call this environment a sustained correction - that is until the indices fall to 20% below their highs made back at the end of April, which would then confirm a bear market.
European indices are already in bear market territory, and the sharp rallies over there are nothing more than short-covering or knee-jerk rallies that belie the true nature of the environment, which has most of Europe falling into recession in the next quarter. If Europe goes, the US will not be far behind, and some say we're already there.
So, what will it be in the coming months? Recession and a bear market (and one which could be particularly brutal) or a sustained recovery, upon which the middle class of America has been waiting nearly three years? Choose wisely.
Bear in mind that today's rally, like so many before it, was punctuated by embarrassingly low volume.
Dow 11,414.86, +275.56 (2.47%)
NASDAQ 2,548.94, +75.11 (3.04%)
S&P 500 1,198.62, +33.38 (2.86%)
NYSE Composite 7,355.17, +207.04 (2.90%)
NASDAQ Volume 1,755,357,500
NYSE Volume 4,312,856,500
Combined NYSE & NASDAQ Advance - Decline: 5655-944
Combined NYSE & NASDAQ New highs - New lows: 35-46
WTI crude oil futures: 89.33, +3.31
Gold: 1817.00, -56.60
Silver: 41.64, -0.32
Idea: Buy Gold and Silver on eBay
Unless you've been living under a rock for the past decade, you know how gold and silver have outperformed stocks and bonds and just about all other asset classes (maybe all of them), but if you are reluctant to purchase some for your own portfolio, you might take a look at eBay's offerings and do a little bit of research into why gold and silver will continue to rise as fiat currencies devalue.
One fine site n which to do some research about pre-1965 silver coins is Coinflation.com, which offers a nice selection of metals-related news and some great charts and tools to determine present and future value of mostly 90% silver coins, which just happened to be the standard way back when the US was a net exporter and a strong, growing nation.
After 1964, coinage was dramatically changed, with the percentage of silver in dimes, quarters, halves and silver dollars substantially reduced. Once you check out the values, head over to ebay and buy a few Morgans or Walking Liberties or Washington Quarters. Prices are fair and right around spot, including shipping and the sellers are 99.99% honest and fair dealers.
The rest of the day-long rally in equities was the work of machines, following the momentum flow of the day.
But what do these sharp rallies really mean? Are they signs of health in US equity markets and the global economy or are they false flag events designed only to be sold off minutes, hours or days later as a bear market commences?
The answer to those questions probably lies somewhere in the recent charts of the major indices, which all show the same pattern of a sharp drop-off at the end of July, followed by a series of volatile rallies and sell-offs, leaving the indices well below their 50 and 200-day moving averages (which have all already crossed over). The high bar for markets is to get back to those July levels, which seem like distant specs on the horizon from where the market now resides.
These high water marks are roughly 12750 for the Dow, 2875 for the NASDAQ, 1350 for the S&P and 8490 for the NYSE Composite. Just take a look below to see just how far stocks would have to rally to regain those levels and your thinking about whether or not this is a good time to invest in stocks might be changed radically because if they don't get there, technicians will call this environment a sustained correction - that is until the indices fall to 20% below their highs made back at the end of April, which would then confirm a bear market.
European indices are already in bear market territory, and the sharp rallies over there are nothing more than short-covering or knee-jerk rallies that belie the true nature of the environment, which has most of Europe falling into recession in the next quarter. If Europe goes, the US will not be far behind, and some say we're already there.
So, what will it be in the coming months? Recession and a bear market (and one which could be particularly brutal) or a sustained recovery, upon which the middle class of America has been waiting nearly three years? Choose wisely.
Bear in mind that today's rally, like so many before it, was punctuated by embarrassingly low volume.
Dow 11,414.86, +275.56 (2.47%)
NASDAQ 2,548.94, +75.11 (3.04%)
S&P 500 1,198.62, +33.38 (2.86%)
NYSE Composite 7,355.17, +207.04 (2.90%)
NASDAQ Volume 1,755,357,500
NYSE Volume 4,312,856,500
Combined NYSE & NASDAQ Advance - Decline: 5655-944
Combined NYSE & NASDAQ New highs - New lows: 35-46
WTI crude oil futures: 89.33, +3.31
Gold: 1817.00, -56.60
Silver: 41.64, -0.32
Idea: Buy Gold and Silver on eBay
Unless you've been living under a rock for the past decade, you know how gold and silver have outperformed stocks and bonds and just about all other asset classes (maybe all of them), but if you are reluctant to purchase some for your own portfolio, you might take a look at eBay's offerings and do a little bit of research into why gold and silver will continue to rise as fiat currencies devalue.
One fine site n which to do some research about pre-1965 silver coins is Coinflation.com, which offers a nice selection of metals-related news and some great charts and tools to determine present and future value of mostly 90% silver coins, which just happened to be the standard way back when the US was a net exporter and a strong, growing nation.
After 1964, coinage was dramatically changed, with the percentage of silver in dimes, quarters, halves and silver dollars substantially reduced. Once you check out the values, head over to ebay and buy a few Morgans or Walking Liberties or Washington Quarters. Prices are fair and right around spot, including shipping and the sellers are 99.99% honest and fair dealers.
Wednesday, January 13, 2010
For those suckers in stocks, today was a good day. all of the major indices posted gains, with the Dow jones Industrials close to 52-week highs.
