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Here’s Why The Stock Market Got Crushed Today

Topline: The stock market was off to a rough start on Tuesday, and although it rebounded slightly in the afternoon, rising uncertainty over trade talks with China—set to start Thursday—took a huge toll and prompted a further sell-off.

  • With fading optimism around U.S.-China trade negotiations, the S&P 500 dropped 1.56%, while the Dow Jones Industrial Average was down 1.19%.
  • The CBOE Volatility Index spiked 9.5% following Tuesday’s reports that both sides were ramping up trade tensions.
  • Every sector of the market was in the red, with all but 2 out of 11 sectors falling by more than 1%.

Here are all the latest trade developments roiling the markets:

  • Just days before trade talks were scheduled to resume, the Trump administration again escalated tensions on Monday, moving to blacklist eight more Chinese technology companies and reportedly discussing limits on pension investments in Chinese stocks.
  • A Chinese Foreign Ministry spokesman on Tuesday said to “stay tuned” for China’s retaliation, followed by the Ministry of Commerce saying it “strongly urges” the U.S. to remove sanctions and stop accusing China of human rights violations.
  • The South China Morning Post also reported that the Chinese delegation is toning down expectations and already planning to cut short its stay in Washington.
  • Later on Tuesday, the Trump administration reportedly implemented new visa restrictions on a slew of Chinese officials over alleged abuses of Muslim minorities in Xinjiang.

What to watch for: The all-important trade talks on Thursday and Friday. If no progress is made, the U.S. will go ahead with its planned tariff hike on $250 billion worth of Chinese goods, from 25% to 30%, on October 15.

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I am a New York—based reporter for Forbes, covering breaking news—with a focus on financial topics. Previously, I’ve reported at Money Magazine, The Villager NYC, and The East Hampton Star. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History. Follow me on Twitter @skleb1234 or email me at sklebnikov@forbes.com

Source: Here’s Why The Stock Market Got Crushed Today

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Meet Wall Street’s Best Dealmaker: New Billionaire Orlando Bravo

Orlando Bravo discovered his edge early. In 1985, at age 15, he traveled from his home in Mayagüez, Puerto Rico, a small town on the island’s western coast, to Bradenton, Florida, to enroll in the legendary tennis guru Nick Bollettieri’s grueling academy.

Bravo would wake at dawn, head to class at St. Stephen’s Episcopal School, then return to Bollettieri’s tennis courts at noon. He spent hours warring against peers like Andre Agassi and Jim Courier under the broiling sun. At sundown, after an hour to shower and eat, he would study, then retire to a sweaty, two-bedroom condominium in which players bunked four to a room like army barracks. Then he would do it all over again, six days a week, for a full year. “It was the tennis version of Lord of the Flies,” says his former roommate Courier.

The brutally competitive environment helped Bravo climb to a top-40 ranking in the U.S. as a junior. Then he peaked. “It was quite humbling,” recalls Bravo, who’s still fit from his weekly tennis games. “It was a different level of hard work altogether. It became clear I could operate at these super-high levels of pain.”

That grit and perseverance eventually propelled him to the top echelons of the private equity world. Few outside of finance have heard of the 49-year-old Bravo, but he is the driving force behind Wall Street’s hottest firm, the $39 billion (assets) Thoma Bravo.

In February, the French business school HEC Paris, in conjunction with Dow Jones, named Thoma Bravo the best-performing buyout investor in the world after studying 898 funds raised between 2005 and 2014. According to public data analyzed by Forbes, its funds returned 30% net annually, far better than famous buyout firms like KKR, Blackstone and Apollo Global Management. That’s even better than the returns from the software buyout firm Vista Equity Partners, its closest rival, run by Robert F. Smith, the African American billionaire who recently made headlines by paying off the college debt of Morehouse College’s entire graduating class. Since the beginning of 2015, Bravo has sold or listed 25 investments worth a total of $20 billion, four times their cost. His secret? He invests only in well-established software companies, especially those with clearly discernible moats.

“The economics of software were just so powerful. It was like no other industry I had ever researched,” says Bravo, seated in his office in San Francisco’s Transamerica Pyramid. He wears a tailored purple dress shirt and enunciates his words with a slight Puerto Rican accent. “It was just very obvious.”

Bravo’s firm has done 230 software deals worth over $68 billion since 2003 and presently oversees a portfolio of 38 software companies that generate some $12 billion in annual revenue and employ 40,000 people. Forbes estimates the value of the firm, which is owned entirely by Bravo and a handful of his partners, at $7 billion. Based on his stake in the firm and his cash in its funds, Bravo has a $3 billion fortune. Not only does that make him the first Puerto Rican-born billionaire, it’s enough for Bravo to debut at 287th place on this year’s Forbes 400 ranking of the richest Americans.

Like a good tennis player who’s worked relentlessly on his ground strokes, Bravo has made private equity investing look simple. There are no complicated tricks. He figured out nearly two decades ago that software and private equity were an incredible combination. Since then, Bravo has never invested elsewhere, instead honing his strategy and technique deal after deal. He hunts for companies with novel software products, like Veracode, a Burlington, Massachusetts-based maker of security features for coders, or Pleasanton, California-based Ellie Mae, the default system among online mortgage lenders, which the firm picked up for $3.7 billion in April. His investments typically have at least $150 million in sales from repeat customers and are in markets that are too specialized to draw the interest of giants like Microsoft and Google. Bravo looks to triple their size with better operations, and by the time he strikes, he’s already mapped out an acquisition or turnaround strategy.

The pool of potential deals is growing. On public markets, there are now more than 75 subscription software companies, worth nearly $1 trillion, that Bravo can target, versus fewer than 20, worth less than $100 billion, a decade ago. Investors around the world clamor to get into his firm’s funds, and lenders have checkbooks ready to finance his next big deal. “The opportunities today are the biggest I’ve ever seen,” Bravo says. “Right now we are in a huge, exploding and changing industry.”

Orlando Bravo’s isn’t a rags-to-riches story. He was born into a privileged life in Puerto Rico in the Spanish colonial city of Mayagüez, which for decades was the port for tuna fishing vessels supplying the local Starkist, Neptune and Bumble Bee canneries.

Starting in 1945, his grandfather Orlando Bravo, and later his father, Orlando Bravo Sr., ran Bravo Shipping, which acted as an agent for the massive tuna-fishing factory ships entering the port in Mayagüez. It was a lucrative business. His parents moved him and his younger brother Alejandro to what’s now a gated community in the hills of Mayagüez, where the brothers attended private schools and tooled about on the family’s 16-foot motorboat.

