|Day's Range||3,366.15 - 3,380.69|
|52 Week Range||2,722.27 - 3,385.09|
(Bloomberg) -- U.S. and European equity futures rose alongside China’s stocks and the yuan, taking encouragement from pledges to support the nation’s economy. Japanese equities declined after a deep contraction in GDP.China’s CSI 300 Index recouped all of its losses since trading resumed after the Lunar New Year break, with the central bank lowering one of its interest rates and saying it would support firms that can restart production as soon as possible. Otherwise, Asian markets saw a mixed start to the week. Treasuries aren’t trading due to a U.S. holiday. The euro ticked higher.China also over the weekend unveiled plans for reducing corporate taxes and fees, and letting banks run up more non-performing loans. Bloomberg Economics estimated China’s economy has been running at just 40% to 50% capacity in the last week, underscoring the short-term damage done by the coronavirus-linked shutdowns of large swathes of the country.Hubei, the province at the epicenter of the outbreak, Monday reported 1,933 new cases, slightly higher than a day earlier. Deaths were reported in France and Taiwan over the weekend, bringing to five the number of fatalities outside mainland China.“If the Chinese economy does recover and you’ve added all this fiscal and monetary stimulus into it as well, the situation could be that you have much stronger emerging markets into the second half” of 2020, Sunny Bangia, a fund manager at Antipodes Partners Ltd., said on Bloomberg TV in Sydney. “A lot depends on how this virus gets contained and if it can morph into something more minor.”Japan’s Topix Index slid as much as 1.5% after the worst nominal GDP performance since Prime Minister Shinzo Abe took office. In Singapore, the government Monday cut its growth forecasts, citing uncertainty over the length and severity of the virus outbreak. The country is expected to unveil a large stimulus package to mitigate the hit from the epidemic.Here are some key events coming up:Earnings season rolls on with results from companies including: BHP Group, Glencore Plc, HSBC Holdings Plc, Walmart Inc. and Deere & Co.U.S. celebrates Presidents’ Day on Monday, with financial markets shut.Minutes of the most recent Federal Reserve meeting are published on Wednesday.Indonesia is expected to cut interest rates on Thursday, following emerging-market peers from Brazil to South Africa which have lowered borrowing costs already this year.Group of 20 finance ministers and central bank chiefs are scheduled to meet Feb. 22-23 in Riyadh, Saudi Arabia, and are expected to discuss efforts to support growth amid the coronavirus threat.These are the main moves in markets:StocksThe MSCI Asia Pacific Index fell 0.2% as of 7:09 a.m. in London.Japan’s Topix index lost 0.9%.Futures on the S&P 500 added 0.3%. The index rose 0.2% on Friday.Hong Kong’s Hang Seng Index rose 0.5%.The Shanghai Composite Index added 2.3%.Australia’s S&P/ASX 200 Index slipped 0.1%.South Korea’s Kospi index was little changed.Euro Stoxx 50 contracts rose 0.2%.CurrenciesThe yen was flat at 109.85 per dollar.The offshore yuan added 0.1% to 6.9829 per dollar.The Australian dollar rose 0.2% to 67.27 U.S. cents.The euro bought $1.0837.BondsThe yield on 10-year Treasuries slid three basis points to 1.58% on Friday. Futures were down slightly Monday.Australia’s 10-year yield held at 1.05%.CommoditiesWest Texas Intermediate crude ticked up 0.2% to $52.16 a barrel.Gold was little changed at $1,582 an ounce.To contact the reporters on this story: Adam Haigh in Sydney at email@example.com;Andreea Papuc in Sydney at firstname.lastname@example.orgTo contact the editors responsible for this story: Christopher Anstey at email@example.com, Joanna OssingerFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Futures: Walmart, Medtronic and InMode earnings are due Tuesday. IPO stocks InMode, Progyny, Ping are near buy points. So is Taiwan Semiconductor. Buffett-boosted RH is likely to break out.
Investors took solace in robust economic data, better-than-expected earning reports and the fact a quorum of the global central banks have the markets back which we will highlight in the Asia Week Ahead section.
The US market is closed for Presidents Day, so in the absence of an unexpected headline shock action could be a bit muted as it typically is during a US holiday weekend.
Markets are closed on Monday. Then, fourth-quarter earnings season continues with earnings from Walmart, Deere, ViacomCBS, Analog Devices, and more.
With tax filing season now underway, we have two full years of the Tax Cuts and Jobs Act (TCJA) changes in the rearview mirror: 2018 and 2019. Not surprisingly, the answers depend on your specific situation and, just as importantly, your perceptions. Perceptions often override reality.
(MSFT)(INTC) and (AAPL) among the biggest stocks in the S&P 500 index, have well outpaced the market benchmark in the past 12 months. “MIA” stocks is an apt term, given the trio has been underweighted by fundamentally-driven large-cap portfolio managers, according to Harvey. “Ironically, some [portfolio managers] admit they have not gone ‘up-cap’ in order to avoid looking like an index fund (painful mistake!),” he wrote.