Gold and silver were also higher, but, if you had money in your pocket, your investment was safe and not exposed to any risk except that of somebody robbing you.
You must learn to love cash. It has no equal as far as liquidity is concerned, it takes up very little space, and can buy more things, especially things by which you can make more cash. It's tax-free once in your possession and nobody has to know how much or how little you have of it. With a little, you can buy a decent meal. With a lot, the world's your oyster.
Every minute of every waking day should be an effort to raise more cash. Even as I write this, tiny increments of cash are headed my way, in a never-ending flow (well, as long as the advertising market remains intact). I have various web sites and blogs which generate cash all day and all night. Over the past 5 years, it's been the most remarkable, reliable source of cash I have found. The best part of it is that I incrementally improve my earnings with more traffic. More eyeballs = more page views = more $$ for me and my partners.
If you don't have a stream of income like mine, you're going to be left to find other ways to make money, probably a job, the most degrading, insecure, life-cheating device ever invented. The job has enslaved millions and millions of people who could be otherwise leading normal, productive lives. If you have a job, I'm sorry. I your boss is an absolute ass, too bad. I've been there, many years ago. Didn't like it. Moved on.
Having a regular job is about the absolute worst way I can imagine going through life. The alarm clock, the traffic, the meetings, the BS, the commute home, are all so conducive to wasting one's life that I chose to avoid that path completely. Now, there are the benefits of a regular check, until you get laid off, that is, or fired, but how many of us use that money wisely to free ourselves from the mordant, the mundane, the mortal blows of employment?
You need to find a way out of the rat race. Here's my simple tip for the day: Sell something on ebay. Anything, one item a week at least. You can find something around the house that you don't use, want or need. Somebody will buy it. Put the money you make into a tin or bank or bottle, and leave it there. Keep adding every week. Just keep adding to it. You'll find the habit addictive and maybe, in 2 years or 10 years, you'll have enough to do whatever you want with your life. You'll have enough to quit your job and become a surfer, or a guitarist or something that doesn't involve checking in on a daily basis with a boss, who, by the way, could give a sh-t about you or your life.
Dow 10,680.77, +53.51 (0.50%)
NASDAQ 2,307.90, +25.59 (1.12%)
S&P 500 1,145.68, +9.46 (0.83%)
NYSE Composite 7,430.14, +59.69 (0.81%)
Advancers beat decliners, 4581-1924. New Highs: 405; New Lows: 55.
NYSE Volume 4,821,581,000
NASDAQ Volume 2,348,554,000
Oil, -$1.14, $79.65. Gold, +$8.60, $1,138.00. Silver, +$0.15, $18.40.
See ya.
Gold and silver were also higher, but, if you had money in your pocket, your investment was safe and not exposed to any risk except that of somebody robbing you.
You must learn to love cash. It has no equal as far as liquidity is concerned, it takes up very little space, and can buy more things, especially things by which you can make more cash. It's tax-free once in your possession and nobody has to know how much or how little you have of it. With a little, you can buy a decent meal. With a lot, the world's your oyster.
Every minute of every waking day should be an effort to raise more cash. Even as I write this, tiny increments of cash are headed my way, in a never-ending flow (well, as long as the advertising market remains intact). I have various web sites and blogs which generate cash all day and all night. Over the past 5 years, it's been the most remarkable, reliable source of cash I have found. The best part of it is that I incrementally improve my earnings with more traffic. More eyeballs = more page views = more $$ for me and my partners.
If you don't have a stream of income like mine, you're going to be left to find other ways to make money, probably a job, the most degrading, insecure, life-cheating device ever invented. The job has enslaved millions and millions of people who could be otherwise leading normal, productive lives. If you have a job, I'm sorry. I your boss is an absolute ass, too bad. I've been there, many years ago. Didn't like it. Moved on.
Having a regular job is about the absolute worst way I can imagine going through life. The alarm clock, the traffic, the meetings, the BS, the commute home, are all so conducive to wasting one's life that I chose to avoid that path completely. Now, there are the benefits of a regular check, until you get laid off, that is, or fired, but how many of us use that money wisely to free ourselves from the mordant, the mundane, the mortal blows of employment?
You need to find a way out of the rat race. Here's my simple tip for the day: Sell something on ebay. Anything, one item a week at least. You can find something around the house that you don't use, want or need. Somebody will buy it. Put the money you make into a tin or bank or bottle, and leave it there. Keep adding every week. Just keep adding to it. You'll find the habit addictive and maybe, in 2 years or 10 years, you'll have enough to do whatever you want with your life. You'll have enough to quit your job and become a surfer, or a guitarist or something that doesn't involve checking in on a daily basis with a boss, who, by the way, could give a sh-t about you or your life.
Dow 10,680.77, +53.51 (0.50%)
NASDAQ 2,307.90, +25.59 (1.12%)
S&P 500 1,145.68, +9.46 (0.83%)
NYSE Composite 7,430.14, +59.69 (0.81%)
Advancers beat decliners, 4581-1924. New Highs: 405; New Lows: 55.
NYSE Volume 4,821,581,000
NASDAQ Volume 2,348,554,000
Oil, -$1.14, $79.65. Gold, +$8.60, $1,138.00. Silver, +$0.15, $18.40.
See ya.
