Financial Markets – Top 5 Things To Watch This Week

This Tuesday will see Federal Reserve Chairman Jerome Powell testify to Congress on the economic stimulus measures put in place so far. A day later the minutes of the Fed’s April meeting are scheduled to be released.


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Investors will be looking at the weekly jobless claims data as the reopening of the economy gathers pace. Retail earnings will shine a light on consumer spending amid the coronavirus pandemic, while Tuesday brings the monthly expiration of U.S. West Texas Intermediate crude futures contract. Meanwhile, central banks in South Africa and Turkey are expected to cut interest rates again.

Here’s what you need to know to start your week.


Powell testimony, FOMC minutes
The Fed chairman is to testify on Tuesday before the Senate Banking Committee alongside Treasury Secretary Steven Mnuchin to update government officials on the economic stimulus programs approved so far.

In a speech last week Powell gave a sober assessment of the long-term risks to the U.S. economic outlook and the possible need for elected officials to approve more spending programs to keep the economy afloat.

On Wednesday, the Fed is to publish the minutes of it is April meeting. In its rate statement last month, the Fed said it will keep interest rates at near-zero until officials are “confident that the economy has weathered recent events.”


Economic data
In the U.S., the main datapoint continues to be the weekly report on initial jobless claims. With the reopening of the economy gaining momentum economists are hoping for a reading of below 2.5 million, which would indicate that the rate of layoffs is slowing somewhat.

There is a packed economic calendar in the U.K. this week, with updates on March employment, retail sales and inflation. Given that the lockdown in the U.K. didn’t start until late March it may be too early to see the impact of the pandemic on the employment figures.

The retail sales data for April could show at least a 15% decline in spending, while plunging oil prices are expected to have sent inflation tumbling last month.


Retail earnings
While the U.S. first-quarter earnings season is almost over the retail sector is just getting started. This week will see results from big U.S. retailers including Walmart (NYSE:WMT), Home Depot (NYSE:HD), Lowe’s (NYSE:LOW), Target (NYSE:TGT), Kohl’s (NYSE:KSS) and Best Buy (NYSE:BBY). Their figures will show whether U.S. consumers are still spending money despite the widespread coronavirus lockdowns.

The retailers are reporting in the shadow of online shopping giant Amazon (NASDAQ:AMZN), which is among the “stay-at-home” stocks benefiting from the lockdown. Its shares have soared some 28% this year.


Repeat performance of oil plunge?
The monthly expiration of U.S. West Texas Intermediate crude futures contract is coming up on Tuesday and many energy traders are worried about a repeat performance of the oil price slump last month which saw prices drop into negative territory for the first time ever.

Normally uneventful, the expiry turned dramatic in April as brimming storage tanks discouraged traders from taking delivery of oil.

The U.S. Commodities Futures Trading Commission has warned market participants they should be prepared for volatility and negative pricing again, with oil storage still tight and the demand outlook still severely depressed.

But oil prices have recently rebounded on hopes that the easing of lockdown restrictions will boost the energy demand outlook. In another hopeful sign, U.S. crude inventories fell in the most recent week for the first time since January.

Yet some traders seem to be heeding the CFTC’s warning. Volumes in the July futures contract, which expires in a month’s time, are outpacing the June contract by nearly 50%.


Emerging market rate cuts
Central banks in Turkey and South Africa are both to hold policy meetings on Thursday and both are expected to cut rates again despite heavy losses their currencies’ have recently endured.

Analyst polls predict South Africa will cut its 4.25% main rate by another 50 basis points. Economists stress any policy easing must be sizeable if it is to offer any help to the suffering economy.

Turkey’s meeting will be even more interesting. The lira has plunged to record lows, hard currency reserves are dwindling and inflation is in the double digits, yet all that probably won’t deter the central bank from chopping another 50-100 basis points off its 8.75% repo rate



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China Makes Bad Loans Disappear as Virus Pummels Banks

Chinese banks are taking extraordinary measures to avoid recognizing bad loans, seeking to shield themselves and cash-strapped borrowers from the economic fallout of the coronavirus outbreak.

Some of the measures, which include rolling over loans to companies at risk of missing payment deadlines and relaxing guidelines on how to categorize overdue debt, have the explicit approval of regulators in Beijing. Some lenders are also refraining from reporting delinquencies to the country’s centralized credit-scoring system and allowing borrowers to skip interest payments for as long as six months, according to people familiar with the matter, who asked not to be named discussing internal decisions.


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The moves will buy time for both Chinese companies and the nation’s $41 trillion banking industry, after the outbreak brought much of the world’s second-largest economy to a standstill. But they’re also fueling concern about a buildup of hidden risks on lenders’ balance sheets. Some analysts worry that China is reversing a multi-year push to increase the transparency of its financial system and undermining the long-term health of banks.

“This will provide breathing space,” said Harry Hu, a credit analyst at S&P Global Ratings. “It will also likely undermine standards, making some Chinese banks less creditworthy in the long run.”

Earlier this month, S&P said a prolonged health emergency could cause China’s non-performing loan ratio to more than triple to about 6.3%, amounting to an increase of 5.6 trillion yuan ($800 billion) in bad debt.

The push by banks and regulators to tamp down NPLs is part of a broader effort by President Xi Jinping’s government to shore up the Chinese economy, which some forecasters say may suffer a rare quarter-on-quarter contraction in the first three months of this year. In addition to pumping billions of yuan into the banking system to make it easier for lenders to extend credit, authorities have cut interest rates, reduced taxes and pledged to adopt more “proactive” fiscal policies.

Shares of Chinese banks continued to under-performer the benchmark index this year in Hong Kong. The four biggest state-owned banks are trading at an average 0.5 times their estimated book value for this year, near the record low.

The NPL measures mark an abrupt shift in China’s approach toward financial regulation. Authorities in Beijing have spent the past three years trying to instill more discipline in the banking system and develop credit markets that more accurately price risk. As part of that effort, they’ve encouraged banks to be more diligent when accounting for bad loans.

The outbreak has changed the government’s priorities. In a press conference this week, Ye Yanfei, an official at the China Banking and Insurance Regulatory Commission, said policy makers need to be more tolerant when it comes to bad loans. “Saving corporates now is saving banks themselves,” Ye said.

China isn’t the only country to have relaxed accounting standards for banks during a crisis. In April 2009, during the depths of the global recession, mark-to-market rules in the U.S. were eased after banks complained that they resulted in bigger-than-warranted writedowns on thinly traded mortgage securities. While critics of the decision said it reduced transparency, it arguably helped big American lenders recover more quickly from the crisis.

China’s ability to control the pace of NPLs during economic shocks is an advantage of its centralized financial system, according to Leland Miller, the chief executive officer of China Beige Book.

“When you have a party that controls all the counterparties in the economy — you have state banks loaning to state enterprises and you have state banks loaning to small- and medium-sized enterprises — you can tell them to lend,” Miller said in an interview on Money Undercover with Bloomberg TV’s Lisa Abramowicz. “You never have to freeze up liquidity in the same way that a commercial financial system would work.”

Yet even if China’s banks turn on the credit taps, lots of businesses may struggle to secure the funding they need to stay afloat.

A survey of small- and medium-sized Chinese companies conducted this month showed that a third of respondents only had enough cash to cover fixed expenses for a month, with another third running out within two months. About two-thirds of the country’s 80 million small businesses, including many mom-and-pop shops, lacked access to loans as of 2018, according to China’s National Institution for Finance & Development.

It remains to be seen whether the benefits of delaying NPLs will outweigh the costs. Much depends on how quickly Chinese authorities can contain the outbreak and get the country back to work. In the week to Feb. 21, the economy was likely running at 50%-60% capacity, according to Bloomberg Economics.



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A sharp recovery in coming months would likely ease concerns that banks are obscuring the true health of their balance sheets. “If they can tide the virus over, then the delinquent loans will disappear,” said Zhang Shuaishuai, a banking analyst at China International Capital Corp.

But that’s far from a given. S&P analysts see scope for caution, saying last week that it may take years for the industry to revert to normal standards for recognizing NPLs and that some banks may see their long-term health suffer as a result.



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Investors Bet on Volatility Comeback in 2020


⇑⇓ Today’s Stock Market Quotes ⇓⇑


A better-than-feared corporate earnings season and swinging sentiment on U.S. and China trade talks have helped lift stocks to fresh records in recent weeks, pushing volatility lower. A number of factors make next year’s outlook rockier, leading some investors to pay up for hedges that would protect against a downturn well into 2020, according to Wells Fargo Securities.

“It could be the market pricing in a ’Phase 1 trade deal’ event (either the signing of, or postponement/cancellation of) at some uncertain point in the near future, or it could be the residual memory of the Q4 selloff last year,” wrote Pravit Chintawongvanich, an equity derivatives strategist at the firm in a note Friday.

Markets were calm until late last year, before spiraling into a selloff that dragged the S&P 500 into negative territory for the year.

The sentiment is evident in an options measure called skew, which gauges how expensive it is to buy bearish put options versus bullish call options expiring six months from now. The measure is near its highest level of the past five years, the firm said.


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Put options give the right to sell shares at a specific price, later in time. Calls give the right to buy stock at a designated price. “The market also seems to think things will pick up in the new year,” wrote Mr. Chintawongvanich.

The higher volatility would be a sharp shift. The Dow Jones Industrial Average finished unchanged for only the third time since 2000 last week. The Cboe Volatility Index, an options-based measure of market swings, hit the lowest level since April this month.


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Tesla Surprising Profit


◊ Tesla Stock Market News ◊


Tesla’s shares climbed 20% in after-hours trading. “We were able to make great strides in controlling our costs,” Chief Executive Elon Musk said in a call with analysts Wednesday. “Our operating cost is now the lowest level since Model 3 production started.”

The company said trial production of its compact Model 3 car has started at a new facility in China, and production on its new Model Y compact sport-utility vehicle is ahead of schedule, with a launch set for next summer. The China facility is another sign of Tesla’s ambition to become a global force in car production.


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Tesla posted earnings of 78 cents a share for the three months ended Sept. 30, upending analysts’ predictions for a loss of 46 cents a share. For the year-earlier quarter, the company reported earnings of $1.75 a share.

A record delivery figure helped lift Tesla’s bottom line, as customers largely flocked to the lower-price Model 3. But even as Tesla ramps up Model 3 production, sales of its premium cars have declined.

Third-quarter revenue fell to $6.3 billion from $6.82 billion a year earlier, as deliveries of the Model S and Model X vehicles dropped 37%.
Analysts polled by FactSet had predicted. The company said it is on track to deliver more than 360,000 vehicles in 2019, the lower end of its targeted range of 360,000 to 400,000.

Tesla has had back-to-back quarters of record vehicle deliveries this year after failing to meet estimates earlier in 2019. The company needs to deliver at least 104,800 vehicles in the three months through Dec. 31 to meet the lower end of the projected range.



Tesla has made significant gains in its yearly production—a crucial part of Mr. Musk’s strategy to become a mass-market auto maker. The lower end of the projected range compares with deliveries last year of almost 250,000 cars.

But even as Tesla gets closer to showing it can consistently produce large volumes of cars, it faces the prospect that market dynamics might be shifting as demand slows. Tesla faces the elimination next year of a federal tax credit to its customers, a change that analysts say could affect demand.

What’s more, industry experts fear overall demand for new vehicles might be about to slump after a prolonged growth period. Demand in China and Europe already is showing signs of weakness and the appetite for new vehicles in the U.S. could be in jeopardy, analysts have said.

New vehicles often help generate sales interest among reluctant vehicle buyers. Tesla said it would produce limited volumes next year of an all-electric semi truck the company unveiled in 2017 and is starting to install equipment for the Model Y. The car maker also said it would announce the location of a new factory in Europe by the end of the year.


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Tesla, which initially rolled out the luxury Model S large sedan and Model X SUV, has shifted its focus to the Model 3. That smaller car accounted for about 82% of the 97,000 deliveries the company made in the third quarter.

Tesla has said it wants the Model 3 to be a mass-market car and has priced the vehicles accordingly. They cost less than half the price of the premium models. The starting price of the Model 3, which Tesla has been working to bring down to $35,000 by shedding jobs and closing facilities, is currently listed at roughly $39,000 on the company’s website, excluding projected savings from gasoline and tax credits.

Despite price reductions, Tesla said its gross margins improved through cuts to manufacturing and material-related costs. Operating expenses decreased 16% from the year before to $930 million. Zach Kirkhorn, Tesla’s chief financial officer, noted that the company reduced costs by making “improvements in labor hours per vehicle,” as well as in its logistics, warehouse and delivery operations.

Sales of the Model 3 boosted Tesla’s free cash flow, a metric considered important for the company’s health because it supports operations and helps the company maintain its assets. Tesla recorded $371 million in cash flow for the third quarter, compared with $614 million for the three months ended June 30. The car maker’s cash reserves totaled $5.3 billion

The opening of Tesla’s China facility comes as car sales in the country, the world’s largest auto market, have slumped.


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A slowing Chinese economy has pinched sales for major car makers, including in the electric-vehicle market, where sales fell 11% in the third quarter.




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Stock Market News: Airbnb Says It Plans to Go Public in 2020


Airbnb is considering several nontraditional approaches to its public offering, including a direct listing, the people said. In a direct listing, a company lists shares on a public market without raising any additional capital.


Airbnb said on Thursday that it planned to go public in 2020, becoming one of the last of a generation of prominent technology start-ups to aim for the stock market, even as some of its brethren have struggled since listing their shares.


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The online room rental company gave little detail about when in 2020 it planned to go public, beyond a one-sentence announcement. On Wednesday, Airbnb reported second-quarter revenue of more than $1 billion and said that it had more than seven million listings in 100,000 cities around the world.

When it goes public, Airbnb, valued by private investors at $31 billion, will be one of the most highly valued public offerings to hit the market since this spring, when a rash of hot start-ups, including Uber, Lyft, Slack and Pinterest, listed their shares.

Airbnb-news-stockmarket

Making a public statement about going public in a particular year is unusual among technology start-ups, which typically keep their plans secret. But Airbnb made the move as it explored offering equity to the “hosts” who list their homes on its site, according to three people familiar with the situation, who declined to be named because the plans were confidential. Under securities law, Airbnb has to unveil its plans to go public before it can offer shares to the hosts.

Airbnb is considering several nontraditional approaches to its public offering, including a direct listing, the people said. In a direct listing, a company lists shares on a public market without raising any additional capital. The method has gained traction in recent years as the streaming service Spotify and Slack, the business software company, have adopted it.


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This year, some of the most prominent start-ups — known as unicorns because they were valued at $1 billion and more by private investors — have run into trouble as they tried to reach the stock market or after they went public. The stock prices of the ride-hailing companies Uber and Lyft have plunged, as has the share price of Slack. All of the companies, which are unprofitable, had been hugely hyped on their way to listing their shares.

This week, WeWork, another deeply unprofitable start-up, postponed its initial public offering altogether after a cold reception from investors. The shared office space giant has faced deep skepticism about its business model and corporate governance.

In the past, public market investors have often overlooked the losses of hot tech start-ups, as long as they were growing quickly. But many of the unicorns are maturing, and their growth is beginning to slow. This has raised questions about whether public market investors are missing out on the gains that venture capitalists have experienced.


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Airbnb’s public offering will cap off a decade of start-up growth driven by the spread of mobile phones, cheap cloud computing and gig economy workers. The company, founded in 2009, has raised more than $4 billion in venture funding, according to Crunchbase.


Airbnb Inc – Company Profile

Airbnb, Inc. operates an online marketplace for hospitality services. The Company offers lodging, homestays, and tourism services via websites and mobile applications. Airbnb serves clients worldwide.


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10 Best Stocks to Buy { Second Half of 2019 }

Net2


< StockMarketNews.Today > … Stocks to buy in the second half 2019 … Here are 10 stocks to buy today { Second Half of 2019 } …


  1. Netflix

  2. iRobot

  3. Amazon.com

  4. Intuitive Surgical

  5. Alphabet

  6. Axon Enterprises

  7. Wayfair

  8. Facebook

  9. Constellation Brands

  10. Lululemon athletica 


5 of the Best Stocks for Beginning Investors

Let’s start with five that are particularly good for beginning investors because of their strong balance sheets, positive free cash flow, and competitive advantages:


Amazon.com
Alphabet
Facebook
Intuitive Surgical
Axon Enterprises


The first three stocks are all “FAANG” (Facebook, Amazon, Apple, Netflix, and Google) stocks. These Big Tech companies have their hands in seemingly everything and have the potential to disrupt the parts of the economy they don’t. Their large market capitalizations reflect the fact the market knows this, too. That said, beginning investors are generally better off sticking to well-known large cap stocks with strong brand recognition as they start off on their investing journey versus getting too cute with under-the-radar smaller cap stocks.

Amazon dominates online retail to the tune of about half of all U.S. e-commerce! If that doesn’t amaze you, how about the estimates that over 100 million Americans are now paying the $119/year price tag to be Amazon Prime members?

And that’s not even where it gets most of its profit. That comes from Amazon Web Services, its cloud computing offering. While its retail segment sells us literal picks and shovels, Amazon Web Services sells the virtual picks and shovels of the Internet.

As a bonus, Amazon throws in other goodies like its burgeoning original content as well as its subsidiaries like high-end organic retailer Whole Foods and the gaming-related live streaming video platform Twitch.


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Alphabet (aka the owner of Google) is no less impressive. Its search engine might be better termed a “money engine.” That’s what happens when you have around a 90% market share worldwide.

In addition, YouTube is the #1 video platform in the world while Android is the #1 mobile operating system.