After taking up tennis at age 8, practicing on the courts of a local university and a Hilton hotel, Bravo and his family began making the two-and-a-half-hour drive from their home to San Juan on weekends to allow him to train against better competition. “What I loved about tennis was the opportunity,” he recalls. “I’m from Mayagüez, and I’m going to come to the big city and I’m going to make it,” he says. “Let’s go! The underdog!”

He quickly became one of Puerto Rico’s top players, which landed him at Bollettieri’s academy and then on Brown University’s tennis team. “I was so scared I wouldn’t make it through,” Bravo says of the Ivy League, so he took most classes pass/fail as a college freshman. But he quickly found his footing and graduated Phi Beta Kappa in 1992 with degrees in economics and political science. That helped him get a prestigious job as an analyst in Morgan Stanley’s mergers and acquisitions department. There he paid his dues, clocking 100-hour weeks under the renowned dealmaker Joseph Perella.

“I learned I didn’t want to invest in risky things ever again. It was too painful.”

Bravo’s Spanish fluency put him in front of clients as other analysts slaved away in data rooms. Working on Venezuelan billionaire Gustavo Cisneros’ 1993 acquisition of Puerto Rican supermarket chain Pueblo Xtra International opened his eyes to the world of buyouts. But mostly he says he learned he didn’t want to be a banker.

Bravo eventually headed west to Stanford University. He’d already been accepted into its law school, but he also wanted to attend the business school. He called insistently and eventually got accepted to pursue both. He worked during a summer at Seaver Kent, a Menlo Park, California-based joint venture with David Bonderman’s Texas Pacific Group that specialized in middle market deals. Upon graduation in 1998, Bravo wasn’t offered a position there or at TPG, and he spent months cold-calling for a job. After about a hundred calls, Bravo’s résumé caught the eye of Carl Thoma, a founding partner of the Chicago-based private equity firm Golder, Thoma, Cressey, Rauner (now known as GTCR), and they hit it off. “The biggest mistake Texas Pacific made was…that they didn’t make him a job offer,” says Thoma, 71, who Forbes estimates is also a billionaire based on an analysis of public filings.

One of the pioneers of the private equity industry in the 1970s, Thoma is a tall and mild-mannered Oklahoman whose parents were ranchers. Thoma and his partners practiced a friendlier version of the buyouts popularized by Michael Milken, preferring to buy small businesses and expand them using acquisitions. When Bravo came aboard in 1998, Thoma and partner Bryan Cressey had just split from Stanley Golder and Bruce Rauner, who later went on to become governor of Illinois, creating Thoma Cressey. Thoma sent Bravo to San Francisco to hunt for investments and eventually expand the firm’s Bay Area presence.

Bravo’s first few deals, struck before he turned 30, were disasters. He backed two website design startups, NerveWire and Eclipse Networks, just as the dot-com bubble popped. The two lost most of the $100 million Bravo invested. “I learned I didn’t want to invest in risky things ever again,” Bravo says. “It was too painful to live through.” Thoma Cressey was also struggling elsewhere, with underperforming investments in oil and gas and telecommunications. It was among the worst performers in the private equity industry at the time.

“Every time we picked up our heads to peek at a deal that wasn’t software, the software deal looked a lot better to us.”

But the failure led to an epiphany that soon made Bravo and his partners billions. He realized his mistake was in backing startup entrepreneurs, an inherently risky move, when for the same money he could buy established companies selling niche software to loyal customers. With Thoma’s blessing, Bravo pivoted and became an expert on these arcane firms. Coming out of the dot-com bust, the market was littered with foundering companies that had gone public during the bubble and had few interested buyers. Bravo got to work. His first big move, in 2002, was to buy Prophet 21, a Yardley, Pennsylvania-based software provider to distributors in the healthcare and manufacturing sectors that was trading at a mere one times sales.

Rather than clean house, Bravo kept the company’s CEO, Chuck Boyle, and worked beside him to boost profits, mainly by rolling up competitors. When Boyle wanted to buy a company called Faspac, Bravo flew to San Diego to work out of the Faspac owner’s garage for five days, analyzing reams of contracts to see if the deal would work. “Orlando would help not only at the highest level with strategy but also when we got grunt work done,” Boyle recalls. After seven acquisitions, Bravo sold the business for $215 million, making five times his money.

Software quickly became Bravo’s sole focus, and Thoma Cressey began to thrive. By 2005, Bravo and Thoma had recruited three employees, Scott Crabill, Holden Spaht and Seth Boro, to focus on software applications, cybersecurity and Web infrastructure. All remain with the firm today as managing partners.

Bravo’s big opportunity came during the financial crisis when Thoma put Bravo’s name on the door and split with his partner Bryan Cressey, a healthcare investor, creating Thoma Bravo. From that moment on, the firm invested only in software, with Bravo leading the way.

A string of billion-dollar buyouts followed—Sunnyvale, California-based network security firm Blue Coat, financial software outfit Digital Insight of Westlake Village, California, and Herndon, Virginia’s Deltek, which sells project management software—all of which more than doubled in value under Bravo’s watch. The firm’s inaugural 2009 software-only fund posted a 44% net annualized return by the time its investments were sold, making investors four times their money and proving the wisdom of discipline and specialization. “Every time we picked up our heads to peek at a deal that wasn’t software, the software deal looked a lot better to us,” he brags.

It’s late May, and Orlando Bravo’s 20th-floor offices overlooking the San Francisco Bay are filled with dozens of tech executives from its portfolio companies. Folks from Houston’s Quorum Software, which makes technology systems for oil and gas companies, mingle with cybersecurity experts from Redwood Shores, California’s Imperva. They juggle their rollerboard suitcases and thick financial books as Thoma Bravo partners map out corporate strategies on dry-erase whiteboards. Those on break hammer away at keyboards in small workrooms or demolish chicken sandwiches in a no-frills kitchenette.

This is one of Thoma Bravo’s monthly boot camps for new acquisitions, grueling daylong sessions that are critical to its success. Partners regularly buzz into Bravo’s spartan glass-walled offices, while in the background the drilling and hammering of construction workers making room for 13 new associates disturbs the peace.

With a fresh $12.6 billion war chest, Bravo is now eyeing $10 billion-plus deals and expects to begin buying entire divisions of tech giants.

After two decades studying software, Bravo recognizes clear patterns. For instance, when a company pioneers a product, its sales explode and then inevitably slow as competitors emerge. Often a CEO will use this cue to stray into new markets or overspend to gin up sales. Bravo calls this “chasing too many rabbits.” To fix it, he and his ten partners work alongside 22 current and former software executives who serve as consultants. They begin tracking the profit-and-loss statements for each product line and pore over contracts in search of bad deals or underpriced products. Critically, by the time a Thoma Bravo acquisition check clears, existing management has agreed that this rigorous approach will help. Bravo calls it “making peace with the past.”