Wednesday, July 18, 2007
Markets Pare Gains on Profit Weakness
Earnings continued to roll out on Wednesday, with the following highlighting a heavy day of releases:
Most of the big names offered disappointing results, and it took a toll on the overall market.
Dow 13,918.22 -53.33; NASDAQ 2,699.49 -12.80; S&P 500 1,546.17 -3.20; NYSE Composite 10,148.28 -22.08
The results thus far for companies reporting 2nd-quarter earnings have been mixed with some major misses, not a positive trend for a market that's just made new highs. Add to the sour mood of today, Fed Chairman Ben Bernanke's remarks that the sub-prime lending ordeal is likely to worsen, though the US economy is in good overall shape. He has his doubters, however, and signs of a significant slowdown are everywhere.
Today's trade was also somewhat deceptive. All of the indices were down more than twice their closing losses. Some serious tape-painting occurred in the last hour of trading.
Declining issues once again overwhelmed advancers, by nearly a 2-1 margin. New lows surpassed new highs for the first time in weeks, 375-229. This is a definite sell signal that's been building for weeks.
Oil continued to weigh on the market as well, with the price of crude for August delivery gaining another $1.03 on the NY Merc, to close at $75.03.
Gold moved up to $673.70, a gain of $7.80, while silver added 27 cents to close out at 13.29. There's a growing number of commodity specialists who believe the precious metals are due for another run-up on inflation concerns, though both are near historic highs and have been stuck in trenches for more than 18 months.
There may have been consolidation in these commodities as positions have been unraveled, though most of the speculators are calling for doubling or even tripling in price over the next 2-3 years. Those predictions have been around for years, and, following the movements of the metals, they are highly cyclical and they seem to be on the downside of their most recent bullish cycle.
On the other hand, the gold cycle is very long, and neither gold nor silver has yet to show signs of breaking the long term uptrend. With inflation running rampant, they are not the worst investments, but stocks have performed much better over the last year and a half. These should be only held in large quantity if the potential for a complete market crash is high, and that's certainly not the case at present.
Watch out for the remainder of this week. Any more profit disappointments may just cause outright flight from equities for the summer.
- CIT Group (CIT): Second-quarter loss after paying preferred dividends of $134.5 million, of 70 cents per share was reported, compared with a profit of $236 million, or $1.16 per share, in the year-ago period. The results include a charge of $495.3 million, or $2.58 per share, from the planned exit of its home lending business, making CIT yet another casualty of the subprime mortgage industry implosion. Analysts expected 1.35. The stock dropped 6.26 (11.29%) on the news.
- eBay (EBAY): Reported earnings of $375.8 million, or 27 cents per share, compared with earnings of $250 million, or 17 cents a share, for the same period last year. Analysts expected 0.32
- Gannett (GCI): Excluding a $73.8 million gain from the sale of several newspapers and earnings from discontinued operations in both periods, Gannett earned $289.9 million from continuing operations in the quarter, down 4.8 percent from $304.5 million in the same period a year earlier. Per-share earnings on the same basis came in at $1.24 versus $1.28 in the same period a year ago. Analysts expected 1.21
- Pfizer (PFE): Excluding items, adjusted profit fell 20 percent to $2.94 billion, or 42 cents per share, from $3.66 billion, or 50 cents per share, a year ago. Analysts expected 0.50
- Piper Jaffray (PJC): Second-quarter net income was $9.3 million, or 52 cents per share, compared with earnings of $4.1 million, or 21 cents per share, in the second quarter of 2006. Analysts expected 0.74. Shares were off 3.69 (6.72%).
- Southwest Airlines (LUV): Earned $278 million, or 36 cents per share in the April-June quarter, compared with $333 million, or 40 cents per share, a year earlier. After adjusting for fuel-hedging transactions, Southwest said it would have earned 25 cents per share. Analysts expected 0.22
- United Technologies (UTX): Earnings per share for the quarter that ended June 30 were $1.16. Analysts expected 1.15
Most of the big names offered disappointing results, and it took a toll on the overall market.
Dow 13,918.22 -53.33; NASDAQ 2,699.49 -12.80; S&P 500 1,546.17 -3.20; NYSE Composite 10,148.28 -22.08
The results thus far for companies reporting 2nd-quarter earnings have been mixed with some major misses, not a positive trend for a market that's just made new highs. Add to the sour mood of today, Fed Chairman Ben Bernanke's remarks that the sub-prime lending ordeal is likely to worsen, though the US economy is in good overall shape. He has his doubters, however, and signs of a significant slowdown are everywhere.
Today's trade was also somewhat deceptive. All of the indices were down more than twice their closing losses. Some serious tape-painting occurred in the last hour of trading.
Declining issues once again overwhelmed advancers, by nearly a 2-1 margin. New lows surpassed new highs for the first time in weeks, 375-229. This is a definite sell signal that's been building for weeks.
Oil continued to weigh on the market as well, with the price of crude for August delivery gaining another $1.03 on the NY Merc, to close at $75.03.
Gold moved up to $673.70, a gain of $7.80, while silver added 27 cents to close out at 13.29. There's a growing number of commodity specialists who believe the precious metals are due for another run-up on inflation concerns, though both are near historic highs and have been stuck in trenches for more than 18 months.