Also within the Alphabet umbrella are a whole bunch of futuristic moonshots and other “alpha bets”. As a result, Google is involved in everything from driverless cars to virtual reality to drones to artificial intelligence (AI).

Rounding out the FAANG companies here is Facebook, the ruler of social media with Instagram and WhatsApp in addition to its namesake Facebook and Facebook Messenger platforms. Each of those four platforms counts at least a billion monthly users. Pretty impressive when the world’s population is also counted in the single-digit billions. And yeah, don’t forget about their Oculus VR tech and other bets, too.

Getting out of the Big Tech space a bit, there’s healthcare pioneer Intuitive Surgical, which makes robotic surgery a reality with its da Vinci surgical systems. The technology assists surgeons in making procedures less invasive, leading to better patient outcomes. Far from an unproven flyer, Intuitive Surgical already has billions in annual sales and has been consistently wildly profitable — think gross margins in the 60% to 70% range and net margins in the 20% to 30% range.

It’s easy to see a growth path forward with increased adoption by surgeons and hospitals and increasing numbers of approved procedures.

Finally, we come to Axon Enterprises, known for its law enforcement and self-defense products. To wit, its Taser stun guns, Axon body cameras, and Evidence.com (uses AI to analyze uploaded video footage) offerings give an integrated solution to police departments.


5 of the Best Growth Stocks

In contrast to dividend stocks, growth stocks often pay little (or none) of their earnings back to investors as dividends. In fact, many are at the pre-earnings stage or have such small earnings that their P/E ratios are stratospheric. And if they do have earnings, they tend to plow them back into their businesses.


iRobot
Lululemon athletica
Wayfair
Netflix
Constellation Brands


iRobot is known for its Roomba line of robotic vacuum cleaners. Bears worry about the threat of increased competition. Bulls, however, point to the huge potential for optionality (i.e. a company morphing and pivoting over time to become something we can’t envision today). iRobot is already expanding its offerings into robotic lawn mowers, so it’s not hard to imagine it going after other household and commercial applications soon. More broadly, though, there’s a lot of room for pivoting into interesting spaces when you’re an early ish mover into robots, machine learning, and artificial intelligence. It’s hard to speculate on exactly what iRobot could become, but at just over $3 billion in market capitalization, it’s still less than 1% the size of Facebook, Alphabet, or Amazon, meaning there’s lots of room for the stock price to run if its wildest goals come true. And plenty of room for success in between if there’s a more conventional outcome.


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Springing from its core yoga apparel base, the Lululemon brand has become an absolute force in athleisure. There are debates about whether athleisure (e.g. wearing spandex as if it were denim) is merely a trend or here to stay. While the answer to that debate may affect shorter-term growth, consumers will need fitness apparel for a long time to come. Beyond that, Lulu can grow internationally, beyond its North American stronghold (while Lululemon is a Canadian company, about 70% of its sales come from the U.S. and only about 10% of its sales come from outside the U.S. and Canada). Another potential growth driver is expansion beyond its traditionally female target demographic.

Wayfair is an online destination for furniture and other home items. Retail in any channel is tough, and it’s no different for Wayfair. Competition is fierce, featuring major online players like Amazon, all the traditional bricks-and-mortar players, and a host of online boutique start-ups. To buy the Wayfair story, you’ll probably want to believe that Wayfair can build up a brand, customer loyalty, and scale that’ll enable it to boost margins to a point where it can be sustainably profitable. One favorable indicator for that case is Wayfair’s 5-year sales growth rate near 50%.


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Netflix needs no introduction. It’s been able to stay steps ahead of doubters as it has vanquished Blockbuster, pivoted from mailed DVDs to online streaming, created award-winning original content, and kept total content costs contained enough to be consistently profitable. The worries today include ever-present competition (including other streaming service entrants from formidable content owners), fears of domestic saturation, and even higher content costs. On the other side, Netflix seems to have brand and pricing power, the notion that cable cutters can sign on to more than one online service, international expansion possibilities, and economies of scale as it continues to grow the top line (30%+ the past few years).

Constellation Brands is aptly named. Even if you haven’t heard of the company, you know many of the alcohol brands it either owns outright or markets. These include beers like Corona, Modelo, and Ballast Point, wines like Robert Mondavi, Clos du Bois, and Ruffino, and spirits like SVEDKA Vodka. It’s accomplished much of this through acquisitions over the years (and decades), a strategy that is generally riskier than growing organically. So far, however, it’s worked out pretty well for Constellation.


 


 

U.S. Stocks Open Higher on Hopes for Trade Talks


◊ U.S. Stocks News Today ◊


♦ Stock Market News Today ♦ …U.S. stocks advanced Thursday amid renewed hopes for progress in the trade dispute between the U.S. and China.

The Dow Jones Industrial Average climbed 267 points, or 1.1%. The S&P 500 added 1%, led by gains in trade-sensitive industrial and material stocks. The technology-heavy Nasdaq Composite rose 1.3%.


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A batch of steady economic data and stronger-than-expected earnings reports from discount retailers helped ease some of the fears about slowing economic growth, as investors continued to weigh developments on the U.S.-China trade front.

Beijing hopes to prioritize discussions over removing the latest tariffs announced by President Trump last week, to prevent a further escalation of the trade war, Gao Feng, a spokesman for China’s Commerce Ministry, said Thursday.

The ministry said the U.S. needed to create the necessary conditions for trade negotiations to proceed, while noting that the countries remained in communication over possible talks in September.

Stocks have had a turbulent August amid renewed anxieties surrounding trade tensions, with all three major indexes down at least 2.2% this month. Still, all three are sitting within roughly 5% of their records. Shares of industrial conglomerates Caterpillar and Boeing climbed 2% and 1.3%, respectively.




“Any news around negotiations starting up or retaliations not happening are going to have a move in markets,” said Bert Colijn, senior eurozone economist at Dutch financial-services firm ING Group.

Investors were also sorting through a wash of economic data. U.S. gross domestic product—the broadest measure of the nation’s output of goods and services—rose at a seasonally adjusted annual rate of 2% in the second quarter, compared with the previous estimate of a 2.1% rise.

The government said consumers spent more than previously estimated in the April to June period, but the housing sector, exports and inventory investment were more of a drag than initially thought.

Meanwhile, U.S. jobless claims rose slightly to 215,000 last week, though the figure remains at a historically low level.

The yield on the 10-year U.S. Treasury climbed to 1.486% Thursday from 1.469% Wednesday, and the two-year Treasury yield edged up to 1.514% from 1.504% Wednesday, according to Tradeweb. Yields fall as bond prices rise.

In Thursday’s action, shares of Best Buy fell 5.1% after the consumer electronics retailer reported second-quarter sales that disappointed investors.

Discount retailers got a lift, with shares of Dollar Tree rising 2.5% on higher second-quarter sales and Dollar General shares gaining 7.2% on stronger-than-expected earnings.


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Meanwhile, the pound fell 0.2% against the U.S. dollar and the euro a day after U.K. Prime Minister Boris Johnson moved to suspend Parliament, a tactic aimed at stopping opposition lawmakers from blocking an abrupt break with the European Union.

Elsewhere, the Stoxx Europe 600 rose 1%. In Asia, the Shanghai Composite and Japan’s Nikkei both slipped 0.1%, while Hong Kong’s Hang Seng rose 0.3%.




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Natural-Gas: Prices in Europe and Asia Plummet to Historic Lows

Oil refinery with twilight sky


 ◊ Natural Gas News Today ◊


♦ Natural Gas – Stock Market News ♦ … — Natural-gas prices in Europe and Asia have plummeted this year to historic lows in the midst of reduced demand, the trade dispute with China and brimming storage facilities in Europe. The biggest driver of falling prices, though, has been the U.S. Natural Gas that is spilling into global markets.

“It was inevitable,” said Ira Joseph, head of global gas and power analytics at S&P Global Platts. “There is simply too much supply coming into the market at one time.”



Natural Gas News ›


The price decline has eliminated some of the allure involved in liquefying cheap U.S. gas and shipping it abroad, where it typically fetches much higher prices.

That is a concern for the exploration-and-production companies that have flooded the market with cheap shale gas and are already struggling with flagging shares and restive shareholders.


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The more international prices fall, the better the chance that the waterfront facilities that produce liquefied natural gas, or LNG, for overseas shipment will reduce their intake of gas, which has helped keep domestic gas prices from collapsing completely this year.

U.S. natural-gas futures for September delivery settled Tuesday at $2.202 per million British thermal units. That is down about 25% from this time last year despite the surge in exports and record consumption among U.S. power plants this summer to generate electricity in response to sweltering heat.


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The benchmark price for natural gas in Asia, the Japan Korea Marker, has fallen to as low as $4.11 per MMBtu this summer, down from more than $11 per MMBtu a year ago, according to S&P Global Platts. Meanwhile, a widely used European price set in the Netherlands has dropped to nearly $3, from about $9 a year ago.

Those prices don’t leave much margin for U.S. sellers. Though processing and shipping costs can vary by exporter and destination, $2 per million BTUs is typical, analysts say. Houston’s Tudor, Pickering, Holt & Co. estimates that about 25% of the global LNG market is subject to spot prices, as opposed to pricing that is sketched out in long-term supply contracts.

The squeeze comes in the midst of the biggest expansion yet of LNG shipping capacity.

Earlier this month Freeport LNG Development LP’s export terminal in a beach town south of Houston began buying and liquefying gas with the expectation of sending out its maiden cargo in September. The Freeport facility, the fifth to begin operating in the lower 48 states since the first opened in early 2016, should help push gas consumption from LNG exporters to a new high. Last week, a record nine LNG vessels left the U.S. carrying cargoes, according to Jefferies Financial Group Inc.

In July, LNG exporters consumed an average of about 6 billion cubic feet of gas per day, according to the U.S. Energy Information Administration. That is the most yet and is equal to roughly 7% of total U.S. gas production. Analysts expect demand from LNG facilities to absorb about 12% of total production by next summer as additional facilities start up and existing terminals boost their capacity.


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But if those projects are delayed because of low prices overseas or if existing LNG plants slow down or take advantage of the lull to perform extended maintenance, then the domestic gas market could be swamped, sending prices even lower.

“If that demand goes away even for a couple months, it becomes a real problem for the balance of the market,” said Welles Fitzpatrick, an analyst with SunTrust Robinson Humphrey.

The reliance of U.S. producers on demand around the world is a stark change from just a few years ago, when domestic gas prices were isolated from global markets and depended mostly on weather-related demand.

These days, though, U.S. gas prices take into account a range of overseas factors, such as Japan’s nuclear-reactor output, trade negotiations with Beijing and Dutch stockpiles.

The EIA, for instance, has estimated that Japan’s imports of LNG will decline by as much as 10% this year as nuclear reactors that were shut down after 2011’s Fukushima accident return to service.

At the same time, shipments to China essentially ended after the country placed a 10% tariff on U.S. LNG last September and boosted the levy to 25% in June in its tit-for-tat trade dispute with President Trump. Meanwhile, EIA data shows an increase in shipments to European countries, including the Netherlands and Spain, where gas is stored for later use.


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Many of those facilities are reaching capacity, however, and some analysts have expressed concern that buyers in those European markets may become sated until inventories are drawn down to heat homes this winter.




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Amgen to Buy Celgene’s Otezla for $13.4 Billion in Cash


◊ Amgen News Today ◊


♦ Amgen Buy Otezla ♦ Stock Market News ♦ … — Amgen Inc. said it has agreed to buy Celgene Corp. ’s psoriasis treatment Otezla for $13.4 billion in cash, in a deal that would pave the way for Bristol-Myers Squibb Co. to complete its acquisition of Celgene. Amgen said Monday the deal is worth about $11.2 billion, net of anticipated future cash tax benefits.

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Bristol-Myers in January said it would acquire Celgene in a deal valued at about $74 billion, but the U.S. Federal Trade Commission raised anticompetitive concerns related to anti-inflammatory drugs. In June, the companies said they would shed Otezla to satisfy the FTC’s concerns.

Bristol-Myers on Monday said the sale of Otezla to Amgen is contingent on a consent decree with the FTC and completion of the Celgene acquisition, which the company now expects to occur by the end of the year.


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Amgen, a Thousand Oaks, Calif., biotechnology company, said Otezla is a strong strategic fit with its psoriasis and inflammation portfolio and it expects at least low-double-digit sales growth for the drug, on average, over the next five years.

Shares of Bristol-Myers rose 4.2% in morning trading. Celgene shares added 3.7% and Amgen climbed 2.1%. Amgen, which has been pressured recently by the introduction of copycats to its white blood cell booster Neulasta and calcium reducer Sensipar, saidOtezla has exclusivity through at least 2028 in the U.S.


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Bristol-Myers said it would use proceeds from the Otezla sale to pare its debt load, adding that it plans to focus on deleveraging in the near term to maintain strong investment-grade credit ratings and a ratio of debt to earnings before interest, taxes, depreciation and amortization of below 1.5-times by 2023.

The New York drugmaker also raised an accelerated share repurchase program, planned for after the Celgene deal closes, to $7 billion from $5 billion.




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Amgen Inc Company Profile:

Amgen Inc. is a biotechnology company. The Company discovers, develops, manufactures and delivers various human therapeutics. It operates in human therapeutics segment.

Its marketed products portfolio includes Neulasta (pegfilgrastim); erythropoiesis-stimulating agents (ESAs), such as Aranesp (darbepoetin alfa) and EPOGEN (epoetin alfa); Sensipar/Mimpara (cinacalcet); XGEVA (denosumab); Prolia (denosumab); NEUPOGEN (filgrastim), and other marketed products, such as KYPROLIS (carfilzomib), Vectibix (panitumumab), Nplate (romiplostim), Repatha (evolocumab), BLINCYTO (blinatumomab), IMLYGIC (talimogene laherparepvec) and Corlanor (ivabradine).

It focuses on human therapeutics for the treatment of serious illness in the areas of oncology/hematology, cardiovascular disease and neuroscience. Its product candidates in Phase III include Erenumab for episodic migraine, Aranesp for myelodysplastic syndromes, BLINCYTO for acute lymphoblastic leukemia and IMLYGIC for metastatic melanoma.




 

Trump Orders U.S. Businesses to Find Alternative to China

{ Trade War and Tariffs – Stock Market News } … President Trump said U.S. companies were “hereby ordered” to start looking for alternatives to doing business in China after Beijing said it would impose tariffs on $75 billion worth of additional U.S. products.

“Our Country has lost, stupidly, Trillions of Dollars with China over many years,” Mr. Trump wrote in a series of tweets. “They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue. I won’t let that happen! We don’t need China and, frankly, would be far better off without them.”


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Mr. Trump’s comments came in response to China’s plan, laid out Friday, to impose tariffs of 5% and 10% on almost all the remaining U.S. imports on which it has yet to impose punitive taxes, including vehicles and car parts, in retaliation against U.S. moves to slap punitive tariffs on an additional $300 billion of Chinese goods.

The president demanded that U.S. companies “immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.”

Trade tensions are disrupting supply chains in China that have churned out electronics such as Apple’s iPhone and Nintendo’s Switch. The sharp escalation in the prolonged trade conflict between the two countries comes weeks after Mr. Trump said he impose the fresh tariffs on Chinese goods and Beijing had vowed to retaliate. China’s new levies on U.S. goods are set to go into effect on Sept. 1 and Dec. 15, timed with the next two rounds of U.S. tariffs on Chinese goods. Chinese tariffs on U.S. automotive goods are set to begin Dec. 15.

Mr. Trump also said he would require shipping companies to block shipments of fentanyl from China and elsewhere. The president has blamed Beijing for not following through on a commitment in earlier trade negotiations to curb flows into the U.S. of the addictive and potentially lethal painkiller.

The White House didn’t immediately respond to questions about the president’s demand that shipping companies “SEARCH FOR & REFUSE” deliveries of fentanyl or offer further details on his demand that U.S. companies find alternatives to China.

Mr. Trump said on Twitter he would formally respond to China’s announcement later in the day. Items China plans to impose tariffs on include agricultural products, apparel, chemicals and textiles.

Some major car companies will be hit hard by the increase in tariffs, particularly Tesla Inc. and Ford Motor Co., as well as Germany’s BMW AG and Daimler AG ’s Mercedes-Benz. These companies build a significant number of vehicles in the U.S. for export to China—mostly premium models—and a higher tariff could force them to raise prices.


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In all, auto makers exported roughly 230,100 U.S.-built cars to China last year, according to forecasting firm LMC Automotive.

The Dow Jones Industrial Average dropped more than 450 points, or 1.7%, ending what had been a relatively quiet several days for markets. Yields on U.S. government bonds also tumbled, as did commodities markets, such as oil and copper, that are sensitive to the two countries’ trade battle.

Shares of retailers and semiconductor companies that manufacture parts and materials in China were among the hardest hit. Mattel Inc. and Hasbro Inc. dropped more than 6%, while Nvidia Corp. and Advanced Micro Devices Inc. slumped about 5%.

Federal Reserve Chairman Jerome Powell on Friday offered his most forceful warning of the risks emanating from the administration’s trade policy. “We have much experience in addressing typical macroeconomic developments under” the Fed’s policy-making framework, he said in a speech, “but fitting trade policy uncertainty into this framework is a new challenge.”

White House trade adviser Peter Navarro played down the broader economic impact in an interview on Fox Business Network.

“The risk here for China, when it does things like this, is simply to galvanize support even more” for President Trump in the U.S., Mr. Navarro said, adding that $75 billion “is not something for the stock market to worry about” when compared with the $21 trillion U.S. economy.


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A spokeswoman for Robert Lighthizer, the U.S. trade representative, didn’t immediately reply to a request for comment on the tariffs.