There are also layoffs. Those can total as much as 10% of the workforce, for which Bravo doesn’t apologize. “In order to realign the business and set it up for big-time growth, you first need to take a step back before you take a step forward. It’s like boxing,” he says. “These are unbelievable assets with great innovators, and they are usually undermanaged.”

Mark Bishof, the former CEO of Flexera Software, an application management company outside of Chicago that Bravo bought in 2008 for $200 million and sold for a nearly $1 billion profit three years later, has a succinct description for this wild success. “He just kind of cuts all of the bullsh*t,” Bishof says. “It’s refreshing.” Flexera’s profits rose 70% during Bravo’s ownership, largely thanks to four major acquisitions. “Orlando’s like the general in the foxhole with his sergeant. You know he’s knee-deep in there with you,” Bishof gushes.

Under Thoma Bravo’s watch, companies on average saw cash flow surge as margins hit 35%, as of 2018, nearly triple those of the average public software company at that time. “It’s like training for the Olympics. . . . You have a finite goal to make it [in year four], and you make it very, very clear,” Bravo says. Today’s roaring market adds potency to the playbook. Lenders are now gorging on software debt, and stock market multiples for these businesses are surging.

“I learned more about building an efficient software company over the last four and a half years than in the first 30 years of my career.”

A recent example is Detroit’s Compuware, a decades-old pioneer of software applications to manage mainframe computer systems. In 2013, this Nasdaq-listed giant was all but left for dead and up for sale. There was minimal interest, other than from Bravo and partner Seth Boro, who were keen on Dynatrace, software that helped companies move databases to the cloud, which Compuware had acquired in 2011. Thoma Bravo used $675 million in cash and raised $1.8 billion in debt to buy Compuware and then split off Dynatrace as a separate company. The pair began to move Dynatrace from selling database licenses, once the bulk of its business, to cloud subscription services, now 70% of sales. This past August, Dynatrace went public, and Thoma Bravo’s 70% stake is now worth over $4 billion, with the remainder of Compuware worth nearly a billion more. “I learned more about building an efficient software company over the last four and a half years than in the first 30 years of my career,” says Dynatrace CEO John Van Siclen.

With a fresh $12.6 billion war chest for its 13th fund raised in 2018, Bravo is eyeing $10 billion-plus deals and expects to begin buying entire divisions from today’s technology giants. But thanks in part to the success of his firm, he now faces more competition. Heavyweights like Blackstone and KKR are increasingly sussing out software deals, not to mention his longtime rival Vista Equity. And he’s not immune to mistakes. Bravo’s $3.6 billion 2015 acquisition of San Francisco-based digital network tracker Riverbed Technology is currently struggling because of slowing sales and too much debt. He isn’t worried. “There are bigger and better companies to fix than there were ten years ago,” Bravo says.

His biggest challenge these days is likely back home in Puerto Rico where it all began. Bravo announced in May that he is contributing $100 million to his Bravo Family Foundation that will be used to promote entrepreneurship and economic development on the island.

This new foundation was birthed by Hurricane Maria, which devastated the island two years ago. Bravo was in Japan raising cash for yet another massive fund and frantically calling San Juan trying to locate his parents, who were living in the capital. They were fine, but the island wasn’t.

Five days later, he flew his Gulfstream jet with 1,000 pounds of supplies—water, granola bars, meal kits, satellite telephones, diapers, intravenous tubes and hydration pills—to Aguadilla, near Mayagüez. When an airport worker opened the door of his plane, Bravo says, the look of fear on his face was unforgettable. “All you could say was ‘I’m sorry for what happened to you.’ ”

He returned two weeks later in a larger plane with 7,000 pounds of supplies. Then he came in a massive DC-10 cargo plane before ultimately chartering two container ships carrying 600,000 pounds. “It was just like cold-calling for deals,” Bravo says of rounding up all the donations. He personally put in $3 million in just the first 30 days, and committed $10 million altogether.

When the Federal Emergency Management Agency became fully operative there, the island’s richest native turned his attention to Puerto Rico’s future. Though 44% of Puerto Ricans live below the poverty line, Bravo believes in the potential to foster entrepreneurship, citing that a tenth of the population has tried to build a business.

Armed with his money, his foundation is looking to back Puerto Rican technology entrepreneurs, even ferrying them to Thoma Bravo’s offices for training. Bravo admits to being tired of the debate over Puerto Rico’s statehood and holds his tongue when asked about President Trump’s performance during Maria. “My passion, which is the same as with companies, is to move beyond the strategic, long-term pontification, and into the operational and tactical moves that make you move forward today,” he says. “Economies go down, companies miss their numbers, trade stops, product issues happen and people quit. [The question is] do you have a creative approach to problem solving?” Bravo says. “Some people are stuck . . . and some people love putting the pieces together. I just feel like every operational problem can be solved. There’s always a solution.”

Recommended: Read Forbes’ Other Dealmaking Cover Stories

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How Billionaire Robert Smith Conquered Private Equity And Technology

Stephen Schwarzman And Blackstone: Wall Street’s Unstoppable Force

Brookfield’s Bruce Flatt: Billionaire Toll Collector Of the 21st Century

Get Forbes’ daily top headlines straight to your inbox for news on the world’s most important entrepreneurs and superstars, expert career advice, and success secrets.

I’m a staff writer at Forbes, where I cover finance and investing. My beat includes hedge funds, private equity, fintech, mutual funds, M&A and banks. I’m a graduate of Middlebury College and the Columbia University Graduate School of Journalism, and I’ve worked at TheStreet and Businessweek. Before becoming a financial scribe, I was a part of the fateful 2008 analyst class at Lehman Brothers. Email thoughts and tips to agara@forbes.com. Follow me on Twitter at @antoinegara

Source: Meet Wall Street’s Best Dealmaker: New Billionaire Orlando Bravo

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Orlando Bravo, managing partner of Thoma Bravo and founder of the Bravo Family Foundation, https://www.bravofamilyfoundation.org/, announced he personally will contribute $100 million to his foundation to promote entrepreneurship and economic development in Puerto Rico, where Bravo was raised, and his family still lives.

Late-Inning Heroics? Stocks Hint At Friday Rally As Trade Talk Optimism On the Rise

  • Stocks down for the week so far but trade optimism gives positive tone early
  • Micron shares fall on disappointing forecast
  • Wells Fargo gets a new CEO, helping lift shares

Friday dawns after a week that didn’t provide much direction for investors. Stocks have generally chopped around in reaction to the latest geopolitical or domestic political news, and stayed in a tight range.

