Breaking News: Tesla Inc market value has now surpassed both legendary Ford Motors and General Motors company market values combined.
January 8, 2020 (Wednesday) Tesla Inc had a market cap of $89 billion, approx 2 more billion dollars then Ford Motors ($50 billion) and General Motors ($37 billion) combined.
Many of Tesla Inc’s attributes for rising market cap has to be with a profitable 3rd quarter the electrical auto maker had; also surpassing auto deliveries in the Chinese market, while also having its stock more then double over the past few months. These all seem to be contributing factors to its increased market cap currently.
With all the accolades Tesla has achieved, there are skeptics in the investment community who believe the company will not able to sustain cash flow nor provide more profitability in the next few years.
2019 was not the year of the hedge fund. Many hedge funds in 2019 were strapped for cash and liquidity was not as readily available, as in previous years.
According to Bloomberg news wire, hedge funds will be reporting more losses and closures for the 5th year in a row. More then 4,000 hedgefunds have liquidated in the past five years (HedgeFund Research Inc).
The reasons have varied on why hedge funds have been closing in recent years, such as investors revolting, or wanting their money earlier from the funds, to simply hedgefund officers getting tired on running their funds and family owned offices.
The profits have not been there as well. There are various reasons of funds closing at rapid paces, but take note this is a trend that may continue until the profits are there.
1) The U.S. Federal Reserve elected not to raise interest rates, thereby signaling borrowing cost will most likely remain unchanged, and they expect moderate economic growth and low unemployment to continue into the presidential election year. The Feds left the benchmark overnight lending rate at its current range of 1.5% to 1.75% with 13 of the 17 fed policymakers supporting no change.
2) American consumer prices rose more than expected in November, giving credence to the Fed’s decision not to raise interest rates. The consumer price index increased 0.3% last month, in part from households paying more for gas. In the twelve months through November, the CPI (Consumer Price Index) increased 2.3% after a similar gain in October. Gasoline prices rose 1.1% after rebounding 3.7% in October.
3) China is accused of dumping cheap mattresses which is disrupting the U.S. bedding industry, in an attempt to gain a foothold in American markets. In recent years dozens of Chinese companies have been flooding the market with super low priced mattresses, selling them to retailers for as little as $18 each. In turn, the mattresses are sold under a wide range of labels at national chains, online businesses, local retailers and mattress stores. In recent years the industry has been troubled by disruption including thousands of job losses, multiple bankruptcies and hundreds of store closures. In 2018, about five million mattresses were shipped to the U.S. from China.
4) Stock market closings for – 11 DEC 19:
Dow 27,911.30 up 29.58 Nasdaq 8,654.05 up 37.87 S&P 500 3,141.63 up 9.11
1) The money-markets have about $3.4 trillion dollars invested, and the large pile of cash could push the already soaring markets higher. The money-markets have grown by $1 trillion dollars over the last three years because of higher money-market rates, concerns of the ten year economic expansion and the ageing of the bull market. But despite the double digit gains this year, that cash remains in the money-markets amid concerns of an economic slowdown, investors wanting the safe bet of having a large cash reserve. Many fear the markets are at an unstable high and a reversal could occur at any time.
2) The U.S. trade deficit for September has falling to its lowest level in five months with imports dropping more sharply than exports. America has a rare surplus of petroleum, which has traditionally been a major source of imports. The import-export difference shrank 4.7% to $52.5 billion dollars, down from the August deficit of $55 billion dollars, with the deficit with China creeping down 0.6% to $31.6 billion dollars.
3) The Bank of America announced it will pay a $20 dollar minimum wage in 2020, a year earlier than planned. This will raise wages for more than 208,000 of its U.S. employees. The higher pay for retail bankers is becoming crucial with the increasingly competitive job market. Other main street banks have also raised their minimum wage, such as Citigroup and JP Morgan Chase. Other major companies including Amazon, Walmart, Target and McDonald’s have also increased their minimum pay.
4) Stock market closings for – 5 NOV 19:
Dow 27,492.63 up 30.52 Nasdaq 8,434.68 up 1.48 S&P 500 3,074.62 down 3.65
Alibaba Holdings LTD (BABA) surpassed earnings expectations. The Asian e-commerce giant, stated that their retail business and their cloud business, were huge components in their earnings viability, while also beating estimates.
Their retail commerce business (BABA) spurned over $14 billion USD in revenue, while thier (BABA) cloud business did over $1 billion USD in revenue. At the end of the Friday Oct. 31, 2019 business day, BABA’s stock was up over 3%. Not a bad day for a major Chinese e-commerce business..SB
1) The Federal Reserve has cut interest rates for the third time this year to ensure the U.S. economy weathers a global trade war without a recession. While the feds signaled the rate cut cycle might be at a pause, there is signs for a future rate cut if need be. The markets have shown little response to the cut because the action was widely expected. While unemployment is near a 50 year low, inflation is moderate while gross domestic product grew at 1.9% in the third quarter, parts of the economy like manufacturing having slowed as well as the global economy.
2) A new kind of consumer debt is gaining popularity, called the Online Installment Loan. It is a longer maturity loan unlike the payday loans, but also comes with the triple digit interest rates. Unlike the payday loans aimed at the nation’s poor, these loans are targeting the working class who have amassed debt over years. The installments generate much greater revenue for loan companies than the payday loans, with loan amounts much larger.