There may have been consolidation in these commodities as positions have been unraveled, though most of the speculators are calling for doubling or even tripling in price over the next 2-3 years. Those predictions have been around for years, and, following the movements of the metals, they are highly cyclical and they seem to be on the downside of their most recent bullish cycle.
On the other hand, the gold cycle is very long, and neither gold nor silver has yet to show signs of breaking the long term uptrend. With inflation running rampant, they are not the worst investments, but stocks have performed much better over the last year and a half. These should be only held in large quantity if the potential for a complete market crash is high, and that's certainly not the case at present.
Watch out for the remainder of this week. Any more profit disappointments may just cause outright flight from equities for the summer.
Monday, June 18, 2007
Bailing Out: eBay and Yahoo
From time to time, I like to mention stocks I like or don't like. In all cases I will tell you whether I own the stocks (full disclosure). The stocks I am highlighting today - eBay and Yahoo - I do not own. Nor would I. These are two of the oldest internet properties and both have had their ups and downs, but lately, I see little to no upside, in terms of share price appreciation, for either of them.
Let's look at Yahoo first. Six years ago, they were the leaders in just about every measurable internet category. They had traffic, were the leader in search, news aggregation, games, etc. Then along came Google and stole their search crown. Other competitors sliced away at other categories. And while Yahoo still has impressive traffic numbers, they lack what every great internet company needs - innovation - and that's why their profits and share price are down.
Yahoo is exploring partnerships and integrations with local newspapers to improve the ad spending and reach in major local markets. This is a strategy that has great potential to backfire. Local ad spending on the 'net is the last great frontier, as yet unexploited by the giants. But large, clunky local newspapers, which have been slow to adopt best practices regarding their web offerings, while established entities, may not be the best prospects for innovative ad deals.
There's that word again. Innovation. Many of the largest chains of newspapers have been slow on the uptake and are still, like it or not, tied to the big bucks in print ad sales. The old tree-killing, mash-to-pulp-to-print mantra still resonates in newsrooms and ad departments across America. Teaching the old dogs of newspaper ad sales new tricks is going to be challenging, and likely unprofitable for some time to come, if ever. Ad reps at large newspapers have entrenched customer bases, many of them are in their 50s or 60s and make six-figures, so they're a tough bunch to crack. Why should they offer internet ads to their big-time clients? If it ain't broke don't fix it.
Yahoo would do better to seek out new internet-only local entities, like bloggers, wikis and ultra-local small websites. But they're stuck in that "bigger-is-better" corporate mindset, and that's yet another reason they're in failure mode.
Local ad markets represent some of the most fiercely-fought-over turfs in any selling regimen. Yahoo is in for a long, tough fight in which the landscape shifts from market to market and sometimes day to day. Good luck. It's a losing battle for both the newspapers and Yahoo. In the innovation war, they've come to a gunfight with a switchblade.
Just as i was finishing up this entry, Yahoo announced that CEO Terry Semel is stepping down and will be replaced by co-founder Jerry Yang. Leave it to Yahoo. News about their own company, and they get scooped by CNN Money. I'll stand by my prediction for short term gloom, however. This company needs more than a face-change at the top.
As for eBay, I'll just keep it simple. If it wasn't for their purchase of payment processor PayPal back around 2002, they'd be sunk lower than they already are. The company has made various large acquisitions that don't seem to offer much synergy. Take Skype, for instance. What good does a free long-distance telephone service offer a company that depends on online retail sales for 60% or more of its revenue?
If you're scratching your head on that one, you're not alone. Analysts, merchants and users of the big, fat internet auction shopping site are still trying to figure that one out.
eBay had made other questionable calls on acquisitions and they seem to have lost their focus, if they ever had one in the first place. It's almost as though they feel that the online auction format is not sustainable long term, and maybe they're right. They haven't made the one fundamental change to the auction format that could change the paradigm - taking the time element out of the auction. Most offerings on eBay languish for days before getting bids in the final minutes or seconds, if at all.
The chiefs at eBay haven't noticed that they could make more money with a better, more exciting user experience in the company's 10 year history. Already this summer, listings are down on the flagship US site. It bodes evil for the future of the auction king.
Once again, failure to innovate plagues this company as it does Yahoo. The only advancements eBay has made over the years to their core product are bloated extras that have the potential to boost their bottom line. eBay is missing the web's new wave in very noticeable ways.
Currently trading around 31, eBay should languish in the 20s for some time to come and underperform the S&P 500 through 2008, or until there's a management shake-up.
Yahoo, already trading slightly below 30, may make it's way down to the teens by the end of 2007. They've offered nothing new for so long, major shareholders may begin to bail soon.
Now, today's markets: Dull. With a capital D. Get used to it. It's summer and these kinds of days are the norm. Volume was very light and the indices didn't budge far from the flat line, though they all closed on the downside.
Dow 13,612.98 -26.50; NASDAQ 2,626.60 -0.11; S&P 500 1,531.05 -1.86; NYSE Composite 10,005.47 -8.46
Declining issues lead advancers marginally, by roughly a 10-9 margin, but new highs still superseded new lows, 427-92.
Oil was up over $68... and $69, ending $1.09 higher at $69.09. They're out of their minds, these oil people, and they deserve to see everyone in America walk to work or take alternative transportation for two months. It won't happen, but they, the sheiks and the Big Oil execs deserve a fate much, much worse than death. They're raping the US economy, the world economy, and trying to rape Iraq and next, Iran. Brutal.
