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According to Bloomberg, SoftBank Group Corp.’s first earnings report without founder Masayoshi Son went a lot like those he presided over the past few years: The Japanese conglomerate lost billions of dollars on failed startup bets.
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ZOOM-The videoconferencing company that became a household name during Covid is cutting 15% of its workforce, or about 1,300 people. CEO Eric Yuan said the “uncertainty of the global economy” was partly to blame, but he also admitted the company “made mistakes.” To own up to those mistakes, Yuan said he’s reducing his upcoming fiscal year salary by 98% and ditching his 2023 corporate bonus. Zoom shares are down about 85% from their 2020 highs’ according to Bloomberg.
U.S. equities finished near their lows of the day as the markets continued to digest mixed earnings data and last night’s State of the Union Address from President Joe Biden. Meanwhile, yesterday’s commentary from Fed Chairman Jerome Powell remained in focus after he acknowledged that inflation pressures are coming down but more needs to be done to finish to job.
Earnings season continued in earnest, as Chipotle Mexican Grill missed estimates, but Uber Technologies topped quarterly expectations and issued a positive outlook, and Yum! Brands also bested the Street’s projections. Outside earnings, Activision Blizzard fell as U.K. regulators are challenging Dow member Microsoft Corporation’s near $69 billion takeover agreement of the gaming company.
The economic calendar was relatively light, but mortgage applications rebounded last week, and wholesale inventories were unrevised at its previously reported modest increase.
Treasury yields were lower, and the U.S. dollar was little changed, while crude oil prices were higher to add to a weekly advance, and gold saw a modest gain.
Asia finished mixed and Europe was mostly higher with the markets continuing to grapple with monetary policy uncertainty across the globe.
In this episode, host Christopher Hughey talks to Steven Huskey about the financial, management and planning mistakes many independent doctors make when setting up their own medical practice.
Google (GOOG, GOOGL) just announced several new AI-powered features for its Search, Maps, and Lens apps. The announcement comes just a day after rival Microsoft (MSFT) rolled out a new version of its Bing search engine complete with generative AI capabilities, bringing a rare threat to Google’s search supremacy.
But, shares of Google parent company Alphabet were down more than 7% today as investors expressed skepticism about these new features.
Is the U.S. equity market eventually going to collapse?
By Klaus Grobys
University Vaasa
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The US stock market could face collapse by 2050, according to new research by a Finnish economist.
That’s because US stock growth is unsustainable, and a crash is bound to happen in the coming decades.
The findings of the study mirror recent commentary from Wall Street legends, who are warning of an epic wipeout.
The next few decades could bring on an epic stock market collapse, according to a Finnish economics professor and researcher from the University of Vaasa who’s sounding the alarm over an “armageddon” financial crisis.
U.S. equities finished higher after whipsawing in the wake of comments from Federal Reserve Chair Powell. The Chairman spoke at the Economic Club in Washington D.C. today, saying that disinflation has begun, but interest rate increases would likely continue. The moves came as the markets were looking for more insight regarding monetary policy, but all-in-all Powell’s remarks appeared to offer little in the way of new information on the Fed’s path forward.
And, the economic calendar was fairly light as data on the trade balance showed that the deficit widened at a slower pace than expected, while consumer credit expanded by a smaller-than-expected amount in December. Earnings data continued to heat up, as Take-Two Interactive missed forecasts and warned that net bookings will be lower in the near term. Dupont, on the other hand, bested earnings estimates, but provided some disappointing guidance, while Hertz beat EPS forecasts and posted revenues that were in line with estimates.
Treasury yields were also higher, and the U.S. dollar ticked lower, while crude oil and gold prices traded to the upside.
Asian stocks were mixed and markets in Europe diverged following a rate hike from the Reserve Bank of Australia, and as global sentiment remained choppy amid heightened tensions between the U.S. and China.
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A frenzy over investing opportunities in artificial intelligence continues to benefit Baidu BIDU +12.18% with shares in the Chinese tech giant rallying Tuesday after the company revealed concrete plans to launch a chatbot to rival the likes of popular ChatGPT. It is known as ERNIE-bot.
American depository receipts of Baidu (ticker: BIDU) jumped 15% in pre-market trading on Tuesday, bringing the 2023 gain for the shares above 20%. The stock’s latest jump higher comes as Baidu detailed plans to launch an artificial intelligence chatbot in the coming months, confirming media reports that had telegraphed the move.
U.S. stocks declined, continuing losses that came in the wake of a much stronger-than-expected key labor report, which caused FOMC uncertainty to flare back up. The uncertainty came as the employment data followed a decelerated rate hike, and some seemingly less hawkish commentary from the Fed.
The economic calendar will deliver some reports today that may garner attention, including data on the trade deficit and consumer credit. Additionally, the FOMC will be headlined by today’s speech from Fed Chair Jerome Powell. Q4 earnings season remained in high gear this week, as Tyson Foods kicked things off in lackluster fashion by missing expectations.
In other equity news, Dell Technologies announced that it plans to reduce its workforce by about 5.0%, or 6,500 jobs, while Public Storage made a hostile takeover bid for Life Storage.
Treasury yields rose, and the U.S. dollar increased, along with crude oil and gold prices. Asia finished mixed, as geopolitical tensions remain elevated after the U.S. shot down what was believed to be a Chinese spy balloon floating over U.S. soil.
Additionally, markets in Europe were mostly lower, trimming some of its strong start to the year.
Ark Investment Management’s chief executive Cathie Wood is upbeat about her strategy of investing in young technology companies. After her exchange-traded funds dropped 60% to 80% last year from highs in 2021, Woods talked about the current stock market environment in a year-end commentary Dec. 29, 2022.
“We’re getting a lot of deflationary signals, but the Fed isn’t buying in yet,” Wood said, referring to the Federal Reserve’s continuing interest-rate increases. “But the bond market will start to convince the Fed,” Wood said. “The bond market is telegraphing much lower-than-expected inflation and/or recession.”
That prediction seemed to be validated February 1st. when the Federal Open Market Committee (FOMC) raised interest rates by only 25 basis points. That was smaller than the 50 basis points it had raised them by in December and the 75 basis points it had increased the rates by in each of its previous four meetings. The Fed seemed to have been recognizing the deflationary signs.
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Markets: In the five weeks of trading so far in 2023, the NASDAQ gained in all five and the S&P 500 in four. The still-booming labor market and falling inflation appear to be outweighing poor corporate earnings in investors’ minds.