The question Friday might be whether the major indices can propel themselves to a victory for the week, because they start the session slightly down from a week ago thanks to positive trade vibes and solid durable goods data. That data looked really nice, up from the previous month and rising for the third month in a row. We’ll have to see if that’s sustainable because a lot of it was from the defense sector in the form of planes and parts. Either way, the trend can sometimes be your friend, as the old market saying goes.

Today In: Money

Also, the Personal Consumption Index (PCE)—the Fed’s preferred inflation metric—rose 0.1%, roughly in line with expectations. The core index, which strips out the often-volatile food and energy prices, also rose 0.1% to an annualized rate of 1.8%. It’s an uptick for sure, but still below the Fed’s stated target of 2% inflation. Might this be enough to shift the Fed’s thinking from dovish to neutral?

Whether or not stocks make a last-minute run here, it’s been hard to find much of a theme in the last few days. Hopes for progress in trade negotiations got reinforcement yesterday with an October 10 date set for new talks, but the noise out of China since then has mostly been about how willing they are to buy more U.S. products.

That’s all good, but it doesn’t get at the intellectual property and other issues that U.S. negotiators say are at the heart of the matter and apparently were a sticking point when the last round of talks broke down. It’s hard to see these talks getting much further without movement on these issues.

Another focus is the impeachment drama in Washington. Two big bombshells came out this week, but stocks didn’t show much reaction. As we’ve said, it’s important to keep your emotions out of trading, and impeachment is an emotional issue. It’s likely to be a long process and a constant background noise over the next weeks and months, but investors might serve themselves better by watching earnings and data.

It’s interesting to hear some analysts saying that the impeachment situation might actually be bullish because it could put pressure on the administration to get a trade deal done on the sooner side. This school of thought suggests President Trump might be keen to get some positive headlines to counter the negative ones. That remains to be seen and is just speculation for now.

On the earnings front, bad news came at the end of the week from Micron (MU), as the semiconductor firm issued guidance that Wall Street didn’t seem to like too much. Shares were down 5% in premarket trading. Revenue and earnings beat third-party consensus views, but were way down from a year ago as the company continues to struggle with demand for its memory products. It wouldn’t be too surprising to see the weakness in MU shares work their way into the entire chip sector, maybe putting pressure on Technology stocks today.

And Wells Fargo (WFC) is back in the news today after the financial company hired a new CEO. This ended a six-month search and means investors won’t have to approach WFC’s earnings call next month with more questions about who would head the company. Shares rose in premarket trading.

Quarterly Market Gains Not Much To See

The old quarter is just about over, and it’s been a wild one that basically didn’t go much of anywhere if you look at the major indices. Sure, they surged to new peaks at times, but also retreated. It ended up being almost a wash, with the benchmark S&P 500 (SPX) closing Thursday up just 1% from where it finished at the end of June.

The choppy trade that marked most of the quarter continued on Thursday, with the market giving up early gains, clawing back to flat and then losing more ground by the closing bell. Some of the “risk-on” trading we saw on Wednesday didn’t really carry into Thursday, with small-caps in the Russell 2000 (RUT) drifting lower and Financials having a rough day.

Instead, some caution appears to be coming back into play late this week, with Utilities and Real Estate near the top of the leaderboard Thursday. Those aren’t places people tend to go when they’re feeling gung-ho about the economy. Bonds—another defensive area—also rallied, but gold didn’t share in the fun.

Though every day seems to have a different theme, there’s a lot of concern out there about the fundamental picture. It’s good to hear that new trade talks begin October 10, as we found out Thursday, but a resolution doesn’t seem all that close.

One concern is that new tariffs announced last month on Chinese goods could start having an impact on consumer spending, which would possibly cause companies to get even more cautious. If companies stay in a holding pattern, it’s hard to see any significant rally on the horizon. Earnings growth is already expected to fall year-over-year in Q3 after sinking in Q1 and Q2.

When you get right down to it, earnings drive the market. If investors continue to see earnings grow at slower rates, at some point the market could start to reflect that. FactSet, a research firm, predicts a nearly 4% earnings loss for S&P 500 companies in Q3. Earnings fell 0.4% in Q2 and also fell in Q1, making this potentially the first three-quarter stretch of falling year-over-year earnings since late 2015/early 2016.

No Fun for FAANGS

Some of the FAANG stocks, including Amazon (AMZN), Netflix (NFLX) and Facebook (FB), also are having tough weeks. Again, it’s regulatory issues dogging FB, but the others could be under pressure from changing money flows as the FAANG sector seems to be losing some of its mojo, according to an article this week on MarketWatch.

Next week will be October, after Monday at least, so let’s look at what the market’s going to be grappling with beyond the China trade and impeachment stories. We’re still a few weeks out from earnings, meaning volatility could be a factor and the market could move up or down quickly based on the latest headlines or tweets. It could still do that after earnings start in mid-October, too, but earnings give people something solid to point at in times of turmoil.

One thing we’ll be pointing to next week is a monthly payrolls report for September. A lot of eyes are likely to be on the numbers a week from today, wondering if those relatively modest job gains back in August were a one-time deal or maybe a sign of something more serious. Even before August, job growth had been slowing this year, but it’s still above the level economists think we need to keep unemployment low.

Other data aren’t so exciting next week, but Chicago PMI on Monday might be interesting when you consider recent data where manufacturing activity appears to be slowing down. Chicago PMI surprised to the upside last time and came in above 50. Anything below that would indicate economic contraction, according to how the report is structured. It was 50.4 in August.

Volatility can sometimes tick up the last days of the quarter, but the Cboe Volatility Index (VIX) has dropped below 16 this morning after topping 17 earlier this week.

Company Caution Crimps Quarter: Normally, the government’s report on gross domestic product (GDP) gets lots of attention. That wasn’t the case yesterday because a few other things were going on (there’ve been some political headlines, if you haven’t noticed). A check of the data showed 2% growth in Q2, which means the slowdown that began early this year continued. As a reminder, gross domestic product was nearly 3% in 2018. To some extent, this downturn probably reflects the trade war with China. Many companies appear to be in a holding state because they’re putting off decisions on business plans. You can’t continue to have companies putting decisions off, because it could start affecting the longer curve of growth. It may already be doing that.

