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Thursday, March 28, 2024

News You Can Use From Phil’s Stock World

Visit Phil's Stock World for the latest market news, market commentary and investing ideas and strategies. 

Financial Markets and Economy

maersk container shipGlobal trade just experienced its sharpest drop since the Financial Crisis (Business Insider)

Maybe we shouldn’t take our daily corporate samples too seriously. Maybe they don’t adequately represent the global economy. So IBM’s revenues last quarter plunged 13% from a year ago. It blamed China and the dollar, among other culprits. But IBM’s revenues have dropped for 13 quarters in a row. It’s a normal IBM condition and not a reflection of the global economy.

A whole slew of other tech companies chimed in with either disappointing revenues or disappointing outlooks, or both, each blaming a variety of issues, among them China and the dollar. Chip maker Qualcomm just reported a 14% plunge in its quarterly revenues. It’s having trouble in the smartphone market and will lay off a bunch of people. But maybe they’re just running into tougher competitors, rather than a lousy global economy. And the PC business, which is cratering, is dragging down all those involved. That’s structural and has little to do with the state of the global economy.

The Hard Truth: For Retail Investors, The NYSE Is Always Out Of Service (Nanex)

On July 8, 2015 at 11:32:57, trades and quotes stopped updating from the NYSE. Trading eventually resumed at 3:10pm.

The true cost of China’s multibillion-dollar market intervention (Market Watch)

As the Shanghai Composite Index dove and panic sales spread, the Chinese government spent billions of dollars to soothe battered sentiment and shore up the stock market. But China may eventually end up paying a much higher price from delayed reforms and a distorted stock market, analysts say.

For now, the throw-everything-at-the-wall-and-see-what-sticks strategy appears to be working.

Oil Turning Back to Bear Erases $100 Billion From Shale Drillers (Bloomberg)

Oil slipped back into a bear market Thursday, disappointing U.S. shale drillers that pinned their hopes on higher prices.

West Texas Intermediate, the benchmark U.S. contract, tumbled 21 percent since June 10 to $48.45 a barrel, erasing more than $100 billion in market value from the companies in the Bloomberg Intelligence North America Independent Explorers and Producers Index.

What's The Real Reason The Fed Is Raising Rates? (Hint: It's Not Employment) (Roger Thomas, Value Walk)

Sometime this fall, the Federal Reserve will begin a new tightening cycle.

Publicly, Federal Reserve officials appear to be confident that the American labor market may be overheating or that inflation may be on the way in.

Employment

Brian McAndrews Pandora's stock surges on earnings beat and CEO says he's not worried about Apple Music (Business Insider)

Pandora's stock popped more than 10% after-hours after it beat Q2 revenue expectations thanks to solid advertising growth. 

The streaming music service's revenue clocked in at $285.6 million, just over the $283 million expected,  though it lost $16.1 million overall.

Pandora's total advertising grew 30% year-over-year, with its local advertising business increasing 67%.  

As gold falters, big-bank stocks are mounting a rally (Market Watch)

Stocks of some the largest U.S. banks have been trailing the S&P 500 index for the past five years, but their relatively cheap valuations and the promise of a Federal Reserve rate hike this year is building momentum for financials.

Why Analysts Are Chasing Fortinet Higher (24/7 Wall St)

Fortinet Inc. (NASDAQ: FTNT) absolutely crushed its earnings Wednesday after the markets closed; now analysts are clamoring to update their position on this cybersecurity company. 24/7 Wall St. has put together some of the recent ratings and research that analysts have been throwing around, as well as adding some color.

Needless to say, most analysts were fairly positive on Fortinet as the company has had a massive year, shares are up about 38% year to date and over 70% in just the past 52 weeks.

Diageo Queried by SEC Shows CEOs Battle to Turn Around Company (Bloomberg)

Diageo Plc said the Securities and Exchange Commission is looking into its distribution practices in the U.S., compounding the distiller’s woes as frustrated investors question the performance of its chief executive officer.

Commodity Carnage Contagion Crushes Stocks & Bond Yields (Zero Hedge)

Where to start…

Bonds – Good!

Amazon is now bigger than Walmart (Business Insider)

Amazon is now bigger than Walmart.

Based on market capitalization, Amazon, which began as an online bookstore, has now overtaken the retail giant.

amazon vs walmart market cap

This is the most bizarre move in currencies this week (Market Watch)

Policy makers at the Reserve Bank of New Zealand voted to cut the central bank’s official cash rate — the amount of interest it charges banks on overnight loans — by 25 basis points to 3% at their July policy meeting Thursday morning local time.

China's Pain Is India's Gain as International Funds Flee to Mumbai (Bloomberg)

The tumult in China’s stock markets has turned into a blessing for Indian shareholders.