“Everyone knew this was coming, which is why we should have come into this fight with allies and a discernible strategy, instead of letting America’s workers and consumers bear the brunt of Donald Trump ’s erratic trade war,” said Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee. “Meanwhile, China’s market is more closed than ever to American goods.”

The tariffs come just as the two sides had planned for another round of high-level trade talks. Beijing remains interested in a deal that would remove U.S. punitive tariffs, analysts say, and has left open whether its officials would travel to Washington in September for trade talks as previously agreed.

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“Now that China has imposed tariffs, it can go to the negotiations,” said Wang Huiyao, founder of Beijing-based think tank Center for China and Globalization. “If China hadn’t, it would look like they’re still under the gun of the U.S.”

Mr. Navarro said Friday the high-level trade talks between U.S. and Chinese officials were still expected to resume in September. Some business leaders on Friday warned that the rising tensions with China are hurting the economy.


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“Nobody wins a trade war, and the continued tit-for-tat escalation between the U.S. and China is putting significant strain on the U.S. economy, raising costs, undermining investment, and roiling markets,” said Myron Brilliant, head of international affairs at the U.S. Chamber of Commerce.




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Home Depot Cuts Sales Forecast


{ Home Depot Cuts Sales Forecast – Stock Market News } … Home Depot Inc. lowered its sales forecast as the company warned that rising material costs as well as the potential effects of tariffs on U.S. consumers could weigh on growth.

The home-improvement retailer said fiscal 2019 sales growth would increase by 2.3%, down from its previous guidance of 3.3%. Same-store sales are projected to grow by about 4%, 1 percentage point lower than its previous forecast. The company affirmed its earnings guidance.


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Despite positive signs of a stable housing market, lumber-price deflation is expected to negatively affect sales growth, the company said.

Overall sales rose 1.2% for the quarter to $30.84 billion from a year ago. Analysts projected sales of $31 billion, according to FactSet.

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The number of customer transactions was flat from a year ago while average ticket prices, or the amount of money customers spent per visit, rose 1.7%. Same-store sales—a common metric in retail based on revenue at stores open at least one year—rose 3%. Analysts expected a 3.3% rise.


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Home Depot said second-quarters earnings were $3.48 billion, or $3.17 a share, down from $3.51 billion, or $3.05 a share, a year earlier, primarily due to higher expenses. Expenses rose 1.3% in the quarter. Analysts projected earnings of $3.09 a share.

Shares of Home Depot rose 0.8% premarket on low trading volumes.




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Home Depot Inc – Company Profile:
The Home Depot, Inc. is a home improvement retailer. The Company sells an assortment of building materials, home improvement products, and lawn and garden products, and provides various services. The Home Depot stores serves three primary customer groups: do-it-yourself (DIY) customers, do-it-for-me (DIFM) customers and professional customers. Its DIY customers are home owners purchasing products and completing their own projects and installations.

The Company assists these customers with specific product and installation questions both in its stores and through online resources and other media designed to provide product and project knowledge. Its DIFM customers are home owners purchasing materials themselves and hiring third parties to complete the project or installation. Professional Customers are primarily professional renovators/remodelers, general contractors, repairmen, installers, small business owners and tradesmen.



 

Wall Street: Strong Retail Sales Data


◊ Wall Street News ◊


streetnews


• Business & Financial News – Stock Market News Today • 


— U.S. stocks tried to bounce back on Thursday from a steep selloff a day earlier, as strong retails sales data and upbeat Walmart (WMT) earnings eased concerns of a recession, but mixed signals on trade and Cisco‘s dismal forecast capped gains.

Recession fears have gripped the market after the U.S. Treasury yield curve inverted for the first time in 12 years on Wednesday on growing worries about the impact of a bruising trade war on global growth.

However, a Commerce Department report showed a much better-than-expected rise in July retail sales as consumers bought a range of goods even as they cut back on motor vehicle purchases.


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“Data still indicates that the consumer is in a relatively good shape, it points to the fact that even with an inverted yield curve that we saw yesterday, a recession is not coming so fast,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

“The trade news is not linear. It’s very hard to guess what the next step is going to be and it’s impacting companies like Cisco, so the longer the trade issue lingers, the harder it is going be for companies to show top- and bottom-line growth.”

Cisco Systems Inc (CSCO) dropped 7% and was the biggest drag on all three major indexes, after the Dow component blamed the bruising U.S.-China trade war for poor quarterly forecasts.

China’s finance ministry said earlier in the day that it would retaliate to the latest U.S. tariffs, spooking markets initially. However, a spokeswoman for the ministry later said, “We hope the U.S. will meet China halfway, and implement the consensus of the two heads of the two countries in Osaka.”

Walmart Inc shares rose 4.3% after the retailer reported second-quarter U.S. comparable sales that beat estimates and boosted its earnings forecast for the year.

The company’s strong report lifted the consumer staples sector up 1.5%, which gave the biggest boost to the market.

At 12:14 p.m. ET, the Dow Jones Industrial Average was up 112.05 points, or 0.44%, at 25,591.47, the S&P 500 was up 11.95 points, or 0.42%, at 2,852.55. The Nasdaq Composite was up 13.38 points, or 0.17%, at 7,787.31.

The benchmark S&P 500 is about 6% away from an all-time high hit in July.

General Electric (GE) plunged as much as 15.3%, and was on pace to post its biggest one-day drop in a decade, after a whistleblower in the Bernard Madoff Ponzi scheme case alleged that company financial filings masked the depths of its problems.


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Advancing issues outnumbered decliners by a 1.48-to-1 ratio on the NYSE and by a 1.05-to-1 ratio on the Nasdaq. The S&P index recorded five new 52-week highs and 47 new lows, while the Nasdaq recorded 15 new highs and 204 new lows.



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Bond Market Recession Signal …


bond-bomb


◊ Business & Financial News – Stock Market News Today ◊


 —  Stocks plunged on Wednesday, giving back Tuesday’s solid gains, after the U.S. bond market flashed a troubling signal about the U.S. economy. The Dow Jones Industrial Average dropped about 655 points or 2.3%, while the S&P 500 fell 2.3% and Nasdaq Composite declined 2.6%. The Dow fell to a new low for August, giving up the entire rebound from a sell-off earlier in the month.

The yield on the benchmark 10-year Treasury note on Wednesday broke below the 2-year rate, an odd bond market phenomenon that has been a reliable indicator of economic recessions. Investors, worried about the state of the economy, rushed to long-term safe haven assets, pushing the yield on the benchmark 30-year Treasury bond to a new record low on Wednesday.


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Bank stocks led the declines as it gets tougher for the group to make a profit lending money in such an environment. Bank of America and Citigroup fell 5% and 5.2% respectively, while J.P. Morgan also dropped 4.1%. The S&P 500 Financials Sector dipped into correction territory on an intraday basis.

“The U.S. equity market is on borrowed time after the yield curve inverts,” wrote Bank of America technical strategist Stephen Suttmeier.

There have been five inversions of the 2-year and 10-year yields since 1978 and all were precursors to a recession, but there is a significant lag, according to data from Credit Suisse. A recession occurred, on average, 22 months after the inversion, Credit Suisse shows. And the S&P 500 actually enjoyed average returns of 15% 18 months after an inversion before it eventually turns.

The last time this key part of the yield curve inverted was in December 2005, two years before the recession hit.


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“Historically speaking the inversion of that benchmark yield curve measure means that we now must expect a recession anywhere from six-to-18 months from today which will drastically, and negatively, shift our medium-to-longer term outlook on the broader markets,” Tom Essaye, founder of The Sevens Report, said in a note on Wednesday.


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August has been a volatile month for the stock market so far. Including Wednesday, the Dow has moved more than 200 points in either direction on seven occasions. Wednesday’s plunge was the biggest drop since the August 5 drubbing of 767 points, or 2.9%, on the Dow.

Shares of Macy’s tanked nearly 17% after the retailer posted second-quarter earnings way below analysts’ expectations as heavy markdowns used in spring to clear unsold merchandise weighed on profits.

Global slowdown… Investors are increasingly worried about a global economic slowdown as weaker-than-expected data in China deepened the gloom in the world’s second-largest economy. Official data published Wednesday showed growth of China’s industrial output slowed to 4.8% in July from a year earlier, the weakest growth in 17 years.

Adding to the fears is Germany’s negative GDP print, which raised the risk that Europe’s largest economy is on the verge of falling into a recession. Euro zone GDP also grew by just 0.2% quarter on quarter, a significant slowdown from the 0.4% growth in the first quarter.

The U.S. decided to delay tariffs on certain Chinese goods while outright removing some items from the tariff list, the United States Trade Representative announced Tuesday. Wall Street cheered the news, with the Dow jumping as much as 529 points before settling to finish the day 372 points higher.

President Donald Trump said Tuesday that the move was designed to avoid any potential impact on holiday shopping ahead of the Christmas season. He added China would very much like to make a trade deal.


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There are still seven “structural issues” the U.S. needs to settle with China through negotiations, White House trade advisor Peter Navarro told Fox Business Network on Wednesday. These issues include cyber intrusion into U.S. business networks, forced technology transfer, intellectual property theft and currency manipulation, he added.

China’s Commerce Ministry said Vice Premier Liu He had spoken by phone with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Tuesday and they agreed to talk again in two weeks.



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U.S. Mortgage Debt Hits Record


◊ U.S. Mortgage Debt 2019 ◊


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◊ Business & Financial News – Stock Market News Today ◊ — U.S. mortgage debt reached a record in the second quarter, exceeding its 2008 peak as the financial crisis unfolded.

Mortgage balances rose by $162 billion in the second quarter to $9.406 trillion, surpassing the high of $9.294 trillion in the third quarter of 2008, the Federal Reserve Bank of New York said Tuesday.

Mortgages are the largest component of household debt. Mortgage originations, which include refinancings, increased by $130 billion to $474 billion in the second quarter. The figures are nominal, meaning they aren’t adjusted for inflation.

“The big picture is that when you look at mortgages, which is the biggest piece of [household debt], it still looks pretty healthy,” said Michael Feroli, chief U.S. economist at JPMorgan Chase, noting that while household debt has grown, so have incomes.


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The milestone for mortgage debt has been long in the making. Americans’ mortgage debt dropped by about 15% from the 2008 peak to the trough in the second quarter of 2013 and has climbed slowly since then.

Total household debt has been on the rise since mid-2013. It rose by 1.4% from the first quarter to $13.86 trillion, the 20th consecutive quarter of increase.

Still, the household debt picture is much different in 2019 than it was 11 years ago, since lending standards are tighter and less debt is delinquent today.

The second quarter saw a steep drop in the 30-year mortgage rate, which boosted borrowers’ incentive to take out a mortgage or refinance. The average rate on a 30-year fixed-rate mortgage dropped below 4% in May for the first time since early last year.

“What’s more interesting is when you look at the service burden, we don’t have more debt,” said Diane Swonk, chief economist at Grant Thornton.

Still, the housing market has been crimped by low inventory and high prices. Home prices hit a new nominal peak in September 2016 and have continued to climb since then.

Alongside higher home prices, a factor behind rising mortgage debt balances in the second quarter could be homeowners tapping into home equity for cash when they refinance.


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Refinancing accounted for about half of new mortgages in the second quarter, according to Guy Cecala, chief executive at Inside Mortgage Finance, an industry research group.

That represents a “mini refinancing boom” since the refinancing share of new mortgages was about 30% in 2018, when rates were rising, Mr. Cecala said.

Borrowers who refinanced in the second quarter and chose the option to cash out withdrew an estimated $17.5 billion in equity out of their homes, according to Freddie Mac, a mortgage-finance company. While that was $2.1 billion higher than the second quarter of last year, it remains well below the prerecession peak of $84 billion cashed out in the second quarter of 2006.

“American homeowners are being very prudent in liquidating home equity,” said Sam Khater, Freddie Mac’s chief economist, citing the scars of the last recession.

Mortgages remain the largest form of household borrowing but have become a smaller share of total debt since the late 2000s as consumers take on more automotive and student loans.


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Despite the higher debt loads, Americans appear to be keeping up with their payments. The report found that 95.6% of balances were current, the highest level of the current expansion.

In the second quarter, Americans continued to borrow more for cars and their credit-card balances rose, although student debt declined slightly.

Outstanding student loan debt was $1.48 trillion in the second quarter, down $8 billion from the first quarter of this year. Student loan balances typically decline or stagnate in the second quarter before picking up in the third at the start of the academic year.


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Xiaomi: The Stock’s Price Has Steadily And Consistently Declined Over The Past Year… The Question Is Why?


At the end of its most recent day of trading, Xiaomi’s stock was down to around $1.15 (USD) a share, just a hair above half of what it debuted on its first day on the market nearly a year ago. As a result, Xiaomi’s total market capitalization is around $28 billion.

The stock’s price has steadily and consistently declined over the past year with very little fluctuation. That suggests most investors don’t see a bright future for a company many thought was poised to take over the smartphone-as-a-commodity market. The question is why?



… when you’re talking about a corporation that makes and sells products through hundreds of verticals in dozens of countries around the world which are then subject to their own micro and macroeconomic forces, things can get complicated quickly…

Equally, to blame individual phone models or one particular decision by the company is unhelpful—knee-jerk stock movements perhaps can be attributed to such things, but not long-term trends. Looking at the basic financials, Xiaomi isn’t doing terribly, either: the company has reaped a net profit for the last four consecutive quarters.

What do we know about the smartphone market that could cause a company like Xiaomi to fail, though? … For one, we know it’s plateauing. In 2017 and 2018, the global smartphone market actually shrunk, and in 2018 the rate of shrinkage actually increased. The data we have to date shows this trend isn’t abating in 2019, either.

That’s seriously bad news for a company that has positioned itself as driven by the expansion of the global smartphone market to new regions and demographics—Xiaomi has relied on the notion that global smartphone sales would grow and create an ever-larger pie to slice up. Now, that trend is reversing.

There’s also the continued pressure Xiaomi has faced from competitors—some old, like Huawei and its Honor sub-brand—and some new, like Oppo’s Realme, which seeks to directly undercut Xiaomi’s Redmi line.

This isn’t to mention Vivo, Samsung, LG, and the various regional brands available in India and China, Xiaomi’s largest markets. The competition didn’t take long to figure out what Xiaomi was doing right—and copy it. And it turned out what Xiaomi was doing wasn’t actually very special: building smartphones with good components and then pricing them to razor-thin margins.

XiAnd when it comes to the company’s services, in a world full of highly competitive online and cloud options for consumers which are all accessible on Xiaomi’s own phones, the same problem arises: why choose Xiaomi???…

This, I think, gets to the heart of the issue: Xiaomi isn’t as special as all the hype it initially received suggested. Xiaomi makes a commodity—smartphones—and it makes them very well. And perhaps in China, its ecosystem of products and services are compelling and competitive enough to truly stand apart. But in the rest of the world, particularly the west, online retail, services, and consumer products at large are highly evolved industries.

xiaomi-stock-news-price

And with Xiaomi’s core commodity facing a shrinking market, it seems less likely than ever that its repeated promises to come to America will be realized, even as it now attempts to move into Europe.

Xiaomi, then, may be priced by investors as what it increasingly seems to be: just another company building affordable smartphones.




Xiaomi Corp Company Profile:

XIAOMI CORPORATION is a China-based investment holding company principally engaged in the research, development and sales of smartphones, Internet of things (IoTs) and lifestyle products, the provision of Internet services, and investment business. The Company mainly conducts its businesses through four segments.

The Smartphone segment is engaged in the sales of smartphones. The IoT and Lifestyle product segment is engaged in the sales of other in-house products, including smart televisions (TVs), laptops, artificial intelligence (AI) speakers and smart routers; ecosystem products, including IoT and other smart hardware products, as well as certain lifestyle products.

The Internet service segment is engaged in the provision of advertising services and Internet value-added services. The Others segment is engaged in the provision of repair services for its hardware products. The Company distributes its products in domestic market and to overseas markets.

First Trading Day Of August: U.S. Stock Futures Pause Following Fed Rate Cut


The Fed cut interest rates by 25 basis points on Wednesday — its first cut in more than a decade — citing “global developments” along with “muted inflation” as reasons for easing monetary conditions.

However, Chairman Jerome Powell told reporters in a news conference following the Federal Open Market Committee’s rate decision that the central bank’s rate cut was a “midcycle adjustment,” hinting that further rate cuts later this year were not a sure thing.

That comment led to a 333-point drop on the Dow, its biggest one-day drop since May 31. The S&P 500 and Nasdaq dropped 1.1% and 1.2%, respectively, to end July.

“It was always going to be a tough job for the Fed to be as dovish as stock markets hoped,” Chris Beauchamp, chief market analyst at online trading firm IG, wrote in a note. “The sense of disappointment was almost inevitable.”


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In off-hours trading, shares in chip maker Qualcomm fell 7% after it reported its earnings Wednesday and cut its full-year forecast for global smartphone sales. Prudential Financial ’s shares dropped 5.2% after the company posted a slight increase in adjusted operating earnings.

General Motors ’s shares rose 2.9% after the car maker reported second-quarter results that beat expectations. Shares in Verizon Communications rose 1.7% premarket after the company said it added more wireless customers than some analysts expected in its second quarter.

Siemens’s shares fell 4.7% after the German industrial giant reported a drop in its quarterly profit and said a weakening global economic environment was hurting its key industrial businesses.


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Royal Dutch Shell ’s shares slid 5.5% after the energy giant said its profit fell. The company cited lower oil and gas prices and weaker refining margins, outweighing a rise in production.

In Asia, both China’s benchmark Shanghai Composite Index and Hong Kong’s Hang Seng fell 0.8%. The latest round of U.S.-China trade talks concluded Wednesday without any compromise, though both sides described the talks as constructive. The next round will be held in September.

