Displaying items by tag: stocks

Thursday, 08 February 2018 09:56

The Dow’s Finish Yesterday Was Bad News

(New York)

For most of the day the stock market was in positive territory yesterday. However, right at the close, the market was gripped by a swift selloff that pushed it into the red for the day. If the saying holds true—that smart money trades the close—then today could be an ugly one. The drop at the end seemed to foretell more volatility to come, and show that the market has not psychologically recovered from Monday. The market may remain directionless until next Wednesday, when new inflation data comes out. Investors are worried about the prospect of stronger inflation, and thus a quick rate rise.


FINSUM: The markets are trying to find a new baseline for valuations as investors search for a new narrative of where shares are heading. The US economic picture is strong, but there is no tax cut or other major carrot being dangled, which seems to be hurting prices.

Published in Eq: Large Cap
Thursday, 08 February 2018 09:53

The No Fee ETF is Almost Here

(New York)

The march downward in ETFs fee has been unstoppable. Over the last few years the fee war between providers, combined with increasing AUM, has driven down fees to almost negligible levels on many of the most popular ETFs. Now, it looks like free ETFs are on the way, or even ones that pay the holder. In the next year, it seems likely that free or negative fee ETFs will debut. This is possible because providers have huge economies of scale as well as good sources of non-fee income from running the funds, such as lending the securities out.


FINSUM: It is sort of amazing that it may be economical to run free or negative fee ETFs, but it seems like an inevitable outcome to the current fee war.

Published in Eq: Large Cap
Wednesday, 07 February 2018 10:51

This Market Has an Ugly Comparison to 2007

(New York)

One of the Financial Times’ most respected columnists has just published an article making a grim comparison. Saying that he dreads even mentioning it, John Authers argues that the current state of markets and the context of the losses are very similar to the summer of 2007, or the eve of the Financial Crisis. In particular, just like then, stocks moved higher even as bond yields did, all until a yield threshold is broken, when stocks finally panic. Then, even though fixed income started the worries, equity investors flee into the safety of bonds. The important extension of the argument is that all the associated fallout will not occur this time, as the economy is stronger and more balanced.


FINSUM: So this is only a half comparison. The actual market event may be similar, but the condition of the economy, and its link to markets is very different, and almost inarguably better this time around.

Published in Macro
Wednesday, 07 February 2018 10:48

How Two Tiny Products Spurred Monday’s Huge Losses

(New York)

It seems like every time there is a big plunge in the market over the last few years one can trace the root cause back to a few products traded by people, but more often, machines. Well, it is no different this time as Bloomberg says two tiny volatility products, which now only have $135m under management, were largely responsible for the selloff. One of the products is the VelocityShares Daily Inverse VIX Short-Term ETN, which will soon be delisted. Despite the small size of the products, traders closely monitor the products’ behavior, and that is said to have caused the panic, as traders predicted how the funds would rebalance and front ran that rebalancing.


FINSUM: Well, at least it was not an algorithmic disaster this time. This sounds a lot like good old fashion human gamesmanship.

Published in Eq: Large Cap

(New York)

Goldman has been trying intensely for the last few years to develop a much bigger consumer side of its business. The bank has debuted consumer savings products and tried to extend its reach into consumer products generally. Now, it might be take a huge step. The bank is reportedly in talks with Apple to provide point-of-sale financing to customers who are buying Apple’s products. The bank sees an opportunity to provide lower interest financing than credit cards, where most people charge such purchases. The deal is not closed, and could still fall apart.


FINSUM: There is a whole slew of interesting considerations here. For one, will using Goldman Sachs for financing hurt Apple’s image? Two, is Goldman trying to make a push into credit cards with this move?

Published in Eq: Large Cap

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