Alchanati Campbell & Associates
Best day since 2015, U.S. Treasury going on sale, finding the truth and confidence within ourselves, and how bout them apples.
US Market Indexes are back up; Dow Jones sees biggest gain (660+ points) since August 2015. Stocks surge on report of talks about US-China trade negotiations. Trade negotiations began with the US requesting a reduction of Chinese tariffs on US automobiles, more Chinese purchases of US semiconductors and greater access to China’s financial sector. Microsoft powered the surge with a 7.5% jump following Morgan Stanley’s price target increase. Microsoft’s market capitalization climbed to $722 billion. Intel rose 6% with reports of Raymond James upgrading the stock to “market perform”. Remington, one of the oldest and most famous gun companies in the U.S filed for Chapter 11 bankruptcy. This comes after the tragically frequent shootings in the past weeks and as surviving students push for tighter gun regulation. Chapter 11 Bankruptcy reorganizes the internal structure of a company, usually to relieve heavy debt. This differs from the more well known Chapter 7 bankruptcy, which involves the liquidation of almost all assets.
US Treasury is auctioning about $294 billion of bills and notes this week. A major reason for US financing is a result of the tax overhaul. There is no doubt that the US can fulfill their borrowing needs, but the demand for 10-year notes has fallen to the lowest since October 2009. On top of the $21 trillion of debt the US already owes, the US deficit (an excess of expenses over income) is set to widen to almost $1 trillion next year.
We are always most gullible to ourselves. David Dunning, a social psychologist at University of Michigan, said, “To fall prey to another person you have to fall prey to your belief that you’re a good judge of character, that you know the situation, that you’re on solid ground opposed to shifty ground.” In 1999, Dunning and Justin Kruger identified the Dunning-Kruger effect: “People who are incompetent and lack knowledge in a field tend to massively overestimate their abilities because they don’t know enough to recognize what they don’t know." An example of this is: Participants in a 2013 study were asked a question about the trajectory of a ball after it was shot through a curved tube. Those who said the trajectory of a ball would be curved were wrong, but were just as confident in their answer as those who correctly stated the trajectory would be straight. (https://qz.com/1231534/the-person-whos-best-at-lying-to-you-is-you/)
“I got an apple for the teacher, gonna make a great success,”(An Apple for the Teacher by Bing Crosby). Apple Inc. saw a gain of over 400 basis points (1 BP = .01%). Apple announced that it will introduce new low-cost iPads and education software next week. Years ago, Apple products dominated the classroom. But as their prices rose, sales declined and competitors like Microsoft took the market. Now, times are changing.
For people who like sports. Over the weekend, the Golden State Warriors star point guard, Steph Curry, sprained his MCL. He will be out for 3-6 weeks and will definitely miss the first round of the NBA playoffs. This affects the entire league because the Warriors have been in three consecutive finals, but none without Steph. If he remains out, Houston will mostly snap their streak. In the college world, March Madness is currently in the final four with Villanova playing Kansas, both number 1 seeds, and number 11 seed, the Cinderella story Loyola playing number 3 Michigan. The two winners will advance to the Championship game on April 2nd.
The Alchanati Campbell and Associates Team
WHAT'S UP FRIDAY? is a weekly newsletter that will give you a summary of "What's up?" on Wall Street, in the US and around the World written by The Alchanati Campbell and Associates Team. What makes us unique is we focus on long-term knowledge; knowledge that will still be useful to you 10 years from now.