Bull Market officially over!! Year heading negative.

[Breccia]

EU is making moves to increase EU-Chinese trade in general, and EU will most likely expect China to buy more EU products in return as well as other concessions.

Trump pushed China away, giving them incentive to deal with other countries. When he said he was the great dealmaker, he should have been more specific.

Oh, and the US imported a bunch of medical equipment and probably will import more. There are only so many places that stuff comes from.

[Omega10]

Trump pushed China away, giving them incentive to deal with other countries. When he said he was the great dealmaker, he should have been more specific.

Oh, and the US imported a bunch of medical equipment and probably will import more. There are only so many places that stuff comes from.

With the US imploding - and I think things will continue to deteriorate substantially in the US regardless of how November turns out, I am heartened by the fact that EU and China are rising as co-super powers to replace the US.

Having just 1 superpower is not good for the world. Having two would be much better. I was hoping that India and the US would keep up with the top two. But that is not happening.

I was worried about Brexit bringing EU down. But instead the opposite seems to be happening. The article I posted in the Brexit thread about EU-Chinese recent economic negotiations shows that EU can stand up for itself, and is finding its voice in the world. I am hopeful that EU-China (China-EU???) as a team keeps the world going strong so that when we start our recovery - whenever that happens - there is a world out there that we will be able to work with.

[Masark]

BoC is planning to keep interest rates right where they are (0.25%) for years to come.

https://www.canadianmortgagetrends.c...es-until-2023/

[Rasulis]

I attended a CA Legislative Analyst's Office zoom presentation yesterday. Some of the items presented I have already discussed before.

Income tax witholding, sales tax and corporate tax (which make up 90%) of the State's revenue is up by 9% from last year.

New business creation is up around 30% above the 5-year baseline.

Some new items. Keep in mind that they have the data, but not necessarily the “why.”

Unemployment in August down 11.2%. Still ridicilously high. Fifth highest in the nation. Some of the drop was due to people hired for the census work.

Productivity is up 20% from pre-Covid. They think that since people did not have to drive to and from work, meetings, fly, etc., employees are now working longer and pushing productivity up.

The number of 100k plus jobs in CA went up by 110k from the same period last year. The number of high paying jobs in CA has exceeded the pre-covid numbers.

The number of white-collar entry level job openings have gone down by around 30% from last year. Likely due to the fact that it is harder to provide training while working remotely.

The number of mid-, senior- and management-level job openings have increased.

Manufacturing output and employment have gone up. Driven mostly by biotech.

The State General Fund Cash Position is surprisingly good. The blue line in the figure below shows the state’s General Fund cash position, as forecasted by DOF, through the fiscal year. As the figure shows, similar to a typical fiscal year, the state will experience cash deficits early in the fiscal year and cash surpluses later in the year. However, the state had a significant cash surplus in July as that was the major revenue collection month for the 2019 tax year.

The figure shows that the state’s available cash cushion is expected to stay around $30 billion to $40 billion for most of the year. At its lowest level, under these projections, the state’s available cash cushion would drop to about $24 billion in March of 2021.

The state is operating under a deficit due to Covid-19 expenditures. However, they expect the federal government—specifically the Federal Emergency Management Agency (FEMA)—to eventually reimburse the state for about 75 percent of these costs.

The current record number of new California IPOs will likely boost revenue from capital gain tax in 2021.

All in all, although the unemployment number is grim, financially the State is in a much better place than they anticipated back in March when the lockout started.

On the not so pleasant side. Nationwide, 25% of hotels are in financial trouble. However, nearly 70% of Houston hotels have financial problems due to pandemic and falling oil prices.

[Rasulis]

Oil & gas update.

One of the largest well completion companies in North America, Dallas based FTS International, is filing Chapter 11.

66% of 154 oil and gas firm executives contacted by the Dallas Fed this month believe U.S. crude oil production has peaked. The survey includes executives from Texas, Louisiana and New Mexico.

Business travel, the true bread and butter of the airline industry, is still down 90% from pre-pandemic. As work-from-home kept growing, it is not expected to recover anytime soon.

Southwest plans to cut flights to smaller US cities without Federal relief.

Despite oil platforms and refineries in the Gulf of Mexico having to close down multiple times due to hurricanes, the price of crude is stuck at $40 per barrel.

Houston based Oasis Petroleum missed debt payment. Dark cloud is gathering around the Oasis.

Libya increased their oil production from 100,000 to 260,000 bpd. Because they need the money. We all need money.