Gold and silver went in opposite directions, but not far. The metals are so dull, they are barely worth reporting. A timely strategy might be to sell all your precious metal holdings now and buy back in a year from now. These particular commodities have had their days in the sun and have been treading water for months. A major fall is coming soon.
Let's look at Yahoo first. Six years ago, they were the leaders in just about every measurable internet category. They had traffic, were the leader in search, news aggregation, games, etc. Then along came Google and stole their search crown. Other competitors sliced away at other categories. And while Yahoo still has impressive traffic numbers, they lack what every great internet company needs - innovation - and that's why their profits and share price are down.
Yahoo is exploring partnerships and integrations with local newspapers to improve the ad spending and reach in major local markets. This is a strategy that has great potential to backfire. Local ad spending on the 'net is the last great frontier, as yet unexploited by the giants. But large, clunky local newspapers, which have been slow to adopt best practices regarding their web offerings, while established entities, may not be the best prospects for innovative ad deals.
There's that word again. Innovation. Many of the largest chains of newspapers have been slow on the uptake and are still, like it or not, tied to the big bucks in print ad sales. The old tree-killing, mash-to-pulp-to-print mantra still resonates in newsrooms and ad departments across America. Teaching the old dogs of newspaper ad sales new tricks is going to be challenging, and likely unprofitable for some time to come, if ever. Ad reps at large newspapers have entrenched customer bases, many of them are in their 50s or 60s and make six-figures, so they're a tough bunch to crack. Why should they offer internet ads to their big-time clients? If it ain't broke don't fix it.
Yahoo would do better to seek out new internet-only local entities, like bloggers, wikis and ultra-local small websites. But they're stuck in that "bigger-is-better" corporate mindset, and that's yet another reason they're in failure mode.
Local ad markets represent some of the most fiercely-fought-over turfs in any selling regimen. Yahoo is in for a long, tough fight in which the landscape shifts from market to market and sometimes day to day. Good luck. It's a losing battle for both the newspapers and Yahoo. In the innovation war, they've come to a gunfight with a switchblade.
Just as i was finishing up this entry, Yahoo announced that CEO Terry Semel is stepping down and will be replaced by co-founder Jerry Yang. Leave it to Yahoo. News about their own company, and they get scooped by CNN Money. I'll stand by my prediction for short term gloom, however. This company needs more than a face-change at the top.
As for eBay, I'll just keep it simple. If it wasn't for their purchase of payment processor PayPal back around 2002, they'd be sunk lower than they already are. The company has made various large acquisitions that don't seem to offer much synergy. Take Skype, for instance. What good does a free long-distance telephone service offer a company that depends on online retail sales for 60% or more of its revenue?
If you're scratching your head on that one, you're not alone. Analysts, merchants and users of the big, fat internet auction shopping site are still trying to figure that one out.
eBay had made other questionable calls on acquisitions and they seem to have lost their focus, if they ever had one in the first place. It's almost as though they feel that the online auction format is not sustainable long term, and maybe they're right. They haven't made the one fundamental change to the auction format that could change the paradigm - taking the time element out of the auction. Most offerings on eBay languish for days before getting bids in the final minutes or seconds, if at all.
The chiefs at eBay haven't noticed that they could make more money with a better, more exciting user experience in the company's 10 year history. Already this summer, listings are down on the flagship US site. It bodes evil for the future of the auction king.
Once again, failure to innovate plagues this company as it does Yahoo. The only advancements eBay has made over the years to their core product are bloated extras that have the potential to boost their bottom line. eBay is missing the web's new wave in very noticeable ways.
Currently trading around 31, eBay should languish in the 20s for some time to come and underperform the S&P 500 through 2008, or until there's a management shake-up.
Yahoo, already trading slightly below 30, may make it's way down to the teens by the end of 2007. They've offered nothing new for so long, major shareholders may begin to bail soon.
Now, today's markets: Dull. With a capital D. Get used to it. It's summer and these kinds of days are the norm. Volume was very light and the indices didn't budge far from the flat line, though they all closed on the downside.
Dow 13,612.98 -26.50; NASDAQ 2,626.60 -0.11; S&P 500 1,531.05 -1.86; NYSE Composite 10,005.47 -8.46
Declining issues lead advancers marginally, by roughly a 10-9 margin, but new highs still superseded new lows, 427-92.
Oil was up over $68... and $69, ending $1.09 higher at $69.09. They're out of their minds, these oil people, and they deserve to see everyone in America walk to work or take alternative transportation for two months. It won't happen, but they, the sheiks and the Big Oil execs deserve a fate much, much worse than death. They're raping the US economy, the world economy, and trying to rape Iraq and next, Iran. Brutal.
Gold and silver went in opposite directions, but not far. The metals are so dull, they are barely worth reporting. A timely strategy might be to sell all your precious metal holdings now and buy back in a year from now. These particular commodities have had their days in the sun and have been treading water for months. A major fall is coming soon.
Wednesday, January 24, 2007
Dow Powers to New Record, eBay Piles On
Thanks to oodles of cash and some better-than-expected earnings reports from a handful of companies, the Dow Jones Industrial Average cruised to a new closing high today of 12,621.77, putting the fears that January would be a downer of a month pretty much to rest.