Crude Concerns: The fundamental concerns mentioned above aren’t any easier to dismiss when you consider how crude’s behaved recently. Remember when U.S. crude rose above $60 less than two weeks ago in a 15% one-day rally? Seems like a long time ago, with crude back down in the mid-$50s by Thursday. Rising U.S. inventories apparently caught some market participants by surprise and raised questions about demand. It’s just a week or two of data, so you don’t want to make any broad conclusions, but falling crude demand would possibly be a sign of a slowing economy if it continues. That remains to be seen, but for the moment it’s hurting the Energy sector, which suffered more than a 1% loss yesterday.

Batting 3000: The first time the S&P 500 (SPX) crossed the 2000 level was on Aug. 26, 2014. But it traded below 2000 on an intraday basis 22 months later, on June 27, 2016. The lesson here? Just because an index crosses a big round-number benchmark doesn’t mean you can put that magic number in the rearview mirror and forget about it. We’re getting a reminder of that now, with the SPX struggling to get its head above 3000 after first hitting that mark back in July. At this point, the late July intraday high of 3027 remains the peak, and the SPX has fluttered back and forth above and below 3000 ever since.

This doesn’t necessarily mean we’ll still be wrestling with 3000 in mid-2021, though that can’t be ruled out. And while we’re talking scenarios, one can’t rule out a major test to the downside either. In the near term, it’s very hard to see any move above 3000 lasting long without a China deal. Anticipated weak earnings are another major barrier, because without earnings growth, it gets harder and harder to justify rallies.

TD Ameritrade® commentary for educational purposes only. Member SIPC.

I am Chief Market Strategist for TD Ameritrade and began my career as a Chicago Board Options Exchange market maker, trading primarily in the S&P 100 and S&P 500 pits. I’ve also worked for ING Bank, Blue Capital and was Managing Director of Option Trading for Van Der Moolen, USA. In 2006, I joined the thinkorswim Group, which was eventually acquired by TD Ameritrade. I am a 30-year trading veteran and a regular CNBC guest, as well as a member of the Board of Directors at NYSE ARCA and a member of the Arbitration Committee at the CBOE. My licenses include the 3, 4, 7, 24 and 66

Source: Late-Inning Heroics? Stocks Hint At Friday Rally As Trade Talk Optimism On the Rise.

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Stock Market Looking Up Amid Some Trade-Related Optimism

Key Takeaways:

  • Fed’s Bullard says U.S. manufacturing appears to be in recession
  • China lowers its benchmark lending rate
  • U.S., China set to conclude second day of lower-level talks today

Welcome to quadruple witching day. It happens every quarter on the day when futures and options on indices and stocks all expire on the same day.

Maybe it’s not as ominous as its name might suggest, but these remain days when investors might want to exercise special care as there could be some heightened volatility as people unwind baskets of stocks or futures.

On Wall Street, investors this morning seem to be a bit upbeat, heartened by developments on the trade front and by yet another major economy cutting interest rates.

Today In: Money

China cut its one-year lending rate, joining the Federal Reserve and the European Central Bank in dovish steps designed to help stimulate economies by reducing borrowing costs. The moves come amid rising worries about global economic growth as the trade war between the United States and China drags on. (See more below.)

On the trade front, China and the United States are scheduled today to conclude two-day negotiations that began yesterday, seemingly with the aim of paving the way for higher level discussions next month.

The discussions come as there has been a bit of a thaw recently in the chilly trade relationship between the world’s two largest economies. Among recent developments, the Trump administration has excluded hundreds of Chinese items from a 25% tariff.

Resistance Near Record Highs

We’ve been talking for a while about how the U.S.-China trade war seems to be creating a cap that the stock market may not be able to meaningfully breach until the dispute between the world’s two largest economies comes to some sort of definitive conclusion.

That narrative seemed to be in play Thursday with stocks near all-time highs but losing momentum throughout the day. The S&P 500 Index (SPX) closed above 3000 after making it above 3,020. But without a catalyst to push stocks into record territory, this area between 3000 and the all-time high of 3027.98 looks to be an area of resistance.

True, the Fed didn’t give market participants much to get really excited about this week when the central bank delivered an as-expected rate cut. But it seems like the unresolved trade issue could be the bigger weight here.

While optimism around the two-day negotiations may have helped boost the market early Thursday, that sentiment may have been tempered by comments from a White House adviser in a media report that the United States could escalate the trade conflict if a deal isn’t reached soon. Meanwhile, a tweet from the editor of the official newspaper of the Communist Party of China said that “China is not as anxious to reach a deal as the U.S. side thought.”

Reading the Fed Tea Leaves

With mixed signals on the trade front, the market was left to scratch its head about what the Fed might do after its latest rate cut—not exactly a recipe for a rip-roaring day of gains in equities.

It’s arguable that the Fed has left the market in a holding pattern as investors seem unconvinced that the current central bank trajectory is as pro-growth as they want it to be.

But even though there seems to be wariness about the Fed’s language when it comes to interest rates, there could be some percolating excitement about a different type of stimulus that the central bank might have up its sleeve.

Still, without clear direction or conviction, investors seem to be holding off from making a big rotation into any one style of equities, leaving cyclicals still in play even as market participants may also be eyeing defensive sectors.

Today, investors and traders are likely looking to a slate of Fed speakers to try to gain some clarity on the central bank’s thinking. Additionally, Federal Reserve Bank of St. Louis President James Bullard posted a note explaining his dissent in the Fed’s recent decision to cut its key rate by 25 basis points. Bullard had wanted a 50-basis-point cut, citing expected slowing U.S. economic growth, trade policy uncertainty, rising recession probability estimates, and a U.S. manufacturing sector that “already appears in recession.”

Next week could offer the market further direction on the economy as investors and traders are scheduled to see data releases on consumer confidence and sentiment, new home sales, personal spending, and durable goods orders, as well as the government’s third estimate of gross domestic product.

A Firming Foundation: It’s been a pretty good week for housing market data. Yesterday, figures on existing home sales for August came in at a seasonally adjusted annual rate of 5.49 million. That was up from 5.42 million in July and beat a Briefing.com consensus of 5.36 million. That came after figures showing August housing starts and building permits came in above expectations. Briefing.com pointed out that lower mortgage rates were behind the strength in existing home sales. “The August sales strength cut the inventory of homes for sale,” Briefing.com said. “That will keep upward pressure on home prices, which in turn is likely going to necessitate the need for mortgage rates to stay down to drive ongoing sales growth.”

