BOARD CERTIFICATION EXAM STUDY GUIDES Lower Extremity Trauma
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Posted on July 28, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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The Dow slipped on Thursday, snapping a 13-day winning streak. The blue-chip index fell 237 points after being on track to close higher for a 14th consecutive session. That would have marked the Dow’s longest run of consecutive gains since May 1897. If the Dow had closed higher Thursday and Friday, it would have notched 15 days of gains, its longest daily winning streak ever.
But the index’s run was at historic levels before it was cut short Thursday: On Wednesday it notched its 13th straight day of gains, its best winning streak since 1987 and its highest level since February 2022. The Dow, up roughly 6% for the year, has rallied in recent weeks as cooler-than-expected inflation data has investors more optimistic that a soft landing, or no recession, could be in the cards for the economy.
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Here is where the major benchmarks ended for the day:
The S&P 500 Index was down 29 points (0.64%) at 4,537.41; the Dow Jones Industrial Average was down 237 points (0.67%) at 35,282.72; the NASDAQ Composite (COMP) was down 77 points (0.55%) at 14,050.11.
The 10-year Treasury note yield (TNX) rose about 14 points 4.002%.
CBOE’s Volatility Index (VIX) dropped 5 points to at 13.32.
Posted on July 27, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Whether we’ll see another interest rate increase soon depends on what happens between now and the Fed’s next meeting in September. Jerome Powell will be watching to see if consumer prices come down more than they already have, thanks to previous rate hikes.
There are some promising signs that the worst is behind us:
Tomorrow, when the government releases the latest personal consumption expenditures price index—the Fed’s preferred measure for tracking inflation—it’s expected to show the lowest inflation increase since the end of 2021. And last month, the consumer price index showed inflation fell to 3%, which is above the Fed’s 2% target but an improvement from last June’s 9.1%.
Meanwhile, Coca-Cola—whose prices were 10% higher last quarter compared to Q2 2022—said it’s done marking up drinks for the year, and the CFO of Unilever said the packaged goods giant’s price inflation has peaked (though prices may still get higher).
But the FOMC wants more: Chairman Powell said that for inflation to be truly conquered, the job market, which currently boasts a low unemployment rate of 3.6%, will need to slow.
Posted on July 27, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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The Federal Reserve raised its benchmark interest rate another 0.25% on Wednesday, reviving its inflation fight despite a significant cooldown of price increases in recent months. The rate hike brought the Fed’s benchmark interest rate to a 22-year high of between 5.25% and 5.5%. Inflation has fallen significantly from a peak last summer, but remains at a level one percentage point higher than the Federal Reserve’s target of 2%.
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The Dow on Wednesday rose for a 13th straight day, matching its longest winning streak since 1987. If it closes higher today, it would be a streak not seen since 1897 — about a year after the benchmark was created — when the Dow advanced for 14 sessions in a row. During this latest run, the Dow has outperformed, gaining 5%. That momentum hasn’t been seen in the broader S&P 500 and NASDAQ Composite indexes, however. Both are up just 3% since the Dow’s streak began. The S&P 500 has fallen twice in that time, while the NASDAQ has posted three losing sessions
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Here is where the major benchmarks ended for the day:
The S&P 500 Index was down 0.02% at 4,566.75; the Dow Jones Industrial Average (DJIA) was up about 82 points (0.23%) at 35,520.12; the NASDAQ Composite was down 17 points (0.12%) at 14,127.28.
The 10-year Treasury note yield (TNX) edged down to 3.867%.
CBOE’s Volatility Index (VIX) dropped 5 points to at 13.32.
Posted on July 25, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By StaffReporters
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Recession: Last October, economists surveyed by Bloomberg were predicting a 100% chance of a Recession. But currently, the Dow is riding a 10-day winning streak, and the S&P 500 is just over 5% away from its all-time high. This week, Wall Street will be glued to the Fed’s interest rate announcement and a heavy slate of earnings.
Final Fed rate hike? The Federal Reserve will likely announce another interest rate increase this week, but this could be the final hike in its 16-month quest to bring down inflation. If the Fed hikes 25 basis points as expected, interest rates would be at their highest level since 2001.
Earnings galore: Corporate America’s A-list will report Q2 earnings this week, including Meta, Alphabet, Microsoft, McDonald’s, Coca-Cola, and Exxon Mobil. In all, about one-third of companies in the S&P 500 will give financial updates over the next five days, so we should get a good look into the health of a bunch of different industries.
Posted on July 19, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Cash is king, especially in this tough interest rate environment. That’s proving true in the mergers and acquisitions market this year, according to PwC’sUS Deals 2023 midyear outlook, which says companies and private equity with cash in hand are making deals happen. There are “opportunities for corporates with strong balance sheets. Private equity sponsors with large amounts of dry powder also have been getting deals done,” according to PwC.
Deal makers need cash because lending has become tougher and more expensive to obtain. Additionally, “the IPO market has remained quiet for over a year.”
Even the private equity market, which often leans heavily on debt financing, is reaching for other ways to get deals done: “Some PE sponsors have turned to more creative financing solutions, including higher equity contribution, seller’s notes, paid in-kind financing and the private credit markets.”
The challenging market is also impacting deal size. PwC found that deal makers are eschewing big deals in favor of smaller opportunities. However, although the deals appear to be smaller, the volume of M&A activity is “relatively strong compared to” COVID pre-pandemic levels.
Posted on July 14, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
Producer Price Index
By Staff Reporters
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Here is where the major benchmarks ended on Thursday
The S&P 500 Index was up 37.88 points (0.9%) at 4,510.04; the Dow Jones Industrial Average (DJIA) was up 47.71 points (0.1%) at 34,395.14; the NASDAQ Composite was up 219.61 points (1.6%) at 14,138.57.
The 10-year Treasury note yield (TNX) was down about 10 basis points at 3.763%.
CBOE’s Volatility Index (VIX) was up 0.04 at 13.58.
Technology shares were among the strongest performers Thursday, with the NASDAQ-100 Index (NDX) and Philadelphia Semiconductor Index (SOX) both climbing roughly 2% to 18-month highs. Communication Services and regional banks were also strong.
Oilfield services stocks gained on an extended rally in crude oil futures, which pushed above $77 a barrel near a three-month high. The U.S. dollar sank to its weakest point against the euro since February 2022 on expectations U.S. interest rates may have peaked.
Posted on July 12, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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American consumers are on track to run out of cash later this year, Bill Gross has warned.
Consumer spending is a key driver of economic growth. If it drops, a recession might be the result.
“Bond King” Gross said the government’s aggressive spending during the pandemic is still buoying the economy.
American consumers are propping up the economy by spending their pandemic savings, but they’re likely to run out of cash later this year, Gross warned.
“It’s fiscal policy not just monetary policy — stupid,” the billionaire investor tweeted. His point was that government spending and tax rates, along with interest rates and money supply, affect economic growth and inflation.