U.S. stocks fell Wednesday after Fed Chairman Jerome Powell disappointed investors when he rolled back expectations for future interest-rate cuts…

The 10-year U.S. Treasury yield edged down Thursday to 2.020%, from 2.034% Wednesday. Yields rise when bond prices fall. The WSJ Dollar Index, which measures the currency against a basket of its peers, climbed 0.2%.

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In commodities, global benchmark Brent crude fell 1.3% to $64.23 a barrel. Gold dropped 1.5%. The British pound was down 0.4% against the dollar on Wednesday, hovering near historic lows. The Bank of England on Wednesday left interest rates unchanged.

The real worry is the strength of the pound,” Kerstin Braun, president of international trade-finance firm Stenn, said in a note. “Regardless of the Bank of England’s actions, there will still be a downward pressure on sterling.”


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A lower pound rate will benefit U.K. exporters, but the bigger impact across the board is likely to be in raised prices for consumers on imported items such as food and fuel, Dr. Braun said. Data on U.S. manufacturing are also expected Thursday.

Pfizer Agreed To Merge Its Off-Patent Drugs Business With Mylan


Pfizer and Mylan are betting that combining Pfizer’s off-patent business, called Upjohn, with Mylan—known for the EpiPen emergency allergy shot—will provide a pathway to reignite sales growth.

Shareholders of Pfizer will own 57% of the new business and the rest of it will be owned by shareholders of Mylan. The new company is expected to have between $19 billion and $20 billion revenue on a pro forma basis.

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The deal brings together two businesses whose sales have slowed since former big sellers lost patent protection and began facing lower-priced competition. For Pfizer, these include Lipitor cholesterol pills and the male-impotence drug Viagra.

Pfizer shares fell 2.9% to $41.82 in morning trading Monday, while Mylan gained 13% to $20.85. Talks of the deal were first reported by The Wall Street Journal on Saturday. The deal could trigger further changes in the generic-drug industry, shaken by competition from Indian makers and under pricing pressure from the groups in the U.S. that buy and distribute the drugs and have been getting bigger.

The squeeze has hurt the sales—and shares—of Mylan and other leading generic drugmakers, notably Teva Pharmaceutical Industries Ltd. Mylan stock has dropped by about 75% from its high in the spring of 2015.

The new company, which will be renamed and rebranded, will be based in the U.S. Mylan is incorporated in the Netherlands but run from Pittsburgh. Pfizer’s Upjohn off-patent drugs business is based in Shanghai.

The deal would further Pfizer Chief Executive Albert Bourla’s efforts to focus on patent-protected prescription drugs and vaccines. Pfizer is in the later stages of developing a number of new products, each of which could surpass $1 billion in yearly sales if approved, accelerating growth.

Michael Goettler, who runs Pfizer’s off-patent drugs business, will become chief executive of the combined company, and Mylan Chairman Robert Coury would be executive chairman. Rajiv Malik, current Mylan President, who will serve as president.

Mylan Chief Executive Heather Bresch will retire after the deal closes, which is expected to happen in the middle of 2020, the companies said Monday. Ms. Bresch, who has been with Mylan since 1992, became the pharmaceutical company’s chief executive in 2012. Ms. Bresch appeared before Congress in 2016 when Mylan drew criticism from patients, doctors and lawmakers for raising the price on EpiPen nearly 550% between 2007 and 2016.

Trading›

In May, Mr. Bourla broached the idea of a combination with Mr. Coury, a person familiar with the deal said. Earlier, Pfizer had explored spinning out its off-patent drugs business, which it calls Upjohn and is based in Shanghai, and listing it on the Hong Kong stock exchange.

The deal announced Monday is expected to be tax free to Pfizer and Pfizer shareholders, and taxable to Mylan shareholders. The new company intends to initiate a dividend of approximately 25% of free cash flow beginning the first full quarter after close.

Pfizer also reported its second-quarter results Monday. The company’s profit rose 30% to $5.05 billion on revenue that slipped 1.5% to $13.26 billion. Of that revenue, $2.81 billion came from the Upjohn business, which was down 11%.

Upjohn’s products, which besides Lipitor and Viagra include painkiller Lyrica, were once household names and generated billions of dollars in yearly revenue for Pfizer, helping make it one of the world’s biggest drugmakers by sale.

Currently the New York-based Pfizer is combining its consumer-health business with GlaxoSmithKline PLC’s in a joint venture that will eventually be spun off. Last month it agreed to buy cancer drugmaker Array BioPharma Inc. for $10.6 billion. Mylan’s board, meanwhile, has been conducting a strategic review as the company tries to revive sales by moving into more complex and higher-price generics and copies of biotech drugs.

Mylan management has touted the company’s pipeline of new products. Yet Wall Street has cooled on the company in recent years in large part because of the competition that has emerged for its top-selling product, the EpiPen.

Mylan reported $2.5 billion in first-quarter sales, down 7% from a year earlier. Mylan also is burdened by roughly $14 billion in debt, much of it accumulated from deals for other drugmakers like Sweden’s Meda.

The new company will have about $24.5 billion in outstanding debt when the deal closes. Mylan is also among several generic drugmakers under investigation by federal prosecutors and state attorneys general probing potential collusion to fix the prices on some medicines. Mylan has said it knows of no evidence of wrongdoing.

Pfizer and Mylan already work together. Pfizer makes EpiPen injectors for Mylan. And the two companies jointly make and sell generic drugs in Japan.

Financial Markets News: Top 5 Things to Watch This Week


1. U.S. Jobs Report.

In a big week for economic data the U.S. jobs report for July will steal the spotlight, with a consensus forecast for the economy to add 160,000 jobs, slowing from 224,000 in June. The unemployment rate is expected to tick down to 3.6%, while average hourly earnings are forecast to rise 0.2% month-on-month and 3.2% year-on-year.

Market watchers will also get updates on manufacturing, trade, pending home sales, personal income and consumer confidence this week. The bulk of the data will come after the Fed meeting and will confirm whether a rate move was necessary as investors try to gauge the monetary policy outlook for the rest of the year.

Elsewhere, euro zone data on Wednesday is expected to show that growth slowed in the in the second quarter, while an inflation report the same day is expected to indicate that inflation remains below the ECB’s target of just under 2%.


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 2. BOE, BOJ Meetings.

In a busy week for central bank meetings, the Bank of England is expected to keep rates on hold at its meeting on Thursday, as policymakers wait for the fog of Brexit to clear. Investors will be watching for the BOE’s assessment of the British economy‘s current downturn, and how it might respond in the event of a hard Brexit under new Prime Minister Boris Johnson.

Sterling has fallen more than 5% since May, largely on fears of a no-deal Brexit. Johnson, less than a week into the job, has already clashed with Brussels after he again called for the withdrawal deal to be rewritten and vowed to take Britain out of the EU on Oct. 31 regardless.

The Bank of Japan is also expected to hold steady when it delivers its policy decision on Tuesday, but could reinforce its commitment to keep interest rates at rock bottom. The European Central Bank’s decision to hold last week gives the BoJ some breathing room amid a shift to a more dovish stance by central banks worldwide.


STOCK MARKETS ›

3. Federal Reserve Decision.

The Fed is widely expected to cut interest rates for the first time in more than a decade when it delivers its latest monetary policy decision on Wednesday. Money markets have priced in a quarter percentage point rate cut, after expectations for a half percent cut briefly soared mid-month, before pulling back.

The central bank has faced repeated criticism from President Donald Trump over its rate increases and the ongoing reduction of its balance sheet. Trump believes the measures are holding back growth.

That balance sheet reduction, known as quantitative tightening, is set to end in September, but with only a month to go, why wait? Many Fed policymakers are leery of having two policy tools — interest rates and balance sheet size — working at cross-purposes.


4. Trade Talks.

Trade talks between the U.S. and China are due to resume on Tuesday with U.S. trade representative Robert Lighthizer and Treasury secretary Steven Mnuchin travelling to Shanghai. Vice Premier Liu He is expected to lead the talks for China.

With Trump’s November 2020 re-election campaign not in full swing yet and Wall Street at record highs, Trump may not be feeling much pressure for the ‘big beautiful deal’ he has touted but markets will still want something.

The previous round of talks collapsed in May and Trump increased tariffs on $200bn of Chinese imports to 25% from 10% and threatened to slap 25% tariffs on a further $300bn worth of products.


INSIGHTS ›

5. Earnings.

Investors can look forward to another slew of U.S. earnings this week with 170 companies listed on the S&P 500 set to report results, including Apple, General Electric , Spotify , Qualcomm , Verizon , General Motors and ExxonMobil.

Apple’s fiscal third quarter earnings will be in focus as investors wait to see if handset sales have improved, particularly in China amid the ongoing U.S.-Sino trade dispute. Apple reported that quarterly sales dropped 5% from a year earlier in the previous quarter, largely due to weak growth in China where iPhone sales fell by 17%.

The tech giant’s services business, which has helped drive profits, will also be closely watched. Apple’s stock price has climbed 33% this year, closing Friday’s session at $207.74.



 



 

Best Cheap Stocks To Invest In 2019 … {Warren Buffett Portfolio}



◊ Cheap Stocks To Buy Now ◊



1- Synchrony Financial ($36.60), a major issuer of charge cards for retailers, was spun off of GE Capital in 2014. It’s both a lender and a payments processor – like another Buffett stock, American Express (AXP) – but it caters to customers who skew more toward the middle and lower end of the income scale.

But SYF doesn’t jibe only with Buffett’s affection for credit-card companies and banks. It also appeals to his keen love of a bargain. Today, SYF trades at a 26% discount to its own five-year average forward P/E. It’s 56% cheaper than the S&P 500.

Berkshire initiated a position in SYF during the second quarter of 2017, paying an estimated price per share of $30.02. It’s up more than 18% from that level, and that’s before including dividends.

Analysts forecast SYF to deliver average annual earnings growth of 16.5% over the next half-decade, according to Refinitiv data.



2- Bank of New York Mellon ($47.50). Warren Buffett’s stocks have been increasingly peppered with banks over the past several quarters, but his interest in Bank of New York Mellon ($47.50) dates back to 2010 and the early innings of the current economic expansion.

Financial-sector stocks were generally cheap in the aftermath of the financial crisis. BK remains attractively priced to this day. Trading at just 10.4 times expected earnings, shares offer a discount of 23% to their own five-year average price-to-earnings ratio, according to data from StockReports+ from Refinitiv.

But wait, there’s more. BK is almost 40% less expensive than the S&P 500 on an expected-earnings basis. (The S&P 500 currently goes for 17.2 times projected earnings, according to Refinitiv.)

Warren Buffett last added to his BK stake in the fourth quarter of 2018 when he increased Berkshire Hathaway’s investment by 3%, or more than 3 million shares. With a total of 80.9 million shares, BRK.B owns 8.5% of all shares outstanding, making it BK’s largest investor by a decent margin, according to data from S&P Global Market Intelligence.



3- Wells Fargo ($49.15) is easily among the most troubled Buffett stocks. Buffett initiated his position back in 2001, and he’s stuck by the nation’s third-largest bank by assets despite a spate of scandals. Indeed, BRK.B remains WFC’s largest shareholder with 9.8% of all shares outstanding.

Opening phony accounts, modifying mortgages without authorization and charging customers for auto insurance they did not need are just some of the bad news WFC investors have had to contend with since 2016.

“If you look at Wells, through this whole thing they’re uncovering a whole lot of problems, but they aren’t losing any customers to speak of,” Buffett told Financial Times in an April interview.

On the bright side, headline risk — and extra scrutiny from federal regulators — has kept WFC stock cheap. Shares trade at just 9.2 times expected earnings. That’s 25% below their own five-year average and 47% less expensive than the S&P 500. The dividend yield of 4.0% only sweetens the pot. Analysts forecast WFC to deliver average profit growth of 8.5% a year over the next five



INSIGHTS ›


4- American Airlines ($31.20). As mentioned repeatedly, Buffett became an airline-stock convert in 2016, when he began taking stakes in four major U.S. carriers, among them American Airlines ($31.20).

American Airlines, unfortunately, hasn’t done much for the Oracle of Omaha, who first bought shares during the third quarter of 2016. Since the start of Q4 of that year, AAL shares have delivered a loss of 9% – or less than 7% once you factor in the airline’s small dividend. That includes a 35% drop since 2018 spurred by a host of issues, including fuel prices, labor costs and the grounding of Boeing’s (BA) 737 Max aircraft in the wake of a deadly Ethiopian Airlines crash.

On the other hand, the share-price decline has put AAL well into value territory.

The stock trades at less than six times forward earnings – a 64% discount to the S&P 500, and an 11% discount to its own five-year average. Not bad, considering that the analyst community thinks the airline is ready to reverse its fortunes. They’re projecting 16.3% average annual profit growth over the next half-decade.



5- Phillips 66 ($102.30). Buffett first bought shares in the oil and gas company in 2012. But despite having heaped praise on PSX in the past, Buffett has dramatically reduced his stake over the past year. Still, Berkshire retains 1.2% ownership of all Phillips 66 common shares outstanding.

That doesn’t mean Phillips 66 isn’t a good fit for a diversified portfolio, especially one lacking in cheap energy-sector stocks. With shares changing hands at just 9.7 times projected earnings, PSX offers a 29% discount to its own five-year average forward price-to-earnings multiple. It’s a whopping 44% cheaper than the S&P 500.

Today Is A Good Time To Invest In Latin American Mining


After Latin American countries gained independence, roughly 200 years ago, international mining investors had to change their approach. But the lure of Latin America’s mining sector remains just as strong. It has the planet’s largest reserves of copper, lithium and silver with plenty of gold to boot. While modest local demand – it has less than 10% of both world population and GDP – makes it a natural exporter.

Latin America has emerged as a mining-friendly jurisdiction with a wide range of international mining companies listed on Canadian, US, Australian and British stockmarkets. The development of solid democracies across the region since the 1980s has allowed many Latin American countries to finally develop fair systems to manage international mining investment.

The best thing about Latin America for mining investors is that it is incredibly rich in base and precious metals. The region’s mining powerhouses of Chile, Peru, Brazil and Mexico are particularly blessed. According to the US Geological Survey, Chile has the world’s largest reserves of both copper and lithium and the seventh-largest silver reserves.


INSIGHTS ›

Peru has the world’s largest silver reserves, third-largest copper reserves, third-largest zinc reserves, fourth-largest nickel reserves and fifth-largest gold reserves. Mexico has the world’s fourth-largest zinc reserves, fifth-largest lead reserves, sixth-largest copper reserves, sixth-largest silver reserves and is also a top-ten gold producer. Finally, Brazil has the world’s second-largest reserves of iron ore, third-largest reserves of nickel and fourth-largest reserves of tin and seventh-largest reserves of gold.

Outside of the established powerhouses, you also have world-class metal deposits scattered around the region. So, for example, the Dominican Republic has the world’s third-largest gold mine, while Guatemala has its second-largest silver mine. Argentina and Bolivia form part of the ‘lithium triangle’ with Chile that together holds around 54% of global resources -that is to say potential reserves. While Bolivia also has top ten reserves of zinc and lead.

Moreover, it is likely that Latin America has even more mineral wealth than the official statistics suggest as a mix of political and economic factors have prevented international miners from extensive exploration in Argentina and Ecuador. Given that most of Peru and Chile’s largest mines are found in the Andes, it seems reasonable to suppose that their neighbour’s stretches of the mountain range are also rich in minerals.

Latin America isn’t just rich in metals – it’s rich in the right metals. Copper and lithium have exciting medium-term prospects while gold miners present an interesting opportunity. That’s confirmed by in a recent study from the market intelligence division of ratings agency, S&P Global, which notes that “for the first time since 2014, base metals matched gold as the top Latin American exploration target, with each garnering 42% of planned spending.” The rise in base metals exploration is being driven by bullish long-term views on copper.

As the commodity supercycle began to unwind in 2012, investors turned sour on copper. Its rise had been powered by massive Chinese demand but conventional thinking figured that the infrastructure glut in the Middle Kingdom, combined with efforts to move its economy away from heavy industry, would limit future global copper use.

However, the rapid growth in electric vehicles has transformed the outlook for the red metal. A battery-powered electric vehicle uses about 83 kg of copper compared to just 23 kg in an internal combustion engine. Hybrid vehicles, like the Prius are normally somewhere in the middle.

Consultant McKinnsey estimates that yearly electric vehicle sales will hit 4.5 million in 2020, up from 1.2 million in 2017. That would still just be 5% of annual light electric vehicle sales, leaving plenty of room for further growth. Copper has been hit by worries of a trade war between China and the US, and prices are still 40% below their 2011 peak.

Another clear winner from the transition to low carbon energy systems is lithium. It’s already established as the battery of choice for electric vehicles. While the search for renewable energy’s holy grail – a cheap efficient battery that can store excess electricity produced by intermittent sources such as wind farms and solar panels – may yet give lithium another boost.

At present Australia has managed to become the world’s largest producer despite the fact its lithium is made mined from ore – a more expensive process than extracting it from the lithium-heavy salt brines found in the lithium triangle. That’s because historically Australian has been more welcoming to lithium investors than Chile, which treats the white metal differently to copper, Argentina or Bolivia. Now that’s starting to change, with Argentina in particular receiving a mix of international investment.

Finally, you have gold. Alex Black, a mining industry veteran who helped investors strike rich in Peru when he turned Rio Alto, his last company, from a penny stock gold explorer into a billion-dollar miner, told us that he’s never seen such tough financing conditions. “Trying to raise $20million for mine development now is like asking for $250million in 2014. We have more than 5 million ounces and a market cap of less than $50million, so investors can get an ounce of gold for under $10.”