By adding nearly 88 points today on top of Tuesday's 56-point gain, the Dow is a cool 148 points on the plus side for 2007. While that's only a 1.2% bump, it's likely to be enough to keep January positive, which is a huge emotional buffer for the markets. So long as companies keep reporting earnings close to in line or better than expectations, the month will end on a high note, portending good things for the rest of the year.
The so-called January barometer actually tracks the S&P 500, and, according to the highly-regarded Stock Trader's Almanac the adage, "As goes January, so goes the year," is usually on-the-money. According to a February 1, 2006 report by U.S. News and World Report's Paul J. Lim,
With the S&P up 22 points or roughly 1.5%, we seem to be in safe territory, bearing in mind that there are only 5 trading days left in the month.
If one was to take out the days of the January Effect - the last trading day of the year and the first week of trading in the new year - a period notorious for dumping stocks - we're in very, very good territory. That's because the S&P bottomed at 1409.71, roughly 8 1/2 points below last year's close. But, that's enough of beating a worn and nearly dead horse. Suffice it to say we're setting up for another solid year of gains on the markets.
After the close, auction behemoth eBay released 1st quarter results and stunned investors with a dazzling report. Profits were 24% higher than last year's same period. Net income rose to $346.5 million, a healthy gain from the $279.2 million in Q4 2006. The 25 cents per share was well above analyst estimates of 19 cents.
Shares were bid up 1.38 prior to the release and added another 3.93 in after-hours trading. That's almost an 18% gain in one day. Not bad. The beat goes on...
By adding nearly 88 points today on top of Tuesday's 56-point gain, the Dow is a cool 148 points on the plus side for 2007. While that's only a 1.2% bump, it's likely to be enough to keep January positive, which is a huge emotional buffer for the markets. So long as companies keep reporting earnings close to in line or better than expectations, the month will end on a high note, portending good things for the rest of the year.
The so-called January barometer actually tracks the S&P 500, and, according to the highly-regarded Stock Trader's Almanac the adage, "As goes January, so goes the year," is usually on-the-money. According to a February 1, 2006 report by U.S. News and World Report's Paul J. Lim,
85 percent of the cases since 1970, a positive gain in the S&P 500 in January has led to a positive year for stocks
With the S&P up 22 points or roughly 1.5%, we seem to be in safe territory, bearing in mind that there are only 5 trading days left in the month.
If one was to take out the days of the January Effect - the last trading day of the year and the first week of trading in the new year - a period notorious for dumping stocks - we're in very, very good territory. That's because the S&P bottomed at 1409.71, roughly 8 1/2 points below last year's close. But, that's enough of beating a worn and nearly dead horse. Suffice it to say we're setting up for another solid year of gains on the markets.
After the close, auction behemoth eBay released 1st quarter results and stunned investors with a dazzling report. Profits were 24% higher than last year's same period. Net income rose to $346.5 million, a healthy gain from the $279.2 million in Q4 2006. The 25 cents per share was well above analyst estimates of 19 cents.
Shares were bid up 1.38 prior to the release and added another 3.93 in after-hours trading. That's almost an 18% gain in one day. Not bad. The beat goes on...
Monday, January 22, 2007
Suddenly, January's No Sure Thing
There was not much in the way of jubilation on Wall today. Rather, like the weather, investors have tuned cold on stocks they seemingly could not get enough of just a few sessions ago. The buoyant feelings that usually complement a new year have given way to doubt and indecision. Stocks soured. The Dow lost 88 points, closing a scant 14 points above the 2006 finale.
The tech side didn't fare any better, dropping 20 points on the day. The hangover from last week's deflating comments from analysts covering the likes of Apple, Intel, Cisco, Motorola and others had a continuing effect on the day's trade.
But the real news was in the Dow components. Pfizer, while beating earnings expectations, announced a restructuring, calling for a 10% workforce reduction and the closing of some plants. Boeing was downgraded and both stocks took a hit. Pfizer lost only about 1%, but investors bailed on Boeing, dropping the aircraft manufacturer by 3 points (3.42%). With the Dow leading the way, the rest of the market marched to the sour notes. Declining stocks led advancers by a nearly 2-1 margin on both the NYSE and NASDAQ.
One could say that this kind of dip was overdue, but whether its a one-off or indicative of a longer term trend is not readily apparent. The markets - despite fairly benign economic data - are in a trendless phase, though if a consensus were to be had, it would likely point lower. Right now, earnings are the horse pulling the cart, or rather, the cart pushing the horses... and they're currently heading for a nearby ditch.
Some optimism may come from Yahoo, which reports on Tuesday, and eBay, on Wednesday, though savvy investors aren't likely to pin much hope on either. Yahoo has been a consistent underperformer and eBay is besieged by doubt over the wisdom of upcoming fee increases, their shuttering of operations in China and the effectiveness of new initiatives such as eBay Express.
Shares of eBay have been under some pressure of late, down more than 10% since mid-November. Analysts are seeking an attainable .28 per share for the just-completed 4th quarter, though the future for the company seems very much up in the air. If the company doesn't begin producing better margins and profits, management may take aim on some top executives, notably Bill Cobb, President of eBay North America and quite possibly CEO Meg Whitman, one of tech's most vilified personalities.