3) While the U.S. economy continues growing, with unemployment at a half century low, factory activity has contracted for two consecutive months. Manufactures of consumer goods are still stronger, while those manufactures engaged in global markets are feeling the effects of trade wars and profound uncertainly of the future. Thousands of factory workers have been laid off in the mid-west with factory wages being higher than average, as well as higher benefits than other jobs not requiring a college degree..
4) Stock market closings for – 30 OCT 19:
Dow 27,186.69 up 115.27 Nasdaq 8,303.98 up 27.12 S&P 500 3,046.77 up 9.88
1) Despite more than two centuries in New York, JP Morgan is quietly shrinking its workforce there. The bank has been relocating several thousand New York based employees out of the area to reduce operating cost incase of an economic downturn. JP Morgan is considering moving the hub from New York to other lower cost hubs such as Plano, Texas or Columbus, Ohio or Wilmington, Delaware.
2) The world famous jeweler Tiffany has been offered $14.5 billion dollars from LVMH, which would be the largest take over by LVMH. The goal of the acquisition is to extend the reach of Louis Vuitton into the U.S. markets. Jewelry is one of the few segments of the luxury market where LVMH is not the leader, but having Tiffany would make it a stronger competitor under the ownership of LVMH.
3) The subprime auto giant Santander Consumer USA Holdings has defaulting loans at a faster rate since 2008. Many of these loans are packaged into bonds. The growing number of borrowers defaulting indicates that many of the borrowers may be getting loans based on fraudulent application information. Delinquent auto loans have reached their highest levels this year since 2011. The weakening performance in managed portfolio signals elevated risks and is an overall negative development.
4) Stock market closings for – 28 OCT 19:
Dow 27,090.72 up 132.66 Nasdaq 8,325.99 up 82.87 S&P 500 3,039.42 up 16.87
1) Despite positive last quarters, both General Motors and Ford Motor company’s are concerned about the U.S. auto market taking a turn for the worse. Shares for the two automakers, as well as Fiat Chrysler, fell because of smaller figures for the quarter, although smaller than market analysis projected. There are also concerns of the overall impact from a slowing U.S. and international economies with the impact it would have on new car sales.
2) For the second day, the stock markets nose dived with the Dow losing more than 800 points these last two days. Fears of an economic recession cause the Dow to lose 490 points on Wednesday, with indications that manufacturing is slowing down, and even though manufacturing accounts for only 10% of the economy, investors see this as an indication that the economy is contracting soon with a possible recession in the near future.
3) With the markets in decline, there is a lot riding on the up coming job numbers this Friday. Fears of a coming recession could be reinforced with poor job numbers signaling that a recession is nearing. So far, there is little evidence of layoffs on the rise despite scattered reports that more companies are cutting jobs.
4) Stock market closings for – 2 OCT 19:
Dow 26,078.62 down 494.42 Nasdaq 7,785.25 down 123.44 S&P 500 2,887.61 down 52.64
1) Ikea, the pioneer of inexpensive self-assembled home furniture is adapting its manufacturing and marketing methods to inexpensive housing. Sections for homes will be built in factories, then quickly assemble into ready to move-in houses. Bringing the factory manufacturing techniques to homes would significantly reduce the cost as compared to the hand built housing techniques now used. This could open the way to home ownership by the younger generations.
2) Despite the continual upsurge of the markets, Americans aren’t convinced the economy is doing well. A survey shows 39% of U.S. consumers believe the economy is ‘not so good’ or even poor. Lower income Americans are not doing as well as macro indicators would suggest, despite getting more raises recently. These gains don’t offset years of high unemployment and stagnant wages.
3) A huge drop in U.S. crude oil inventories and the outlook for demand has pushed oil futures prices up to near $60 dollars a barrel. Domestic stockpiles fell by 12.8 million barrels last week, the biggest drop in supplies since September 2016. In the past week, oil futures have jumped 10%, with the traditional expected increase in oil demand with summer driving. Gasoline reserves are further aggravated by the fire at Philadelphia Energy Solutions, the East Coast’s largest refinery.
4) Stock market closings for- 26 JUN 19:
Dow 26,536.82 down 11.40 Nasdaq 7,909.97 up 25.25 S&P 500 2,913.78 down 3.60
1) Many consider that it is no longer a question if the Fed will cut interest rates, but rather when. With the apparent softening of the job market, many investors firmly believe the Federal Reserve will move to cut interest rates this year possible as soon as this July. The markets bounced up on the expectation.
2) The job numbers are in for May, with job creation slowing dramatically. There were just 75,000 new jobs added to the economy, about 100,000 less than economist expected. Both March and April job numbers were lower than expected leading experts to conclude a downward trend in the American economy is beginning. There are fears that we may see a recession as early as next year.
3) The book seller Barnes & Noble has closed a deal to sell itself to Elliott Management Corp, a hedge fund based in New York. The news sent Barnes & Noble stock surging upward as much as 36%. Like many other retailers, Barnes & Noble has struggled with little success to counter the power house e-commerce giant Amazon. It’s Nook e-book device was a bust, which the company had heavily invested in. Barnes & Noble has 600 brick and mortar retail stores.
4) Stock market closings for 7 JUN 19: The Dow has had its best week since November.
Dow 25,983.94 up 263.28 Nasdaq 7,742.10 up 126.55 S&P 500 2,873.34 up 29.85