Written by doctors and healthcare professionals, this textbook should be mandatory reading for all medical school students—highly recommended for both young and veteran physicians—and an eliminating factor for any financial advisor who has not read it. The book uses jargon like ‘innovative,’ ‘transformational,’ and ‘disruptive’—all rightly so! It is the type of definitive financial lifestyle planning book we often seek, but seldom find. —LeRoy Howard MA CMPTM,Candidate and Financial Advisor, Fayetteville, North Carolina I taught diagnostic radiology for over a decade. The physician-focused niche information, balanced perspectives, and insider industry transparency in this book may help save your financial life. —Dr. William P. Scherer MS, Barry University, Ft. Lauderdale, Florida This book was crafted in response to the frustration felt by doctors who dealt with top financial, brokerage, and accounting firms. These non-fiduciary behemoths often prescribed costly wholesale solutions that were applicable to all, but customized for few, despite ever-changing needs. It is a must-read to learn why brokerage sales pitches or Internet resources will never replace the knowledge and deep advice of a physician-focused financial advisor, medical consultant, or collegial Certified Medical Planner™ financial professional. —Parin Khotari MBA,Whitman School of Management, Syracuse University, New York In today’s healthcare environment, in order for providers to survive, they need to understand their current and future market trends, finances, operations, and impact of federal and state regulations. As a healthcare consulting professional for over 30 years supporting both the private and public sector, I recommend that providers understand and utilize the wealth of knowledge that is being conveyed in these chapters. Without this guidance providers will have a hard time navigating the supporting system which may impact their future revenue stream. I strongly endorse the contents of this book.—Carol S. Miller BSN MBA PMP,President, Miller Consulting Group, ACT IAC Executive Committee Vice-Chair at-Large, HIMSS NCA Board Member This is an excellent book on financial planning for physicians and health professionals. It is all inclusive yet very easy to read with much valuable information. And, I have been expanding my business knowledge with all of Dr. Marcinko’s prior books. I highly recommend this one, too. It is a fine educational tool for all doctors.—Dr. David B. Lumsden MD MS MA,Orthopedic Surgeon, Baltimore, Maryland There is no other comprehensive book like it to help doctors, nurses, and other medical providers accumulate and preserve the wealth that their years of education and hard work have earned them. —Dr. Jason Dyken MD MBA,Dyken Wealth Strategies, Gulf Shores, Alabama I plan to give a copy of this book written ‘by doctors and for doctors’ to all my prospects, physician, and nurse clients. It may be the definitive text on this important topic. —Alexander Naruska CPA,Orlando, Florida
Health professionals are small business owners who need to apply their self-discipline tactics in establishing and operating successful practices. Talented trainees are leaving the medical profession because they fail to balance the cost of attendance against a realistic business and financial plan. Principles like budgeting, saving, and living below one’s means, in order to make future investments for future growth, asset protection, and retirement possible are often lacking. This textbook guides the medical professional in his/her financial planning life journey from start to finish. It ranks a place in all medical school libraries and on each of our bookshelves. —Dr. Thomas M. DeLauro DPM,Professor and Chairman – Division of Medical Sciences, New York College of Podiatric Medicine
Physicians are notoriously excellent at diagnosing and treating medical conditions. However, they are also notoriously deficient in managing the business aspects of their medical practices. Most will earn $20-30 million in their medical lifetime, but few know how to create wealth for themselves and their families. This book will help fill the void in physicians’ financial education. I have two recommendations: 1) every physician, young and old, should read this book; and 2) read it a second time! —Dr. Neil Baum MD,Clinical Associate Professor of Urology, Tulane Medical School, New Orleans, Louisiana
I worked with a Certified Medical Planner™ on several occasions in the past, and will do so again in the future. This book codified the vast body of knowledge that helped in all facets of my financial life and professional medical practice. —Dr. James E. Williams DABPS, Foot and Ankle Surgeon, Conyers, Georgia
This is a constantly changing field for rules, regulations, taxes, insurance, compliance, and investments. This book assists readers, and their financial advisors, in keeping up with what’s going on in the healthcare field that all doctors need to know. —Patricia Raskob CFP® EA ATA, Raskob Kambourian Financial Advisors, Tucson, Arizona I particularly enjoyed reading the specific examples in this book which pointed out the perils of risk … something with which I am too familiar and have learned (the hard way) to avoid like the Black Death. It is a pleasure to come across this kind of wisdom, in print, that other colleagues may learn before it’s too late— many, many years down the road. —Dr. Robert S. Park MD, Robert Park and Associates Insurance, Seattle, Washington
Although this book targets physicians, I was pleased to see that it also addressed the financial planning and employment benefit needs of nurses; physical, respiratory, and occupational therapists; CRNAs, hospitalists, and other members of the health care team….highly readable, practical, and understandable. —Nurse Cecelia T. Perez RN, Hospital Operating Room Manager, Ellicott City, Maryland
Personal financial success in the PP-ACA era will be more difficult to achieve than ever before. It requires the next generation of doctors to rethink frugality, delay gratification, and redefine the very definition of success and work–life balance. And, they will surely need the subject matter medical specificity and new-wave professional guidance offered in this book. This book is a ‘must-read’ for all health care professionals, and their financial advisors, who wish to take an active role in creating a new subset of informed and pioneering professionals known as Certified Medical Planners™. —Dr. Mark D. Dollard FACFAS, Private Practice, Tyson Corner, Virginia As healthcare professionals, it is our Hippocratic duty to avoid preventable harm by paying attention. On the other hand, some of us are guilty of being reckless with our own financial health—delaying serious consideration of investments, taxation, retirement income, estate planning, and inheritances until the worry keeps one awake at night. So, if you have avoided planning for the future for far too long, perhaps it is time to take that first step toward preparedness. This in-depth textbook is an excellent starting point—not only because of its readability, but because of his team’s expertise and thoroughness in addressing the intricacies of modern investments—and from the point of view of not only gifted financial experts, but as healthcare providers, as well … a rare combination. —Dr. Darrell K. Pruitt DDS, Private Practice Dentist, Fort Worth, Texas This text should be on the bookshelf of all contemporary physicians. The book is physician-focused with unique topics applicable to all medical professionals. But, it also offers helpful insights into the new tax and estate laws, fiduciary accountability for advisors and insurance agents, with investing, asset protection and risk management, and retirement planning strategies with updates for the brave new world of global payments of the Patient Protection and Affordable Care Act. Starting out by encouraging readers to examine their personal ‘money blueprint’ beliefs and habits, the book is divided into four sections offering holistic life cycle financial information and economic education directed to new, mid-career, and mature physicians.
This structure permits one to dip into the book based on personal need to find relief, rather than to overwhelm. Given the complexity of modern domestic healthcare, and the daunting challenges faced by physicians who try to stay abreast of clinical medicine and the ever-evolving laws of personal finance, this textbook could not have come at a better time. —Dr. Philippa Kennealy MD MPH, The Entrepreneurial MD, Los Angeles, California Physicians have economic concerns unmatched by any other profession, arriving ten years late to the start of their earning years. This textbook goes to the core of how to level the playing field quickly, and efficaciously, by a new breed of dedicated Certified Medical Planners™. With physician-focused financial advice, each chapter is a building block to your financial fortress. —Thomas McKeon, MBA, Pharmaceutical Representative, Philadelphia, Pennsylvania An excellent resource … this textbook is written in a manner that provides physician practice owners with a comprehensive guide to financial planning and related topics for their professional practice in a way that is easily comprehended. The style in which it breaks down the intricacies of the current physician practice landscape makes it a ‘must-read’ for those physicians (and their advisors) practicing in the volatile era of healthcare reform. —Robert James Cimasi, MHA ASA FRICS MCBA CVA CM&AA CMP™, CEO-Health Capital Consultants, LLC, St. Louis, Missouri Rarely can one find a full compendium of information within a single source or text, but this book communicates the new financial realities we are forced to confront; it is full of opportunities for minimizing tax liability and maximizing income potential. We’re recommending it to all our medical practice management clients across the entire healthcare spectrum. —Alan Guinn, The Guinn Consultancy Group, Inc., Cookeville, Tennessee Dr. David Edward Marcinko MBA CMP™ and his team take a seemingly endless stream of disparate concepts and integrate them into a simple, straightforward, and understandable path to success. And, he codifies them all into a step-by-step algorithm to more efficient investing, risk management, taxation, and enhanced retirement planning for doctors and nurses. His text is a vital read—and must execute—book for all healthcare professionals and physician-focused financial advisors. —Dr. O. Kent Mercado, JD, Private Practitioner and Attorney, Naperville, Illinois
Kudos. The editors and contributing authors have compiled the most comprehensive reference book for the medical community that has ever been attempted. As you review the chapters of interest and hone in on the most important concerns you may have, realize that the best minds have been harvested for you to plan well… Live well. —Martha J. Schilling; AAMS® CRPC® ETSC CSA, Shilling Group Advisors, LLC, Philadelphia, Pennsylvania I recommend this book to any physician or medical professional that desires an honest no-sales approach to understanding the financial planning and investing world. It is worthwhile to any financial advisor interested in this space, as well. —David K. Luke, MIM MS-PFP CMP™, Net Worth Advisory Group, Sandy, Utah Although not a substitute for a formal business education, this book will help physicians navigate effectively through the hurdles of day-to-day financial decisions with the help of an accountant, financial and legal advisor. I highly recommend it and commend Dr. Marcinko and the Institute of Medical Business Advisors, Inc. on a job well done. —Ken Yeung MBA CMP™, Tseung Kwan O Hospital, Hong Kong I’ve seen many ghost-written handbooks, paperbacks, and vanity-published manuals on this topic throughout my career in mental healthcare. Most were poorly written, opinionated, and cheaply produced self-aggrandizing marketing drivel for those agents selling commission-based financial products and expensive advisory services. So, I was pleasantly surprised with this comprehensive peer-reviewed academic textbook, complete with citations, case examples, and real-life integrated strategies by and for medical professionals. Although a bit late for my career, I recommend it highly to all my younger colleagues … It’s credibility and specificity stand alone. —Dr. Clarice Montgomery PhD MA,Retired Clinical Psychologist In an industry known for one-size-fits-all templates and massively customized books, products, advice, and services, the extreme healthcare specificity of this text is both refreshing and comprehensive. —Dr. James Joseph Bartley, Columbus, Georgia
My brother was my office administrator and accountant. We both feel this is the most comprehensive textbook available on financial planning for healthcare providers. —Dr. Anthony Robert Naruska DC,Winter Park, Florida
In the week since the Indian mogul was targeted by a short seller, his businesses have lost a combined $108 billion in value and his own net worth has plummeted by $52 billion. Adani was once the second-richest person in the world. But, as Bloomberg notes, his downfall “defies just about every historical comparison.”