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Used Auto Prices Down
Used car prices in America saw the largest monthly slump since the height of the pandemic in June.
That’s good news on inflation, which could fall below 3% in June, the analyst said.
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Here is where the major benchmarks ended: yesterday
The S&P 500® Index (SPX) was up 29.73 points (0.7%) at 4,439.26; the Dow Jones Industrial Average (DJIA) was up 317.02 points (0.9%) at 34,261.42; the NASDAQ Composite (COMP) was up 75.22 points (0.6%) at 13,760.70.
The 10-year Treasury note yield (TNX) was down about 3 basis points at 3.978%.
CBOE’s Volatility Index (VIX) was down 0.23 at 14.84.
Energy companies led sector gainers Tuesday as crude oil futures extended a rally, with the benchmark WTI contract rising more than 2.5% and touching a 2½-month high on signs of lower Russian production.
The Philadelphia Oil Service Index (OSX) jumped more than 3% to a four-month high. Retail and transportation shares were also among the strongest sectors, while the health care and semiconductor sectors slipped.
Posted on July 10, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Miss seeing terms like “adjusted profits” and “forward guidance” in the ME-P?
They’re coming back as earnings season got underway on Friday with big banks reporting. Tech companies, in particular, will have to impress to justify their expensive share prices.
Posted on July 10, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Atracking stock, also known as letter stock and/or targeted stock is a specialized equity offering issued by a company that is based on the operations of a defined business within the larger organization (such as, for instance, a wholly owned subsidiary of a diversified firm). Therefore, the tracking stock will be traded at a price related to the operations of the specific division of the company being “tracked”.
Tracking stock is typically limited, or has no voting rights. Often, tracking stock is issued to separate a high-growth (but initially, unprofitable) division from its parent company, while the parent company and its shareholders remain in control of the subsidiary’s operations.
The Atlanta Braves professional baseball team is set to be spun-off into an independent company along with their related properties (Battery) in two weeks. Along with this change, an as-of-yet unknown amount of equity in the company is set to be publicly traded on the stock market. The easiest explanation of this transition is to get a more accurate (Liberty Media’s Ownership) valuation of the franchise as a precursor to a sale. The Braves already have a pretty unique business structure, being owned by a publicly traded media conglomerate as a semi-autonomous entity within the conglomerate and a tracking stock, but this formalizes the franchises independence much more.
In the view of some, there is significantly more downside as a fan than upside to a sale, as the absolute upside involves more spending on the team payroll, but the team already is near the top of the league in payrolls and the team performance on the field is clearly top tier in the league. The downside is that the new ownership meddles more in the operations of the club in a negative way and/or slashes budgets, etc.
Posted on July 7, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Ann Miller RN MHACMP™
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Our new e-books consists of text, images, and are fixed to a specific spot on the page.
And, our e-books are a data files similar in content and structure to a word-processing document that comes in a PDF format. To use our e-books, you need to purchase and download it to a device that has a .pdf file reader app, such as ADOBE® or similar on a smartphone, tablet or computer. A PDF, also known as a portable document format, is the format most people are familiar with and used in our e-books. PDFs are known for their ease of use and ability to hold custom layouts. They are the most commonly used e-Book formats, especially by professionals and adult-learners.
You can then access the e-book and read it, or highlight pages and even take side notes.
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Posted on July 7, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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When markets closed Friday, Apple’s market capitalization was over $3 trillion, making it the most valuable company — ever. It’s a massive milestone for the tech giant, which warned investors in May that its current quarter revenue was expected to decline. But Friday’s stock price increasing by just over 2 percent to close at $193.97 per share suggests that investors are still confident in the company, a bright spot in an industry that has otherwise been rocked by layoffs over the past year.
Curiously, Goldman Sachs is considering exiting its partnership with Apple, the Wall Street Journal reported on Friday, citing sources familiar with the matter.
The iPhone-maker and Goldman Sachs started rolling out a virtual credit card in 2019. The bank is in talks with American Express to take over its Apple credit card and other ventures with the tech giant, the report added.
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Here is where the major benchmarks ended:
The S&P 500 Index was up 53.94 points (1.2%) at 4,450.38, a gain of 16% for the first half of 2023. The Dow Jones Industrial Average (DJIA) was up 283.18 points (0.8%) at 34,407.60, up 3.8% in the first half. The NASDAQ Composite was up 196.59 points (1.5%) at 13,787.92 for a first-half gain of 32%.
The 10-year Treasury note yield (TNX) was down about 2 basis points at 3.837%.
CBOE’s Volatility Index (VIX) was down 0.15 at 13.39.
Oilfield services companies and others in energy led sector gainers Friday, after crude oil futures rose 1% (though oil prices are down 12% so far this year).
Technology and Consumer Discretionary stocks were also strong performers, while regional banks were among the laggards. The U.S. Dollar Index (DXY) eased slightly. It is down about 0.5% for the first half.
Posted on July 6, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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[AP]:Meta is poised to unveil a new app that appears to mimic Twitter — a direct challenge to the social media platform owned by Elon Musk. A listing for the app, called Threads, just appeared on Apple’s App Store, indicating it would debut as early as today. It is billed as a “text-based conversation app” that is linked to Instagram, with the listing teasing a Twitter-like micro-blogging experience.
“Threads is where communities come together to discuss everything from the topics you care about today to what’ll be trending tomorrow,” it said.
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Here is where the major benchmarks ended:
The S&P 500 Index was down 8.77 points (0.2%) at 4,446.82; the Dow Jones Industrial Average was down 129.83 points (0.4%) at 34,288.64; the NASDAQ Composite was down 25.12 points (0.2%) at 13,791.65.
The 10-year Treasury yield (TNX) was up about 7 basis points at 3.932%.
The CBOE Volatility Index (VIX) was up 0.49 at 14.19.
Chemical makers and other materials sector companies were among the weakest performers Wednesday. Semiconductor shares were also lower, as were many energy-company shares despite a 3% surge in crude oil futures. U
Utility stocks were among the strongest performers.
Posted on July 5, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Here is where the major benchmarks ended on Monday:
The S&P 500 Index was up 5.21 points (0.1%) at 4,455.59; the Dow Jones Industrial Average (DJIA) was up 10.87 points at 34,418.47; the NASDAQ Composite was up 28.85 points (0.2%) at 13,816.78.
The 10-year Treasury note yield (TNX) was up about 4 basis points at 3.862%.
The CBOE Volatility Index® (VIX) was little changed at 13.58.
Financial companies had a good day Monday, with the KBW Regional Banking Index (KRX) rising more than 2%.
The consumer discretionary sector was also strong, while energy companies got a bump as crude oil futures reached their highest level in more than a week.
Health Care stocks lagged.