Permian has too many pipelines. It wasn’t long ago that oil in Midland traded at a steep discount due to pipeline bottlenecks and surging production. Now, the Permian is producing 4 mb/d, but has 3 mb/d of excess pipeline capacity. Pipeline companies are starting to hurt.

Analysts have estimated that battery pack prices should drop to US$100/kWh so that electric vehicles have a chance to compete with cost with the internal combustion engine. Automakers and industry experts believe that the US$100/kWh milestone could be reached as early as in 2024. Others say that the threshold will arrive much sooner.

High-cost oil projects are unprofitable at $40 per barrel, and if oil remains stuck at that price level, reserves will be left as “stranded assets.” If the world manages to comply with climate targets limiting warming to 1.5C, more than 80 percent of oil, gas, and coal assets would be worthless.

Berlin, Bristol, Cape Town, Durban, London, Los Angeles, Milan, New Orleans, New York City, Oslo, Pittsburgh and Vancouver pledged to divest from fossil fuel investment.

What is the impact of all these to oil and gas states? We have data from Texas where oil and gas tax is 16% of the State’s revenue.

Oil production tax revenue was $3.23 billion in 2020, down 16.9 percent from fiscal 2019.
Natural gas production tax revenue was $925 million, down 45.1 percent from fiscal 2019.

However, oil and gas did not get bad until March and April. Why don't we take a look at the August's numbers.

Oil production tax in August 2020 was $219 million, down 39 percent from August 2019;
natural gas production tax was negative $15 million, down 115 percent from August 2019, due to substantial refund payments.

[Zan15]

SNIP

Business travel, the true bread and butter of the airline industry, is still down 90% from pre-pandemic. As work-from-home kept growing, it is not expected to recover anytime soon.

Southwest plans to cut flights to smaller US cities without Federal relief.

.

Crazy thing is they would benefit more from actual stimulus to the American public vs direct subsidies

But we can't get Moscow Mitch to do anything because he is unwilling to compromise.

.

[Rasulis]

Crazy thing is they would benefit more from actual stimulus to the American public vs direct subsidies

But we can't get Moscow Mitch to do anything because he is unwilling to compromise.

.

I am not flying anytime soon.

CDC flags 1600 flights where person on board may have had COVID-19

[Zaydin]

So is the stock market undergoing a correction right now or is the entire house of cards on the verge of completely collapsing?

[Felya]

So is the stock market undergoing a correction right now or is the entire house of cards on the verge of completely collapsing?

Is Trump still president? Then correction...

[Rasulis]

So is the stock market undergoing a correction right now or is the entire house of cards on the verge of completely collapsing?

A lot of the money is going to IPOs right now. Thirteen new IPOs this week. Seven next week. The market has not seen so many new IPOs for awhile. A lot of invertors are gambling on IPOs. Hoping one of them will turn into the next Amazon.

[Thepersona]

A lot of the money is going to IPOs right now. Thirteen new IPOs this week. Seven next week. The market has not seen so many new IPOs for awhile. A lot of invertors are gambling on IPOs. Hoping one of them will turn into the next Amazon.

What will happen if none of them become the next amazon in a few months?

[Rasulis]

What will happen if none of them become the next amazon in a few months?

Money down the drain. Nothing new. Palantir been around for 16 years and has not had a single profitable quarter. Now it is trying for 20B direct IPO offering. I would not touch that piece of crap with a 100-foot pole.

[Masark]

Money down the drain. Nothing new. Palantir been around for 16 years and has not had a single profitable quarter. Now it is trying for 20B direct IPO offering. I would not touch that piece of crap with a 100-foot pole.

Why hasn't their corporate charter been revoked for that name alone? Much less what they do.

[Breccia]

So is the stock market undergoing a correction right now or is the entire house of cards on the verge of completely collapsing?

Markets head for fourth week of losses

Simply put, the stock market is a predictive force. They spent the last few months predicting, not growth, but recovery. And a lot of that may have happened. The fast part of the recovery is over, and things are flat/leaning down.

- - - Updated - - -

S&P 500 on the brink of a correction

The S&P 500 hit its highest level ever earlier this month — but as September closes out, the index is teetering on the brink of correction territory.

As of Thursday’s close, the S&P 500 has sunk 9.3% below its record high. Slight gains on Thursday pushed it a bit further away from the 10% decline that would mark a correction — but investors say volatility could be here to stay.

The pullback comes as pessimism grows about the economic recovery — and whether the stimulus Wall Street pinned its hopes on will ever arrive.