Will King Consumer’s Crown Stay Shiny? With the health of the U.S. consumer one of the top issues on the minds of investors and traders along with the trade war and Brexit, market participants are likely to be eyeing next week’s reports on consumer confidence and consumer sentiment with some interest. From the data we’ve been seeing, the U.S. consumer has been helping the economy continue to power along. GDP isn’t going gangbusters, but it’s still pretty solid, and the consumer has a lot to do with that. This could be a comforting sign to investors even as the trade war continues to drag on. If prices at the retail level move up due to tariffs and other cost pressures, consumer resilience could help cushion the U.S. economy.

Global Economic Outlook Darkens: While the U.S. consumer has been one of the backstops to the domestic economy, worries about the global economy in the face of the continued trade war are ratcheting up. The OECD is projecting that the global economy will expand by 2.9% this year and 3% next year, which would be the weakest annual growth rates since the financial crisis. And downside risks continue to mount, the group said Thursday. “Escalating trade conflicts are taking an increasing toll on confidence and investment, adding to policy uncertainty, aggravating risks in financial markets, and endangering already weak growth prospects worldwide,” the OECD said.

TD Ameritrade® commentary for educational purposes only. Member SIPC.

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I am Chief Market Strategist for TD Ameritrade and began my career as a Chicago Board Options Exchange market maker, trading primarily in the S&P 100 and S&P 500 pits. I’ve also worked for ING Bank, Blue Capital and was Managing Director of Option Trading for Van Der Moolen, USA. In 2006, I joined the thinkorswim Group, which was eventually acquired by TD Ameritrade. I am a 30-year trading veteran and a regular CNBC guest, as well as a member of the Board of Directors at NYSE ARCA and a member of the Arbitration Committee at the CBOE. My licenses include the 3, 4, 7, 24 and 66.

Source: Stock Market Looking Up Amid Some Trade-Related Optimism

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It was a big week for the bulls as optimism for a new trade deal gained steam. With CNBC’s Melissa Lee and the Fast Money traders, Tim Seymour, Brian Kelly, Dan Nathan and Guy Adami.

Sell Stocks And Pay Off Your Mortgage

It’s hard to borrow yourself rich—especially when you can’t deduct the interest.

A friend from Connecticut tells me she and her husband were recently inspired to sell some securities and pay off their mortgage. She figures the market is due for a correction.

A clever move, I say, and not just because stocks are richly priced. Mortgages, even though rates are at near-record lows, are expensive. And there’s a tax problem.

The tax angle relates to what went into effect last year—something Trump called a tax cut, although it raised federal taxes for a lot of people in high-tax states like Connecticut. For our purposes what matters is that the law made mortgages undesirable.

Used to be that people would say, “I took out a mortgage because I need the deduction.” That doesn’t work so well now. The new law has a standard deduction of $24,400 for a couple, and you have to clear this hurdle before the first dollar of benefit comes from a deduction for mortgage interest.

Today In: Money

Most middle-class homeowners aren’t itemizing at all. For them, the aftertax cost of a 4% mortgage is 4%.

If you are still itemizing, your interest deduction may not be worth much. You are probably claiming the maximum $10,000 in state and local taxes. (If you aren’t, you are living in an igloo in a state without an income tax.) That means the first $14,400 of other deductions don’t do anything for you.

A couple with $2,400 of charitable donations and $15,000 of interest is in effect able to deduct only a fifth of the interest. The aftertax cost of the mortgage depends on these borrowers’ tax bracket, but will probably be in the neighborhood of 3.7%.

Before 2018, your finances were very different. You no doubt topped the standard deduction (which was lower then) with just the write-off for state and local taxes (which didn’t have that $10,000 cap). So all of your mortgage interest went to work in reducing federal taxes. You could do a little arbitrage.

If your aftertax cost of a 4% mortgage was 2.7%, an investment yielding 3% aftertax yielded a positive spread. You’d hold onto that investment instead of paying off the mortgage. It was quite rational to sit on a pile of 3% tax-exempt bonds while taking out a 4% mortgage to buy a house.

Now that sort of scheme doesn’t make sense. The aftertax yield on muni bonds is way less than than the aftertax cost of a mortgage. This is true of corporate bonds, too: Their aftertax return, net of defaults, is less than the cost of a mortgage today.

So, if you have excess loot outside your retirement accounts, and it’s invested in bonds, you’d come out ahead paying off a mortgage.

What about stocks? Should you, like my friend, sell stocks held in a taxable account in order to pay off your mortgage? This is a trickier question. If your stocks are highly appreciated, perhaps not. You could hang onto them and avoid the capital gains.

If they are not appreciated, or if you have a windfall and you’re deciding whether the stock market or your mortgage is the place to use it, the trade-off changes.

Stock prices are, by historical measures, quite high in relation to their earnings. The market’s long-term future return is correspondingly less.

Financiers

In the short term, stocks are entirely unpredictable. Neither my friend, nor I, nor Warren Buffett can tell you whether there will be a crash next year to vindicate her decision or another upward lurch that will make her regretful.

For the long term, though, you can use earnings yields to arrive at an expected return. I explain the arithmetic here. A realistic expectation for real annual returns is between 3% and 4%. Add in inflation and you’ve got a nominal return not much more than 5%.

From that, subtract taxes. You’ve got a base federal tax of 15% or 20% on dividends and long-term gains. There’s also the Obamacare 3.8% if your income is above $250,000. You have state income taxes, no longer mitigated by a federal deduction for them (because you’ll probably be well above the $10,000 limit no matter what).

Add it all up, and you can look forward to an aftertax return from stocks of maybe 4%. That is, your expected return could be only a smidgen above the aftertax cost of your mortgage. Worth the risk? Not for my friend. Not for me.

What if I’m wrong about the market, and it’s destined to deliver 10%? Or what if you are a risk lover, willing to dive in with only a meager expected gain? Mortgages are still a bad way to finance your gamble.

You don’t have to borrow money at a non-tax-deductible 4%. I can tell you where to get a loan at slightly more than 2%, with the interest fully deductible.

The place to go is the Chicago Mercantile Exchange. Instead of buying stocks, buy stock index futures.

When you go long an E-mini S&P 500 future you are, in effect, buying $150,000 of stock with borrowed money. You don’t see the debt; it’s built into the price of the future. The reason the loan is cheap is that futures prices are determined by arbitrageurs (like giant banks) that can borrow cheaply. The reason the interest is in effect deductible is that it comes out of the taxable gains you report on the futures.

Futures contracts are taxed somewhat more heavily than stocks. Their rate is a blend of ordinary rates and the favorable rates on dividends and long-term gains. Also, futures players don’t have the option of deferring capital gains. Even so, owning futures is way cheaper than owing money to a bank while putting money into stocks.

One caveat for people planning to burn a mortgage: Stay liquid. Don’t use up cash you may need during a stretch of unemployment.