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Wall Street is hoping for a strong start to the second half of 2023 taking cues from the recent tech rally that has boosted the overall investor sentiment. Turning toward the U.S.-China trade war, on Monday, the mainland posed restrictions on the export of gallium and germanium to the U.S. citing national security concerns. These metals are used in semiconductor manufacturing and the curb is being used as a means of retaliation to the U.S. chip ban on China.
Remarkably, Tesla (NASDAQ:TSLA) stock has been on an uphill climb lately, thanks to the growing adoption of its North American Charging Standard (NACS) charging connectors by major automakers including General Motors (NYSE:GM), Ford (NYSE:F), and Rivian (NASDAQ:RIVN). Moreover, the EV maker posted better-than-expected auto delivery and production numbers for the month and quarter ending June 30, pushing shares up 6.9% on July 3.
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Future Salaries Will Decrease?
Median incomes are projected to drop over the next few decades, falling by 0.43 percentage points per year between now and 2020, 0.52 points per year between 2020 and 2030, and 0.2 points per year between 2030 and 2040.
Although the figures on their own are not staggering, the percentage drops over time will add up significantly. By 2050, an employee who earned $50,000 in 2013 will only make $44,000. The number is even more noticeable after accounting for inflation.
Posted on July 4, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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July Fourth is Today
If you haven’t bought supplies for your cookout yet, you’ll find that sirloin steak and processed cheese for your burger are more expensive than last July Fourth, but chicken and eggs are cheaper, according to Wells Fargo’s Chief Agricultural Economist Michael Swanson.
Plus, filling up your gas tank will cost you about $1.30 less per gallon than a year ago, per AAA.
Jobs Report Incoming
The June jobs report highlights a relatively slow week for economic data. Once again, like in every month before it since January 2021, the report is expected to show that companies are still on the hiring grind, adding an estimated 225,000 new jobs last month.
Posted on June 30, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Three charged with insider trading related to Trump’s SPAC deal
The DOJ arrested three Florida investors, alleging they made more than $22 million in illegal profits through trading stock in the SPAC that took former President Trump’s social media company public.
The men are accused of trading shares in Digital World Acquisition Corporation based on nonpublic knowledge and making bank in October 2021 when news it planned to acquire Truth Social made its stock soar. Neither the former president nor his family members are implicated.
Posted on June 30, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Big banks powered the Dow higher h of positive economic headlines dropped. Financial institutions aced their Fed “stress test” that measures how they’d hold up during a downturn, Q1 GDP was revised much higher than previously calculated, and the number of Americans filing new unemployment claims fell the most in 20 months.
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Solid economic numbers lifted the S&P 500 and Russell 2000 to nearly two-week highs. So, here is where the major benchmarks ended:
The S&P 500 Index was up 19.58 points (0.5%) at 4,396.44; the Dow Jones Industrial Average (DJIA) was up 269.76 points (0.8%) at 34,122.42; the NASDAQ Composite (COMP) was little changed at 13,591.33.
The 10-year Treasury note yield (TNX) was up nearly 13 basis points at 3.838%.
CBOE’s Volatility Index (VIX) was up 0.11 at 13.54.
Financial companies were among the strongest sectors Thursday, with the KBW Regional Banking Index (KRX) rising nearly 2% to its highest level in over a week.
Oilfield services stocks also gained behind strength in crude oil futures, which briefly climbed above $70 a barrel to their highest price in a week. Communications services and technology shares were among the weakest sectors.
The U.S. Dollar Index (DXY) strengthened to its highest level in over two weeks amid expectations for higher interest rates.
Markets: Stocks ended mixed yesterday after Jerome Powell (and other major central bankers around the world) signaled that more interest rate hikes are as inevitable. In fact, Jerome Powell hinted he couldn’t rule out two rate raises in a row.
Stock spotlight: AI-chip hero Nvidia fell on reports that the US is considering even more restrictions on chip exports to China.
Posted on June 29, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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The new magic number for retirement is up slightly from last year, when U.S. adults said they believed they needed $1.25 million to retire comfortably, according to new findings from Northwestern Mutual. High-net-worth individuals – those with more than $1 million in investible assets – believe they’ll need $3 million to retire comfortably.
There’s quite a gap, however, between what people have now and what they think they’ll need. The average amount that U.S. adults have saved for retirement is only $89,300, up 3% from $86,869 in 2022, Northwestern Mutual found.
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Interestingly, more than four in 10 Americans (42%) said they could imagine a time when Social Security no longer exists, according to the research. And yet, people are relying on Social Security to provide 28% of their overall retirement funding. That’s more than personal savings (22%) and equal to retirement savings (28%).
Gen Z and millennials have tempered expectations – they anticipate Social Security will provide 15% and 19% of their overall retirement funding, respectively. That’s a significant drop from what boomers+ say – 38%.
Posted on June 28, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Over $200 billion from the U.S. government’s COVID-19 relief programs were likely stolen, a federal watchdog said on Tuesday, adding that the U.S. Small Business Administration (SBA) had weakened its controls in a rush to disburse the funds.
At least 17% of all funds related to the government’s coronavirus Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) schemes were disbursed to potentially fraudulent actors, according to a report released Tuesday by the SBA’s office of inspector general. Over the course of the pandemic, the SBA disbursed about $1.2 trillion of EIDL and PPP funds.
The SBA disputed the more than $200 billion figure put forward by the watchdog and said the inspector general’s approach had significantly overestimated fraud.
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Here is where the major benchmarks ended, yesterday
The S&P 500 Index was up 49.59 points (1.2%) at 4,378.41; the Dow Jones Industrial Average (DJIA) was up 212.03 points (0.6%) at 33,926.74; the NASDAQ Composite was up 219.89 points (1.7%) at 13,555.67.
The 10-year Treasury note yield (TNX) was up about 5 basis points at 3.766%.
Cboe’s Volatility Index (VIX) was up 0.50 at 13.75.
Technology stocks led sector gainers, with the Philadelphia Semiconductor Index (SOX) rising nearly 4%. Consumer Discretionary and Retail shares were also higher. Energy shares lagged as crude oil futures dropped more than 2%.
Posted on June 25, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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The S&P 500 Index ($SPX) (SPY) was down -0.61%, the Dow Jones Industrials Index ($DOWI) (DIA) was down -0.45%, and the NASDAQ 100 Index ($IUXX) (QQQ) was down -1.11%.
U.S. stocks were undercut by weak U.S. manufacturing PMI and the weak Eurozone PMI reports, which indicated that the U.S. and Eurozone economies are struggling even as the Fed and the ECB plan further rate hikes.
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Alternative Investments?
Oddity, which runs the makeup brand Il Makiage, has filed paperwork for an IPO.
SpaceX is offering to sell select buyers shares at a price that values the private company at ~$150 billion, Bloomberg reports.
Bitcoin hit its highest price in a year, signaling that a thaw has come in the crypto winter.
Healthy investments: Despite a VC slowdown in 2022, healthcare firms raised $61.1 billion in investments. Want to know how VCs decide which healthcare startups to fund? Read more here.