The Ontario Teachers’ Pension Plan, one of the biggest pensions in the world, more than doubled its BlackBerry stockholdings in the fourth quarter.
Festering worries about the spread of COVID-19 is a potential peril for the U.S. economy, but ailing manufacturers and tepid investment are already muzzling growth.
As the COVID-19 spreads and the patient count and death toll grow, economists are slashing their once-rosy expectations for global growth in 2020.
Mark Spitznagel of Universa Investments is getting ready for the next big drop, but he says he’s fine if it never comes.
There’s no shortage of arguments that the U.S. stock market, whose main benchmark indexes are at record highs, is overvalued. If your investment portfolio is concentrated in an index fund, you might feel you are properly diversified, but there’s a good chance your risk is concentrated among a short list of companies. Jim Roumell, the founder of Roumell Asset Management of Chevy Chase, Md., and manager of the Roumell Opportunistic Value Fund (RAMSX) offers an investment strategy that is truly different: A balanced fund that takes concentrated positions in micro-cap companies that he argues are grossly undervalued.
Munger, who serves as chairman for the Daily Journal along with his Berkshire role, cited the increasing use of EBITDA — earnings before interest, taxes, depreciation and amortization — as an example of that excess. “I don’t like when investment bankers talk about EBITDA, which I call ‘bulls**t earnings,’” Munger, 96 years old, explained.
Bob Doll, chief equity strategist at Chicago fund manager Nuveen, says markets are priced for good news. But he also doesn’t expect a recession.
The Trump administration is considering making it possible for Americans to invest more in the stock market on a tax-free basis, according to a report on Friday citing four unnamed administration officials.
When Warren Buffett turns 90 years old in August, it would be only natural for (BRKA) shareholders to celebrate his success—and worry about the future of the extraordinary company he built. In his 55 years at the helm as CEO, chairman, and investment chief, Buffett turned a struggling textile maker into a $555 billion conglomerate, using investment skills that became the envy of American business. An investor who put $1,000—roughly 50 shares—in Berkshire in 1965 would now have $20 million, against $175,000 for a similar investment in the S&P 500index.
While the moderate 2020 Democrats finished behind Bernie Sanders in New Hampshire, presidential hopefuls Amy Klobuchar, Pete Buttigieg and Joe Biden are winning over S&P 500 CEOs, as the execs vote for them with their wallets.
U.S. financial markets will be closed on Monday, Feb. 17, in observance of Presidents Day. The New York Stock Exchange and Nasdaq will be closed. The S&P 500 (SPX)and Dow Jones Industrial Average (DJIA)were both less than a percentage point away from their respective record closes on Friday, while the 10-year Treasury note yield (BX:TMUBMUSD10Y)traded around 1.59% at last check.
Investors don’t shed their political biases when they start buying and selling stocks. After all, to state the obvious, the stock you buy or sell doesn’t know your political affiliation. This growing body of research indicates that you need to bend over backward not to let your biases lead you into making investment decisions you will eventually regret.
(Bloomberg) -- It’s that time of the bull market again, when everyone decides things beyond the realm of rationality have taken over in equities. Demand is brisk for an account of all the ways investors have lost their minds.Concern is normal whenever the market is buoyant. When it’s 11 years into a massive rally and share values soar by $1 trillion in two weeks, skeptics come out of the woodwork. Records keep falling -- the S&P 500 is setting one every 2 1/2 days -- while valuations fatten. It’s enough to make the staunchest bull wonder about a reckoning.Dread is a natural human reaction to a market that appears to have inured itself to bad news. A global health panic, flat-lining economies in Europe, inverting bond yields -- none has restrained the S&P 500, which is up eight of the last 10 days and 15 of 19 weeks. Forty days into 2020 and a third of the Nasdaq 100 is already up 10% -- the list goes on.Maybe it’s a bad look to complain when stocks surge. Yet lately it seems half of Wall Street must go on twitter to protest each time the S&P 500 rises 1% or Tesla Inc. spikes. For a rundown of all the stuff they say make this leg of the advance untenable, read on.Theory No. 1The stock market has ceased to be a report card on the broad health of American commerce and is instead being hijacked by four or five monopoly-like companies that basically can’t keep rising.Wealth concentration in the market is well documented. Microsoft Corp., Apple Inc., Amazon.com Inc., Alphabet Inc., and Facebook Inc. now make up 18% of the S&P 500, a record. Combined, they account for half of the S&P 500’s gain this year, and one-fifth of its 400% rise since March 2009. When they break, so will everything else.It may be sooner than you think, too, with regulators stepping up scrutiny. This week, the Federal Trade Commission issued orders to the five companies for information on past acquisitions. Even that couldn’t keep them from rallying.The counterargument is that concentration is always present. In 2020, it’s Apple, Microsoft and Amazon. In 1990, the top three S&P constituents -- Exxon Mobil Corp., IBM Corp. and General Electric Co. -- accounted for 8% of the S&P. In 1980, IBM, Exxon and AT&T Inc. made up 12%, data compiled by S&P Dow Jones Indices show.