Given Adani’s sprawling business empire and his cozy relationship with India’s leadership class, this crisis has echoed across both markets and politics. Here’s a rundown of what you need to know about the most important story in global business this week.
According to Morning Brew, Adani grew up middle-class, dropped out of college to trade diamonds and eventually formed his own business hawking other physical products. During the ’90s his ambitions expanded along with the Indian economy, and he now runs a conglomerate that encompasses energy, transportation infrastructure such as ports and airports, defense manufacturing, and media.
On January 24th, a US short seller named Hindenburg Research claimed Adani’s empire pulled “the largest con in corporate history,” accusing it of stock manipulation and accounting fraud in a 100-page report. Adani has denied the allegations, but his push-back hasn’t comforted spooked investors…especially after he scrapped a $2.5 billion share sale a few days ago.
Adani responded that Hindenburg’s report wasn’t just an attack on him, it amounted to a “calculated attack on India…and the growth story and ambition of India.” Adani’s business ventures have aligned closely with the priorities of Indian Prime Minister Narendra Modi, and Modi’s political opponents are seizing on the fiasco to highlight the relationship between India’s leader and Adani.
Adani emphasized that his company’s fundamentals remain “very strong” and its balance sheet “healthy.” Still, some experts say the accusations could leave a lasting reputational stain on India’s largest corporations and hamstring their ability to grow
Stocks ended the week subdued when a red-hot jobs report once again got investors biting their nails over what the Fed will do next—though the S&P and NASDAQ both eked out positive weeks. The tech stock rally started losing steam after several big companies reported disappointing quarterly results, with Amazon being the one investors cooled on most.
More specifically, racing game publisher Motorsport Games (NASDAQ:MSGM) is seeing more volatility, tumbling 24.2% Friday after announcing a $4M at-the-market offering. The company entered a definitive agreement to issue and sell 232,188 shares of its class A common stock at $17.39 per share. The stock has slid $5.46 to trade at $17.50. The closing of this new offering is set for on or around February 7th with H.C. Wainwright & Co. acting as exclusive placement agent. Gross proceeds will be about $4.03M, which Motorsport Games will put toward development of multiple games, working capital and general purposes.
Still, it was the most eventful week for the stock in many months. On Monday it launched a debt-for-equity exchange to shore up its balance sheet, sending the stock lower by 8.7%. After regaining full compliance with Nasdaq listing rules, the stock jumped 714% Tuesday, moving from $2.63 a share to $21.40. After moving up another 73% Wednesday, the company then moved to convert all remaining debt in a new debt-for-equity exchange, and the stock fell 38% Thursday. Before Friday’s decline, the stock moved up an aggregate 482% in five days.
Colleagues know that I enjoy personal coaching and public speaking and give as many talks each year as possible, at a variety of medical society and financial services conferences around the country and world. All in a Corona safe environment.
These include lectures and visiting professorships at major academic centers, keynote lectures for hospitals, economic seminars and health systems, end-note lectures at city and statewide financial coalitions, and annual lectures for a variety of internal yearly meetings.
Treasury yields jumped after a much stronger-than-expected U.S. January jobs report clouded investor expectations for the Federal Reserve to end its interest rate hiking cycle in coming months. Treasury Yields and debt prices move opposite each other:
The yield on the 2-year Treasury note rose 14.9 basis points to 4.233%.
The 10-year Treasury note yield jumped 9.9 basis points to 3.498%.
The 30-year Treasury bond yield was up 6.9 basis points at 3.626%.
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U.S. equities declined in a choppy trading session following a stronger-than-expected January labor report, and some uninspiring earnings results from mega-cap stocks. Non farm payroll additions beat estimates by a large amount, and the unemployment rate declined, solidifying the notion of a tight job market.
Meanwhile, a read on domestic services sector activity moved back into expansion territory. Mega-cap stocks were in focus today, as Dow member Apple missed estimates and posted its first quarterly decline in revenues since 2019, and Alphabet also posted discouraging quarterly results, while Qualcomm bested EPS estimates by a penny, but fell short on the revenue side.
Notably, the retail giant Amazon is finally starting to feel the economic pinch. The e-commerce company, which most people thought was unstoppable, has reportedly had its first unprofitable year since 2014. The company released this week that it has lost over $2 billion in 2022, despite holiday-season sales increasing by 9%.
Asian and European stocks finished mixed, as the markets continued to process the week’s monetary policy decisions, as well as some services sector data across the globe.
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Elon Musk was found not liable for investors’ losses in a securities fraud trial over his 2018 tweet that he had “funding secured” to take Tesla private at $420 per share, continuing the tech mogul’s streak of favorable verdicts over his erratic behavior. Plaintiff Glen Littleton and fellow members of the class action sued Musk and Tesla, including its board of directors, over the tweet and Musk’s subsequent statements, alleging the notion that financing was in place had been false. They said shareholders suffered steep financial harms because of panicked sales in the 10 days following the tweet, as Tesla and Musk engaged in damage control.
Technology stocks have largely been in favor since the COVID-19 pandemic began, but re-openings in the U.S. and elsewhere as vaccines take hold have pushed investors toward value stocks, which are geared more toward the economy. But lately, stronger growth expectations are also sparking worries of higher inflation, and a potential tapping of the brakes by central banks.
Therefore, an important concept for physicians and all investors to understand is the Current Rate of Return (CCR).
So, What Exactly is CRR?
According to this principle, the current rate of a taxable return must be evaluated in reference to a similar non-taxable rate of return. This allows you to focus on your portfolio’s real (after-tax return), rather than its’ nominal, or stated return. Since most medical professionals own a combination of both vehicles, it is important to calculate the average rate of return (ARR), as demonstrated in the following matrix. Usually, this will result in the assumption of more risk, for the possibility of great return.
To compare after tax yields, with taxable yields, use the following formulas:
Tax equivalent yield = yield / (1 – MTB), while taxable yield X (1-tax rate) = tax exempt yield.
Example: if the yield on a tax exempt municipal bond was 6%, and you are in a 28% tax bracket; the equivalent taxable yield (ETY), is 8.3%, calculated in the following manner: 06 / 1.00 – .28 =.083, or, 8.3% ETY.
This means that you would need a taxable instrument paying almost 9 % to equal the 6 percent tax exempt bond.
US employers in January announced the most job cuts since 2020, according to data compiled by Challenger, Gray & Christmas, Inc. Businesses reported 102,943 cuts in the month, more than twice those announced in December and up 440% from January 2022. The technology sector made up 41% of the planned reductions. Announced layoffs at retailers and financial companies also climbed from a year ago.
Meanwhile, U.S. stocks ended the day mixed, with the S&P 500 and NASDAQ adding to yesterday’s rally that came as the Fed hiked rates by a decelerated amount and suggested that it may be nearing the end of its tightening cycle. The global markets also reacted to 50-basis point rate increases from the European Central Bank and Bank of England.
Earnings continued to pour in, with Meta Platform jumping after some upbeat guidance, and Eli Lilly and Company saw pressure after some softer-than-expected revenue growth. The economic calendar delivered some positive news, with Q4 productivity much stronger than expected and unit labor costs slowing more than anticipated, and jobless claims continued to slide, while factory orders missed estimates.