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Stock spotlight: GSK shares surged on both the London and New York exchanges after the company settled what would have been the first case against it to go to trial in the US claiming its heartburn drug Zantac causes cancer. It would have been a high-profile test case since thousands of similar cases have been filed.
Posted on June 23, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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The marine mystery that captivated the world this week had a tragic conclusion: Authorities confirmed yesterday that they found broken pieces of the OceanGate Titan submersible near the Titanic wreckage it was en route to explore, meaning its five passengers are dead.
They are OceanGate CEO Stockton Rush, British explorer Hamish Harding, Titanic expert Paul-Henri Nargeolet, British-Pakistani businessman Shahzada Dawood, and his son, Suleman Dawood (who, according to his aunt, was “terrified” of the trip but ultimately went to please his dad for Father’s Day).
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Here is where the major benchmarks ended yesterday
The S&P and NASDAQ found their way back into the green after a three-day losing streak, though the market overall has been a little sleepy this week.
Yesterday’s winner goes to Overstock which jumped after the online retailer agreed to buy Bed Bath & Beyond’s IP, name and digital assets for $21.5 million. But BB&B, which went bankrupt in April, won’t be able to keep its stores open as part of the deal.
And, the 10-year Treasury note yield (TNX) was little changed at 3.727%.
While, CBOE’s Volatility Index (VIX) was was down 0.68 at 13.19.
Technology shares were among the weakest performers Wednesday, with the Philadelphia Semiconductor Index (SOX) dropping nearly 2% to near a two-week low.
Regional banks were also lower. Energy stocks led sector gainers as crude oil futures jumped nearly 2% to a two-week high on hopes for stronger demand from China.
Volatility based on the VIX sank to its lowest level since January 2020.
Posted on June 17, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Here is where the major benchmarks ended; yesterday
The S&P 500 Index was down 16.25 points (0.4%) at 4,409.59; the Dow Jones industrial average was down 108.94 (0.3%) at 34,299.12; the NASDAQ Composite was down 93.25 (0.7%) at 13,689.57.
The 10-year Treasury note yield (TNX) was up about 4 basis points at 3.769%.
CBOE’s Volatility Index (VIX) was down 0.97 at 13.53.
Retailers and regional banks were among the weakest performers Friday, and the Russell 2000 ended with a loss of about 1%.
Energy companies were among the strongest sectors thanks to crude oil futures extending a recent rally above $70 a barrel.
Posted on June 14, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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DEFINITION: A consumer price index (CPI) is a price index, the price of a weighted average market basket of consumer goods and services purchased by households. Changes in measured CPI track changes in prices over time.
1. Energy is doing a lot of the work. Cheaper energy played a major role in pulling inflation down to 4% last month from 4.9% in April, per Axios. Gas prices plunged almost 20% from last year, when Russia’s invasion of Ukraine sent fuel costs to the moon, while broader energy prices fell nearly 12%.
2. “Revenge spending” is down. Once COVID pandemic lock downs lifted, Americans splurged on vacations, leisure, and recreation (new pickle ball paddles!) in what economists dubbed “revenge spending.” Now that everyone has taken their week long trip to Italy, there are signs that revenge spending is waning: Airfare prices dropped 13% annually in May and, according to the US Travel Association, hotel demand is below 2019 levels. Bad for your Instagram, but good for inflation.
3. Food prices are up. The cost of food ticked up 0.2% in May from April after staying flat in the previous two months, showing how inflation has persisted on grocery store shelves. But not all aisles are created equal—the price of eggs dropped nearly 14% from April (the biggest one-month drop since 1951), while fruit and veggie prices rose 1.3%.
4. More than anything else, rent is propping up inflation. Shelter costs are the largest category in the CPI report, and they’re still on the upward march, climbing 8.7% from a year earlier. The good news: Economists say this government data doesn’t reflect on-the-ground information, such as reports of softening rent by Zillow and Apartment List. Shelter costs in the CPI are expected to decline during the second half of the year.
Posted on June 10, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Republicans in the U.S. House of Representatives just unveiled a series of new tax breaks aimed at businesses and families while proposing to reverse some of President Joe Biden’s legislative victories, including credits to spur the sale of clean-burning electric vehicles.
Under the proposed legislation, married couples filing jointly would receive a $4,000 “deduction bonus” for two years that the committee said would potentially help up to 107 million families who take the standard deduction.
The legislation also would significantly increase the way businesses could claim depreciation deductions, raising the threshold to a permanent $2.5 million from the current $1 million that was contained in the Republicans’ broad 2017 tax cut package.
Other provisions include an expansion of tax benefits for small start-up enterprises to “S Corporations,” while eliminating some “red tape” that small businesses experience related to contract workers.
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The Closing Friday Markets
Markets: Stocks celebrated the summer Friday by jumping up yesterday, giving the S&P 500, which recently reentered bull market territory, its fourth positive week in a row. And, Tesla enjoyed its eleventh consecutive trading day in the green, matching its longest hot streak.
The S&P 500 Index was up 4.93 points (0.11%) at 4,298.86; the Dow Jones Industrial Average (DJIA) was up 43.17 points (0.13%) at 33,876.78; the NASDAQ Composite (COMPX) was up 20.62 points (0.16%) at 13,259.14.
The 10-year Treasury note yield (TNX) was little changed at 3.740%.
CBOE’s Volatility Index (VIX) was up 10 points at 13.75.
The Technology, Consumer Discretionary, and Communication Services sectors—home to market heavyweights such as Alphabet (GOOGL), Apple (AAPL), Meta (META), Microsoft (MSFT), NVIDIA (NVDA), and Tesla (TSLA)—were the strongest performers Friday. Energy was among the weaker sectors, as crude oil futures fell 1.5% to just above $70. The small-company-focused Russell 2000 (RUT) lagged, falling about 0.9%.
Posted on June 6, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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The Normandy landings were the landing operations and associated airborne operations on Tuesday, 6th June 1944 of the Allied invasion of Normandy in Operation Overlord during World War II. Code-named Operation Neptune and often referred to as D-Day, it was the largest seaborne invasion in history.
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It has also been 42 years since the CDC first reported on AIDS in the US, describing five Los Angeles-area patients with Pneumocystis jiroveci pneumonia. Today about 1.2 million people in the US live with HIV, the virus that causes AIDS, a condition that’s considered chronic but not necessarily fatal. Still, US leaders want to end the HIV epidemic by 2030.
Advocates are calling for gun violence to be considered as an “adverse childhood experience.”
Chicago health officials still recommend exercising caution over Mpox in the year following a major outbreak.
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With the drama of earnings season, the debt ceiling battle, and last Friday’s crucial jobs report in the rear-view mirror, Wall Street enters the week seeking new catalysts.