Of course, a CEO is going to talk up his company to a journalist but the S&P Global report backs him up. “Although financings are moving in the right direction, the $9.6billion raised in 2017 and $9.4billion raised in 2018 remain well below the $19.4billion raised in 2011.

Capital offerings targeted primarily for exploration purposes in 2018 were down slightly compared with 2017 and 2016, with the totals for all three years returning to 2012 levels, when equity markets were just beginning to shun the industry.” One theory is that the proliferation of cannabis stocks and crypto currencies have diverted more speculative capital from gold explorers. Gold’s main use is not industrial, so it’s impossible to know if the price will be higher or lower in a few years’ time.


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Mining investors judge potential projects on ‘above ground’ and ‘below ground’ risk. Latin America’s geology means it has plenty of exciting mining projects yet the above ground risks have often made it difficult them difficult to realise. Latin America was blighted by political instability ever since independence, with frequent periods of military rule and most countries only returning to democracy within the last 40 years.

The political instability hindered mining investment in the region because you need a relatively stable and efficient state to create a fair mechanism for the ongoing transaction between the country’s citizens – the ultimate owners of the metal – and the mining company Mining has a massive environmental impact on local citizens, while there are also political and economic consequences of extracting a non-renewable resource to export for profit.

In many Latin American countries, the state’s role as arbiter is complicated by the fact that strong indigenous populations have alternative concepts of land ownership, such as ancestral community territories. Those community rights are recognised in many Latin American post dictatorship constitutions but not clearly defined, leading to a legal standoff as miners and locals vie for a greater share of profits in proposed projects.

These political issues can have a direct hit on investors’ pockets. Investors in US-listed precious metals miner, Tahoe Resources, learnt that first-hand when it was forced to cease operating Escobal, the world’s second largest silver mine, because of opposition in Guatemala. Its shares plummeted and was bought out by a rival for a knockdown price earlier this year.

Even well-established mining jurisdictions, such as Peru, can have problems. For example, one of the country’s most important mining investments, the $7billion Las Bambas copper mine, has spent two months this year under a blockade from angry members of the neighbouring communities.

Those costly lessons have taught mining companies that they need to get community relations right. That begins when they assess a potential project, as there are big differences in local attitudes to mining. For example, central Peru, which has a longer mining tradition, typically sees less protests than the north or south of the country. But ultimately miners need to follow the minerals, so it’s also important for investors to pick firms that have a well-thought out community strategy.

Last month in Lima we interviewed Victor Gobitz, CEO of Buenaventura, a Peruvian non-ferrous metals miner, and he explained how the firm has learned to work with local groups. “If a miner just tries to exchange money for lands it is a big mistake. You need to create a long-term relationship based on generating employment for local workers and providing some social infrastructure such as drinking water, energy, sewerage and so on.”

Not only are miners becoming more adept at handling these issues, there are also signs that most Latin American states are improving their ability to regulate this complex transaction between investors and the citizens. The Fraser Institute is a Canadian think tank that publishes a global ranking of mining jurisdictions. It judges both the mineral endowment and the policy framework to score the overall attractiveness for investors.

Latin America and the Caribbean was the standout performer in the latest report, with the region’s median investment attractiveness jumping 16% in 2018, more than any other region. That’s even more impressive considering the negative weighting of disaster cases such as Venezuela, Nicaragua and Guatemala.

Unsurprisingly Chile, Peru and Mexico were in the top three. However, Ecuador and Colombia also made big improvements, jumping into the top half of the regional table and overtaking Brazil. However, just as with community protests, the reality of mining policy can differ greatly within countries. Argentina’s national score was poor, dragged down by the extreme anti mining policies of some individual provinces, yet others, such as Catamarca scored excellently. So, investors need to understand the local reality of a company’s projects.


INSIGHTS ›

This improving policy landscape isn’t down to luck. It reflects the trend of general improvement in Latin American institutions as the young democracies across the region begin to mature. Barring sad cases, such as Venezuela, most other states in the region are gradually becoming more efficient, less bureaucratic and now, thanks to the repercussions of long-running, region-wide graft scandal, slightly less corrupt.

The fact that industry insiders are targeting Latin America for future projects shows that the region is fertile ground for profit-hunting investors.

Economic Growth Slowed In Second Quarter


U.S. economy slowed but still grew at a solid clip in the second quarter, gross domestic product, a broad measure of goods and services produced across the economy, rose at a 2.1% annual rate in the second quarter, adjusted for seasonality and inflation, down sharply from a 3.1% pace in the first quarter, the Commerce Department said Friday.

Businesses took a more cautious approach in the second quarter, causing a key gauge of their investment to decline for the first time since early 2016. Nonresidential fixed investment—which reflects spending on software, research and development, equipment and structures—fell at a 0.6% rate, compared with a 4.4% rise in the first quarter.


ECONOMIC INDICATORS ›

One factor that generated uncertainty for businesses in the second quarter was the international trade situation, as the U.S. increased levies on Chinese goods and threatened, but didn’t implement, tariffs on Mexican imports.

Joe Baiz, president of Phoenix-based plastic-injection-mold manufacturer 4front Manufacturing, said business “slowed a little bit in the second quarter” as worries over trade policy generated “a lot of fear of the unknown.” Trade itself was a drag on growth, as exports fell at a 5.2% rate while imports rose slightly, expanding the deficit.

Shoppers picked up the slack however. Consumer spending, which accounts for more than two-thirds of the economy, rose at an inflation-adjusted annualized rate of 4.3% in the second quarter, up from its first-quarter pace of 1.1% and marking the strongest reading since late 2017.

“The simple proposition is that the trade war made manufacturing weaker and the tax cut made consumer spending stronger,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

The White House blamed the Federal Reserve for the growth slowdown. President Trump said on Twitter Friday morning that the 2.1% figure was “not bad considering we have the very heavy weight of the Federal Reserve anchor wrapped around our neck.”

Mr. Trump has criticized the central bank for holding interest rates steady so far this year and he has repeatedly called for rate cuts to boost growth.

Friday’s report is one of the last major readings of the economy’s temperature Fed officials will see before their policy meeting July 30-31. They are prepared to cut their benchmark interest rate by a quarter percentage point from its current range between 2.25% and 2.5% and signal more reductions to come to bolster the U.S. economy at a time of cooling global momentum.

The divergent signals from strong consumer spending and weakening business investment in the second quarter leave a mixed picture. The economy remains supported by low unemployment and rising incomes, but slowing global growth, a strong dollar and trade uncertainties are weighing on the outlook.

“Combine all those together and you have the kind of [GDP] report that justifies a rate cut,” said Gregory Daco, an economist at Oxford Economics. Mr. Daco likened a rate reduction now to a vaccination shot for the economy and said that “you want to keep looking at the patient as you get into the fall.”

Some companies have tempered their outlook for this year due to worries about U.S. trade policy. Materials-science company Dow Inc. this week reported a decline in profit and lowered its guidance for capital expenditures.

“The macro environment is cautious, largely driven by geopolitical volatility and prolonged trade negotiations which continue today,” Chief Executive Jim Fitterling said Thursday. Earnings for the S&P 500 appear to have grown in the second quarter at their most anemic pace since mid-2016.

Earnings per share are expected to rise just 0.5% over second-quarter 2018, according to an estimate from financial-data firm Refinitiv, which combines analyst estimates with actual results from the 44% of companies that have already reported.

Housing was a headwind for growth for the sixth quarter in a row as residential investment fell at a 1.5% annual pace, despite falling mortgage rates in the April to June period.

Businesses also drew down inventories in the second quarter rather than replenished stock shelves, which subtracted 0.85 percentage point from the quarter’s overall GDP growth rate.


INSIGHTS ›

Government spending boosted overall growth, rising at a 5.0% annual rate in the second quarter, though that was partly a rebound from the effects of the federal government shutdown that started in the fourth quarter and stretched into late January.

Many economists expect growth this year of around the 2.3% averaged during the current expansion, which started in mid-2009 and this month became the longest on record. Fed officials’ median projection in June was for 2.1% growth from the fourth quarter of 2018 to the fourth quarter of 2019.

Falling Real Yields Signal Worry Over U.S. Economy


Stock Market News Today ◊ … Yields on U.S. government bonds have fallen broadly this year. But the decline in the yield on one particular type has been especially persistent and is, according to some investors, a sign of concern for the U.S. economy.

Since last fall, the yield on 10-year Treasury inflation-protected securities, a measure of what are known as real yields, has tumbled from a high of 1.154% to a recent low of 0.241%, the stingiest rate of return since November 2016.

Real yields are notable because they show the purchasing power investors can expect to obtain from government bonds after accounting for inflation. In recent weeks, they have fallen even as the more-closely-followed nominal 10-year Treasury yield has stabilized at just above 2%.

INSIGHTS ›

The continued decline in the 10-year TIPS yield is potentially worrisome because it is sometimes viewed as a gauge of economic growth expectations, one even more refined than the nominal yield.

At least in theory, “real yields and real growth should be tied together,” said Thomas Simons, senior vice president and money-market economist in the fixed-income group at Jefferies.

Because the TIPS yield removes the expected rate of inflation baked into the nominal Treasury yield, it can be seen as the baseline, or risk-free, rate of return investors expect from investing in the U.S. economy. Its decline, therefore, suggests investors are anticipating slower growth.

Some analysts warn about reading too much into the decline in real yields. While there is little question that low nominal and real yields reflect concern about the economic outlook, their divergence over a short period can reflect idiosyncratic factors such as slow summer trading.

One reason why real yields may have declined in recent weeks is that investors are buying TIPS as insurance against a surprise uptick in inflation as the Federal Reserve prepares to cut interest rates, said Jim Vogel, an interest-rates strategist at FTN Financial.

Even so, investors and analysts say there is a broad consensus that inflation won’t break above the Fed’s 2% target anytime soon and that low inflation expectations remain a major force pushing down nominal yields.

INSIGHTS ›

Apart from their status as economic barometers, real yields can also matter because of their influence on borrowing and investing decisions. In general, falling real yields should encourage businesses and consumers to borrow because the cost is lowered.

That impact, however, “is probably going to be marginal at best,” said Anthony Karydakis, an adjunct professor at New York University’s Stern School of Business. The reason, he said, is that corporate borrowing will likely be slowed by worries about trade tensions.

Consumers, meanwhile, pay more attention to nominal yields than real yields and could be dissuaded from borrowing anyway because of such factors as high home prices.

10 Emerging Businesses That Nobody Saw Coming…



Burgeoning Business… Global industry doesn’t stand still for very long, and there are quite a few disappearing industries — but what is taking their place? … We took a look around the business landscape and found several industries that seemed to appear from nowhere … at least to those who weren’t paying attention


1 – Corporate Wellness Services
A “corporate wellness service” is what companies bring in when they don’t want to pay more for health care — consultants, wellness fairs, and employee fitness incentives used to create healthier employees or at least get a company off the hook for their care. Annual growth for these services was 1.3% a year from 2011 to 2016, IBISWorld notes, and through 2021, this industry is projected to grow another 7.8% each year.

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2 – Professional Video Gaming 
Video game tournaments date back to the late 1970s, but e-sports as an industry wasn’t remotely feasible until the late ’90s. Consider that in 1998 there were nine tournaments; midway through 2019, there’s been 2,085, according to E-Sports Earnings, and the top-earning player has earned $3.7 million in prize money. Twitch-fueled, league-driven, NBA-beloved, ESPN-approved e-sports were valued at $500 million in 2016 by Goldman Sachs, which expects the market to grow into a $3 billion annual proposition.

Video Game Tester Jobs | Get Paid To Play Games!


3 – Online Food 
Let’s just start the timeline at June 2017. Sure, there were already grocers with online ordering and services such as Peapod and Instacart, but it was Amazon buying Whole Foods that really changed things. With Aldi, Costco, and Kroger jumping on with Instacart after the Amazon deal and Albertsons expanding delivery, annual growth expectations are now 30% annually, the Freedonia Group reports. Walmart says it’ll do 40%.

Keto Resources


4 – Robotic Mowers
Husqvarna crowed when it sold its 1 millionth robotic lawn mower in 2017, part of a global lawn mower market estimated at $26 billion in 2016 — but that was 23 years after its invention, reasonable growth considering a robotic lawn mower costs $600 to $3,500, the same price as a riding lawnmower. Would you pay that much extra to have someone else mow your lawn? Freedonia Group analyst Elliot Woo thinks you will, and that U.S. robotic mower sales in the will triple between 2016 and 2021.

Teds Woodworking


5 – Relaxation Beverages
They used to just call this tea, but relaxation drinks — the counterweight to energy drinks — first appeared in the mid-2000s and have spawned hundreds of options. These drinks expanded their corner of the beverage industry by 15.7% annually in revenue between 2013 and 2018, IBISWorld notes. The downer version of energy drinks has the potential to be as much of a convenience-store staple as their counterparts.

7 Minute Mindfulness


6 – Online Surveys
Online surveys are far less expensive than hiring a polling company or doing phone surveys (because who uses a phone as a phone?). That’s created a glut of online survey companies, with the industry seeing growth of nearly 12% annually since 2014, IBISWorld notes. Still, with just two companies accounting for 41% of the industry’s revenue, there’s room for growth.

Get Paid For Your Opinions! Real Survey Jobs


6 – Fracking
While the hydraulic fracturing process dates back to the 1800s, it wasn’t used in conjunction with horizontal drilling to extract oil and natural gas from shale until 1997. Even then, it was after 14 years of trying and still required a great deal of innovation in the 2000s to perfect. It’s been only about a decade since prices at U.S. gas pumps hit $4 a gallon, and the Bureau of Labor Statistics believes oil and gas extraction jobs will increase by more than 30% through 2026.

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7 – Drones
The Federal Aviation Administration didn’t permit small drones until 2016, but PayScale notes that now drone pilots can earn over $22 an hour as use grows from the military to construction, firefighting, crop inspecting, filmmaking, and package delivery. Insurance companies even used them after Hurricane Harvey to inspect damage. The drone market was around $14 billion globally in 2018, but is expected to hit around $43 billion by 2024.

Fan Page Robot


9 – Marijuana
The District of Columbia and 33 states have legalized marijuana in some form. Eleven states and D.C. have legalized it for recreational use. Though most governments are proceeding slowly, marijuana was a $10.4 billion industry in the U.S. in 2018 and employs more than 200,000 people full time.

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10 – Cryptocurrency Mining
This year marks the 10th anniversary of Bitcoin, the first cryptocurrency. Bitcoin alone has a market cap of more than $228 billion, and there are at least 17 others surpassing the $1 billion mark. But it takes a whole lot of energy to mine cryptocurrency — with units being created and handed out to “miners” using specialized hardware and software to take part in the decentralized record of transactions called blockchains. Some of the greatest business minds still aren’t convinced it isn’t a scam.

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4 Stocks To Buy Today … { August 2019 }


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< StockMarketNews.Today > … Stocks to buy in August 2019 … Here are 4 stocks we believe fit the bill and are worth considering for your portfolio:


1 – Cisco Systems (CSCO) is the dominant player in internet switches and routers, but about 40% of overall sales comes from steady revenue streams in its software and services businesses. Cisco’s $34.6 billion in cash and short-term investments gives it plenty of latitude to raise dividends or make acquisitions. The stock yields 2.5%. In May, the company reported that fiscal third-quarter earnings were 13% above the same period in 2018. And company executives said during a quarterly earnings call that Cisco has slashed its manufacturing in China, reducing potential damage from a trade war between the U.S. and China.


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2 – Danaher (DHR) is a health care equipment maker on a hot streak. Shares are up nearly 30% so far in 2019 and trade at 26 times projected year-ahead earnings. And yet, says Mike Bailey, director of research at FBB Capital Partners, the market doesn’t fully appreciate the growth potential stemming from Danaher’s recent mega-acquisition of General Electric’s biopharmaceutical business. The unit is a leading provider of instruments, equipment and software supporting the discovery, development and manufacture of complex, biologic drugs.


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3 – Walmart (WMT)… Not many retailers can give Amazon.com a run for its money, but Walmart is giving it a go. Analysts at CFRA bumped up their rating on the stock from “buy” to “strong buy” after the retailer reported boffo first-quarter earnings, including a 37% jump in U.S. e-commerce sales. The retailer also announced plans to introduce free next-day shipping on orders over $35. “We think the offer will help it take e-commerce market share from Amazon,” say CFRA analysts. They see the stock trading at $115 within the next 12 months.


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4 – Zoetis (ZTS)… Ahead of the 2020 election, talk of potential Medicare and Medicaid changes, among other things, has spooked many health care investors. But Zoetis, the world’s biggest animal health company, is immune to election-year rhetoric. Every major division of its business, which makes vaccines, medicine and health products for a diverse lineup of livestock and pets, expanded in 2018. Managers at Eaton Vance Worldwide Health Sciences fund like the firm’s predictable revenue and its growing overseas footprint.


 


 

PepsiCo Inc. Has Agreed To Buy South Africa’s Pioneer Foods Group Ltd. For $1.7 Billion


…Snack-and-beverage giant plans to use the purchase of South Africa’s Pioneer Foods to expand across the region… Pioneer Foods is one of South Africa’s largest producers and distributors of branded food and beverage products, and PepsiCo said it planned to use that market presence as a beachhead for expansion across the continent.

PepsiCo joins a slew of companies from retailers to hotel chains to beer makers that are expanding in Africa. The continent offers businesses the world’s fastest-growing population, a number of swiftly expanding economies and a growing middle class.