Treasury yields were unchanged, and the U.S. dollar gained ground, while crude oil and gold prices declined. Asian stocks finished mixed following the Fed’s decision, and markets in Europe were mostly higher in the wake of the monetary policy decisions in the region.
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Finally, a Japanese maker of flying motorbikes will list on the NASDAQ stock exchange and start trading in New York, making it the fifth company from the Asian nation to join the tech-heavy bourse, according to Bloomberg. Tokyo-based ALI Technologies Inc. is going public through a merger with the blank-check firm Pono Capital Corp. Under terms of the deal, ALI Technologies will become a fully owned unit of its US arm, Aerwins Technologies, the people said, asking not to be named because the information isn’t yet public. Its market cap is expected to be at least $600 million, in line with its target last year despite a market selloff. Its ticker will be AWIN.
The fact that every physician in private medical practice, without a business education, leaves approximately a million dollars on the table and is unaware of it is well known to business experts who work with medical doctors experiencing financial difficulties.
Business experts such as Dan S. Kennedy, Peter Drucker, Michael Gerber, Maxwell Maltz, Neil Baum, William Hanson, Huss and Coleman, Steven Hacker, Thomas Stanley, Chris Hurn, Napoleon Hill, and Dave Ramsey, among others, understand the financial problems faced by medical practices and how to solve them.
According to Bloomberg, applications for US unemployment benefits fell for the fourth time in five weeks, underscoring the broad resilience of the job market that threatens to keep inflation elevated. Initial unemployment claims ticked down by 3,000 to 183,000 in the week ended January 28th, the lowest since April, Labor Department data showed Thursday. The median forecast in a Bloomberg survey of economists called for 195,000 applications.
Continuing claims, which include people who have already received unemployment benefits for a week or more, fell to 1.66 million in the week ended January 21st. The labor market, while cooling at the margins, is still tight by many measures and remains one of the key hurdles in the Federal Reserve’s fight against inflation. Even though payrolls growth has slowed and companies in technology and banking have laid off staff in recent months, demand for workers still far exceeds supply, which could put upward pressure on wages and broader prices.
Palantir Technologies is a public American company that specializes in big dataanalytics. Headquartered in Denver, Colorado, it was founded by Peter Thiel, Nathan Gettings, Joe Lonsdale, Stephen Cohen, and Alex Karp in 2003. The company’s name is derived from The Lord of the Rings where the magical palantíri were “seeing-stones,” described as indestructible balls of crystal used for communication and to see events in other parts of the world.
According to Wikipedia, the company is known for three projects in particular: Palantir Gotham, Palantir Apollo, and Palantir Foundry. Palantir Gotham is used by counter-terrorism analysts at offices in the United States Intelligence Community (USIC) and United States Department of Defense. In the past, Gotham was used by fraud investigators at the Recovery Accountability and Transparency Board, a former US federal agency which operated from 2009 to 2015. Gotham was also used by cyber analysts at Information Warfare Monitor, a Canadian public-private venture which operated from 2003 to 2012. Palantir Apollo is the operating system for continuous delivery and deployment across all environments. Their SaaS is one of five offerings authorized for Mission Critical National Security Systems (IL5) by the U.S. Department of Defense. Palantir Foundry is used by corporate clients such as Morgan Stanley, Merck KGaA, Airbus, Wejo, Lilium, and Fiat Chrysler Automobiles.
Now, Palantir is coming off a tough year, with its shares falling 65% in 2022. That’s a more severe decline than the tech-heavy NASDAQ Composite Index, which fell 33% last year. But, Palanti just announced new commercial customers, including J.D. Power and Dish Network Corp. Palantir is expected to report its year-end financial results on February 13th, 2023.
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U.S. equities came well off the lows of the day to finish higher, as investors shook off the Fed’s decision to raise rates for a seventh time. The Central Bank opted to raise its target by only 25 basis points, while in his presser Chairman Powell appeared somewhat dovish, alluding to the possibility that it may be near the end of its rate hike campaign.
Meanwhile, the markets also digested a batch of economic data that showed manufacturing activity continued to contract, ADP private sector employment grew at a slower pace than anticipated, job openings unexpectedly rose, mortgage applications snapped a three-week winning streak, and construction spending surprisingly declined. Q4 earnings season continues to heat up, with Snap reporting a larger-than-expected loss and suggesting current quarter revenues may decline for the first time, though Advanced Micro Devices topped quarterly estimates.
Treasury yields turned lower following the Fed’s announcement, and the U.S. dollar accelerated to the downside, while crude oil prices tumbled on reports of a large build in stockpiles, and gold rallied.
Asia finished higher and Europe was mixed as today’s Fed decision will be followed by announcements from the European Central Bank and Bank of England tomorrow.
According to Wikipedia, the Federal Open Market Committee (FOMC), a committee within the Federal Reserve System (the Fed), is charged under United States law with overseeing the nation’s open market operations (e.g., the Fed’s buying and selling of United States Treasury securities). This Federal Reserve committee makes key decisions about interest rates and the growth of the United States money supply. Under the terms of the original Federal Reserve Act, each of the Federal Reserve banks was authorized to buy and sell in the open market bonds and short term obligations of the United States Government, bank acceptances, cable transfers, and bills of exchange. Hence, the reserve banks were at times bidding against each other in the open market. In 1922, an informal committee was established to execute purchases and sales. The Banking Act of 1933 formed an official FOMC.
The FOMC is the principal organ of United States national monetary policy. The Committee sets monetary policy by specifying the short-term objective for the Fed’s open market operations, which is usually a target level for the federal funds rate (the rate that commercial banks charge between themselves for overnight loans).
The FOMC also directs operations undertaken by the Federal Reserve System in foreign exchange markets, although any intervention in foreign exchange markets is coordinated with the U.S. Treasury, which has responsibility for formulating U.S. policies regarding the exchange value of the dollar.
The Federal Reserve is set to announce today whether it will impose another interest rate hike, the central bank’s latest move in a months long fight that has eased inflation but risks plunging the U.S. into a recession.
The Fed [FOMC] has put forward a string of borrowing cost increases as it tries to slash price hikes by slowing the economy and choking off demand. The approach, however, risks tipping the U.S. economy into a downturn and putting millions out of work.
And so, at a meeting in December 2022, the Fed raised its short-term borrowing rate a half-percentage point, pulling back from three consecutive 0.75% increases and signaling confidence that sky-high inflation could be brought down to normal levels.
Economists expect the Fed to continue softening its approach with a 0.25% rate hike today? The decision comes weeks after a government report showed that inflation slowed in December, marking six consecutive months of easing price increases.
Due to a lack of demand for chips and a slowdown in its data processing center business, Intel just reported its worst financial results since the dot-com bubble popped at the turn of the century. Though the stock only ended up falling 6.4% by the time the market closed yesterday, Wall Street definitely took notice of the company’s troubles.
And so, twenty-one analysts slashed what they thought it was worth, and many did not hold back in describing the chip maker’s fall. “No words can portray or explain the historic collapse of Intel,” one said according to Bloomberg.
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Samsung Electronics Co., however, made a surprisingly aggressive decision to keep capital spending at the same level as last year, defying expectations it would go along with rivals in pulling back to alleviate pressure on an already-battered semiconductor industry. The result will be more pressure on chip pricing than if the Korean giant had pulled back spending on new machinery and factory capacity.
Foreign-exchange volatility hammered North America’s corporate profits by a record in the third quarter, though signs of relief are on the horizon. Currency oscillations cost North American companies $43.2 billion in the July to September period — an all-time high since data tracking started a decade ago — according to Kyriba Corp. That’s a 26% spike from the previous quarter, also a record, according to the corporate-treasury management software company. And, public companies pointed to the euro, Canadian dollar and ruble as the currencies weighing the most on profits in the period, followed by the Chinese yuan and the Japanese yen, according to Kyriba’s report. The euro and the loonie had also earned top mentions in the firm’s second-quarter report.
U.S. equities ended a choppy trading session higher, as investors sifted through a host of earnings and economic data, and awaited tomorrow’s monetary policy decision from the Federal Reserve. Several Dow members were in focus, as McDonald’s beat earnings estimates, and Caterpillar missed expectations due to unfavorable foreign currency impacts.