“Tech has run up quite a bit but it’s not as worrisome as it’s been in the past,” says Jeff Zipper, managing director at U.S. Bank Private Wealth Management. “From a valuation standpoint, we still like it.”By the way, as big as the Fang stocks are, the S&P 500’s weighting methodology is not the reason for its success over the years. Since bottoming in 2009, an equal-weighted version of the benchmark has returned 605% including dividends. That’s 80 points more than the classic market-cap weighted index.Theory No. 2The stock market has ceased to be a report card on the broad health of American commerce and instead is being manipulated by the Federal Reserve.Easy money and plentiful liquidity are the market’s drug, and when they’re taken away, withdrawal will be rough. Financial conditions are historically loose and monetary policy accommodative, and now the central bank is pumping billions of dollars worth of liquidity into financial markets to keep short-term funding markets tame.No doubt Fed largess has played a role throughout the bull market. What’s worrying people now is the Fed’s efforts to prop up the repo market by buying billions of dollars of Treasury bills, which Chair Jerome Powell is at pains to categorize as unstimulative. Still, one strategist says every percentage point increase in the Fed’s balance sheet has corresponded with a 1% gain in the stock market.“There’s tons of liquidity out there, it’s driving the market higher,” Shawn Matthews, the chief investment officer of Hondius Capital Management and former Cantor Fitzgerald CEO, told Bloomberg Television. “People will always look for the extra 3 to 5% at the top. I would rather let someone else take it and move on.”Just as many find the theory preposterous. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, told “QE conspiracists” on twitter that he doesn’t see the connection. Dennis DeBusschere, Evercore ISI’s head of portfolio strategy, says the relationship between changes in the Fed’s balance sheet and the S&P 500 is near zero, and the latest stock rally is consistent with improving economic data and earnings.“This can go on until it doesn’t -- the expansion here can continue,” said Chris Gaffney, president of world markets at TIAA. “I don’t think investing in this equity market at this point is crazy. We still have good fundamentals supporting these equity prices.”Theory No. 3The stock market has ceased to be a report card on the broad health of American commerce and is more like a perpetual-motion experiment fueled by self-fulfilling deposits into passive funds.It’s a theory you hear a lot: that exchange-traded funds and other index products are fueling a bubble. ETFs from industry titans like Vanguard Group Inc. and BlackRock Inc. cost next to nothing to trade, are diversified similar to mutual funds, but are easier to jump in and out.In August, assets in passively managed U.S. equity funds exceeded actively managed competitors for the first time in history. Already in 2020, mutual funds have fallen behind their passive competitors by a distance that will be hard to make up.“After a big gain, you’ll see investors piling in and the momentum continues because of the fact that they say, ‘I may have missed out last year and it looks like it’s really running so I better get more money into equity markets,” said TIAA’s Gaffney. “Momentum, especially ETFs and index-type funds, have an impact.”While the influence of passive money is rising, one should be prudent in blaming ETFs for the market’s problems. More than $3.6 trillion is invested across 1,600 U.S.-listed equity ETFs, data compiled by Bloomberg show. That’s a lot, but it’s still about 12% of the market cap of the S&P 500.Investors put $161 billion into U.S. equity exchange-traded funds in 2019, the smallest inflow in seven years, as the S&P 500 gained 28% in the same time -- its best year in six. An August 2018 study by Federal Reserve staffers listed the verdict as “unclear” and evidence “mixed” as to whether inclusion in indexes was likely to raise a stock’s beta, a measure of systemic risk.“When you get into a market that’s driven by momentum plays and passive money, you can’t help but think that if the rally gets excessive, these factors set things up for a spill,” said Marshall Front, the chief investment officer at Front Barnett Associates in Chicago. “But does it mean you should sell your stocks and run away? Maybe fundamentals aren’t as strong as you wished, but they’re improving.”\--With assistance from Vildana Hajric and Claire Ballentine.To contact the reporters on this story: Sarah Ponczek in New York at firstname.lastname@example.org;Elena Popina in New York at email@example.comTo contact the editors responsible for this story: Jeremy Herron at firstname.lastname@example.org, Chris NagiFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Barron’s writer Andrew Bary has written a dozen major stories on Berkshire Hathaway over more than 20 years, and he still finds covering the legendary investor to be both challenging and rewarding.
The streaming giant had 25 nominations and only two wins at the Academy Award. But the stock price went up. The reason: Lots of chatter about the company’s content.
We’ve heard the market dubbed “ludicrous.” We’ve seen the comparisons to the dot-com bubble. We’ve pointed out that stocks have almost never traded with valuations as high as they are now. That’s still no reason to sell.