David Ross

What I think I learned last week #42

The Dow and S&P 500 both hit record highs this week. This was the first record high for the Dow since January 26. Driving the market to new highs was a huge flow of money into US equity funds: $14.5 billion in the week ending Wednesday, the most since March.

Year-to-date, the Dow is now up 7.8% and the S&P 500 is up 9.6% in dollar terms. The strengthening US economy has offset any fears of trade wars for the market.

Initial jobless claims, a proxy for layoffs across the US, fell to the lowest level since 1969.

The Federal Reserve’s report on US Financial Accounts showed US household net worth increased by $2.2 trillion over the previous quarter during the second quarter. This was the 11th consecutive quarterly gain and brings the total US household net worth to $106.9 trillion.

On Friday, the Hong Kong dollar rose by the most in a single day since 2003.

The OECD lowered its global growth targets for the next two years to 3.7% from 3.8% in 2018 and 3.9% in 2019 due to trade tensions and Brexit.

S&P reclassification happened Friday. Companies accounting for more than 10% of the market value of the S&P 500 will be shifting sectors, a move that will prompt popular exchange-traded funds to buy and sellmore than $20 billion worth of the affected stocks. Stocks moving out of the technology sector include Facebook and Alphabet, while Disney and Netflix will no longer be in the consumer discretionary sector. Instead, these companies will join traditional telecom companies in the “Communication Services” sector.

Visa and Mastercard announced that they have agreed on a $6.2 billion settlement in the class-action antitrust litigation started in 2005 by 12 million US merchants. The wheels of justice grind slowly.

Everything can now be a robot. “Robotic Skins” technology developed by Yale researchers allows users to animate the inanimate and turn everyday objects into robots.

Amazon showed us the future as they introduced many new smart devices. One such device was the Amazon Basics Microwave, which will cost $60 and communicate with a nearby Echo for Alexa controls. There’s even a built-in Dash button for ordering popcorn. They also showed off Alexa Guard, a home security device that integrates with existing Echos. The Guard includes smoke and carbon monoxide detecting and integrates with existing security products. They also are offering the Amazon Smart Plug that will allow you to control compatible lights, fans, coffee makers, and more for $24.99. It is an Amazon world and we are all merely consumers.

Wait a minute….another Amazon news flash: Amazon is planning to open up to 3000 AmazonGo cashierless stores by 2021 as it decides to disrupt the convenience stores, quick service sandwich shops and pizza chains.

In the final Amazon story this week, Amazon has decided to put Google and Facebook in its sights: Amazon Increases Ad Market Share at Expense of Google, Facebook. EMarketer says Amazon will generate $4.61 billion of revenue in US ad sales, or 4.2% of the total digital ad market. Amazon will pass Yahoo to take the #3 digital advertising spot.

Alibaba and Intel announced a Joint Edge Computing Platform with an open architecture integrating Intel’s software, hardware, and AI tech with Alibaba’s Cloud IoT products. The Platform uses computer vision and AI to convert data at the edge into business insights. The product was recently deployed in the factories of Chongqing Refine-Yumei Die Casting Co. and increased defect detection speeds by about 5x compared to manual detection. AI changes everything.

This headline caught my eye: “Oil market bulls are wrong to forecast a pick-up in prices — and here’s why.” It was from last October and quoted “experts” saying that Brent oil prices were unlikely to reach $60 per barrel anytime soon. Brent oil is over $78 today as US oil supplies dropped to their lowest level since 2015. Nobody knows anything.

I sure don’t know anything about this: Canadian cannabis producer Tilray’s closing price on Tuesday was $154.98. On Wednesday, its stock price jumped 94% to reach $300. Talk about getting high. It then lost all of that in 53 minutes, hitting a daily low of $151. Not yet finished with its wild ride, in the final 20 minutes of trading, it jumped $63 to close Wednesday at $214.06 for a net gain of 40% on the day. At the time of writing on Friday, the stock price is currently at $130. A lot of value just went up in smoke.

And that’s what I learned last week.