The tech side didn't fare any better, dropping 20 points on the day. The hangover from last week's deflating comments from analysts covering the likes of Apple, Intel, Cisco, Motorola and others had a continuing effect on the day's trade.
But the real news was in the Dow components. Pfizer, while beating earnings expectations, announced a restructuring, calling for a 10% workforce reduction and the closing of some plants. Boeing was downgraded and both stocks took a hit. Pfizer lost only about 1%, but investors bailed on Boeing, dropping the aircraft manufacturer by 3 points (3.42%). With the Dow leading the way, the rest of the market marched to the sour notes. Declining stocks led advancers by a nearly 2-1 margin on both the NYSE and NASDAQ.
One could say that this kind of dip was overdue, but whether its a one-off or indicative of a longer term trend is not readily apparent. The markets - despite fairly benign economic data - are in a trendless phase, though if a consensus were to be had, it would likely point lower. Right now, earnings are the horse pulling the cart, or rather, the cart pushing the horses... and they're currently heading for a nearby ditch.
Some optimism may come from Yahoo, which reports on Tuesday, and eBay, on Wednesday, though savvy investors aren't likely to pin much hope on either. Yahoo has been a consistent underperformer and eBay is besieged by doubt over the wisdom of upcoming fee increases, their shuttering of operations in China and the effectiveness of new initiatives such as eBay Express.
Shares of eBay have been under some pressure of late, down more than 10% since mid-November. Analysts are seeking an attainable .28 per share for the just-completed 4th quarter, though the future for the company seems very much up in the air. If the company doesn't begin producing better margins and profits, management may take aim on some top executives, notably Bill Cobb, President of eBay North America and quite possibly CEO Meg Whitman, one of tech's most vilified personalities.
Friday, January 19, 2007
Markets End Week Meekly
As the short week drew to a close, the markets exhibited signs of life, but barely. Mixed signals from corporate earnings, economic reports and political tensions kept movement to a minimum. The Dow dropped a scant 2.40 points, while the Nasdaq ended its recent losing streak by adding 8.10.
The upside in tech was despite Motorola's (MOT) dismal earnings - 25 cents per share vs. 47 cents a year ago - as deals on popular cell phones continued to whittle away at margins. Gross income was 17% above last year's figures.
The company announced shortly after its earnings release that it would cut 5% of its workforce - about 3500 jobs - and investors cheered, boosting the stock by half a point.
General Electric (GE), a Dow component, also reported 4th quarter results prior to the market open, and delivered a healthy 64 cents per share, more than double last year's 30 cents. The bad news, which sent GE's shares down nearly a point, was that it was restating earnings from 2001 though the 3rd quarter of 2006, due to interest rate swaps in its commercial paper operations.
With just 8 trading days remaining in January, the Dow is 102 points to the positive for 2007, keeping alive hopes for a winning January and setting the tone for the year. It's amazing how many analysts and brokers are guided by the January effect and will follow their nose dependent solely on how the markets perform in just the first month of the year.
The Nasdaq may be a closer call, though today's close puts it 36 points over last year's finish. Further weakness from the likes of Yahoo or eBay, both of which announce results next week, could spawn more selling in tech.
Google announces on January 31, after the close. Amazon reports on February 1.
The upside in tech was despite Motorola's (MOT) dismal earnings - 25 cents per share vs. 47 cents a year ago - as deals on popular cell phones continued to whittle away at margins. Gross income was 17% above last year's figures.
The company announced shortly after its earnings release that it would cut 5% of its workforce - about 3500 jobs - and investors cheered, boosting the stock by half a point.
General Electric (GE), a Dow component, also reported 4th quarter results prior to the market open, and delivered a healthy 64 cents per share, more than double last year's 30 cents. The bad news, which sent GE's shares down nearly a point, was that it was restating earnings from 2001 though the 3rd quarter of 2006, due to interest rate swaps in its commercial paper operations.
With just 8 trading days remaining in January, the Dow is 102 points to the positive for 2007, keeping alive hopes for a winning January and setting the tone for the year. It's amazing how many analysts and brokers are guided by the January effect and will follow their nose dependent solely on how the markets perform in just the first month of the year.
The Nasdaq may be a closer call, though today's close puts it 36 points over last year's finish. Further weakness from the likes of Yahoo or eBay, both of which announce results next week, could spawn more selling in tech.
Google announces on January 31, after the close. Amazon reports on February 1.
Wednesday, January 10, 2007
Should you be a fool?
The Motley Fool, in an article entitled Companies you should buy right now is recommending the following stocks as buy and hold candidates. I have some difference of opinion, but here's a key quote from the article:
The article was originally published Dec. 8, 2006 and has been updated for publication on Jan. 9, 2007. (Makes one wonder which ones were switched out)
Right off the bat, I have some concerns over anyone calling eBay a great company. As I explained in my stock of the day feature, the company has been mismanaged and made poor business decisions for years.
Southwest Airlines? The stock has ranged between 12 and 22 for 5 years and is currently in a holding pattern over 15. Perhaps the "Fools" expect us to hold stocks that fly under the radar of the S&P 500. Maybe we'll just walk away.
Besides being suspected of operating in many countries as a CIA front, Coca-Cola still has that brand appeal, but the world of soft drinks is evolving quickly, toward more eco-friendly and trendy offerings. Coke has hung in gallantly and is a leader, but where is the growth and price appreciation going to come from? I don't see it.