The S&P 500 Index (SPX) starts the week on the cusp of a new bull market. A close of 4,292 or above would represent approximately a 20% gain from the 2022 low close of 3,577 posted last October 12. A 20% gain from the bottom represents a new bull market. That said, the SPX is still down about 11% from its all-time high close of 4,796 posted January 3, 2022.
You may recall a strong rally last summer. But the 17% rally that lasted from mid-June 2022 through mid-August 2022 lifted the SPX just 17%—not enough to put it into bull market territory.
The 10-year Treasury note yield ($TNX) was down slightly to 3.68%. The U.S. Dollar Index ($DXY) is up slightly to 104.29. The Cboe Volatility Index® ($VIX) has been in positive territory all day today and was last seen up by 0.27 to 14.87. WTI Crude Oil (/CL) is up to $73.22 per barrel after Saudi Arabia said it would cut production.
Gold prices have traded in a range of $1,953.80 to $1,978.00 and were last seen trading higher by 0.17% to $1,973.00.
Natural Gas prices have traded in a range of $2.184-2.2301 so far today and were last seen trading higher by $0.077 (or + 3.55%) to $2.249/MMBtu.
Posted on June 4, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
Mobile money, mobile money transfers and mobile wallets
By Staff Reporters
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DEFINITION: A mobile payment, also referred to as mobile money, mobile money transfer and mobile wallet, is any of various payment processing services operated under financial regulations and performed from or via a mobile device, as the cardinal class of digital wallet. Instead of paying with cash, cheque, or credit cards, a consumer can use a payment app on a mobile device to pay for a wide range of services and digital or hard goods. Although the concept of using non-coin-based currency systems has a long history, it is only in the 21st century that the technology to support such systems has become widely available.
Mobile payments began adoption in Japan in the 2000s and later all over the world in different ways. The first patent exclusively defined “Mobile Payment System” was filed in 2000.
Don’t use Mobile Payment Services to Park Cash, CFPB Warns.
Venmo may not be that much better than stuffing bills under your mattress when it comes to keeping your money safe long term, the Consumer Financial Protection Bureau recently cautioned.
The app and others, like CashApp, Apple Pay, and PayPal, aren’t banks, so the Federal Deposit Insurance Corporation doesn’t provide insurance for funds stored there, the CFPB pointed out. The agency said there are billions of dollars at risk if these apps suffer an SVB-like bank failure.
Posted on June 4, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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The US kept adding jobs according to new data from the Bureau of Labor Statistics. The economy gained 339,000 pay-rolled employees in May, more than in each of the preceding three months and way more than the 190,000 Dow Jones predicted (to be fair, expert estimates low-balled 13 of the last 16 job reports, according to CNBC. This growth happened despite climbing interest rates, inflation, recent bank failures, and a nerve-racking debt ceiling standoff that threatened to destroy the economy And, Wall Street interpreted the data as a big green “buy” sign. For example:
Stocksleaped up last week as investors celebrated the deal to lift the debt ceiling being showed that the economy is still going strong. In fact, Lululemon stretched toward the heavens after beating earnings expectations thanks to a 24% year over year jump in sales.
But not all indications pointed to the hot streak continuing indefinitely.
The unemployment rate inched, wage growth slowed, and workers appear less self-assured in the labor market:
The self-employed lost 369,000 people from its ranks in May, a possible sign that folks might be ditching the self-employment for the security of a traditional employer.
And, recent data shows the quit rate has declined from an all-time high in late 2021, bringing an end to the pandemic job-hopping trend dubbed the Great Resignation.
Ultimately, the Fed will have to use the conflicting and mixed economic indicators to decide whether to further crank up interest rates at their next meeting. The Federal Reserve has been hinting that it might cease raising interest rates, and investors seem convinced the central bank will follow through and at least “skip” a hike this month even though the labor market is still radiating heat.
Posted on June 3, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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The end of debt standoff and a stronger-than-expected jobs report helped boost the Dow to its biggest gain in over six months, while the NASDAQ is near a 14-month high.
Here is where the major benchmarks ended yesterday:
The S&P 500® Index (SPX) was up 61.35 points (1.5%) at 4282.37, near a 10-month high; the Dow Jones industrial average was up 701.19 (2.1%) at 33,762.76; the NASDAQ Composite was up 139.78 (1.1%) at 13,240.77.
The 10-year Treasury note yield (TNX) was up about 9 basis points at 3.695%.
CBOE’s Volatility Index (VIX) was down 1.07 at 14.58.
Financial companies were among the strongest performers Friday, with the KBW Regional Banking Index (KRX) rising more than 6%.
Oilfield services companies and others in the energy sector were also strong, as crude oil futures extended a recent rally above $70 per barrel. Volatility measures dropped as the debt ceiling deal removed a source of uncertainty, with the VIX hitting its lowest level since July 2021.
Posted on May 23, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Last week, investors shrugged off debt ceiling worries to send the S&P and the NASDAQ to their best weekly performance since March. Tech stocks have posted impressive gains this year thanks to the hype around artificial intelligence:
Four giants that have made a big deal about investing in AI—Meta, Alphabet, Microsoft, and Nvidia—have surged in 2023 and now account for ~15% of the S&P 500’s market capitalization, according to Barron’s.
Posted on May 22, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Staff-level discussions over the debt ceiling and budget between the White House and congressional Republicans will resume later today evening after President Joe Biden and House Speaker Kevin McCarthy spoke by phone Sunday afternoon, according to a White House official.
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Traders who WFH do less crime. Employees of financial institutions who work the trading desk from home are less likely to commit securities fraud than in-person colleagues, according to a forthcoming article in European Financial Management.
One theory is that being out of the office shields do-gooders from their crime-inclined colleagues’ peer pressure, which is likely more potent face-to-face than over Slack. Remote work reduced the likelihood of misconduct reports among traders by nearly 15%, but it’s worth noting that the workers allowed to WFH are the ones who already showed a lower risk of committing securities violations.
Posted on May 21, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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According to a new report from S&P Global, the number of companies that have gone bankrupt so far in 2023 is higher than the first four months of any year since 2010.
Filings through April have pushed the year-to-date count to 236 — more than double the comparable figure a year ago and higher than any of the prior 12 years. Leading the way were companies selling directly to consumers (Bed, Bath & Beyond being the most notable), followed by industrials and then financial services.
Posted on May 6, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Ann Miller RN MHACMP™
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And, our e-books are a data files similar in content and structure to a word-processing document that comes in a PDF format. To use our e-books, you need to purchase and download it to a device that has a .pdf file reader app, such as ADOBE® or similar on a smartphone, tablet or computer. A PDF, also known as a portable document format, is the format most people are familiar with and used in our e-books. PDFs are known for their ease of use and ability to hold custom layouts. They are the most commonly used e-Book formats, especially by professionals and adult-learners.
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Posted on May 3, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Markets: The relative calm after JPMorgan scooped up First Republic Bank lasted all of…one day. Two other West Coast lenders, PacificWest and Western Alliance, both tumbled in a sign investors still smell blood among regional banks.
