Record Close For S&P 500 To End Week

Posted on by The INO.com Team

Stocks closed higher on the day Friday to end what was a record week for stocks, specifically for the S&P 500 and NASDAQ. The S&P 500 gained +.34% to 3,397.16, a new record closing high. The NASDAQ climbed +.4% and ended the day at 11,311.80, also a record close. The DOW finished trading up 190.6 points at 27,930.33, a gain of about +.7%.

On a weekly level, the S&P 500 gained +.72%, the NASDAQ outperformed gaining +2.6% on the week, and the DOW was left in the dust finishing flat on the week. Continue reading "Record Close For S&P 500 To End Week" →

Fed Rules Out Yield Curve Control (For Now)

Posted on by Gary Tanashian

That we are even having this conversation is proof that we are and have been in…

alice in wonderland

…Wonderland for years now.

Since at least 2001, actually. Back then Alan the Wizard Greenspan (mixing classic fairy stories, I know) began pulling levers that could never be un-pulled. There were no breadcrumbs with which to find our way back. Off the charts is off the charts. Exponential is exponential. And that’s when funny munny out of thin air entered the realm of normalcy; new normalcy where the financial system is concerned.

I assume that the ‘tool’ known as yield curve control (per this article) is part of MMT (Modern Monetary Theory) TMM (Total Market Manipulation) that the eggheads promote with not an ounce of historical monetary grounding, caution or even human-like soul. They are monetary Humanoids, AKA bureaucrats, AKA economic Ph.Ds with more statistical and theoretical knowledge than common sense. They released the FOMC minutes and policy micro-managers offer their interpretations. Continue reading "Fed Rules Out Yield Curve Control (For Now)" →

Disney Streaming Negating COVID-19 Impact

Posted on by Noah Kiedrowski

Disney’s impressive streaming numbers have thus far negated the impact that COVID-19 has had on its other business segments, mainly its parks. The Walt Disney Company (DIS) has had to shutter all of its worldwide Parks and Resorts, and ESPN has been hit with the cancellation of virtually all sports worldwide. Advertising revenue coming through its media properties has been hit as companies scale back ad spending. All of its movie studio productions have been halted, and movie releases are postponed. Despite the COVID-19 headwinds, streaming initiatives have been major growth catalysts for the company. Disney+’ growth in its subscriber base has shifted the conversation from COVID-19 to a durable and sustainable recurring revenue streaming model. This temporary bright spot, in conjunction with the optimism of its Park and Resorts coming back online, has been a perfect combination as of late. Disney+ has racked up 57.75 million paid subscribers, Hulu has 35.5 million paid subscribers, and ESPN+ has 8.5 million paid subscribers. Disney now has over 100 million paid streaming subscribers across its platforms. Disney+ has been wildly successful via unleashing all of its content (Marvel, Star Wars, Disney, and Pixar) in what has become a formidable competitor in the ever-expanding streaming wars domestically and internationally. Hence the tug-of-war on Wall Street between COVID-19 impacts versus the success of its streaming initiatives. Thus far, its streaming success has changed the narrative as its stock is approaching highs not seen since February. Disney is a compelling hold as its legacy business segments get back on track in conjunction with these successful streaming initiatives.

Long Game

Disney’s business segments will regain their health as COVID-19 subsides worldwide and/or there’s a vaccine approved. Parks will reopen as seen with Shanghai, Hong Kong, and Disney World. Inevitably, movie productions will resume, movie theaters and resorts will reopen, and sports will play-on. The resumption of all of these activities will feed into Disney’s legacy businesses in conjunction with its streaming successes. Disney continues to dominate the box office year after year with a long pipeline of blockbusters in the queue. Its Parks and Resorts continue to be a growth avenue with tremendous pricing power outside of COVID-19. Disney is going all-in on the streaming front and acquired full ownership of Hulu, and the company has launched its Disney branded streaming service with tremendous success with kudos from Reed Hastings. I feel that the company offers a compelling long-term investment opportunity given its growth catalysts that will continue to bear fruit over the coming years despite the current headwinds. Continue reading "Disney Streaming Negating COVID-19 Impact" →

Reasons To Be Cheerful

Posted on by George Yacik

According to the Federal Reserve, the economy is in danger of hurtling over another cliff. Still, recent economic statistics and market indicators paint a much more hopeful picture – the S&P 500 just hit a new all-time high, gold is falling, and bond yields are rising. Which story are we supposed to believe?

On the one hand, we have the recent economic statistics. On Friday, the Commerce Department reported that retail sales rose another 1.2% in July, pushing them above pre-pandemic levels. If that’s not a classic V-shaped recovery, I don’t know what is. While the headline sales figure came in below expectations of a 2.0% rise, the prior month’s 7.5% increase was revised upward to show an 8.4% jump. Excluding autos, July sales actually beat estimates, rising 1.9% versus a Street forecast of 1.5%.

Also, on Friday, the Fed itself reported that industrial production rose 3.0% last month, in line with estimates. In comparison, the capacity utilization rate rose more than two percentage points from the previous month to 70.6% and its fourth big monthly increase in a row.

The day before, the Labor Department said initial unemployment claims continued to drop, falling well below one million for the first time in several months and down sharply from a peak of near seven million in March, a reverse V-shaped drop.

The financial markets seem to be buying it. Last week the yield on the benchmark 10-year Treasury note rose above 0.70% for the first time since late June, putting it up 20 basis points just in the previous 10 days. Gold is down more than 5% from its August 6 high. And of course, the S&P 500 has wiped out all of this year’s losses, including the 33% drop in February and March, when a good portion of the U.S. was going into lockdown. Continue reading "Reasons To Be Cheerful" →

Tesla Is Going To Change The ETFs You May Own

Posted on by Matt Thalman

Watching the Elon Musk and Tesla (TSLA) show from the sidelines has been both entertaining and exhilarating even for those investors who have never owned a single share of the electric vehicle company. But for many investors, the days of watching the historic run of Tesla’s stock price from the sidelines are likely soon to be over, regardless of whether or not you like it.

Tesla’s most recent quarterly earnings report was its fourth consecutive one in which the company posted positive earnings on a GAAP basis, which now makes the automaker eligible to join the S&P 500 index. So why does this matter to the average investor?

Well, first off, if you own any Exchange Traded Fund or Mutual Fund that tracks the S&P 500, you will now own Tesla indirectly if the company is added to the index. Furthermore, Tesla is a massive company. Its market capitalization is north of $250 billion, making it one of the biggest companies in the S&P 500 if it was already a part of the index. So, not only will Tesla be a part of your portfolio, but if you have a large position in an S&P 500 tracking index, well, you will now have a lot riding on Tesla living up to its lofty valuation.

Additionally, since it is not part of the index, and if it does get added, there will be massive selling of other index components to make room for Tesla. Let me explain this point in a little more detail, because its very, very important. The S&P 500, like many indexes, is a market capitalization-weighted index. This means that the largest company in the index, currently either Apple (AAPL) or Microsoft (MSFT), accounts for around 5.7% of the index. The smallest company in the S&P 500, represents less than 0.01% of the index. And remember, 500 companies comprise the index. Continue reading "Tesla Is Going To Change The ETFs You May Own" →