Category: Story of Interest

By: David Ghasimi, CFA Yield on Chinese 10-year sovereign bond soared from 3.65 in early October to just above 4 percent in late November before trimming part of its increase. From the early days of the sell-off, investors were asking if this is a global issue or not. “Early warning signal”? Some analysts believe that it is a global issue and other markets will eventually follow China. Sean Darby, chief global strategist of Jefferies Group, points to the rising yields in China as an “early warning signal” to the global bond market, Bloomberg quoted on November 28. Darby argues that global bond markets will follow this trend as they start factoring the tightening monetary policies around the world. He also expects China to export its inflation to other countries which would contribute in the global bond sell-off. Inflation is often viewed as the number one enemy of bonds as it … Continue reading Is China’s Bond Sell-off a Global Issue?

By: Davoud (David) Ghasimi, CFA “Tesla Semi”, an electric semi-truck that would start production in 2019. Image from Tesla’s website.   Tesla is more valuable than Ford or Nissan, at least based on market capitalizations. These carmakers live in very different worlds. Tesla, run by the iconic entrepreneur Elon Musk, is still a loss making but fast growing company while its rivals are mature companies, some with nearly a century of experience and billions of dollars of net profits. Tesla’s near-term ambitious goal is to produce around half a million cars in 2018 while Ford sold over 6.6 million cars in 2016. But why should Tesla be more valuable? This is a natural question to ask and finding the answer is not easy if you are looking for evidences and not just narratives. In fact, Tesla is often regarded as an example of “story stock” whose value depends on the stories … Continue reading Tesla Sells Electric Cars, and Stories

By, Robert J. Moss   For all intents and purposes, 2017 has been a banner year for the private equity industry. Investors continue to funnel money to private equity funds at record-breaking speed. Prequin reported that Q2 saw 256 funds raise $138 billion with 80% achieving or exceeding their fundraising targets. Likewise, earlier in the year, Apollo raised $24.7 billion, making it the largest buyout fund ever. Investors are flocking to private equity funds, and for good reason. Despite the bull market, funds on average are still outperforming the stock market. An article from Forbes last March relayed data from Cambridge Associates. The consulting company tracked the performance of funds relative to the S&P 500. It found that over a year, ending in June 2016, funds achieved a pooled IRR of 6%, compared to 4% from the index. The data was by no means startling though. Private equity funds routinely … Continue reading Private Equity’s Retreat

By, Alex Ferracuti   Amazon.com the all-in-one E-commerce giant has shaped the retail “game”, causing big box brick-and-mortar stores to either adapt or fold. Sears Canada was the next of the large retail giants closing shop, announcing last Tuesday (Oct. 10) it has received court approval to begin its liquidation process. After 65 years in business, the retailer plans to begin selling off its inventory Oct. 19; closing 74 full-line department stores and laying off 12,000 employees by early January. The past few years have been disconcerting for Sears Canada, losing a considerable amount of market share to Walmart, Costco and Canadian Tire as well as failing to adapt to changing consumer tastes – e-commerce. Amazon has reinvented and reshaped the retail environment, designing an all-in-one online marketplace allowing users to order virtually anything from anywhere. Eliminating the middleman has earned Amazon.com a considerable price advantage it provides to its … Continue reading E-Commerce Giant Amazon has “Redesigned” the Retail Environment

The third quarter earnings season typically gives a significant boost to stock prices, CNBC reports. Using analytic tools developed by Kensho Technologies and typically deployed by hedge funds, CNBC found that the S&P 500 Index (SPX​) posts an average gain of 2.29% in the 30 days following the start of the third quarter earnings reporting season. This is based on the last 19 years of data, during which the S&P 500 advanced 15 times (79%) in that period following the first release of third quarter profits. Tech, Industrial, Banks Lead Looking at the S&P’s industry sectors, information technology, industrials, materials, and financials showed similarly strong upward bias at this time of year. The tech sector has posted an average return of 4.6 percent, double the average return of the S&P 500, in the 30 days after third quarter earnings season starts, according to Kensho, per CNBC. Among the four quarterly corporate earnings … Continue reading Why This Earnings Season May Be the Best Yet For Stocks

The phenomenal growth of bitcoin has had at least one important consequence – it has helped shed light on money laundering, according to Larry Fink, CEO of Blackrock, Inc. In an interview with Bloomberg News, Fink said that the digital currency has helped to illustrate the extent of money laundering in the world. “It just identifies how much money laundering there is being done in the world,” he said. “How much people are trying to move currencies from one place to another.” While he is a “big believer” in the potential of cryptocurrencies​, Fink is not enthusiastic about current market conditions. “What we are talking about today is speculation,” he explained. In particular, he pointed to the “systemic risk” inherent in bitcoin and digital currencies that makes them vulnerable to speculation and hacks. Unlike its competitors in the asset management industry, Blackrock has not announced initiatives related to bitcoin and blockchain​, the underlying technology platform powering the currency. “We are not hearing that … Continue reading BlackRock CEO Is ‘Big Believer’ in Bitcoin and Blockchain