In other equity news, UPS posted higher-than-expected earnings, declared a new quarterly dividend, and revamped its share repurchase program, while Pfizer beat forecasts but issued lower-than-anticipated guidance, and General Motors trounced expectations and offered an upbeat full-year outlook.
The economic calendar heated up, with the Q4 Employment Cost Index coming in lower than expected, and home prices declining by a smaller amount than anticipated in November. More reports came out after the opening bell, as January’s consumer confidence unexpectedly declined, and the Chicago PMI fell further into contraction territory.
Treasury yields were lower, and the U.S. dollar dipped, while crude oil prices increased, as did gold. Asian stocks were mostly lower amid a swarm of economic reports.
European markets finished mixed following the economic data, and as investors awaited monetary policy decisions from the European Central Bank and Bank of England later this week.
U.S. stocks declined, trimming a strong start to 2023, as investors prepared for a busy week full of earnings data, economic reports, and monetary policy decisions. The Fed is expected to raise rates by a decelerated 25-bp rate hike later this week, and the European Central Bank and Bank of England are anticipated to increase their benchmark rates by 50 bps. Equity news was light to begin the week, and the economic calendar was quiet today before heating up, with the most notable report being the Dallas Fed Manufacturing Index, which improved but remained in contraction territory.
Treasury yields were higher, and the U.S. dollar increased, while crude oil prices fell, and gold declined.
Asian stocks were mixed as China returned to action following the week-long Lunar New Year holiday break, and markets in Europe also diverged amid some caution ahead of the data and monetary policy decisions.
FINANCIAL ADVISER WANTED: New York’s Belfer family, which gained riches from oil, is racking up quite an investing losing streak. They lost billions in Enron’s collapse and were clients of Bernie Madoff, and now it’s come to light that they were shareholders in FTX.
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CPAs WANTED: Just as tax season kicks off, US firms are facing a national shortage of accountants, forcing them to look overseas for workers to look over your W-2. More than 300k accountants and auditors have quit in the last two years, per the WSJ.
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CMPs NEEDED: The Certified Medical Planner® program was created in response to the frustration felt by doctors in small and mid-sized practices that dealt with top financial, brokerage and accounting firms. These non-fiduciary behemoths often prescribed costly wholesale solutions that were applicable to all, but customized to few, despite ever changing needs.
Learn why brokerage sales-pitches and/or internet resources will never replace the knowledge and deep advice of a collegial Certified Medical Planner® professional.
Two papers show that large language models, including ChatGPT, can pass the USMLE. The papers highlighted different approaches to using large language models to take the USMLE, which is comprised of three exams: Step 1, Step 2 CK, and Step 3. ChatGPT is an artificial intelligence (AI) search tool that mimics long-form writing based on prompts from human users. It was developed by OpenAI, and became popular after several social media posts showed potential uses for the tool in clinical practice, often with mixed results.
According to Victor Tseng, MD, of Ansible Health in Mountain View, California, and colleagues, the results showed “new and surprising evidence” that this AI tool was up to the challenge. Tseng and team noted that ChatGPT was able to perform at >50% accuracy across all of the exams, and even achieved 60% in most of their analyses. While the USMLE passing threshold does vary between years, the authors said that passing is approximately 60% most years.
Source: Michael DePeau-Wilson, Medpage Today [1/19/23]
Whether we’ve got a recession coming remains the biggest will they or won’t they story, but it looks like more Americans are starting to sock away cash just in case.
Data just released by the Department of Commerce puts the savings rate for December at 3.4%—the highest level in seven months and the biggest uptick from the previous month since July 2021 (November’s rate was 2.9%).
Technology giants IBM and SAP joined the ranks of large companies laying off significant numbers of workers, as both announced that they will be laying off thousands of employees.
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U.S. equities closed out the week on a positive note, as investors sifted through another heavy dose of earnings and economic data. Dow components posted mixed earnings results, as Visa bested expectations, and American Express missed forecasts but offered upbeat guidance.
Additionally, Dow member Chevron also fell short, and Intel disappointed the Street amid a fourth-consecutive quarter of declining sales and warned of future losses. Meanwhile, KLA Corporation beat estimates but offered lackluster guidance. News on the economic front was upbeat, as personal income rose, pending home sales posted a gain for last month, and consumer sentiment was positively revised.
Treasury yields were higher, and the U.S. dollar increased, while crude oil and gold prices declined.
Asian stocks finished out the week with gains in continued light volume as mainland Chinese markets remained closed for the Lunar New Year holiday, and markets in Europe were higher for the most part amid some cautious trading ahead of a host of monetary policy decisions slated for next week.
Q4’s strong GDP numbers are raising hopes that the Fed could actually pull off the tricky “soft landing”—where it knocks down inflation through interest rate hikes without sending economic growth into reverse. The resilient labor market is cooperating: Despite all the headlines about layoffs, jobless claims fell last week to their lowest point since April 2022.
U.S. stocks ended the day in the green as the markets digested a host of economic and earnings data. The economic calendar came in heavy today, as Q4 GDP growth was higher than expected, jobless claims unexpectedly fell, new home sales rose, and durable goods orders jumped, but dipped when stripping out the volatile component of transportation activity. Several Dow members were in focus, as IBM exceeded expectations, though its cash flow performance garnered some scrutiny on the Street, and Dow Inc. missed quarterly estimates. Fellow Dow component Chevron announced an increased dividend and a new $75.0 billion share repurchase plan, while in other news, Tesla topped quarterly estimates and offered an upbeat outlook.
Treasury yields traded mostly higher, and the U.S. dollar advanced, while crude oil prices increased, and gold moved to the downside.
Asian stocks finished mixed in lighter volume as several markets remained closed for holidays, while markets in Europe were higher for the most part, adding to the region’s strong start to the year.
U.S. equities came well off their lows of the day to finish nearly where they began, as the Street sifted through a slew of mixed results with Q4 earnings season kicking into gear.
IOW: A seismic morass.
Dow member Microsoft topped profit projections, but its revenues and guidance disappointed, and Dow Component Boeing Company posted an unexpected loss, and its revenues came in short of forecasts. Elsewhere, AT&T exceeded earnings estimates and topped subscriber expectations, which are overshadowing its lackluster guidance, and Texas Instruments is lower on its outlook. The economic calendar was relatively light today, with the lone report being a third-straight weekly gain for mortgage applications.
Treasury yields were lower, and the U.S. dollar lost ground, while crude oil prices were nearly unchanged, and gold prices were higher.
And, Asia finished mixed, with mainland China and Hong Kong remaining closed for the Lunar New Year holiday, and Europe was mostly lower as investors continued to digest yesterday’s flood of manufacturing and services data.
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Finally, Walgreens Boots Alliance Inc. is weighing a sale of its pharmacy automation business, which could fetch up to $2 billion, according to people familiar with the matter.
Serta Simmons Bedding, the Georgia-based mattress maker owned by private equity firm Advent International, has filed for Chapter 11 bankruptcy protection. The prepackaged bankruptcy filing includes $125 million of debtor-in-possession financing and another $125 million once it exits Chapter 11.
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U.S. equities finished mixed in a lackluster trading session, as Q4 earnings season shifted into a higher gear today. Corporate results from several Dow members were in focus, as 3M missed estimates and reported that it would reduce its global workforce by approximately 2,500 jobs. Verizon Communications and Travelers Companies reported bottom-line results that were in line with expectations, and the former offered some disappointing full-year guidance, while Johnson & Johnson missed estimates amid a decline in revenues citing unfavorable foreign exchange and lower COVID vaccine sales.
Additionally, Lockheed Martin bested forecasts but issued EPS guidance that was lower than anticipated. The economic calendar offered several reports on domestic activity, as manufacturing and services PMIs unexpectedly rose but remained contractionary in January, while manufacturing activity in the Richmond region fell much more than expected.
Treasury rates were lower, and the U.S. dollar dipped, while crude oil prices fell, and gold was higher.
Asian stocks rose although volume remained light as Chinese and South Korean markets were closed for a holiday, while European stocks were mixed amid a host of PMI data across the globe.
Married couples have the option to file jointly or separately on their federal income tax returns. The IRS strongly encourages most couples to file joint tax returns by extending several tax breaks to those who file together.