Economy: Happy Fed Decision Day to all who celebrate. With inflation sizzling at still-uncomfortably high levels, Chair Jerome Powell is expected to announce the central bank’s 10th straight interest rate hike this afternoon. But many economists expect this rate increase could be the grand finale.
Layoffs jump to the highest level since late 2020. The number of job openings in the US dropped to a nearly two-year low in March, and layoffs increased to their highest point since December 2020, the Labor Department revealed yesterday. In this “bad news is good news” economic environment, the Fed will be pleased that the boiling-hot labor market is cooling off. It means less pressure on inflation and more justification to pause hiking rates.
Posted on May 3, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
FOR MEDICAL AND HEALTHCARE ENTREPRENEURS AND INNOVATORS
By Dr. David Edward Marcinko MBA MEdCMP®
I was asked by business schools and medical colleagues – and their bankers, CPAs and advisors – to speak about this topic several times last year before the pandemic.
Now, with the specter of M-4-A etc; it certainly is a vital concern to all young entrepreneurs, doctors & medical professionals whether live, audio recorded or in podcast form. And so, here is a written transcript of a recent presentation for your review.
Now, with the specter of tele-health, tele-medicine, M-4-A etc; it certainly is a vital concern to all young doctors & medical professionals whether live, audio recorded or in podcast form. And so, here is a written transcript of a recent presentation for your review.
Posted on May 2, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Treasury Secretary Janet Yellen warned yesterday that the US could run out of money to pay all its bills as early as June 1st if Congress does not raise or suspend the debt limit before then. The US’ first-ever default would be disastrous for financial markets, economists say.
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Meanwhile, Europe’s painful inflation has inched higher, extending the squeeze on households and keeping pressure on the European Central Bank to unleash what could be another large interest rate increase. Consumer prices in the 20 countries using the euro currency jumped 7% in April from a year earlier, just up from the annual rate of 6.9% in March, the European Union statistics agency Eurostat said today. Food price inflation eased a little, falling to an annual rate of 13.6% from March’s 15.5%, while energy prices rose a more modest 2.5%. Core inflation, which excludes volatile food and fuel, slowed slightly but was still high at 5.6%, underlining the expectation that the ECB will press ahead with its campaign to beat inflation into submission with rate hikes.
Posted on May 1, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
Detailing Oversight Lapses
By Staff Reporters
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The Fed says it’s time for new bank rules
Just in time for a new looming bank failure, the Federal Reserve issued a 102-page report dissecting the corpse of Silicon Valley Bank. Meanwhile, FRB [First Republic Bank] FRB was just sold to JPMorgan Chase.
And in an accompanying letter, Michael Barr, the Fed’s vice chair for supervision, called for stricter rules to be applied to more financial institutions and for more tools to be given to regulators to bring firms with poor capital planning and risk management into line.
Posted on April 30, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Eli Lilly (NYSE: LLY) investors continued to be in a good mood about their stock on Friday. Following the estimates-beating first quarter reported by the big pharmaceutical company the previous morning, they traded the shares up by 1.4% on the final trading day of the week. That eclipsed the 0.8% gain of the S&P 500 index.
Researchers at MIT have created a new type of tabletop printer that spits out vaccine doses on demand in the form of thumbnail-size microneedle patches. Once scaled, this mobile technology could produce hundreds of doses per day, revolutionizing pandemic response. And in a boon for warmer or more remote parts of the world, the vaccine patches can be stored at room temperature for months before they’re slapped on—no refrigeration or professional administering required.
Posted on April 19, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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First quarter earnings from big lending institutions painted something of a mixed picture, with Bank of America posting healthy returns as Goldman Sachs on Tuesday saw headwinds from its loan portfolio.
The following is a round-up of yesterday’s market activity:
The S&P 500 Index was up 3.55 points (0.1%) at 4154.87; the Dow Jones industrial average was down 10.55 at 33,976.63; the NASDAQ Composite was down 4.31 at 12,153.41.
The 10-year Treasury yield was down about 2 basis points at 3.574%.
CBOEs Volatility Index was down 0.12 at 16.83.
Small-cap stocks, which tend to suffer more from recession concerns than their large-cap peers, were among the weakest performers with the Russell 2000 falling about 0.4%. Communications services and utilities were laggards among S&P 500 sectors, while industrials and consumer staples were stronger.
Volatility as measured by the VIX continued to drop to the lowest levels since late 2021.
Posted on April 10, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
NOW AVAILABLE
By Staff Reporters via CMS
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Open Payments is a national disclosure program that promotes a transparent and accountable healthcare system. Open Payments houses a publicly accessible database of payments that reporting entities, including drug and medical device companies, make to certain healthcare providers, which are referred to as covered recipients.
Pre-publication review and dispute for the Program Year 2022 Open Payments data opened on April 1st and is available through May 15th, 2023. Disputes must be initiated by May 15th, 2023 in order to be reflected in the June 2023 data publication.
Posted on April 6, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Understanding FDIC insurance limits
The FDIC wants to make sure it can cover everyone with a bank account, so to make that happen, it caps how much money it insures. The FDIC says its standard is to cover up to “$250,000 per depositor, per insured bank, for each account ownership category.
Here’s an example: Let’s say you have $100,000 in your checking account and $150,000 in your savings, all at the same bank. The FDIC classifies those under the same category: single accounts.So you would have hit your FDIC deposit limit. Every additional cent deposited into either account would be uninsured. But if you have money in other banks or other deposit categories, you may have additional coverage.
Could the insured deposit cap get a lift?
At least four US lawmakers—two from each side of the aisle—said they would support raising the cap on FDIC-insured deposits in order to reassure frazzled bank customers that their deposits are safe. The current cap is $250,000 (up from $100k pre-financial crisis), but Democratic Sen. Elizabeth Warren said bumping it up “is a good move.” Opponents of raising the cap say it would only increase risk-taking and bad behavior by banks. Some even argue we should lower it.
Posted on April 5, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Happy Passover to all those celebrating tonight
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Johnson & Johnson proposes monster $8.9 billion talc settlement. The healthcare giant offered $8.9 billion to settle lawsuits from tens of thousands of people who claim that its talc-based powders and other products gave them cancer. It’s a huge increase from the $2 billion J&J originally offered and would be one of the largest product liability settlements in history, according to the WSJ. To clinch the settlement, J&J needs support from more than 75% of the voting claimants—and it thinks it has it.
And here’s how the major indexes performed yesterday, Tuesday:
The S&P 500 Index fell 23.91 points (0.6%) to 4,100.60; the Dow Jones industrial average fell 198.77 (0.6%) to 33,402.38; the NASDAQ Composite fell 63.13 (0.5%) to 12,126.33.
The 10-year Treasury yield fell about 9 basis points to 3.346%.