JUL15_22_82495582Business Competition Has Not Gotten Fiercer (HBR)

It’s become part of the conventional wisdom. The internet and globalization have combined to render almost every company vulnerable to greater competition than ever. Barriers to entry are withering, innovations are easily copied, and disruption is everywhere. To take an extreme example, Rita McGrath told strategists in an HBR article to just give up on sustainable advantage altogether and work on gaining only temporary boosts.

Investors look at computer screens in front of an electronic board showing stock information at a brokerage house in Shanghai, China, July 14, 2015. REUTERS/Aly Song China slowdown? Depends on where you look (Business Insider)

 Many U.S. consumer companies are brushing aside worries that China's weakening economy and sputtering stock market will dramatically damage their bottom lines even with early trouble signs in recent earnings reports.

Most notably, companies dependent on Chinese infrastructure growth, such as United Technologies Corp <UTX.N> and Caterpillar Inc <CAT.N>, are claiming soft second-quarter earnings and a downgraded outlook based on weakened Chinese demand.

Greece Extends Market Shutdown as Government Begins Discussions (Bloomberg)

The Greek government extended the shutdown of its financial markets at least through Monday as it prepared to welcome creditors for negotiations on a third bailout program.

A decision on when and under what conditions Greek markets will reopen was deferred to next week, a government official told reporters on Thursday, asking not to be named in line with policy. The Athens Stock Exchange, multilateral trading facility and electronic secondary market for bonds have been closed since June 29, when the government issued a decree imposing capital controls and a forced bank holiday.

US Recession Imminent – World Trade Slumps By Most Since Financial Crisis (Zero Hedge)

As goes the world, so goes America (according to 30 years of historical data), and so when world trade volumes drop over 2% (the biggest drop since 2009) in the last six months to the weakest since June 2014, the "US recession imminent" canary in the coalmine is drawing her last breath…

Fannie Mae ups its outlook for home sales (Market Watch)

Mortgage-finance giant Fannie Mae raised its 2015 forecast for U.S. home sales on Thursday, chiming in with other economists who see the market ramping up this year.

Gold could crash more than 20% from here (Business Insider)

The bearish case for spot gold prices here, according to Morgan Stanley, involve a worsening demand picture from China coinciding with a rise in rates here in the US. MS sees more than 20% potential downside from here ($1100 per ounce) should this scenario play out…

gold and real interest rates

Morgan Stanley: Gold Could Plunge to $800 And It's Not Because of China's Reserves (Bloomberg)

Gold's recent dramatic descent began shortly after China revealed its gold reserves for the first time in six years.

IT'S OFFICIAL: Oil is in a bear market (Business Insider)

Oil is officially in a bear market. 

On Thursday, West Texas Intermediate crude oil futures fell more than 1% to settle near $48.55 per barrel in New York.

oil bear market

Bond Report: Treasury yields fall to 2-week low as stocks lose steam (Market Watch)

Treasury yields decline for a third trading day on Thursday, reaching their lowest level since July 8, as investors sold stocks in favor of safer assets in an earnings-heavy trading session.

Power Generators Face Big Payouts or Big Penalties in Reboot (Bloomberg)

Exelon Corp. and Dynegy Inc. stand to gain from new rules that offer greater rewards to generators in the mid-Atlantic that can reliably provide power when demand is highest.

It's time I reminded you how expensive stocks are — a 50% plunge would not be a surprise (Business Insider)

As regular readers know, for the past ~21 months I have been worrying out loud about US stock prices. Specifically, I have suggested that a decline of 30% to 50% would not be a surprise.

Shiller PE with rates

Hoisington On Bond Market Misperceptions: "Secular Low In Treasury Yields Still To Come" (Mauldin Economics)

From the cyclical monthly high in interest rates in the 1990-91 recession through June of this year, the 30-year Treasury bond yield has dropped from 9% to 3%. This massive decline in long rates was hardly smooth with nine significant backups. In these nine cases yields rose an average of 127 basis points, with the range from about 200 basis points to 60 basis points (Chart 1).

Reality check: American consumers aren’t being frugal (Market Watch)

The Great Recession didn’t change the way we handle our money, says Rex Nutting.

The $7.6 Billion Burden That Led Britain to Slash Green Subsidy (Bloomberg)

Prime Minister David Cameron once promised his government would be the U.K.’s greenest ever. Now his ministers are cutting subsidies for renewables wherever they can, including limits on solar and biomass this week.

brian moynihanBank of America's CEO is tightening his grip on the bank (Business Insider)

Bank of America CFO Bruce Thompson is leaving the organization in what Wall Street insiders say is the latest step in an ongoing consolidation of power at the top of the company. 

The man tightening his grip on the bank is chief executive and chairman Brian Moynihan. 