In the vast majority of cases, it’s best for married couples to file jointly, but there may be a few instances when it’s better to submit separate returns.
U.S. stocks were higher, extending the rally from late last week, as Q4 earnings season is set to shift into high gear tomorrow. The markets also prepared for next week’s Fed monetary policy decision, with the Central Bank expected to slow down on their tightening campaign. The economic calendar was light, with the only report being the Leading Economic Index, which indicated a tenth-straight monthly decline and bolstered Fed expectations.
Treasury yields rose, and the U.S. dollar nudged higher, while crude oil prices were mostly unchanged, and gold gained ground. Equity news was relatively light before the week’s earnings storm, as Elliott Investment Management reportedly took a multi-billion dollar stake in Dow member Salesforce, and Evoqua Water Technologies agreed to be acquired by Xylem Inc. for roughly $7.5 billion.
Asian and European stocks finished higher, although trading volume in Asia was lower than usual as several markets were closed for the Lunar New Year holiday.
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Spotifyannounced that it will lay off about 600 employees, or 6% of its workforce, in the latest Big Tech recession hedge. The shakeup could signal a pivot in the company’s podcast strategy. Like most of the other major tech companies making cuts, Spotify cited overly ambitious pandemic growth as the primary cause, and CEO Daniel Ek took “full accountability.” Along with the layoffs, Ek announced a major departure from the audio streamer: Chief Content Officer Dawn Ostroff, who was the driving force behind the company’s $1+ billion podcasting arms race to sign deals with companies like Gimlet and high-profile talent like Barack and Michelle Obama, Prince Harry and Meghan Markle, and Joe Rogan.
When economic trouble and/or uncertainty is brewing, it’s not uncommon for the US Treasury yield curve to flatten or even invert. A yield curve inversion, like we’re experiencing now, involves short-term-maturing bonds sporting higher yields than longer-dated Treasury bonds. It’s an indication that investors are worried about the U.S. economic outlook.
For the past 64 years, the Federal Reserve Bank of New York has used the Treasury yield spread between the 10-year bond rate and three-month bond rate to calculate the probability of a U.S. recession occurring within the next 12 months. Over these 64 years, the probability of a recession has topped 25% a dozen times and 40% on eight occasions.
With the exception of a peak probability of a recession of 41.14% in October 1966, the New York Fed’s recession-forecasting tool hasn’t been wrong if it’s surpassed 40%. In other words, if the New York Fed’s recession probability indicator surpasses 40%, we’ve had a recession within 12 months, without fail, for more than a half-century.
In December 2022, this recession probability tool hit 47.31%. That’s the highest reading since 1981, and a very clear indication that economic activity is expected to slow at some point in 2023.
Last week, the S&P 500 dropped 0.7%, snapping a two-week winning streak, though the index rallied 1.9% Friday, thanks to a surge in tech stocks as Fed officials dialed back fears of overly aggressive policy moves. The tech-heavy NASDAQ 100 Index had its best day since November 30th to eke out a 0.7% gain for the week. At the same time, stocks from rate-sensitive industries like financials, real estate, and growth-oriented technology tend to lag during that period.
In this coming week, markets will sort through earnings results from Microsoft Corp., Tesla Inc. and International Business Machines Corp. that are poised to shape the direction of equities more broadly. Also, the Commerce Department will release its first estimate of fourth-quarter US gross domestic product, which is expected to show an acceleration.
As the US just crashed into the $31.4 trillion debt ceiling as the Treasury Department began taking what it called “extraordinary measures” to prevent the government from defaulting on its debts and sparking an economic crisis.
These measures are a series of deep-cut accounting moves that allow the Treasury to continue making its payments. They include:
Suspending reinvestments into government funds for retired federal employees, such as the Civil Service Retirement and Disability Fund.
Selling existing investments in those funds to free up more outstanding debt.
And while these measures definitely aren’t ordinary…they probably aren’t so “extra,” either. The Treasury has resorted to them more than 12 times since 1985, including during the last debt-ceiling standoff in 2021.
Still, these steps amount to chugging water after eating a ghost pepper—the pain will return. Treasury Secretary Janet Yellen said her extraordinary measures will last through early June, giving lawmakers about five months to work out a deal to raise the debt ceiling.
NOTE: The US has never defaulted on its debt, but even the threat of it could be disastrous. The country’s first credit downgrade in history came during a debt-ceiling showdown in 2011.
TOPIC: Financial Designations and Certifications [Alphabet Soup of Industry Obfuscation and Self-Promotion, or Real Gravitas – You Decide?]
EXCERPT: “Until recently, most financial advisors were regulated by the NASD, the National Association of Securities Dealers. Now the Financial Industry Regulatory Authority or FINRA is the largest non-governmental regulator for all securities firms doing business in the United States. It is a self-regulatory agency comprised of the nation’s brokerage firms. Upon completion of a required exam the FINRA will issue a variety of licenses. The most common are the Series 6, 7, and 24.
The Series 6 is essentially a license to sell packaged products, namely mutual funds. It is most commonly held by insurance agents and bank representatives. It is considered a very easy test. Holding such a license allows the holder to collect commission income through its member firm.
The Series 7 exam is a bit more difficult and includes issues relating to individual securities such as stocks, bonds and limited partnership interests. The pass rate is lower than the Series 6. The probable culprit is the extensive questioning on margin and options, topics most are unfamiliar with prior to entering the securities business.
The Series 24 covers issues of compliance and supervision and is required of Branch Managers of brokerage firms. All registered representatives (the proper name for a broker) must be supervised by someone with a Series 24, also known as a principal’s license.
Checking the background of a registered representative, a branch manager or a member firm is easily done through NASD and/or FINRA Regulation, Inc. NASDR/FINRA maintains the Central Registration Depository (CRD). The CRD can be checked for a description of a disclosed event by phone or by Internet. One should request information on an advisor’s firm as well as the individual. A reputable advisor at a disreputable firm has its own set of potentially dangerous implications.
Regardless of the above, these tests produce licenses to sell financial products. They are not educational achievements. There is virtually no academic barrier to entry for them. Stock-brokers today – hate the term – and prefer “financial advisor”; yet the term has no real meaning other than as a sales license.
Some are college graduates, and beyond; while some other experts argue that too many are not!”
Hence, the need to “raise the bar to fiduciary accountability with deep knowledge of healthcare modernity.”
Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.
Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
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The S&P 500 rose 1.9%. Despite the gains, the benchmark index still ended with its first weekly loss in the last three. The Dow Jones Industrial Average rose 1% and the NASDAQ composite closed 2.7% higher still.
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And so, U.S. equities ended higher for the day and mixed for the week, with the Dow and S&P 500 posting their first weekly declines of the new year.
Equity news remained focused on earnings, as Netflix fell well short of estimates but easily beat the Street’s forecasts for subscribers, and PPG Industries bested expectations. Meanwhile, Alphabet announced it will slash its workforce by 12,000 jobs. Economic news was on the light side today, with the lone report showing an eleventh-straight month-over-month decline in existing home sales.
Treasury yields ended higher, and the U.S. dollar dipped slightly, while crude oil and gold prices rose.
Asian and European stocks saw gains across the board, as investors digested economic data in their respective regions.
The bankruptcy of Barry Silbert’s Genesis Global may not have pummeled crypto markets like the implosion of Sam Bankman-Fried’s FTX did, but it features a list of top creditors with similarly large claims topping $3 billion in total.
According to Bloomberg, Genesis’s Chapter 11 filing on Thursday listed seven creditors owed at least $100 million. By far the biggest one is a $766 million claim related to customers of crypto exchange Gemini, who have money stuck with Genesis’s lending unit. FTX-linked entities have 10 claims of more than $100 million, according to a redacted list filed Saturday.
In all, Genesis owes its top 50 creditors $3.4 billion; for FTX, that figure stands at $3.1 billion. While some of the names of Genesis’ biggest creditors have been redacted in the filing, below is a list of major names.