Small-cap stocks were among the weakest performers Tuesday, with the Russell 2000 index sinking more than 2%. Industrial, energy, and financial stocks led decliners among S&P 500 sectors. Gold futures surged to a 13-month high, while the U.S. dollar index slipped.
Shares of Walmart fell as the largest U.S. retailer began its investor meeting Tuesday. Comments from Walmart executives could offer indications on the overall financial health and spending patterns of U.S. consumers. The company said in February that high prices and weak demand for discretionary items could be headwinds.
Posted on April 4, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Major U.S. stock indexes ended mixed, after the announcement of a surprise OPEC+ production cut sent crude oil prices to two-month highs and fueled inflation concerns that could keep the Federal Reserve in policy-tightening mode. This weekend, several OPEC+ members, including Saudi Arabia, announced production cuts totaling nearly 1.2 million barrels a day that are slated to start in May. In response, WTI crude futures soared above $80 a barrel. Word of the planned cuts also boosted expectations that the Fed could raise its benchmark interest rate again in May as the central bank extends efforts to tamp down inflation. The OPEC+ cuts “suggest more headline inflation pressure in the near-term,” says Jeffrey Kleintop, chief global investment strategist at Charles Schwab & Co. The potential for further waves of inflation will “keep central banks from declaring victory over excessive price gains,” he adds. “That’s another headwind for tech stocks and other ‘long duration’ equities that get more of their cash flow in the future than in the near term.”
The following is a round-up of today’s market activity:
The S&P 500® Index was up 15.2 (0.4%) at 4124.51, the highest close since Feb. 15; the Dow Jones industrial average was up 327 (1.0%) at 33601.15; the NASDAQ Composite was down 32.45 (0.3%) at 12189.45.
The 10-year Treasury yield was down about 7 basis points at 3.417%.
CBOE’s Volatility Index was down 0.14 at 18.56.
Oil producers and other energy companies led gainers Monday. Health care stocks also outperformed. Consumer discretionary and real estate were among the laggards.
Among individual stocks, Tesla (TSLA) shares tumbled over 6% following reports the electric car-maker delivered just 423,000 vehicles in the first quarter. Analysts had expected 430,000, according to research firm FactSet.
Looking ahead, medical companies, especially vaccine makers, may be worth watching this week with the World Vaccine Congress taking place in Washington, D.C. Some well-known vaccine makers include Moderna (MRNA), Johnson & Johnson (JNJ), and GlaxoSmithKline (GSK). Late last month, Walgreens Boots Alliance (WBA) reported a steep year-over-year decline in demand for COVID-19 vaccinations.
The U.S. dollar index fell slightly, while gold futures climbed above $2,000 per ounce to post their highest close in over two years.
Posted on April 3, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Nouriel Roubini says the economy is headed for a “doom loop”. That’s due to three stressors in the economy, which will leave the Fed unable to fight a recession. Roubini, who called the 2008 downturn, has long warned of imminent financial chaos. And, he has more dire words of warning for the economy.
“Dr. Doom” warned in a column this week that the US face a major financial crisis and the economy is entering what he calls a “doom loop”.
In an op-ed for Project Syndicate on Thursday, Roubini forecasted a coming cycle of economic pain, as the US struggling under both high inflation and high debt burdens. Those issues perpetuate each other, he said, warning of a recession and impending financial crisis that would only get worse the longer it dragged on.
During an appearance on “Fox & Friends Weekend,” Breitbart economics editor John Carney warned that the dollar’s feeble valuation could be a “serious threat” to the U.S.’s crucial influence on the world stage.
“”[It’s] not only a serious threat, I think it is inevitable. We went through three stages, as you said, after World War II. The U.S. was the biggest economy in the world. In the 1970s, global banking became basically dollar central. With the fall of the Soviet Union, the entire world, more or less, came under the domination of the U.S dollar…”
Posted on April 2, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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A disastrous month of March is what Charles Schwab has just experienced. An avalanche of bad news fell on the firm. The stock fell 33% between Feb. 28 and Mar. 31. At the end of February, Charles Schwab’s shares were trading at around $77.92. A month later the price is now $52.38. The difference translates to more than $47 billion in market capitalization wiped out in just one month. According to Bloomberg News, this is Charles Schwab’s worst month since the October 1987 stock market crash, known as Black Monday. That day, the Dow Jones index lost 508 points, a decline of 22.6% and the largest daily decline in a stock market index at the time. Only the drop by 76% of the Icelandic stock market in 2008 would exceed this record.
VERSUS
With the first quarter of 2023 behind us, and despite wild fluctuation due to continuous rate hikes from the Fed and an unexpected bank panic, stocks and bonds managed to turn in a pretty, pretty, pretty good performance for the quarter. The S&P 500 gained 7%, and the Dow Jones Industrial Average gained 0.4%. But if the market’s metaphorical report card is impressive, tech companies were indisputably the honors students.
Wall Street rewarded tech companies’ layoffs and other cost cutting measures, giving tech stocks a resurgence. And with ChatGPT becoming a household name, investors have their money on generative AI as the next big bet. As of last night:
The tech-heavy NASDAQ Composite index rose a whopping 18% since January 1, its largest quarterly gain in two years.
Stocks of the tech giants leading the charge in AI-powered search, Microsoft and Alphabet, are up 20% and 16%, respectively.
Bank stocks were a delight for short sellers, who made $2 billion betting against the sector in the past three months.
Smaller institutions were most badly injured by the bank panic: The SPRD S&P Regional Banking ETF, which consists of non-behemoth banks, had more than a quarter of its value wiped out in Q1.
Large banks are feeling the pinch of rising interest rates: Global merger and acquisition deals suffered the biggest first-quarter decline since 2001, according to data analyzed by the Financial Times.
Posted on March 31, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Analysts at Morgan Stanley downgraded Charles Schwab Corp (NYSE: SCHW) on Tuesday, citing concerns over cash sorting and regulatory changes. But, Schwab CEO Walt Bettinger recently said that the company’s banking unit had enough liquidity to cover if 100% of its bank deposits ran off without having to sell a single security — Morgan Stanley says otherwise. Schwab’s recent performance has not been up to Morgan Stanley’s expectations, with customers moving cash out of sweep accounts into money market funds at a rate twice that which the bank had been modeling.
The S&P 500® Index rose 23 points (0.57%) to 4050.84; the Dow Jones industrial average was up 141 points (0.43%) at 32859.03; the NASDAQ Composite was up 87 points (0.73%) at 12013.47.
The 10-year Treasury yield slipped 2 basis points to 3.555%.
CBOE’s Volatility Index was little changed at 19.14.
Posted on March 24, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Wall Street’s $30 billion infusion into First RepublicBank didn’t manage to calm investors’ jitters about how banks are holding up. The regional bank’s stock tanked againFriday, dragging most of the market down with it. Moody’s Investors Service downgraded its credit rating on First Republic Bank to junk, citing a “deterioration in the bank’s financial profile.” First Republic’s debt rating was cut to B2 from Baa1, Moody’s said. Fitch Ratings and S&P Global Ratings downgraded First Republic Bank’s debt earlier this week.
