Wednesday, May 22, 2019

Millennials' Financial Woes

Burdened by significant student loan debt and the fact that many of them spent their first working years in the midst of an economic downturn, millennials are already way behind previous generations on a number of key financial metrics. That's according to a recent analysis by the Wall Street Journal.

In 2016, the average net worth of a household headed by those age 18 to 34 was roughly $92,000. In inflation-adjusted dollars, that was 40 percent lower than the worth of young households in 2001, and 20 percent lower than that of young households in 1989.

Similarly, only about a third of millennials owned homes in 2016. That's compared to half of young people in 2001 who owned homes,  and just under half of young people in 1989.

Tuesday, May 21, 2019

Who's Moving Into Cash?

Are the superrich getting spooked? Members of Tiger 21, a group of about 700 individuals with at least $10 million to invest, increased their cash holdings by 20 percent in the first quarter, bringing the group’s total allocation to levels not seen since the start of 2013. The move marks Tiger 21’s first cash-raising effort in three years.

The group is backing away from hedge funds, but just slightly. Real estate, still the asset of choice, has steadily fallen out of favor, dropping from a peak of 33 percent in the second quarter of 2017 to the current 26 percent level.

Group members have remained steady their bond holdings. That asset class accounts for 9 percent of their holdings, similar to the fourth quarter of 2018.

Monday, May 20, 2019

The Bank of Mom and Dad

Kids have been borrowing or receiving gifts from parents for years, but a new study by Legal & General, a U.K.-based financial services firm and global investor, has quantified the effect. If the Bank of Mom and Dad were a real lender, the total amount loaned out is estimated to be $47.3 billion, just less than U.S. Bancorp, the fifth-largest bank in the nation.

One in five U.S. homeowners received gifts or loans from family to help them buy their home. The average sum given as a gift or interest-free loan is $39,000 per loan. That helped to support the purchase of $317 billion worth of property across America in 2018.

This amount doesn’t include other loans or gifts given out by Mom and Dad, usually dealing with college. Those loans averaged roughly $41,500 apiece.

Friday, May 17, 2019

Earnings Season's Biggest Surprises

Which companies had the biggest upside surprises in terms of sales this earnings season? According to FactSet, these are the ten stocks whose sales figures outperformed the Wall Street analysts the most:

  • Pioneer Natural Resources, exceeded expectations by 38 percent
  • Fifth Third Bancorp, exceeded expectations by 32 percent
  • HollyFrontier, exceeded expectations by 19 percent
  • Alexandria Real Estate Equities , exceeded expectations by 16 percent
  • Lockheed Martin, exceeded expectations by 14 percent
  • Electronic Arts, exceeded expectations by 14 percent
  • Principal Financial Group, exceeded expectations by 12 percent
  • Anadarko Petroleum, exceeded expectations by 12 percent
  • Vulcan Materials, exceeded expectations by 11 percent
  • Westinghouse Air Brake Technologies, exceeded expectations by 11 percent

Thursday, May 16, 2019

A Surprise in Retail Sales

U.S. retail sales unexpectedly declined in April, the Commerce Department said yesterday. The value of overall sales declined 0.2 percent after a 1.7 percent increase in March that had been the strongest gain since 2017.

Overall consumer spending, which includes spending on services such as haircuts and travel, had jumped in March by the most in nearly a decade, but April was a different story. One example of the turnaround: Sales at automobile dealers fell 1.1 percent after increasing 3.2 percent in the previous month.

Sales at clothing stores fell 0.2 percent in April, and by 1.9 percent at home and garden supply stores. Other down sectors included health and personal care, and electronics and appliances. Categories with increases included general merchandise, food and beverage stores, and restaurants and bars.

Tuesday, May 14, 2019

Victims of the Trade War

The trade war between the U.S. and China means hard times for the markets, especially those companies that do a lot of business with China. The Dow Jones Industrial Average and the S&P 500 Index both fell by 2.4 percent yesterday, while the Nasdaq Composite Index dropped 3.4 percent.

Apple led the Dow decliners with a loss of 5.8 percent, after reporting a 22 percent decline in sales in China for the quarter ended March 30 from a year earlier. Other Dow stocks that lost at least 3.5 percent:

  • Boeing, down 4.9 percent
  • Caterpillar, down 4.6 percent
  • DowDuPont, down 3.9 percent
  • Cisco Systems, down 3.9 percent
  • United Technologies, down 3.8 percent
  • Goldman Sachs, down 3.5 percent

Sunday, May 12, 2019

The Bad News from Uber

Uber's hotly anticipated IPO turned into a bit of a dud on Friday. By one measure, it was the fifth weakest one-day return of a company with a value of at least $10 billion of the past 24 years, according to data from Dealogic.

Uber’s stock closed at $41.57, giving it a valuation of $69.71 billion, which is certainly a very big number. But it also finished Friday's trading down 7.6 percent from its official public debut at $45.

The first-day drop put Uber’s return better than only four other companies that were valued at $10 billion or more. ADT, the security company, raised about $1.5 billion on January of 2018 but saw a first-day slide of 11.5 percent. Genuity, one of the last gasps of the dot-com era, saw its stock slide by 14.5 percent on its first day of trading back in June 2000.