Nike? See above, though the stock has been a stellar performer. Since late 2002, share price has appreciated from 40 to 100. Even I can't knock a 150% return over 4 years.
Another star performer is Boeing, which has run from the high 20s in early 2003 to near 90. Those monster returns are not likely to recur. recommending stocks near their highs may be foolhardy, but hardly prudent.
What can I say about 3M besides that it's so old school. The stock hasn't budged since late 2003, so maybe it's time for a move. Like others here, it does pay a dividend. Are the Motley Fools suggesting that 2-3% returns are de rigeur?
I like Starbucks coffee and the company has a great culture, but American's appetite for $4 lattes may wane and competition is sure to take a bite. Starbucks also sports a p/e over 40, so it's no bargain. Shares have ridden up from 10 to 40 over the past 5 years, and that kind of performance (400%) is going to be hard to top. If there's a winner on this list, this may be it.
Probably the most recognizable name in biotech, Genentech is a leader in profit as well. The company is expected to return 2.68 per share in 2007. However, the price of the stock doubled in mid-2003, split in 2004, ran up to nearly 100 in 2005 and was flat in 2006. This is a well-entrenched company, but maybe a touch pricey with a p/e close to 50. Value may still matter to some.
Overall, what impressed me about these picks was how many were close to their highs after impressive runs over a long bull markets. The Fools might have better served their readers - in an article professing that investors trade too often - by advising to time their buys on these stocks or wait for a general market correction before taking a plunge. They didn't.
I'll keep an eye on these stocks and check back in 6 months, a year, and beyond. Obviously, I don't care much for these picks and will stake my reputation against the Motley Fools, a bunch with whom I've frequently found fault.
Here are the closing prices from January 9 on the Fool's picks:
eBay: EBAY 29.75
Southwest Airlines: LUV 15.81
Coca-Cola: KO 48.61
Nike: NKE 99.76
Boeing: BA 88.00
3M: MMM 77.68
Starbucks: SBUX 34.86
Genentech: DNA 84.69
What makes a great company? That's the rub. There can be a lot of ways to measure greatness. eBay (Nasdaq: EBAY) and Southwest Airlines (NYSE: LUV), for example, have high net promoter scores. Coca-Cola and Nike (NYSE: NKE) have nearly unmatched brand and marketing savvy. Boeing (NYSE: BA) and 3M have long histories of innovation. Starbucks (Nasdaq: SBUX) and Genentech (NYSE: DNA) have strong corporate cultures and are among Fortune's 100 Best Companies to Work For.
The article was originally published Dec. 8, 2006 and has been updated for publication on Jan. 9, 2007. (Makes one wonder which ones were switched out)
Right off the bat, I have some concerns over anyone calling eBay a great company. As I explained in my stock of the day feature, the company has been mismanaged and made poor business decisions for years.
Southwest Airlines? The stock has ranged between 12 and 22 for 5 years and is currently in a holding pattern over 15. Perhaps the "Fools" expect us to hold stocks that fly under the radar of the S&P 500. Maybe we'll just walk away.
Besides being suspected of operating in many countries as a CIA front, Coca-Cola still has that brand appeal, but the world of soft drinks is evolving quickly, toward more eco-friendly and trendy offerings. Coke has hung in gallantly and is a leader, but where is the growth and price appreciation going to come from? I don't see it.
Nike? See above, though the stock has been a stellar performer. Since late 2002, share price has appreciated from 40 to 100. Even I can't knock a 150% return over 4 years.
Another star performer is Boeing, which has run from the high 20s in early 2003 to near 90. Those monster returns are not likely to recur. recommending stocks near their highs may be foolhardy, but hardly prudent.
What can I say about 3M besides that it's so old school. The stock hasn't budged since late 2003, so maybe it's time for a move. Like others here, it does pay a dividend. Are the Motley Fools suggesting that 2-3% returns are de rigeur?
I like Starbucks coffee and the company has a great culture, but American's appetite for $4 lattes may wane and competition is sure to take a bite. Starbucks also sports a p/e over 40, so it's no bargain. Shares have ridden up from 10 to 40 over the past 5 years, and that kind of performance (400%) is going to be hard to top. If there's a winner on this list, this may be it.
Probably the most recognizable name in biotech, Genentech is a leader in profit as well. The company is expected to return 2.68 per share in 2007. However, the price of the stock doubled in mid-2003, split in 2004, ran up to nearly 100 in 2005 and was flat in 2006. This is a well-entrenched company, but maybe a touch pricey with a p/e close to 50. Value may still matter to some.
Overall, what impressed me about these picks was how many were close to their highs after impressive runs over a long bull markets. The Fools might have better served their readers - in an article professing that investors trade too often - by advising to time their buys on these stocks or wait for a general market correction before taking a plunge. They didn't.
I'll keep an eye on these stocks and check back in 6 months, a year, and beyond. Obviously, I don't care much for these picks and will stake my reputation against the Motley Fools, a bunch with whom I've frequently found fault.
Here are the closing prices from January 9 on the Fool's picks:
eBay: EBAY 29.75
Southwest Airlines: LUV 15.81
Coca-Cola: KO 48.61
Nike: NKE 99.76
Boeing: BA 88.00
3M: MMM 77.68
Starbucks: SBUX 34.86
Genentech: DNA 84.69
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