The downgrade reflects “the deterioration in the bank’s financial profile and the significant challenges First Republic Bank faces over the medium term in light of its increased reliance on short-term and higher cost wholesale funding due to deposit outflows,” Moody’s analysts said in a release.
And, SVB’s parent company filed for Chapter 11 bankruptcy yesterday, buying it time to pay off creditors and making it easier to sell off its assets (but the bank itself, currently in the hands of the FDIC, isn’t part of the filing). Meanwhile, President Biden called on Congress to make it easier to punish bank executives if their mismanagement causes a bank to collapse, including allowing regulators to claw back their pay.
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But Big Tech stocks got a boost from investors looking to park their cash in non-bank companies, pushing Microsoft to its best weeks in almost eight years.
Posted on March 23, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
AT1 BONDS =OH NO!
By Staff Reporters
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DEFINITION: Junk bonds are bonds that carry a higher risk of default than most bonds issued by corporations and governments. A bond is a debt or promise to pay investors interest payments along with the return of invested principal in exchange for buying the bond. Junk bonds represent bonds issued by companies that are financially struggling and have a high risk of defaulting or not paying their interest payments or repaying the principal to investors. Junk bonds are also called high-yield bonds since the higher yield is needed to help offset any risk of default.
AT1 DEFINITION: Additional Tier 1 bonds are also known as “contingent convertibles,” or “CoCos”. They were created in the wake of the 2008 financial crisis as a way for failing banks to absorb losses, making a taxpayer-funded bailout less likely. They are a risky bet — if a lender gets into trouble, this class of bonds can be quickly converted into equity, or written down completely. Because they are higher-risk, AT1s offer a higher yield than most other bonds issued by borrowers with similar credit ratings, making them very risky. If AT1s are converted into equity, this supports a bank’s balance sheet and helps it to stay afloat. They also pave the way for a “bail-in”, or a way for banks to transfer risks to investors and away from taxpayers if they get into trouble.
UBS’s emergency takeover of Credit Suisse may have been necessary to avert a financial crisis, but at least one group is Yosemite Sam-level angry over how the deal shook out. Investors holding $17 billion worth of Credit Suisse’s additional tier-one bonds were shocked to discover that their $17 billion was now worth a grand total of…$0. The value of those bonds had been completely wiped out in the deal.
Additional tier-one bonds, or AT1 bonds for short, were established after the 2008 financial crisis to reduce the likelihood that taxpayers would have to bail out a failed bank. AT1s are considered riskier assets, but with that risk comes higher potential returns.
So, if these bondholders knew they were taking on risk, why are they so upset?
According to MorningBrew, mainly because, in this unusual deal, they got wiped out while shareholders didn’t. That’s not how the order of operations usually works:
When a write-down happens, shareholders traditionally suffer losses before bondholders get hit.
This deal flipped the food chain, and livid AT1 bondholders are now huddling up with lawyers about potential legal action.
Posted on March 20, 2023 by Dr. David Edward Marcinko MBA MEd CMP™
When Does Spring Start?
By Staff Reporters
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In 2023, the official first day of spring is today Monday, March 20th. This date marks the “spring equinox” in the Northern Hemisphere. So, what is the spring equinox and is it always on the 20th? Read on to learn more—plus, enjoy ideas on how to celebrate the season!
UBS agreed to buy its embattled rivalCredit Suisse for 3 billion Swiss francs ($3.25 billion) yesterday, with Swiss regulators playing a key part in the deal as governments looked to stem a contagion threatening the global banking system.
“With the takeover of Credit Suisse by UBS, a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation,” read a statement from the Swiss National Bank, which noted the central bank worked with the Swiss government and the Swiss Financial Market Supervisory Authority to bring about the combinationof the country’s two largest banks.
In a previous ME-P column I explained why any currency-issuing country, like the US, will never default on its obligations or run out of money with which to purchase goods and services priced in its own currency. Sovereign nations that are currency issuers have no solvency constraints, unlike currency users such as individuals, corporations, and government entities that don’t issue currency.
To follow up, let’s look at what has become known as Modern Monetary Realism (MMR). Economist Cullen O. Roche describes it in a 2011 article on his Pragmatic Capitalism website titled “Understanding the Monetary System.”
This theory came into existence in 1971 when President Nixon eliminated the gold standard and allowed the government to print money at will. This was a paradigm shift in our monetary policy that’s gone largely unnoticed for decades by many educators, economists, and politicians.
Guiding MMR Principles
The principles of MMR are:
The Federal Reserve works in partnership with the US Treasury to issue currency. All other units of government, private entities, and individuals are users of the currency.
The government creates money by minting coins, printing cash, and issuing reserves. The private banking sector creates money by creating loans and bank deposits.
The Federal Government cannot “go broke.” It is inaccurate to compare it to households, companies, and local governments, which all are users of money and can go bankrupt.
The major constraint on currency issuers (sovereign governments like the US) is inflation. It behooves governments to manage the money supply prudently in order to avoid impoverishing their citizens through devaluing the currency.
Floating exchange rates between countries are a necessity to help maintain equilibrium and flexibility in the global economy. Nations that unduly inflate their currency suffer the consequences of devalued currency, shrinking purchasing power, and contracting lifestyles.
The debt of a sovereign currency issuer is default-free. The issuer can always meet debt obligations in the currency which it issues.
Cullen O. Roche Speaks
Roche suggests that a functional government supports the country’s financial system in four ways:
The US government was created by the people, for the people. “It exists to further the prosperity of the private sector—not to benefit at its expense.” Roche argues that when government becomes corrupt by obtaining too much power or issuing too much currency that results in high inflation, it then becomes susceptible to a revolt and dissolution.
Government’s role is to be actively involved in regulating and helping to build an infrastructure within which the private sector can generate economic growth. Roche views regulation as not only beneficial, but necessary to temper the inevitable irrationality that can disrupt markets. Still, he emphasizes that it is the private sector, not the public sector, which drives innovation, productivity, and economic growth.
Money, while a creation of law, must be accepted by the private sector while prudently regulated by the federal government, keeping in mind that the purpose of the regulation is to maximize private sector prosperity.
“Because the Federal government is not a business or a household it should not manage its balance sheet for its own benefit,” notes Roche, “but in a way that most benefits the private sector and encourages private sector prosperity, productivity, innovation and growth.”
Assessment
Like me, you may need to re-read this a couple of times to begin to grasp the concepts. Once you throw off the outdated pre-1971 model of the monetary system, understanding the basics of MMR isn’t difficult. Knowing the basics of how our monetary system works will help physicians, and all of us, frame the important issues in the turmoil unfolding in Europe and in our own upcoming elections.
Conclusion
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