He has led the bank as CEO for about five years, and added the chairman title late last year.  Thompson's departure is widely seen by those on Wall Street as evidence of Moynihan extending his influence even further. 

Vale Says Iron-Ore Output Was Second-Highest Ever Last Quarter (Bloomberg)

Vale SA boosted iron-ore production last quarter to the second-highest ever for the company, exceeding analysts’ estimates and worsening a supply glut that saw prices of the steelmaking ingredient collapse.

Iron-ore output rose 7.4 percent to 85.3 million metric tons in the quarter through June 30, compared with 79.4 million tons a year ago, the company said in a statementThursday. The result, which excludes third-party purchases and operations at a venture with BHP Billiton Ltd., topped the 82.5 million-ton average of eight estimates compiled by Bloomberg.

There goes copper …  (Business Insider)

Copper is at a six-year low.

On Thursday, copper fell nearly 2% to as low as $2.385 a pound, the weakest level since 2009.

fut_chart (1)_edited 1

Politics

GOP establishment’s dumbest idea: Boycott the debates until Trump is kicked out! (Salon)

The rise of Donald Trump has brought all sorts of stupid to the world of politics. Most of it emanates from the mouth of Trump himself, but a lot of it also comes from the scaredy-cat brains of the consultants, establishment figures, and wealthy donors who are concerned about what Trump is doing to the GOP "brand."

The concern is understandable. He is doing not-good things for the GOP "brand." He is saying awful things about Mexican-Americans and the party's other candidates and has zero coherent policy positions, yet nearly a quarter of Republican voters have taken a shine to the carnival.

Jeb Bush tells attendees at Koch brothers event that it’s time start “phasing out” Medicare (Salon)

At an event sponsored by the Koch brother’s Americans for Prosperity Wednesday night, the allegedly moderate GOP presidential contender Jeb Bush made a decidedly radical statement — that it was time to seriously consider “phasing out” Medicare.

“The left needs to join the conversation, but they haven’t,” he began. “I mean, when [Representative Paul Ryan] came up with one of his proposals as it relates to Medicare, the first thing I saw was a TV ad of a guy that looked just like Paul Ryan [and he was] pushing an elderly person off the cliff in a wheelchair. That’s their response.”

Technology

The Future Of War: Soldier Enhancements (Popular Science)

Equipment upgrades will give soldiers an advantage on the battlefield of tomorrow.

Intelligence

Augmented reality combat goggles—such as those being developed by Israeli Defense Forces and for the U.S. Special Operations Command’s Tactical Assault Light Operator Suit (TALOS)—will record everything a soldier sees. They will also provide an information overlay: The projected data could include navigation instructions, intelligence on enemy sites, and real-time translations of local languages.

Vagina-2Vagina contouring is a makeover for your southern hemisphere (Mashable)

You have probably heard of contouring, or visual reshaping, in regards to bronzer and Kardashian-inspired YouTube tutorials. Let's travel a little down south.

Vontouring (no, that's not a typo) is the nickname for Protégé Intima, or the non-invasive, non-surgical remodeling of the inside of the vagina using radio frequencies. And we should mention, it's not makeup either. The recently FDA-approved treatment is the latest and purportedly safe way to visually enhance one's lady lips.

Health and Life Sciences

teen girl plays drumsBand class helps teens learn how to learn (Futurity)

Music training, introduced as late as high school, may help improve how a teenager’s brain responds to sound and could sharpen their hearing and language skills, too.

The findings suggest that music instruction helps enhance skills that are critical for academic success. The gains were seen during group music classes included in the schools’ curriculum, suggesting in-school training accelerates neurodevelopment.

Life on the Home Planet

How This Year's El Niño Compares to the Past (Scientific American)

It was the winter of 1997-1998 when the granddaddy of El Niños—the one by which all other El Niños are judged—vaulted the climate term to household name status. It had such a noticeable impact on U.S. weather that it appeared everywhere from news coverage of mudslides in Southern California to Chris Farley’s legendary sketch on “Saturday Night Live.” Basically, it was the “polar vortex” of the late ‘90s.

So it’s no wonder that it is the touchstone event that people think of when they hear that name. And naturally, as the current El Niño event has gained steam, the comparisons to 1997 have been increasingly bandied about.

HyperSciences Wants To Drill Into The Earth With A Huge Gun (Popular Science)

Hypersciences

A head-on view of the projectile Hyperscience will use to bore into the Earth's crust.

It’s no secret—there’s a lot of energy held just a few thousand feet under Earth’s surface. To harness any sizable amount of our planet’s underlying geothermal energy for steam power, we would have to bore more than two miles into the crust. Unfortunately, the current drilling process is prohibitively expensive for most interested parties, ranging from $5 to 20 million depending on the depth desired.

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