The tech stocks that powered the market higher this year have dragged down the S&P 500 in recent weeks.

The index is on track for its worst September since 2008, Brian Belski, BMO Capital Markets' chief investment strategist, points out in a note to clients.

It’s a reversal from the stock market’s near unstoppable surge, boosted by the Fed’s unprecedented support for the market and the economy. The index is still up 30% since it bottomed out when the pandemic hit in March.

Next week’s job report will shed more light on the economy.

Early estimates indicate the economy likely added 900,000 jobs in September. Job growth has slowed every month since June — when the economy added 4.8 million payrolls.

[Zan15]

Markets head for fourth week of losses

Simply put, the stock market is a predictive force. They spent the last few months predicting, not growth, but recovery. And a lot of that may have happened. The fast part of the recovery is over, and things are flat/leaning down.

- - - Updated - - -

S&P 500 on the brink of a correction

i have to admit its my fault, i moved a bunch of money into some sp500 stocks...so of course fate be tempted now a correction happens.

[Rasulis]

i have to admit its my fault, i moved a bunch of money into some sp500 stocks...so of course fate be tempted now a correction happens.

Hah!

Even with the recent drops, the FAAMG stocks and tech sector are still way up there.

Most of mega and large caps ETFs are up 30% YTD. I think there is one that is up 70%. I can’t remember off hand.

FAAMG stocks, with the exception of Google, are still up between 30% - 60% YTD. That’s despite headwind from government investigations and the DOJ plan to file antitrust suit against Google.

Tech stocks are also doing well - Docusign 187% YTD, Zoom 687%, Salesforce 49%, Nvidia 123%, etc.

My guess is that the market will be flat for awhile until the next batch of quarterly reports. Which, coincide with the election in early November.

A bit of a comment on the market being a predictive force. I think to be precise, the different sectors of the market are predictive of the economic strength and employment of the specific sectors. For examples, the market sectors that are doing bad (energy, hotels, airlines, cruise, etc.) are also the economic sectors that are doing the worst in term of both financial and unemployment. We have talked about this before, the rapid rise and size of the FAAMG stocks and tech sector during the pandemic have given the false impression that the market is doing well. To the contrary, the market as a whole is not doing well. It is just tech is doing fabulous and dragging the entire market valuation up with it.

Once you take out the FAAMG stocks and the tech sector, then yes. The stock market is a pretty good predictive of the overall broader economic performance.

[Breccia]

i have to admit its my fault

Yes, but I counter that expertly with "everyone bought all the tech they needed and therefore there's no reason to expect further growth" which I expect is the actual culprit. Like, is there anyone who needs a new laptop for working at home that doesn't have it by now?

[Rasulis]

Yes, but I counter that expertly with "everyone bought all the tech they needed and therefore there's no reason to expect further growth" which I expect is the actual culprit. Like, is there anyone who needs a new laptop for working at home that doesn't have it by now?

I think the November quarterly reports will prove you wrong. We are not even close to the limit of tech growth.

[Zan15]

Hah!

Even with the recent drops, the FAAMG stocks and tech sector are still way up there.

Most of mega and large caps ETFs are up 30% YTD. I think there is one that is up 70%. I can’t remember off hand.

FAAMG stocks, with the exception of Google, are still up between 30% - 60% YTD. That’s despite headwind from government investigations and the DOJ plan to file antitrust suit against Google.

Tech stocks are also doing well - Docusign 187% YTD, Zoom 687%, Salesforce 49%, Nvidia 123%, etc.

My guess is that the market will be flat for awhile until the next batch of quarterly reports. Which, coincide with the election in early November.

A bit of a comment on the market being a predictive force. I think to be precise, the different sectors of the market are predictive of the economic strength and employment of the specific sectors. For examples, the market sectors that are doing bad (energy, hotels, airlines, cruise, etc.) are also the economic sectors that are doing the worst in term of both financial and unemployment. We have talked about this before, the rapid rise and size of the FAAMG stocks and tech sector during the pandemic have given the false impression that the market is doing well. To the contrary, the market as a whole is not doing well. It is just tech is doing fabulous and dragging the entire market valuation up with it.

Once you take out the FAAMG stocks and the tech sector, then yes. The stock market is a pretty good predictive of the overall broader economic performance.

i am banking on a huge cycle out of tech into cyclical and staples....umm....eventually....

[Breccia]

I think the November quarterly reports will prove you wrong. We are not even close to the limit of tech growth.

I agree we're not close to the limits. I just think the actual growth spurt is over. And I think Wall Street knows that.