But if you have a lot of assets in a taxable account, it’s time to rethink your mortgage. Debt is no longer a bargain.

I aim to help you save on taxes and money management costs. I graduated from Harvard in 1973, have been a journalist for 44 years, and was editor of Forbes magazine from 1999 to 2010. Tax law is a frequent subject in my articles. I have been an Enrolled Agent since 1979. Email me at williambaldwinfinance — at — gmail — dot — com.

Source: Sell Stocks And Pay Off Your Mortgage

In many situations, paying off your mortgage early could potentially be costing you hundreds of thousands of dollars…and I’ll run the numbers to show this based off real world examples. Enjoy! Add me on Snapchat/Instagram: GPStephan Join the private Real Estate Facebook Group: https://www.facebook.com/groups/there… The Real Estate Agent Academy: Learn how to start and grow your career as a Real Estate Agent to a Six-Figure Income, how to best build your network of clients, expand into luxury markets, and the exact steps I’ve used to grow my business from $0 to over $120 million in sales: https://goo.gl/UFpi4c This is one of those subjects that’s not intuitive for most people – you would think that paying off your mortgage early would be a really good idea. But this isn’t always the case. The reason people think this way is because they haven’t really looked at the true cost of ownership, what their money is really worth, and they only focus on the end number. On our $400,000 loan example, your payment is $1956 per month and you wind up paying $304,000 in interest over 30 years. But there are three very important considerations here: 1. The first is the mortgage interest tax write off – this is what makes real estate extremely appealing, and why keeping a mortgage helps long term.For the average person in a 23% tax bracket, with a 4.2% interest rate, after you factor in your write offs, your ACTUAL cost of interest is only 3.23%. 2. The second factor is Inflation. Because the bank is holding the entire loan over 30 years and you get to pay bits and pieces of it over time, it should be safe to assume a 2% AVERAGE inflation rate over 30 years. This means that even though you’re paying a NET interest rate now of 3.23%, if we subtract 2% annually for inflation, this means that you’re really only effectively paying 1.23% in interest after tax write offs and inflation. 3. Finally, the third factor is opportunity cost. Can you make MORE than a 1.23% return ANYWHERE ELSE adjusted for inflation? The answer is pretty much always yes. This means that if you INVEST your money instead of paying down the mortgage, mathematically over the term of the loan you’d come out ahead than if you just paid off the loan early. So with these points above, we’ll take two scenarios. In scenario one, you have a 30-year, $400,000 loan at a 4.2% interest rate that you pay off in half the time – you increase your payments from $1956 to $3000 per month in order to make this happen. Then once the loan is paid off, you invest the full amount in the stock market for another 15 years. After an additional 15 years, that works out to be just over $1,000,000. So you now have a paid of house plus a million dollars. But what happens if you kept the 30-year mortgage and instead of you paying it off in half the time by increasing your payments to $3000/mo, you just invested the extra $1050 per month instead? Because you didn’t pay down your mortgage early and you invested that extra money instead, at a 7.5% return in an SP500 index fund…at the end of 30 years, you’ll have a paid off home PLUS $1,433,000.. This means that over 30 years, that’s a difference of $433,000…by NOT paying down your mortgage early, and instead investing the difference. Although keep in mind, if you have a really high interest rate on your loan, above about 6%, it’s probably better to pay it off. This is because the upside to investing gets smaller and smaller the higher your mortgage interest rate is. But the biggest advantage of paying it off early is that with the above example, we assume the person will actually invest the money rather than pay off their loan early. In order for this calculation to work, the person needs to be disciplined enough to actually invest the different and not spend it. But for anyone with the discipline to actually stick with an investing plan instead of paying down the mortgage, statistically and mathematically, you can often make more money paying it off slowly than paying it off early. For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness@gmail.com Suggested reading: The Millionaire Real Estate Agent: http://goo.gl/TPTSVC Your money or your life: https://goo.gl/fmlaJR The Millionaire Real Estate Investor: https://goo.gl/sV9xtl How to Win Friends and Influence People: https://goo.gl/1f3Meq Think and grow rich: https://goo.gl/SSKlyu Awaken the giant within: https://goo.gl/niIAEI The Book on Rental Property Investing: https://goo.gl/qtJqFq Favorite Credit Cards: Chase Sapphire Reserve – https://goo.gl/sT68EC American Express Platinum – https://goo.gl/C9n4e3

The Week Recession Talk Grew Very Loud

Topline: Recession fears—which have gone up and down and back up just in the past nine months—suddenly seem here to stay for the foreseeable future, as global growth slows to a crawl amid trade war fears. Here’s what happened this week, along with key reactions:

  • Goldman Sachs issued a note Monday saying a trade deal between the U.S. and China is not expected to be made before the 2020 presidential election.
  • On Tuesday, Trump walked back planned tariffs on China, delaying some until after holiday shopping, his first acknowledgment that tariffs impact U.S. shoppers.
  • On Wednesday, Germany’s economy was reported to have shrunk as it contends with Trump’s tariffs and trade war with China.
  • Trump also blasted the Federal Reserve Wednesday on Twitter, as he blamed the central bank for dragging down the U.S. economy and returns on government bonds.
  • Then Wednesday’s close registered the worst stock performance of 2019, as investors were spooked by Germany, China and the much-discussed inverted yield curve.
  • China responded on Thursday by promising a retaliation, threatening “necessary countermeasures.”
  • Global markets responded, with the Nikkei and FTSE 100 closing down over 1% Thursday.
  • By Friday, the Dow rebounded 300 points before closing bell, while the S&P recovered 40 points and the tech-heavy NASDAQ bounced almost 130. But the Dow still lost 1.5% for the week, while the S&P edged slightly down at 0.3%.
  • Globally, the FTSE 100 regained 50 points, while the Nikkei recovered 13 Friday, but both indexes ended the week lower than where they started.
  • Analysts pegged the stock market’s slight Friday recovery to an increase in government bond yields.

Key background: The yield curve is the difference in interest rates (or returns) between short-term and long-term bonds. Usually, investors get more money when they invest in 10-year bonds over three-month short-term bonds. The yield curve is also a pretty accurate historical predictor of recessions, so when it happens, economists and investors alike get worried. This year, the yield curve inverted in March and May, and it happened again Wednesday, contributing to the stock market’s tumble.

Further reading:

Why Trade War Plus Yield Curve Equals Recession (John T. Harvey)

Markets Panic For The Second Week In A Row (Milton Ezrati)

Fed Poised To React Swiftly To Persistent Yield Curve Inversion, With More Rate Cuts (Pedro Nicolaci da Costa)

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I’m a New York-based journalist covering breaking news at Forbes. I hold a master’s degree from Columbia University’s Graduate School of Journalism. Previous bylines: Gotham Gazette, Bklyner, Thrillist, Task & Purpose, and xoJane.