“We believe that the African continent represents a tremendous growth opportunity,” Eugene Willemsen, PepsiCo’s newly appointed chief executive for sub-Saharan Africa, said in an interview, citing the continent’s population and expanding economies.


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PepsiCo said it would pay 110 South African rand ($7.93) for each Pioneer share, a nearly 42% premium to Thursday’s closing price. The stock traded up 32% on Friday.

The deal is PepsiCo’s second-largest acquisition outside the U.S. since 2010. Last year, the company bought Israel-based SodaStream International Ltd. for $3.2 billion.

Pioneer, which has 22 food and beverage brands, mainly operates in South Africa but exports to more than 80 countries. It reported revenue of about $1.46 billion last year. PepsiCo doesn’t break out its sub-Saharan results; its unit that includes the region plus Europe reported $11.5 billion in revenue for 2018.

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PepsiCo said Pioneer’s products—especially cereals, juices and other African food staples—would be a good fit with its existing offerings in the region. Pioneer’s brands include juices such as Liqui-Fruit and Ceres, as well as Weet-Bix cereal and White Star maize meal flour.

“The portfolios are highly complementary in nature,” Mr. Willemsen said, adding that the focus will be on building up the company’s food business across Africa.

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PepsiCo also sees an opportunity to boost its manufacturing and marketing capabilities. Mr. Willemsen said the company would take advantage of the synergies between Pioneer Foods and PepsiCo’s wholly owned South African snack-food manufacturer, Simba (Pty) Ltd.

Pioneer’s beverage brands are quite well known in sub-Saharan Africa, said John Thompson, an analyst at Investec Asset Management in Cape Town, South Africa. That will give PepsiCo a leg up in tapping the growth expected in many African countries, he said. “If you’ve got that 15- or 20-year view, I don’t think you can go too far wrong.”

With the acquisition, PepsiCo said it would expand its sustainable farming program in Africa and work with local farmers to help boost yields, improve livelihoods, and preserve natural resources.


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The deal has been unanimously approved by the boards of both companies, but is subject to approval from Pioneer’s shareholders and regulators. The deal is expected to close by the first quarter of 2020.

U.S. Housing Starts Fall… Permits Hit Two-Year Low

StockMarketNews.Today — U.S. homebuilding fell for a second straight month in June and permits dropped to a two-year low, suggesting the housing market continued to struggle despite lower mortgage rates.

Housing starts decreased 0.9% to a seasonally adjusted annual rate of 1.253 million units last month as a rebound in the construction of single-family housing units was offset by a plunge in multi-family homebuilding, the Commerce Department said on Wednesday.

Data for May was revised slightly down to show homebuilding falling to a pace of 1.265 million units, instead of slipping to a rate of 1.269 million units as previously reported.


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Economists polled by Reuters had forecast housing starts dipping to a pace of 1.261 million units in June.

Single-family homebuilding, which accounts for the largest share of the housing market, increased 3.5% to a rate of 847,000 units in June, partially recouping some of May’s sharp drop. Single-family housing starts fell in the Northeast, but rose in the Midwest, West and South.

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Building permits tumbled 6.1% to a rate of 1.220 million units in June, the lowest level since May 2017. Permits have been weak this year, with much of the decline concentrated in the single-family housing segment.

The housing market hit a soft patch last year and has been a drag on economic growth for five straight quarters. It likely subtracted from GDP in the second quarter.

The sector is being hamstrung by land and labor shortages, which are making it difficult for builders to fully take advantage of lower borrowing costs and construct more affordable housing units. As a result, the housing market continues to struggle with tight inventory, leading to sluggish sales growth.


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The 30-year fixed mortgage rate has dropped to about 3.75% from a peak of 4.94% in November, according to data from mortgage finance agency Freddie Mac. Further declines are likely as the Federal Reserve has signaled it would cut interest rates this month for the first time in a decade.

A survey on Tuesday showed confidence among homebuilders increased in July. Builders, however, complained “they continue to grapple with labor shortages, a dearth of buildable lots and rising construction costs that are making it increasingly challenging to build homes at affordable price points relative to buyer incomes.”


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Permits to build single-family homes rose 0.4% to a rate of 813,000 units in June. Despite the increase last month, permits continue to lag housing starts, which suggests single-family homebuilding could remain sluggish.

Starts for the volatile multi-family housing segment dropped 9.2% to a rate of 406,000 units last month. Permits for the construction of multi-family homes plunged 16.8% to a pace of 407,000 units.

Citigroup Reports Profit: Net Income Rises 7%

◊STOCK MARKET NEWS TODAY◊

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Citigroup said Monday its second-quarter net income rose 7% from a year ago. Quarterly profit was $4.8 billion, up from $4.5 billion. Per-share earnings were $1.95. Analysts had expected $1.81 a share. Revenue at the bank was $18.76 billion, up 2% from $18.47 billion a year ago. Analysts polled by Refintiv had expected $18.5 billion.

Citigroup is the first of the big U.S. banks to report second-quarter results. The New York bank and its rivals have been under pressure in recent months. Tepid market volatility is hurting trading desks. The Federal Reserve has signaled it is ready to cut interest rates, which would likely hurt banks’ lending profitability.

Trading revenue at Citigroup was up 4% to $4.1 billion, but that included a one-time gain on the bank’s stake in a trading platform. Without that gain, Citigroup’s core trading revenue declined 5% from a year ago.

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On that basis, it would be the third straight quarter of declines in the trading unit. Banks have warned that despite record stock markets, clients have remained cautious, and weren’t paying their banks to help them put on big new bets.

The one-time gain in trading also flattered the bank’s earnings per share. Without it, the bank would have earned $1.83 per share.

Overall corporate and institutional banking revenue at Citigroup was flat for the quarter, at $9.72 billion. Investment banking revenue fell 10%, driven by a 36% drop in fee revenue from advising companies on mergers and acquisitions.


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But the bank generated solid growth from its consumer unit. Global consumer banking revenue at Citigroup was up 3% to $8.51 billion.

The bank’s U.S. retail presence lags behind peers in many respects, but Citigroup has been investing heavily to expand it, particularly through digital and mobile banking.

Revenue for U.S. consumer banking was up 3% to $5.16 billion, driven by a big pickup in Citigroup’s branded cards, where revenue grew 7% to $2.2 billion. The bank has been letting many of its promotional zero-interest-borrowing card offers lapse, leading to a revenue pickup.

Citigroup is trying to meet 2020 financial targets closely watched by investors, which makes this year’s results crucial. For the quarter, Citigroup produced a return on tangible common equity of 11.9%. The bank is aiming for a return of 12% this year.

In June, Citigroup won approval from the Federal Reserve to pay out another $21.5 billion to investors in dividends and buybacks in the next 12 months.

The bank continued to slash costs. Expenses fell 2% to $10.5 billion. Chief Executive Michael Corbat predicted investments in technology could improve efficiency by about $500 million a year.

Citigroup shares have led major banks with a 38% gain so far in 2019. The broader KBW Nasdaq Bank index is up 16% this year.

The Next Test For The Stock Market Begins This Week


◊ Stock Market News Today ◊ … The second-quarter earnings season begins in earnest, with Citigroup Inc., JPMorgan Chase & Co., Netflix Inc. and others giving investors an early look at how some of America’s biggest companies are coping with tepid economic growth and billions of dollars in tariffs.

Stocks have busted through records recently, rising thanks in large part to dovishness from the Federal Reserve. The central bank has positioned itself to cut interest rates this month for the first time since the financial crisis.

Investors’ outlook on rates has helped equities outdistance weaker growth around the globe that has been crimped by a continuing trade dispute between the U.S. and China, the world’s two biggest economies.

Now a bleak outlook for corporate earnings is being added to the mix. More than 80 S&P 500 companies warned that their second-quarter financial results will be weaker than initially expected, including online-streaming giant Netflix, software maker Adobe Inc. and industrial conglomerate Honeywell International Inc., according to FactSet.


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That is more than usual, analysts said, and puts the broad index at risk of facing its first period of two or more consecutive quarters of declining earnings since 2016. Analysts predict second-quarter earnings will contract by 3% from a year earlier, which would be the biggest earnings decline since the second quarter of 2016, according to FactSet.

Other investors say despite downbeat estimates, they expect second-quarter earnings to be flat compared with this time last year, if not a little higher. Analysts tend to be conservative with their earnings estimates, making it easier for companies to beat lowered expectations. This happened in the first quarter, with earnings contracting just 0.3% rather than the 4% analysts predicted at the end of March. Twenty-four companies in the S&P 500 have already reported, and 20 of them have beaten estimates.



“Even though the stock market is at an all-time high, expectations about earnings is very low. That sets you up for a very good market response to earnings,” said Andrew Slimmon, senior portfolio manager with Morgan Stanley Investment Management.

So far, the prospect of the Federal Reserve cutting interest rates sometime this year has given investors an incentive to buy stocks. The S&P 500 has climbed 20% this year, rallying on days central-bank officials suggested it would slash rates to help the U.S. grow despite trade tensions and a shaky global economy.


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That happened this past week, when Fed Chairman Jerome Powell sent a strong signal to investors during two days of congressional testimony that a cut could come as soon as this month. This year, major stock indexes have hit records for the first time since the fall, after more than recouping what they lost during a fourth-quarter rout last year.

Shell Aims To Become The World’s Largest Electricity Company


Shell aims to become the world’s largest electricity company without necessarily generating very much power…

The Anglo-Dutch company last month detailed its plans to transform into a cleaner business centered on selling electricity. Hoping to capture the most profitable part of the business, Shell’s power strategy will be light on assets and focus on trading electricity generated by others.


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Trading will sit at the heart of the integrated approach as a very important source of value,” Shell Chief Executive Ben van Beurden said at the company’s management day last month. “Of course we will be involved in generating electricity […] but we have a preference for being asset-light and balance our supply by providing electricity from other producers.”

Oil and gas will remain Shell’s core business, the company says, but it is aiming to be the world’s largest electric power company by the early 2030s.


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The shift presents challenges. Sizable companies already exist in the power industry, and generating power has historically produced smaller profits than oil-and-gas production, because utilities often carry more debt and are heavily regulated.

“The oil companies have always been used to high rates of returns with the production of crude oil,” said Paul Stevens, senior research fellow at Chatham House, a London-based think tank. “Those rates are just not available in power generation.”


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Shell says it hopes to achieve equity returns of between 8% and 12% from its power business, lower than the 12% to 15% target for its traditional oil-and-gas business.

The company currently is the second-biggest power trader in the U.S., with a trading desk that predominantly buys and sells electricity that other companies generate. Shell, however, doesn’t disclose its trading profits or profit margin on its power-trading business.

“Many utilities are hopeless at trading and marketing their power, so it makes sense to let them operate the power plants and have Shell market their power more efficiently,” said Craig Pirrong, a professor of finance at the University of Houston.

Shell’s pivot is part of a broad movement among European oil giants to show they can help meet global goals to reduce fossil-fuel emissions while continuing to churn out profits. It also is an acknowledgment that demand for oil, its chief moneymaker, is expected to peak sometime in the early 2030s, according to a host of studies.

The company’s recent interest in Dutch energy provider Eneco could serve as an asset-light model for where Shell’s power business might be heading.


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Earlier this year, Shell announced a joint bid with Dutch pension-fund manager PGGM for Eneco, a firm that sold around three times more power than it produced last year. The size of the bid wasn’t disclosed but analysts have estimated the company to be worth about $3.4 billion.

As electricity rapidly makes its way into domestic heating, transportation and industrial processes, more than a quarter of global energy demand by 2030 will be for electric power, according to Shell forecasts. That compares with 18% today and Shell’s forecast of as much as 50% by 2060.

Shell could play a leading role in new businesses such as electric charging points in fuel stations, said Nick Stansbury, head of commodity research at Legal & General Investment Management, a shareholder in Shell.

“What I am not yet convinced by is whether—in order to be good at power-market trading, be good at making money—they necessarily need to own and have on the balance sheet the renewable assets,” Mr. Stansbury said.


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Many of the oil industry’s biggest companies are investing in clean energy projects. France’s Total SA owns a majority share in U.S. solar-system maker SunPower and acquired French battery manufacturer Saft Groupe.

In the U.K., BP PLC acquired electric-vehicle charging company Chargemaster last year for about $170 million and invested over $20 million in fast-charging battery company StoreDot. Norway’s state-backed oil company Equinor and Italy’s ENI also have committed to large investments.

Overall, European major oil companies are allocating a fraction of their budgets to low-carbon investments, which accounted for a combined 7% of capital expenditures last year, according to investment research firm CDP.

Shell’s acquisitions in power include German battery company Sonnen, retail energy providers First Utility and MP2 Energy, electric-vehicle charging companies NewMotion and Greenlots, and U.K. energy technology company Limejump Ltd.


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Shell also has outlined an ambitious plan to share profits with investors, with a plan to pay at least $125 billion in dividends and share buybacks between 2021 and 2025. Mr. van Beurden has told The Wall Street Journal that the payouts will come from returns on investments the company already has made.

In the long term, those generous dividends could be at risk if the world’s switch to cleaner forms of energy changes pace. Oil giants’ ability to make high profits remains dependent on their core industries, and failing to embrace the change means they’ll eventually be forced out of the business, according to Chatham House’s Mr. Stevens.


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“The energy establishment is grossly underestimating the speed and depth of the energy transition,” he said. “I think it’s going to happen a lot faster and be a lot deeper.”

The World’s Biggest Diamond Mine⁠ Is Being Shuttered By Rio Tinto Group After Almost Four Decades


< Stock Market News Today > … Rio’s Argyle mine in remote Western Australia has transformed the sector since 1983 when the operation began supplying gems for both ends of the market. RBC Capital Markets and Panmure Gordon are among brokers, banks and competitors forecasting the closure could kick-start prices that have waned since 2011, according to PolishedPrices.com, an industry data provider.

Production at Argyle, about 2,600 kilometers (1,600 miles) northeast of the state capital Perth, is scheduled to end before the end of next year after finally exhausting its supply of economically viable stones, said Arnaud Soirat, Rio’s head of copper and diamonds.

“There is going to be a fair bit of supply which is going to come out of the market,” Soirat said in an interview Friday at the mine site. “In late 2020 we’ll be stopping operations and will start the rehabilitation of the site.”


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Argyle is best known as the source of about 90% of the world’s prized pink diamonds—rose-to-magenta hued stones that command among the sector’s highest prices. Sotheby’s auctioned the 59.6 carat “Pink Star”, mined by Rio’s rival De Beers, for $71 million in April 2017, a record auction price for any gem. While they attract most attention, the pink stones account for less than 0.01% of Argyle’s total output.

More than three-quarters of Argyle’s output is comprised of lower value brown diamonds, and the mine’s overall output sells for an average of between $15-$25 a carat, Canaccord Genuity Group Inc. estimated in 2017. That’s far less than the $171 a carat average price realized last year by De Beers.

The mine also is the biggest diamond producer by volume and that’s what has put the operation at the center of global oversupply. More than three-quarters of Argyle’s output is comprised of lower-value brown diamonds, and the mine’s overall output sells for an average of between $15-$25 a carat, Canaccord Genuity Group Inc. estimated in 2017. That’s far less than the $171 a carat average price realized last year by De Beers.


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A glut of cheap and small diamonds has eroded profits for nearly every miner and made it increasingly hard for the industry’s cutters, polishers and traders to make a profit. In December, some of Rio’s customers refused to buy cheaper stones, while De Beers has been forced to cut some prices and offer concessions to buyers.

Yet, with consumer appetite for diamonds stable, and major mines including Argyle scheduled to shutter, “the rational offset between supply and demand should lead to price growth,” Stornoway Diamond Corp. Chief Executive Officer Pat Godin said in March. Declining output, led by Argyle’s closure, will help revive prices, Toronto-based producer Mountain Province Diamonds Inc. said in May.

About 21 million carats a year of global diamond production—including about 14 million a year from Argyle—are scheduled to exit the market by 2023, a volume that’ll only partially be offset by the addition of new mines, according to Russia’s Alrosa PJSC, the world’s diamond biggest producer. The shortfall between annual demand and supply could be between 11 million and 35 million carats by 2023, the company said in a presentation last month.

“In terms of the pink diamonds, the impact is going to be even more dramatic” from Argyle’s closure, Rio’s Soirat said in the interview. “You can imagine the laws of supply and demand will apply, and you can imagine the impact that will have on those very rare pink, red, blue and purple diamonds.”

The producer estimates Argyle has only about 150 colored diamonds of sufficient quality left to extract and make available for its annual tender, a sale to invited buyers that showcases 50-to-60 of the year’s most valuable gems, he said.

Prices of pink diamonds have already as much as quadrupled over the past 10 years, and buyers are “now just waking up to the potential impact that Argyle’s closure will have” in lifting values further, said Frauke Bolten-Boshammer, proprietor of Kimberley Fine Diamonds, a retailer based in the town of Kununurra, about 200 kilometers north of the mine. She has traded the gems since the 1990s.

Overall, the diamond sector probably also needs a boost to downstream demand, according to Richard Hatch, a London-based analyst at Berenberg. Mine closures that tighten supply “will help, but is it the shot in the arm that the industry really needs? Probably not,” Hatch said.


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Buyers have been hit by a shortage of finance and stagnant end markets, while a weaker rupee has made gems more expensive for Indian manufacturers, who cut or polish about 90% of the world’s stones.

The closure of Argyle will remove about 75% of Rio’s diamonds output, yet the impact on the producer’s earnings will be negligible. Diamonds bring in only about 2% of earnings, while iron ore—the company’s top commodity⁠—accounts for almost 60%.