The number of people seeking unemployment benefits in the U.S. reached a four-month low last week, a sign that employers are holding on to their workers despite the Federal Reserve’s efforts to slow the economy and tamp down inflation. U.S. jobless aid applications for the week ending January14th fell by 15,000 to 190,000, from 205,000 the week before, according to the Labor Department. The four-week moving average of claims, which can even out the week-to-week volatility, declined by 6,500 to 206,000. Jobless claims generally serve as a proxy for layoffs, which have been relatively low since the pandemic wiped out millions of jobs in the spring of 2020. And, the labor market is closely watched by the Federal Reserve, which raised interest rates seven times last year in a bid to slow job growth and bring down stubbornly high inflation.
According to Bloomberg, Netflix Inc. co-founder Reed Hastings is stepping aside as Chief Executive Officer of the company he’s led for more than two decades, leaving the position to his two longtime associates, Ted Sarandos and Greg Peters.
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U.S. stocks were lower, adding to yesterday’s sharp draw downs as investors remain concerned regarding the Fed’s monetary policy decisions and its ultimate impact on the economy. Economic data was mixed, as housing starts came in above estimates, building permits missed forecasts, and jobless claims unexpectedly dropped, while Philadelphia’s manufacturing output improved more than expected but remained contractionary. Q4 earnings season continued to heat up, as Dow member Procter & Gamble matched estimates, while Discover Financial Services topped forecasts but offered cautious guidance about charge offs, and Allstate Corporation issued a Q4 profit warning.
Treasury yields gained modest ground, and the U.S. dollar declined, while crude oil and gold prices rose.
Asian stocks finished mixed and markets in Europe saw widespread losses, trimming some of its strong start to 2023.
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Finally, bankrupt Crypto exchange FTX is looking into the possibility of reviving its business, Chief Executive Officer John Ray just told the Wall Street Journal. Ray, who took over the reins in November, has set up a task force to explore restarting FTX.com, the company’s main international exchange. The CEO also told the Journal that he would look into whether reviving FTX’s international exchange would recover more value for the company’s customers than his team could get from simply liquidating assets or selling the platform. FTX’s native token FTT surged nearly 30% after the report.
A bear market is when a market experiences prolonged price declines. It typically describes a condition in which securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment.
Bear markets are often associated with declines in an overall market or index like the S&P 500, but individual securities or commodities can also be considered to be in a bear market if they experience a decline of 20% or more over a sustained period of time—typically two months or more. Bear markets also may accompany general economic downturns such as a recession. Bear markets may be contrasted with upward-trending bull markets.
So, If you are feeling optimistic the new year will usher in a change in stock market dynamics and shift sentiment from bear to bull-forget about it!? Leon Cooperman has some bad news for you.
The billionaire investor has been a fully-fledged bear for a while now and 2023 has done little to change his stance. “Anybody looking for a new bull market any time soon is looking the wrong way,” Cooperman said.
In fact, Cooperman thinks there’s only a 5% chance the S&P 500 sees out 2023 above the 4,400 mark (up 13% from current levels), believing the stock market is far likelier to head back down from here.
Cooperman evidently knows a thing or two about investing in bear markets, and if we’re to heed his advice, it’s best to look for ‘safe havens’ to shield from further incoming volatility. OR- Maybe not!
According to Rick Kahler MS CFP® ChFC CCIM[www.KahlerFinancial.com] real estate is one of the largest asset classes in the world. The family home is the largest asset many middle-class Americans own. And, real estate makes up a significant portion of the net worth of many wealth accumulators. Directly owning real estate is not an investment for the faint of heart, the armchair investor, or the uneducated. Most wealth accumulators would do well to leave direct ownership of real estate to the pros and invest in real estate investment trusts (REITs) instead [personal communication].
Still, as we have seen, the lure of investing in a tangible asset like real estate is enticing for high risk tolerant physician-investors who need a sense of control and interaction with their investments. If you are among them, here are a few guidelines that may keep you on a profitable path.
1. Don’t attempt to purchase investment real estate without the help of a commercial real estate specialist who is a fiduciary bound to look out for your best interest. Engage a Certified Commercial Investment Member (CCIM) with years of training and experience in analyzing and acquiring investment real estate. To find a CCIM near you, go to http://www.ccim.com.
2. You will sign a disclosure agreement that will tell you who the Realtor represents. Be sure the Realtor you engage represents you and not the seller, both parties, or neither party.
3. Never trust the income and expense data provided by the seller’s Realtor. While a seller represented by a CCIM will have a greater chance of supplying you with accurate data, most will significantly understate expenses and overstate the capitalization rate. Selling Realtors often understate the average annual cost of repairs and maintenance. I estimate this annual expense at 10%.
4. Another often understated expense is management. Many owners manage their own properties, so the selling broker doesn’t include an estimate for management expenses. They should. Real estate doesn’t manage itself, ever. You will either need to hire professional management or do your own management (always a scary proposition). Even if you do it yourself, you have an opportunity cost of your time, so you must include a management fee in the expenses. Most small residential apartments and single-family homes will pay 10% of their rents to a manager.
5. You must verify all the costs presented to you by the seller’s Realtor. Demand copies of at least the last three and preferably five years of tax returns. Research items like utility bills, property taxes, legal fees, insurance costs and repairs, maintenance costs, replacement reserves, tax preparation and all management fees. As a rule of thumb, expenses will average 40% of rental income on average-aged properties where the tenants pay all utilities except water. Newer properties may have expenses as low as 35%, while older properties can be as high as 50%.
6. By subtracting the vacancy rate and stabilized expenses from the rent, you will find the net operating income. This is the income you will put in your pocket—assuming the property is paid for. By dividing the net operating income by the purchase price, you will find the return you will receive on your investment, called the capitalization or “cap” rate. In Rapid City SD, for example, the cap rate tends to be 4% for single-family homes, 5% to 8% for duplexes to eight-plexes, and 8% to 12% for larger residential and commercial properties.
ASSESSMENT: Yes, physician-investors and all of us can build wealth with real estate. You just need to educate yourself, work hard, start conservatively, think long-term, and be prepared for lean years. This is not a quick or easy path to riches.
Amazon just began laying off thousands of more employees as the online retailer and cloud computing giant continues the largest job cuts in its history just months after an initial round of 10,000 job cuts. The Seattle Times and multiple other outlets reported Amazon made the staff reductions in its human resources and stores division, as the company is expected to lay off about an added 8,000 employees. Doug Herrington, Amazon’s worldwide retail chief, said in a memo the company would begin to notify employees by email Wednesday, according to Bloomberg.
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Dow 33,296.96 -1.81%
10-Year 3.363% -1.0 bps
Bitcoin $20,762.78 -2.45%
Kraft Heinz $39.66 -6.31%
*Stock data as of market close, cryptocurrency data as of 3:00am ET.
Markets: Stocks tanked yesterday, with the Dow plunging, the S&P having its worst day since mid-December, and the NASDAQ coming down from a seven-day rally. As investors started heeding recession signals again after new data revealed weak retail sales during the holiday season last month, companies that sell consumer staples were hit especially hard.
Investors processed a slew of mixed economic data, as retail sales fell more than expected, producer price inflation cooled, industrial production dropped more than anticipated, home builder sentiment unexpectedly improved, mortgage applications jumped, and business inventories rose as expected.
Meanwhile, in afternoon action the Fed released its Beige Book, showing little change in activity from its last report. News on the equity front was mixed, as United Airlines topped Q4 estimates, and an optimistic outlook from J.B. Hunt took some of the sting off its earnings miss, while Moderna announced upbeat results from a key trial of its RSV vaccine.
Treasury yields were lower, and the U.S. dollar was nearly unchanged, while crude oil prices lost steam throughout the day to finish lower, and gold traded to the downside.
Asia finished mostly higher, and European markets were mixed, after the Bank of Japan held its monetary policy steady and offered dovish commentary.
Microsoft shrank its workforce in July and October 2022 and eliminated open positions and paused hiring in various groups. While technology peers Amazon.com Inc., Meta Platforms Inc. and Salesforce Inc. have announced cuts by the thousands in the past few months, Redmond, Washington-based Microsoft has so far been taking smaller steps to deal with a worsening global economic outlook and the potential for a protracted slowdown in demand for software and services. However, Microsoft could announce wide-sweeping layoffs within the next few days. The possibility of the tech giant laying off a significant part of its workforce was first reported by Sky News and later corroborated by Bloomberg. Sky put the number of the cuts at approximately five percent of the company’s 220,000-person workforce or about 11,000 employees total. Bloomberg said it couldn’t find out the scale of the layoffs but reported they would affect “a number of engineering divisions” and that they’re set to be “significantly larger” than other rounds of job cuts undertaken by Microsoft over the last year.