Source: The Week Recession Talk Grew Very Loud

 

Three Reasons Recession Fears Have Suddenly Increased

Topline: Falling stocks, trade wars and an inverted Treasury yield curve are three signs that analysts say are predicting a U.S. recession—the only problem, however, is that no one can definitively tell when (or if) one will actually happen.

  • The White House announced Tuesday it would delay some China tariffs from September 1 until December 15, causing the Dow Jones Industrial Average to zoom up nearly 500 points by mid-morning.
  • Stocks fell Monday and were predicted to decline Tuesday, as uncertainty mounts for a China trade deal and global economic health.
  • After Trump surprised the world with more tariffs on Chinese goods, Goldman Sachs analysts estimate a new trade deal will not materialize before the 2020 election.
  • In the bond market, an inverted Treasury yield curve—long used by economists as a recession predictor—is nearing the same level it had reached before the 2007 recession.
  • Bank of America analysts said the odds of a recession happening in the next year are greater than 30%.
  • And Morgan Stanley analysts predict a recession in the next nine months if the trade war between the U.S. and China continues to escalate.
  • Overall, economists cannot accurately forecast recessions, but they suggest de-escalating the trade war with China could soothe fears—and help Trump’s reelection chances.

Surprising fact: Analysis by the New York Times found that recent economic downturns occur in late summer. August of 1989, 1998, 2007, 2011 and 2015 all saw slowdowns.

Key background: One of the Trump’s key platforms is a strong economy, and the stock market has reached historic highs since he assumed office. The President has often used Twitter to demand economic changes, like interest rate cuts and trade deals, and the markets tend to respond to the president’s Twitter proclamations, but it remains to be seen if the economy will continue to grow.

Follow me on Twitter. Send me a secure tip.

I’m a New York-based journalist covering breaking news at Forbes. I hold a master’s degree from Columbia University’s Graduate School of Journalism. Previous bylines: Gotham Gazette, Bklyner, Thrillist, Task & Purpose, and xoJane

Source: Three Reasons Recession Fears Have Suddenly Increased

 

Stock Market Correction – 4 Crucial Steps To Position Your Watch List And Portfolio

Many investors are scratching their heads when it comes to positioning the portfolio in the stock market correction. However, we think that there are four crucial steps that every investor should take into an account. Without further ado, let’s see these steps.

Table of Contents

Stock Market Correction – 4 Crucial Steps To Position Your Watch List And Portfolio

Analyze the Stock Market

Before anything, you should analyze the stock market conditions. The reason for this is that many stocks tend to move in the same direction as the stock market. A stock market correction by the vertical violation or slice below the 50-day line tend to have a very high failure rate for the follow-through day.

Furthermore, the market is, for the big part, driven by news. The investors should always have their mind opened for the new stock market uptrend.

Hedge Your Portfolio

You should manage your trades like a portfolio. After the market turn in the Q4 2018 market correction, IBD’s team added ProShares UltraPro S&P 500 (UPRO). Thanks to this decision, the risk levels were managed against the S&P 500. Let’s not forget that UPRO, when converted to an ETF, corresponds to three times the daily performance of the S&P 500.

Utilize Swing Trading

IBD is constantly scanning for new ideas for its SwingTrader platform. This can be quite an efficient method. For example, we had seven names on the IBD’s swing trading list in September 2018. But, by the end of the month, there weren’t any quality stocks. If the pickings are slim, the general rule is that stock market conditions are weakening.

Make a Watchlist

Finally, make your own watchlist. You need to be able to spot the top stocks and then add them to the watchlist. When you do that, you’ll be able to monitor your selected stocks and carefully choose which one to invest in.

Source: https://www.investors.com/how-to-invest/stock-market-correction-watchlist-portfolio/

Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.

Source: Stock Market Correction – 4 Crucial Steps To Position Your Watch List And Portfolio – stock market correction 2019, stock market correction 2018

What Is the Best Time to Invest in Stocks? – How to Buy and Sell Stocks

Image result for What Is the Best Time to Invest in Stocks?

The worst of times in the market, or at least when it appears that things couldn’t go further below from that point, might actually be the best time to buy stocks and start investing.

We often forget that people actually tend to buy everything when it drops below its original price – think about discounted items in the grocery store for instance – you would rather buy products from your grocery list on a discount, but not the stocks?

This might be a mistake and there are several reasons why.

Table of Contents

Buy Stocks When Below Their Highs – When Is the Best Time to Invest in Stocks?

Ideally, you will decide to buy a stock you are holding interest in when the stock falls below its monthly, quarterly or yearly high, because you will make a profit once the stock starts to show signs of rebounding.

However, perhaps the most ideal time to buy a stock is when the stock comes near -20% below its high price – in addition, you need to make sure that the stock has a proven historical record that supports the theory that the stock won’t go far from -20% dip before it takes a rebound.

Invest in High Beta Scores for Top ROI

Almost as by a rule, whenever a stock that has benevolent, or high, beta score, drops below its initial high value, that same stock tends to take an upward turn against the downside trend.

This behavior should result in flattering returns; however, you need to note that sometimes you need to be patient when buying high beta stocks at lows.

Learn How to Trim Your Stock Positions

Trimming can be a rather favorable strategy for generating more cash through your ROI. You can for example take a quarter or the fifth of the stock you own, you may take tenth even if you will, and sell it when you see a rebound.

You use that cash later on to buy more stocks in that position when the stock hits another low, repeating the process based on the market trends in order to generate cash.

Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.

Source: What Is the Best Time to Invest in Stocks? – How to Buy and Sell Stocks

Here’s How Stocks Perform After Every Midterm Election Since World War II – Stephen McBride

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As you likely know from the lawn signs dotting American neighborhoods, midterm elections take place this Tuesday. If the polls are correct, President Trump and Republicans are in big trouble. There’s an 85% chance Democrats will seize control of the House of Representatives from Republicans, according to statistical analysis firm FiveThirtyEight. This is causing bigtime anxiety for investors who’ve enjoyed the 28% stock market rally since Trump took office. No matter what you think of Trump, his reign as president has been great for stocks. But as the election has drawn closer, the market has fallen apart……..

Read more: https://www.forbes.com/sites/stephenmcbride1/2018/11/02/ive-studied-stocks-after-every-midterm-election-since-world-war-ii-what-i-found-will-shock-you/#4327dbd83c20

 

 

 

 

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