Rio in 2016 shuttered the Bunder development project in India and in 2015 exited the Murowa mine in Zimbabwe. The producer’s only other producing diamond asset, Diavik in Canada, is scheduled to close in 2025, though exploration work is continuing to potentially extend that site’s life, Soirat told reporters Friday at Argyle.

Still, the company aims to retain a presence in the sector. While it could consider acquisitions to add new output, Rio’s main focus is on exploration⁠—an option that’ll take longer to deliver new output growth. Work is advancing on the Fort a la Corne project in Saskatchewan, a joint venture project that potentially could enter production within five to 10 years, Soirat said.


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Diamonds is “not a big business in Rio, however it is a very profitable business,” he told reporters, adding that the company has advantages in the sector that it can look to continue to exploit, including technical expertise and branding. “It’s not a commodity, it is luxury goods, and so the market dynamics are completely different.”

Federal Reserve: Facebook Libra Cryptocurrency A ‘Serious Concern’



The US Federal Reserve System has added its voice to the chorus of doubts raised by lawmakers, politicians and others worldwide about Facebook’s newly announced cryptocurrency , Libra . While speaking to House lawmakers Wednesday, Federal Reserve Chairman Jerome Powell said the US central bank has “serious concerns”  about Libra, The Wall Street Journal reported.


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Facebook last month unveiled the global digital coin, which will be managed by a governing body called the Libra Association and through a wallet named Calibra. Facebook is working alongside 27 launch partners for Libra, including PayPal, Visa, Uber, Coinbase, Lyft, Mastercard, Vodafone, eBay and Spotify, but aims to have 100 members in the Libra Association by 2020.

Libra, set to launch in the first half of next year, is intended to be used to purchase products, send money internationally and make donations.

“While the project’s sponsors hold out the possibility of public benefits, including improved financial access for consumers, Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability…” Powell said when asked about Libra by Rep. Maxine Waters, according to the Journal.

Both the Federal Reserve System and a separate panel called the Financial Stability Oversight Council are meeting to discuss Libra alongside global policy makers, Powell also reportedly said.

The board of governors of the Federal Reserve System didn’t immediately respond to a request for comment, but David Marcus, head of Calibra, last week said the Libra Association is “committed to a collaborative process with regulators, central banks and lawmakers to ensure that Libra helps with the kinds of issues that the existing financial system has been fighting.”

Marcus tweeted that Facebook went live with its announcement of Libra so early so that it could have such dialogue and get feedback on implementation.

“Just caught up with comments from @federalreserve Chairman Powell at his @FSCDems Hearing, and I fully agree that legitimate concerns about @Libra_ should be addressed carefully and patiently, and that it shouldn’t be rushed. This is why we shared plans early,” Marcus tweeted Wednesday afternoon.

Libra has faced considerable skepticism and pushback since being announced, with US and European politicians almost immediately expressing concerns that stem from Facebook’s history of data security problems.


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Waters, chair of the US House Financial Services Committee, previously said Facebook “has repeatedly shown a disregard for the protection and careful use of this data.” She also sent a letter to Facebook executives last week asking them to temporarily cease plans to create Libra until security and privacy concerns are addressed.

A Senate committee has scheduled a hearing for July 17 to discuss the cryptocurrency. In Europe, France’s Finance Minister, Bruno Le Maire, reportedly said Libra would be fine if its use is limited to transactions but that Facebook shouldn’t be allowed to create a “sovereign currency.”

Last week, more than 30 groups, including the Economic Policy Institute and US PIRG, also asked Congress and regulators to impose a moratorium on Libra until “profound questions” are answered. Earlier this week, India also reportedly said it’s considering not allowing the currency to be traded at all.

“Design of the Facebook currency has not been fully explained,” Subhash Garg, India’s Economic Affairs Secretary, told Bloomberg in an interview Saturday. “But whatever it is, it would be a private cryptocurrency and that’s not something we have been comfortable with.”


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The Libra blockchain will be global, but it’ll be up to the Calibra providers to determine where they’ll operate the wallet service. It also won’t be available in any US-sanctioned countries, or countries that ban cryptocurrencies.

In April 2018, all entities regulated by the Reserve Bank of India were banned from dealing in cryptocurrencies and virtual coins, though it’s still legal for individuals to trade currencies like bitcoin. However, last month it was reported that the Indian government is working on draft laws that would propose a jail sentence for any crypto users.

Federal Reserve Chairman Jerome Powell Set The Stage For The Central Bank To Cut Interest Rates



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Jerome Powell set the stage for the central bank to cut interest rates to bolster flagging growth. The S&P 500 and the Nasdaq Composite touched all-time highs, with the S&P briefly eclipsing the 3000 level for the first time. The indexes were up 0.6% and 0.7% in recent trading, respectively. The Dow Jones Industrial Average climbed 0.6%, on track to snap a three-day losing streak.

“Now everybody is really confident that the Fed is going to cut rates at the July meeting,” said Shana Sissel, senior portfolio manager for CLS Investments, an Omaha, Neb., firm that manages about $10 billion. “That’s put a lot of people’s minds at ease.”

Major U.S. indexes had faltered in recent days as investors weighed an economic slowdown against the odds the Fed will bolster the economy by cutting interest rates. Mr. Powell’s testimony prepared for the House Financial Services Committee was released before Wednesday’s opening bell, and signaled that the Fed will likely cut rates later this month.

Mr. Powell said the economic outlook hasn’t improved in recent weeks, and “it appears that uncertainties around trade tensions and concerns about the strength of the global economy continues to weigh on the U.S. economic outlook.”

Traders have largely been treating good economic news as bad news while they wait on the Fed’s decision. Gloomy economic data gives central bankers a reason to intervene to forestall a slowdown.

Federal-funds futures, used by investors to bet on central-bank policy, show a 21% chance that the Fed will cut rates by half a percentage point at its July 31 meeting, up from 3.3% yesterday. The odds of a quarter-point cut stand at about 79%.

The yield on 10-year U.S. Treasurys fell to 2.047% from 2.058% on Tuesday. Yields and prices move in opposite directions. The S&P 500’s crossing of the 3000 threshold has taken nearly 5 years. It broke through 2000 for the first time in August 2014.

Energy and technology stocks led the index higher. Micron Technology Inc. rose 4.3% to $43.13 a share and Seagate Technology PLC gained 2.9% to $47.39 a share.

Energy companies got a boost from rising oil prices after U.S. industry group American Petroleum Institute on Tuesday showed a sharp drop in oil stocks. U.S. oil futures rose 3%, or $1.77 a barrel, to $59.60. Natural gas gained 2% to $2.47 per million British thermal units. Oil and gas producer Noble Energy Inc. was up 2.7% to $22.10 a share.

While the markets clearly welcomed signs of a rate cut, not everyone is convinced that the Fed should act now. Last week’s stronger-than-expected jobs report runs counter to fears of a slowdown, and last month’s trade cease-fire between the U.S. and China has lessened one drag on the economic picture, Ms. Sissel said.

“We have a lot of positives going on right now, and I don’t think the Fed should use this bullet,” Ms. Sissel said. “They should save it for when they need it.” Rep. Carolyn Maloney (D., N.Y.) asked Mr. Powell whether last week’s strong jobs report for June had changed the picture.


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“The straight answer to your question is no,” Mr. Powell responded. He pointed to economic data, particularly in Europe and Asia, that has “continued to disappoint.” A detente between the U.S. and China also isn’t definitive.

“While that’s a constructive step, it doesn’t remove the uncertainty that we see as overall weighing on the outlook, “ Mr. Powell said. Europe’s pan-continental Stoxx Europe 600 wavered between gains and losses.

Data showed the British economy returned to growth in May, reversing a two-month slowdown and easing fears of a contraction in the second quarter. A 24% rise in car production drove the uptick, as auto makers restarted factories they had idled in anticipation of Brexit, which was originally scheduled to take place in April.

However, analysts cautioned that the broader economic picture in the U.K. remains subdued, despite the improvement in manufacturing.


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“Recent PMIs indicate that the service sector—which makes up the lion’s share of the U.K. economy—has struggled to regain momentum amid mounting Brexit uncertainty,” said James Smith, ING developed markets economist, adding that he expects business investment to resume its downward trend over the summer.

Aside from the Fed’s policy outlook, Peter Dixon, senior economist at Commerzbank, said investors will be eager to see how Mr. Powell responds to a grilling from lawmakers over concerns that his independence is being undermined by pressure from President Trump, who has criticized him for allowing the dollar to become too strong.


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Minutes from the central bank’s recent policy meeting are due for release later Wednesday, which could provide additional detail on how officials viewed the economic environment.

Asian markets mostly closed higher, although Shanghai-listed stocks slipped after Chinese consumer inflation held steady in June. The consumer-price index rose 2.7% on year, in line with expectations, as slowing nonfood prices offset faster gains in food prices.

Richard Branson Is Bringing Virgin Galactic To The Stock Market



Richard Branson is bringing Virgin Galactic to the stock market…. The billionaire’s space tourism venture said Tuesday that it will go public as part of a deal that will see new investors take a 49% stake in Virgin Galactic.

Virgin Galactic will merge with Social Capital Hedosophia (SCH), a company formed by venture capital firms Social Capital and Hedosophia. It is traded on the New York Stock Exchange.


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“Upon closing of the transaction, which is expected in the second half of 2019, [Virgin Galactic] will be introduced as the first and only publicly traded commercial human spaceflight company,” the companies said in a statement.


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Virgin Galactic’s existing investors are being offered a combination of SCH stock and cash. The current management of Virgin Galactic will remain in place.

The deal was first reported by the Wall Street Journal… Going public will help Virgin Galactic raise money needed to compete against rivals such as Jeff Bezos’ Blue Origin and Elon Musk’s SpaceX in the billionaire’s space race.


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Hundreds of people are lined up to ride a short high-speed trip aboard a Virgin Galactic space plane and have agreed to pay $200,000 to $250,000 per seat.

Branson plans to be the first non-crew member to board the plane.

“Hopefully, in not many months’ time, I’ll fulfill my dream of going to space and others will soon follow,” Branson said in May.

Bezos has also spent years working on its space tourism plans, and Blue Origin is expected to compete directly with Virgin Galactic in that business.


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Blue Origin expects to launch its first person into space by the end of the year.

SpaceX, which has built a business around building rockets to launch satellites and resupply missions to the International Space Station, also plans to send tourists into space.

What To Expect From Google Earnings?


(GOOGL) Google, has posted less than brilliant performance this year, its stock drastically underperforming its fellow FAANGs and the S&P 500. That disappointing performance reflects major headwinds facing the company that investors will focus intently on when it reports earnings later this month.


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Those headwinds include slowing revenue growth, and the financial disruption that could be caused if the U.S. government attempts to break up Alphabet. Some analysts say the company would be worth 50% more broken up.



To be sure, Alphabet‘s earnings picture looks robust in the short term. Analysts expect Google to post earnings per share of $11.25 for the quarter ending June, compared to year-ago EPS at $4.54.

Investors’ big concern is signs of a possible longterm decline in revenue growth. For starters, in 1Q ending March, Alphabet reported weaker-than-expected results in which revenue slowed to 15.3% year-over-year, a sharply slower pace than 19.9% growth in Q4 and also below 24.4% growth in the Q1 of 2018, per the Wall Street Journal.

For Q2, analysts’ estimate revenue will rise 16.9%, according to analysts surveyed by Yahoo Finance. While that’s slightly faster than Q1, it’s still far slower than Alphabet’s historic growth rates.

What Investors Will be Looking For… A focal point for investors, when Google reports on July 25, will be how soft revenue growth will be in the June quarter. Any downshift that’s much steeper than consensus estimates will provide ammunition for bears who see Google’s sales slump as reflecting a systemic issue for the company, per Barron’s.


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Evercore ISI analyst Kevin Rippey recommends asking key questions such as, what is driving the slowdown, whether it was organic or self-inflicted, if there is a historical precedent for reaccelerating revenue growth, and if anything in the pipeline can act as a positive catalyst. Rippey views slowing sales as reflecting a temporary platform cleanup during which Google removed players participating in ad fraud in an effort to improve the long-term health of its business.

Even with that optimistic view, investors will be watching closely for evidence that Google’s core ad revenue business is slowing with the economy or from inroads from rivals such as Snap Inc. (SNAP), Twitter Inc. (TWTR), and others. A material softening in demand for search advertising would be a severe headwind as it ramps up several new products to boost sales.


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These new ad initiatives have spurred some bulls to lift their forecasts. Google has “among the best ad product pipelines we have seen” in at least four years, says Deutsche Bank analyst Lloyd Walmsley, per Barron’s. “We see an accelerating pace of new ad product making us meaningfully more confident in the 2020 outlook,” he added.

Looking Ahead… Google’s video platform YouTube also will be a focal point of investors as Alphabet reports. Specifically, shareholders will want to know how much rising criticism of YouTube from politicians could lead to oversight.

That, of course, would pale next to a U.S. antitrust lawsuit. On that topic, investors will seek any insight they can from Alphabet’s executive team regarding how they plan to manage the company for growth, and minimize any damage, during a protracted battle with the federal government.


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40% of Americans say they still struggle to pay bills… This doesn’t look like the best economy ever…


 


In discussions with 30 Americans unable to pay all of their bills, a clear pattern emerged: Most were able to eke by until they faced an unexpected crisis such as a job loss, car trouble or storm damage.

The extra expense caused them to get behind on their bills, and they never fully rebounded. Economists fear such precarious financial situations put many Americans at risk if there is even a mild setback in the economy, potentially setting up the next recession to be worse than anything in recent history except the Great Recession.

“So many Americans are living paycheck to paycheck,” said Signe-Mary McKernan, vice president of the Center on Labor, Human Services and Population at the Urban Institute. “We are headed toward a political crisis, if not an economic one.”


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Their vulnerability is due to a confluence of factors. First, the average American family has yet to recover fully from the 2008 financial crisis, the Federal Reserve found, leaving half the nation with a diminished cushion to handle surprise expenses — or the next downturn.

The bottom half has less wealth today, after adjusting for inflation, than it did in 1989, according to Fed data through March of this year. While wage growth has accelerated in recent months, especially for the lowest-paid workers, families who have struggled for years have a ways to go to return to solid footing.

Half of U.S. jobs pay less than $18.58 an hour and more than a third pay less than $15, which makes it difficult to save or invest for a better future.

Trump and his team argue that a strong economy is lifting more and more Americans up financially, including blue-collar workers, the formerly incarcerated and minorities. In contrast, Democrats are calling for major expansions of government programs to address inequality. How to help the economically vulnerable is likely to be a key debate in the 2020 race.

“Just because folks on Wall Street think things are fine doesn’t mean most Americans feel like things are fine,” said Ray Boshara, director of the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis. “When every day is a rainy day for millions of families, things are not fine.”

To get by, Americans have borrowed heavily in recent years. Total U.S. household debt is now $13.7 trillion, surpassing the 2008 peak in dollar terms, according to the Federal Reserve Bank of New York. The surge in debt this time around is for cars and college, not mortgages.


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Older and wealthier — and usually white — Americans typically take on debt to buy homes or make investments that are likely to make them richer in the years to come. Most in this category have recovered the wealth they lost in the Great Recession as home prices and stocks have soared.

In contrast, data from the Fed and the credit-score company Equifax show that families of color, Americans born after 1970 and households earning less than $60,000 are the least likely to have recovered the wealth they lost in the crisis. And they tend to carry heavy debt loads, often taking out loans for college, which they cannot get rid of in bankruptcy, or loans to pay bills, which can put them further behind.

The prevailing view among Wall Street investors and Washington policymakers is that there is little to worry about because student loans are backed by the government and delinquency rates for other kinds of debt are fairly low, meaning most people can make their monthly payments.

Credit quality is about as good as I’ve ever seen it,” said Mark Zandi, chief economist at Moody’s Analytics. “There is nothing that suggests inordinate stress on low-income households . . . certainly nothing compared to times past.”


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But Boshara, of the St. Louis Fed, pointed out that credit card and auto loan delinquencies have risen this year, the opposite of what Wall Street expected in good economic times.

Four in 10 Americans say they still struggle to pay their bills, despite the strong economy, according to a quarterly survey by UBS that has shown no improvement since 2014. And looking at how households are doing by class, race or age reveals a concerning picture.

How To Start Investing In Stocks?


Investing is a way to set aside money while you are busy with life and have that money work for you so that you can fully reap the rewards of your labor in the future. Investing is a means to a happier ending. Legendary investor Warren Buffett defines investing as “… the process of laying out money now to receive more money in the future.” The goal of investing is to put your money to work in one or more types of investment vehicles in the hopes of growing your money over time.

Let’s say that you have $1,000 set aside, and you’re ready to enter the world of investing. Or maybe you only have $10 extra a week, and you’d like to get into investing. In this article, we’ll walk you through getting started as an investor and show you how to maximize your returns while minimizing your costs.

Online Brokers… Brokers are either full-service or discount. Full-service brokers, as the name implies, give the full range of traditional brokerage services, including financial advice for retirement, healthcare and everything related to money.


 


They usually only deal with higher-net-worth clients, and they can charge substantial fees, including a percent of your transactions, a percent of your assets they manage, and sometimes a yearly membership fee. It’s common to see minimum account sizes of $25,000 and up at full-service brokerages. Still, traditional brokers justify their high fees by giving advice detailed to your needs.

Discount brokers used to be the exception, but now they’re the norm. Discount online brokers give you tools to select and place your own transactions, and many of them also offer a set-it-and-forget-it robo-advisory service too. As the space of financial services has progressed in the 21st century, online brokers have added more features including educational materials on their sites and mobile apps.


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In addition, although there are a number of discount brokers with no (or very low) minimum deposit restrictions, you may be faced with other restrictions, and certain fees are charged to accounts that don’t have a minimum deposit. This is something an investor should take into account if he or she wants to invest in stocks.