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Meanwhile, U.S. stocks ended mostly lower with the Dow Jones Industrial Average snapping a four-day win streak after Goldman Sachs reported poor earnings results. The S&P 500 also ended lower, but the NASDAQ Composite eked out a gain as investors focused on whether the early 2023 rally has legs.
The S&P 500 shed 8.12 points, or 0.2%, to end at 3,990.97
The Dow Jones Industrial Average fell 391.76 points, or 1.1%, to finish at 33,910.85
The NASDAQ Composite gained 15.96 points, or 0.1%, ending at 11,095.11
Q4 earnings season continued to heat up, with investors sifting through differing results from Dow member Goldman Sachs and Morgan Stanley, while Travelers Companies warned that its upcoming results will be lower than forecasts. The economic calendar started off a bit slow before beginning to heat up tomorrow, but today a read on New York manufacturing showed an unexpected tumble for January.
Treasury yields were mixed, and the U.S. dollar gained ground, while crude oil prices advanced, and gold traded to the downside.
Asia finished mixed, and markets in Europe also diverged, following a flood of economic data, notably out of China.
Cathie Wood and Ark’s flagship exchange-traded fund Ark Innovation ETF (NYSE: ARKK) bought 168,989 shares of Tesla on Friday, valued at $20.68 million at the session’s closing price. The stock ended Friday’s session down 0.94% at $122.40, according to Benzinga Pro data. At one point in the session, the loss was as much as 6.4%. For the week, the stock gained 8.26%.
Investing $1,000 in META Stock: Shares of Meta Platforms traded at $332.46 on June 4, 2021. A $1,000 investment could have purchased 3 shares of META stock. The $1,000 investment would be worth $410.94 today, based on a current price of $136.98 for Meta Platforms. This represents a loss of 58.9% in 19 months.
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European equities and US stock-index futures fell amid signs central banks will turn more hawkish and as investors focused on earnings reports from Wall Street banks.
The US stock and bond markets are closed today for MLK Day, so we’ll have to wait 24 more hours to see if this year-opening rally will continue for a third week.
But crypto currency trades 24/7, and the same hopeful inflation news that’s been lifting stocks has also given life to beaten-down cryptocurrencies. Bitcoin gained for the 11th straight day on Saturday, topping $20,000 for the first time in more than two months.
So, here are some ways in which the non-stop crypto market affects institutions — banks and exchanges, in particular.
The stock market takes a break every day, and every weekend. That gives all the players in the market — individual investors and institutions — a chance to assess and reposition their assets for their next moves. But since crypto trades all the time, there are stretches during the 24-hour day when banks and exchanges are effectively closed, and money isn’t being moved around as quickly or efficiently as it would during business hours.
This can cause lags — if a crypto trader is trying to deposit money into their crypto exchange account to execute a trade at, say, 2 am ET on a Sunday night, that money won’t actually move until the next day. That has the potential to cause some friction in the markets.
In short, there’s a mismatch between the standard business hours of many institutions and the 24-hour nature of the crypto markets, which may have an effect on the markets.
The U.S. Financial Markets will be closed today, Monday January 16th 2023, for Martin Luther King, Jr. Day.
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This federal holiday was first observed in 1986. In 1994, Congress passed the King Holiday and Service Act, designating the Martin Luther King Jr. Federal Holiday as a national day of service and charged the Corporation for National and Community Service with leading this effort.
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House Oversight Committee Chairman James Comer just said he hoped a U.S. debt default could be avoided. A default would greatly impact the economy and people in the U.S: A default would increase interest rates, which would then increase prices and contribute to inflation. The stock market would also suffer, as U.S. investments would not be seen as safe as they once were, especially if the U.S. credit rating was downgraded. Fortunately, the U.S. has never reached the point of default where the Treasury was incapable of paying U.S. debt obligations, though it has been close on several occasions. The only exception was during the War of 1812 when parts of Washington D.C. including the Treasury were burned.
Many investors were happy to wave goodbye to 2022, Wall Street’s worst year since 2008. The S&P finished down 19.4%, while the tech centered NASDAQ shed 33.1%. The blue-chip focused Dow Jones did better, losing just 8.8% across the year. Unfortunately, a number of senior investment bankers predict 2023 could bring more stock market woes. Most recently, in fact, Morgan Stanley Chief U.S. Equity Strategist & Chief Investment Officer, Michael Wilson, said he thought the S&P 500 could drop by another 22% in 2023.
Wilson wrote in a note this week that next year’s losses could be more significant than many are expecting. According to Bloomberg, Wilson thinks a peak in inflation would be “very negative for profitability.” He added, “The consensus could be right directionally, but wrong in terms of magnitude.”
Some analysts think that when inflation peaks, the Federal Reserve will ease up on its aggressive rate hikes and the stock market will recover. But Wilson argues this is only part of the picture. He thinks falling prices would have a knock-on effect on company profits, and the subsequent drop in margins would outweigh any benefit from a change in the Fed’s stance.
Wilson also alerted clients to the risk that companies would be caught “off guard” by a combination of falling demand and a catch up in supply. Supply chain issues, caused by a mix of COVID-19 lock downs, labor shortages, and other factors, have contributed to price increases and had a negative impact on production. If the supply chain starts to recover at the same time as recession-induced drops in consumption levels, he thinks the stock market could fall further.
A judge just ruled that a group of laid-off Twitter employees suing the business over their severance compensation, have to pursue their claims individually rather than as part of a class action, according to a Bloomberg report. About 500 of the roughly 3,700 Twitter employees Elon Musk laid off since taking control of the company last year have already filed individual arbitration claims, according to Shannon Liss-Riordan, the lawyer who filed those claims on the workers’ behalf.
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SPAC SEEKING SPAC: Money-losing companies that recently went public via SPAC are combining with other SPACs to secure more funding and stay afloat. The ultimate goal is one giant SPAC?
Former Treasury Secretary Larry Summers is worried that investors and economists are becoming overly optimistic after year-over-year inflation cooled to 6.5% in December.
“One has to be careful of false dawns. If you think about it, the good news was inflation running in the 6’s, and that’s still inconceivably high by the standards of two or three years ago,” he told Bloomberg on Friday, adding that his forecast is still that a “recession this year is more likely than not.”
Since March, Federal Reserve officials have raised interest rates seven times in hopes of taming inflation without sparking a recession, and all the while, economists and Wall Street analysts have debated whether they’ll be successful. Summers has repeatedly found himself in the bears’ camp. In October, he told the Financial Times that it would take “a recession” and “unemployment towards the 6% range” to ensure U.S. inflation is truly gone.
But the economist admitted on Friday that the latest inflation report was “good news”—and it came even though the unemployment rate was just 3.5% in December. He argued that this is evidence that wages aren’t rising too dramatically, which means the Fed may be able to change tactics soon.
The December CPI report showed 59% of its components “are now in deflation,” Fundstrat’s Tom Lee said in a Friday note. That’s good news for the stock market, as a drop in inflation will help ease financial conditions. “This is setting up 2023 to be the opposite of 2022, where inflation expectations fall faster than EPS risk,” Lee said.
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Stocks Higher as Q4 Earnings Season Begins U.S. equities ended the day and week higher, as the markets reacted to a host of results from the banking sector to kick off Q4 earnings season. Bank of America, Wells Fargo, and Dow member JPMorgan Chase all bested estimates, but each posted significant increases in provisions for loan losses, while Citigroup fell short of forecasts.
Meanwhile, Dow component UnitedHealth Group beat forecasts and reaffirmed its guidance. News on the economic front was mixed, as a read on import prices surprisingly increased, detracting some from yesterday’s tamer read on consumer prices, while consumer sentiment rose far more than what was projected.
Treasury yields were higher, and the U.S. dollar dipped, while crude oil and gold prices traded to the upside.
Asian and European stocks finished mostly higher, as investors digested inflation reports from the U.S. and abroad.
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