September 9-13, 2013
Markets: Generally, stocks have been moving higher. So have investor anxieties.
The VIX is significantly up from a near-record low below 12 at the start of August.
- Over the past month, the S&P 500 has fallen 18 times out of 22 trading days in the final 60 minutes of trading, and eight of the past nine days – often when the index is up overall.
- Gold, typically seen as a safe asset during tough or uncertain economic times, is rising in price.
These could be autumn jitters, or they could be a reflection of the S&P 500 hitting a "record-high in early August without so much as a 10 per cent correction over the past two years" and uncertainty around Syria, oil prices and the Chinese economy.
Also regarding the TSX: research shows National Bank is the most overbought stock listed on the TSX. Lately, finance and energy stock have topped the overbought list.
In US markets, the DJIA is changing its make up. Goldman Sachs, Nike and Visa are replacing Alcoa, Bank of America and Hewlett-Packard. The DJIA is an incredibly well cited index, but it is not particularly representative of the market generally. The index is made up of 30 stocks. It is price weighted, meaning more expensive shares count for more.
Companies: Twitter shares are coming to an exchange near you. The company made its first move towards IPO, filing confidential forms. And yes, they did announce it through a tweet. There is still a question on the company's revenues and profitability, but some value it near $14 or $15 bn.
Also in Twitter, the company bought MoPub. A deal that will essentially change the way advertising is done going forward.
The MoPub acquisition allows Twitter to fundamentally change how mobile ads are purchased and places them at the forefront of how mobile, Web, and social ads interact.
Apple released two new iPhones, the 5c and 5s. But, C doesn't stand for cheap; it seems the company chose to maintain margins rather than push for increased market share. Many believe a cheaper version would have increased the use of the handset, particularly in emerging markets (China, mostly). Essentially, the company made a new phone (with fancy new colours, and fingerprint ID), and dropped the price of the existing one. Remember, plastic doesn't mean cheap.
One thing I'd never considered in the iOS/Android battle: Apple is primarily a hardware company, whilst Android phones are a sale mechanism for the Google software. While they are competitors, it explains different routes to market and business decisions.
Otherwise: Kill switches are being considered in US exchanges, following technological glitches that caused massive trading faults (for instance the Nasdaq was offline for several hours on August 22nd, and Goldman Sachs sent out incorrect stock option trades).
This week led up to the anniversary of Lehman's collapse five years ago. Sorry to bring up the past, but why wasn't Lehman saved? According to Phillip Swagel, formerly of the Treasury Department (2006 to 2009):
The Federal Reserve did not believe that Lehman possessed the necessary collateral against which the Fed could provide the financing necessary to avert a bankruptcy filing. Indeed, Lehman was widely viewed by market participants as insolvent, requiring other industry participants to come up with tens of billions of dollars even to make possible the acquisition considered by Barclays.
A political edge: With decreasing likelihood of the US invading Syria, stocks and economics are coming back to the forefront in the US. Speaking of diplomatic tensions, have you read the op-ed piece by Putin in the New York Times?
Did you know only 3% of British cash has a physical form? The rest is digital. Also, the £5 note only lasts, on average, nine months! In an effort to make the physical currency more durable, the BoE may move to polymer banknotes.
First Jane Austen, then plastic. What will Carney do next?
TSB is now a stand alone bank. The European Competition Authority demanded Lloyds sell of TSB, its retail banking division, following its bailout from the UK government.
Britney Spears has a new single, named Work Bitch. Personally, the song does very little for me. But, I find it interesting that it leaked, and that Twitter was used by both Britney and her agent to keep people appraised of the situation (moving the official release forward). Once again, new media is an important method of information. The Twitter IPO is certainly one to follow.