Minimums to Open an Account… Many financial institutions have minimum deposit requirements. In other words, they won’t accept your account application unless you deposit a certain amount of money. Some firms won’t even allow you to open an account with a sum as small as $1,000.

It pays to shop around some before deciding on where you want to open an account, and to check out our plus500 review.

Commissions and Fees… Though recently many brokers have been racing to lower or eliminate commissions on trades, and ETFs offer index investing to everyone who can trade with a bare-bones brokerage account, all brokers have to make money from their customers one way or another.

In most cases, your broker will charge a commission every time that you trade stock, either through buying or selling. Trading fees range from the low end of $2 per trade but can be as high as $10 for some discount brokers. Some brokers charge no trade commissions at all, but they make up for it in other ways. There are no charitable organizations running brokerage services.

Depending on how often you trade, these fees can add up and affect your profitability. Investing in stocks can be very costly if you hop into and out of positions frequently, especially with a small amount of money available to invest.

Remember, a trade is an order to purchase or sell shares in one company. If you want to purchase five different stocks at the same time, this is seen as five separate trades, and you will be charged for each one.

Diversify and Reduce Risks… Diversification is considered to be the only free lunch in investing. In a nutshell, by investing in a range of assets, you reduce the risk of one investment’s performance severely hurting the return of your overall investment.

In terms of diversification, the greatest amount of difficulty in doing this will come from investments in stocks. As mentioned earlier, the costs of investing in a large number of stocks could be detrimental to the portfolio. With a $1,000 deposit, it is nearly impossible to have a well-diversified portfolio, so be aware that you may need to invest in one or two companies (at the most) to begin with. This will increase your risk.

This is where the major benefit of mutual funds or exchange-traded funds (ETFs) come into focus. Both types of securities tend to have a large number of stocks and other investments within the fund, which makes them more diversified than a single stock.

The Bottom Line… It is possible to invest if you are just starting out with a small amount of money. It’s more complicated than just selecting the right investment (a feat that is difficult enough in itself) and you have to be aware of the restrictions that you face as a new investor.

You’ll have to do your homework to find the minimum deposit requirements and then compare the commissions to other brokers. Chances are, you won’t be able to cost-effectively buy individual stocks and still be diversified with a small amount of money. You will also need to make a choice on which broker you would like to open an account with.

 

Plus500 Review 2019


◊ Plus500 Review 2019 ◊


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• Business & Financial News – Stock Market News Today • 


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Plus500 is a streamlined broker that focuses on trading in a wide range of financial markets with relatively low spreads and no commissions but without offering many extra services. Plus500 has been in the forex and CFD business since 2008. They are registered in the U.K. and licensed by the Financial Conduct Authority (FCA).

The company offers access to a comprehensive product line including forex, stock indexes, equities, commodities, cryptocurrencies, ETFs and options. Plus500 is the first broker to introduce a bitcoin CFD in 2013. The company does not charge commissions on any of its trades.

All costs are contained within the spread for each of more than 2,000 trading instruments offered on Plus500’s WebTrader platform. Plus500 Ltd. (PLUS.L) is a publicly traded company on the AIM section of the London Stock Exchange since 2013 with a £1.73 billion ($2.25 billion) market capitalization and clients in more than 50 countries around the world. Plus500 offers access to more than 2,000 trading instruments.


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Trust … the company is registered with the Financial Conduct Authority (FCA), CySEC, ASIC, FSCA, FMA, MAS, and the ISA, which provides good accountability and visibility. The company is required to take steps to ensure client funds are not comingled with corporate funds – ensuring that client money and assets are protected in the unlikely event that Plus500 becomes insolvent – by holding those funds in segregated accounts at regulated banks.

If Plus500 defaults, any shortfall of funds of up to £50,000 may be compensated for under the Financial Services Compensation Scheme (FSCS). If the custodian bank holding client funds goes into liquidation, any shortfall of funds of up to £85,000 may be compensated for under the FSCS.


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Plus500 also offers Negative Balance Protection, ensuring that clients cannot lose more than they have put into their account. Guaranteed stop losses can be used on some instruments depending on market conditions but they are subject to a wider spread.

The company does not charge commissions on any of its trades. All costs are contained within the spread for each of more than 2,000 trading instruments offered on Plus500’s WebTrader platform. Large volume traders do not get a trading discount at Plus500 and the spread is the same whether you trade one lot or 1,000 lots.


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There are no charges for normal withdrawals or terminating an account. However, inactivity fees kick in after an account has been idle for three months. Beginning traders can open an account with as little as £100.

Traders can qualify for a “professional” account, which offers a higher level of maximum leverage, but the costs are the same. Investors with a professional account may increase their maximum leverage ten-fold, from 1:30 to 1:300.Spreads at Plus500 were some of the lowest in the market.

Plus500 also offers access to options trading on many markets. These are very similar to plain call and put options traded on exchanges, but they are not standardized which means that the option premium can be customized for your risk tolerance and strategy objectives.


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10 Ways To build Your Business Credit


1.Make sure your business is legit
Making sure your business is set up legitimately is the most involved of the steps we’ll describe, but it’s important for a variety of reasons. To build business credit, you need a business. While that may sound obvious, the vast majority of small businesses in the US operate as sole proprietors and many haven’t taken even basic steps to make sure their business looks (and is) legitimate in the eyes of lenders, suppliers and business partners. You may have taken some of these steps already, but if not now’s the time to knock these out.


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If possible, establish your business as a separate legal entity (LLC or S Corp, for example). You can build business credit as a sole proprietor but when you operate your business that way you have no legal protection and some lenders recognize that. Plus, there may be significant tax advantages to setting up a legal entity.

Make sure you have a business name that doesn’t infringe on others, or will get mixed up with others— including in credit reports. Also be sure you’ve decided on your business address (even if it’s your home address) and get a business phone number separate from your personal phone number. (Here are some inexpensive business phone number options.) You can use this this checklist to make sure you haven’t overlooked basic steps for making sure your business is legitimate.

2. Check your credit status
Even if you haven’t done a thing to build business credit, your business may already be in the databases of commercial credit agencies. This is particularly true if you have formed a corporate structure or registered your business with your state; that information often makes its way to credit reporting agencies and starts your credit file.

You can check if you are in Experian’s database here; Dun & Bradstreet here (click on company search); and Equifax here.

3. Get a DUNS number
A DUNS number is an identifier for your business in the Dun & Bradstreet database. If your business does not already have one (your business did not show up in step 2 when you checked D&B’s database), you can get a DUNS number for free. You do not have to register with Experian or Equifax.

4. Review or pick your NAICS or SIC code
A SIC or NAICS code is a code used to identify the type of business you operate. It is important that this information is accurate. Some types of businesses are considered higher risk and some lenders won’t lend to businesses in certain industry categories. If your business already has a business credit report, make sure the SIC or NAICS code listed makes sense.

5. Get a business bank account
This step won’t directly impact your business credit in the short term, as business bank accounts do not typically appear on credit reports. However, it will help you in the long run. Having a business bank account may help you qualify for business loans or financing in the future, as some lenders will require you to submit business bank account statements and will review your business cash flow when evaluating your application. And if you do get that financing, it may appear on your credit reports and help build credit.

6. Get a business credit card
A business credit card will allow you to separate business and personal purchases, but more importantly, should give you a positive business credit reference if paid on time. This guide explains how major credit card issuers report to commercial credit agencies.

Some small business owners are surprised to learn that it is possible to get a business credit card even when their business is new. Usually these applications are evaluated on the basis of the owner’s personal credit scores, not the credit score of the business. As long as you have good personal credit and sufficient income (from all sources), you should be able to get one.

7. Set up autopay for your business credit card
Paying your bills on time is crucial to building good credit and it’s even more important with business credit since some business credit scores are based almost entirely on payment history. So don’t let a bill slip through the cracks and hurt your credit. Set up automatic payments for your account, even if it’s just to make sure the minimum payment gets paid on time each month.

8. Get your first vendor account
Vendors are companies that offer supplies your company needs, such as shipping boxes, cleaning supplies, printer ink, etc. Some vendors offer net-30 terms to business customers, which means the bill must be paid within 30 days of the invoice date. If you establish an account on terms with a vendor that reports that payment history to commercial credit bureaus, you’ll help build your business credit— provided you pay on time of course! Here are three vendors that can help you build business credit.

Note: If your business is brand new and you don’t have a business credit history, some vendors may require you to purchase and pay for an order in full before they will extend terms.

9. Get your second vendor account
Now that you have one account under your belt, you’ll want to establish a second one. Applying for numerous accounts in a short period of time can backfire on you if the lender is relying on personal credit. That’s because personal credit reports list an “inquiry” every time your personal credit is checked, and each one can lower your credit scores by a few points. But business credit inquiries are not as much of a concern; typically they don’t even matter. You’re going to need a few accounts to establish business credit, so go ahead and get a second one.

10. Get your third vendor account
You’ll need three accounts reporting to Dun & Bradstreet for a D&B Paydex score to be created. If your business credit card does not report to them, you’ll need a third account to complete the process. Go ahead get a third vendor account and buy items your business needs from each one of them in order to start establishing activity and a payment history.



As we mentioned earlier, the most important thing you can do to build strong business credit is to pay all of your business accounts that report on time. (Early is even better.) It may be harder to automate vendor accounts, as compared to credit card accounts, but you may be able to set up online payments from your business bank account. If not, put a reminder on your calendar to make sure the payment is made on time.

If you pay by mail, allow at least seven days to ensure it is received before the due date. Business credit reports will note if a payment is even a day or two late. You’ll now want to monitor your progress. It may be a couple of months before your new business credit card and vendor accounts show up on your business credit reports, so start monitoring your reports on a monthly basis to see when they appear. If they don’t show up in sixty days or so, contact those lenders and/or vendors to see if you can find out why they aren’t reporting.


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You can purchase credit monitoring from the major commercial credit reporting agencies or get an account with Nav, where you can monitor business and personal credit. (A standard Nav account is free; premium accounts provide additional information for a fee.)

Impacts of climate change in Antarctica. What’s Happening Beneath Antarctica’s Ice?… Businesses and investors are keenly interested


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{ By Daniela Hernandez } . They call it the Dreamcatcher. Its job is to help answer one of the most important and perplexing questions facing climate scientists today. Dangling from a helicopter over Antarctica’s frozen landscape, the giant hexagonal instrument sends out electromagnetic waves that penetrate the sheets of ice below, giving scientists something like an X-ray of an ancient body.

The scientists gathered here in Antarctica’s Dry Valleys—a rocky ecosystem dotted with frozen lakes and glaciers, some flowing into the sea—want to know what lies beneath the ice. Is it rock? Or is it salty water?

The answer will have implications for communities, infrastructure and investments all over the world. Glaciers sitting atop briny water can be more prone to sliding off the land and into the ocean, potentially contributing to rising sea levels. Yet chief among the blind spots in climate models is the stability of the ice at the bottom of the world.

Scientists are confident that as the planet warms, Antarctic ice sheets will shrink, shedding the water they store. But how much of this continent’s ice could end up in the ocean, and how quickly that might happen, are unknown. That in turn matters for the financial-services firms, asset managers and consultants that have been turning to climate models to assess risk and guide investment.

“The biggest question when it comes to sea-level rise is: How will the Antarctic ice sheets react to ongoing climate change?” says Ricarda Winkelmann, an ice-sheet modeler in Germany’s Potsdam Institute for Climate Impact Research. When Dr. Winkelmann talks to policy makers and business people, they want to know what is the worst-case scenario, and how fast will climate-related changes occur, she says.


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The answers will come from the work of scientists like Jill Mikucki, Slawek Tulaczyk and Peter Doran, who spent weeks using the Dreamcatcher to map the underbelly of Antarctica’s Dry Valleys. They are part of an ecosystem of polar researchers whose data provide the foundation for global climate models. Such data, which takes years to incorporate into models, is necessary for making the kind of predictions that governments and investors need.

Antarctic scientists are gathering “some of the most high-priority data that needs to be taken,” says Richard Rood, a professor of climate at the University of Michigan in Ann Arbor.

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Climate models use measurements of the Earth’s oceans, atmosphere, land and ice, sometimes going back more than 100 years, both to understand the climate’s history and to predict its future. Scientists use mathematical equations that rely on these data to simulate physical phenomena such as rainfall and ocean currents.

They test how good these simulations are at mimicking reality by doing “hind-casting.” If the outputs match historical records, the model is considered accurate, and scientists can use it to study how the planet might react to future conditions.

If models’ calculations don’t match past observations or they fail to predict a future event, as they did with the sudden disintegration of Antarctica’s Larsen B ice shelf in 2002, it is possible scientists are misunderstanding some crucial physical process or just don’t have enough data. That is what makes more and better measurements, such as the information being gathered in Antarctica, so valuable.

Financial firms, including banks and insurance companies, are hiring climatologists and modelers and contracting with data-analysis firms specializing in climate science to help them apply climate data to business decisions.


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Better ice dynamics data will help with “understanding the overall picture on climate change and the pace of change that’s taking place,” says Francis Condon, who focuses on sustainable investing for the global investment-management arm of Swiss bank UBS Group AG . “If there is an indication that the [sea] level is rising faster than previously indicated, that is an issue that needs to be considered from an investment perspective.”

At the Asian Development Bank, which lends to governments and companies in Asia’s developing markets, Jay Roop is part of a team that oversees the construction of wharves, ports and roads around the Pacific region. To predict how projects might fare in future climate conditions, he and his team use 24 different climate models. The data they incorporate include melting rates of glaciers, historical ocean temperatures and rainfall, and information on local geography and water dynamics, which can affect storm surges. Most models don’t have data on the stability of Antarctic ice.

Mr. Roop consulted climate models to assess a wharf the Papua New Guinea government wanted to build. Many models suggested that, without climate-proofing, the wharf would be underwater within a few decades. The design was reconfigured so the wharf could be easily raised. That increased the cost by roughly 17%. Construction will begin in late 2019.

A better sense of how the ice in polar regions is changing would narrow the “range of possible climate futures… which would give us more confidence in how we manage the risks that are being presented to us,” says Mr. Roop, a senior climate specialist in ADB’s Pacific department.

Those who make investment decisions rely on proprietary climate data and publicly funded ice-sheet and global climate models. Some of the data incorporated into models is from large surveys that show what is happening across continents or the world’s oceans.

Model builders using large-scale data can do no more than generalize about smaller-scale processes such as the effect of water on glaciers’ stability. Smaller surveys like the one in the Dry Valleys are “absolutely necessary” to understanding what is happening on the smaller scale and to improve the accuracy of models decision makers use, says Mathieu Morlighem, an ice-sheet modeler at the University of California, Irvine.

Drs. Mikucki, Tulaczyk and Doran are using the Dreamcatcher and on-the-ground measurements of the chemical properties of subglacial water to gain knowledge about ice-sheet behavior and Antarctic habitats never before gleaned from the continent’s ice.

Dr. Mikucki, a microbiologist from the University of Tennessee in Knoxville, and her students collected samples from the outflows of saltwater at the Taylor Glacier. The water’s high iron content washes the ice in red. They call it Blood Falls.


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Dr. Mikucki wants to know what organisms live in the ferrous flows, which will help her understand the ecology of hidden briny water. When such water flows into the ocean, it can change water density, which in turn affects global weather patterns.

At Marble Point, a camp in the Dry Valleys, the three researchers took turns overseeing work with the Dreamcatcher. For weeks, they planned experiments and analyzed data from tents surrounded by glaciers, seals and scavenging birds called skuas. Helicopters came and went.

To use the Dreamcatcher—its formal name is SkyTEM—a helicopter must fly it over the glaciers the researchers want to study. Each mission can survey 150 miles.

The tool discriminates between different materials based on something called resistivity—a measure of how easily electrical current can flow. Substances such as ice have high resistivity, meaning electricity doesn’t flow through them easily. Water conducts electricity better. The saltier the water, the lower its resistivity.

Those differences allow the scientists to map subglacial topography. “It’s transformative,” says Dr. Mikucki. The work done in November, says team member and glaciologist Dr. Tulaczyk, provided “positive evidence” there is a lot of water beneath Antarctica’s ice and land surface, including along the coast. Typically, such pockets of water act as a lubricant, making the ice more prone to sliding into the sea.

One surprise: Because of the way some glaciers evolved, especially in valleys below sea level, their undersides might be coated by ancient seawater whose chemistry has changed through interactions with rock and sediment over millennia. How much lubrication that provides has yet to be determined, Dr. Tulaczyk says.

He wants to study, he says, whether the “transformed seawater” has “the same capacity to impact the dynamics, the motion of the glaciers, as water that’s generated by melting those glaciers themselves.” Combined with ice-flow data and climate archives contained in ice cores drilled from other areas of the continent, the information could yield new insights into the stability of Antarctic ice deposits, according to glaciologists and climate scientists.

After the Dry Valleys team wrapped up their experiments in late November, another group of scientists headed to Hercules Dome, roughly 250 miles from the South Pole, to look for 125,000-year-old ice. Their goal is to use that frozen record, which will take five to six years to unearth, to understand how the fragile West Antarctic Ice Sheet has reacted to past changes in climate, and at what rate. Roughly 125,000 years ago, it was much smaller than it is today, and sea levels were much higher.


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The ice core this team is after should provide glaciologists and modelers critical clues about how sensitive this area is to changes in climate, according to Eric Steig, a University of Washington glaciologist who is part of the Hercules Dome expedition. “The largest uncertainty in future sea-level rise is this problem,” he says. “I can’t imagine that won’t affect insurance companies…if we narrow that one way or another.”