foxex: Spring Fling?

The Market Sum | Insight after the bell

By Caleb Silver, Editor in Chief

Wednesday's Headlines

1. U.S. China trade talks are back on track. Markets Yawn.

Markets Close

Dow
26,449.54 -0.01%

S&P
2,900.45 -0.23%

Nasdaq
7,996.08 -0.05%

VIX
12.6 +3.45%

INV Anxiety Index
102.86 Neutral

US 10-Yr Yield
2.592 0.00%

U.S. Markets Slump on Earnings and Ignore Trade Progress

Stop me if you've heard this one before, but the U.S. and China are back on track to complete trade talks with a possible deal and signing ceremony as soon as Memorial Day (The end of May). The WSJ reported the progress, but its source was 'someone familiar with the situation'. That's code for someone inside the White House who wants to keep the press and investors on the edge of their seats as this drama plays out. It has worked in the past, but not today. Investors shrugged off the news and U.S. markets barely budged and failed to break into the green.

Pinterest and Zoom Plan their Public Debuts

The IPO door is open and two more high profile companies are about to come through. Photo-sharing app Pinterest and video conferencing company Zoom are planning to price their shares this evening and officially go public on Thursday, per the WSJ.

Both companies are expected to price at 'the higher end of their price range', which is another way of saying that demand for their shares among institutional investors has been strong. Institutional investors, pension funds and hedge funds get early access to companies planning to go public because they can make sizable commitments to purchase shares once they IPO. They represent the 'demand' part of the equation, and are usually the reason many new IPOs, especially popular ones like Lyft, rise on their first day of trading.

But, those same institutions are also some of the first investors to book their gains, and sell the stock once they've made a sweet profit. They'll celebrate over steaks and lobsters as this happens:

I'm not saying this will happen to Pinterest and Zoom. They are very different companies with different business models than Lyft or Uber. For its part, Pinterest is not profitable, but it has a rabid user base and advertisers who pay to reach them. Zoom, which is profitable, has become an indispensable part of business communications, but it has a lot of competitors and a relatively low barrier to entry. It has been around for 8 years, though, and has kind of become a verb inside many companies that use it. That's hard to do.

Read More: How Pinterest Makes Money

The WSJ put together a very nice visualization of the two companies and their paths to profitability, which we will share with you.

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Top Movers

Charts courtesy of KoyfinCharts.com

Chips and Transports Up, Pharma and Healthcare down

Trains, planes and semiconductors rose their way through a rough market today and were among the top gainers in the S&P 500. Qualcomm is still riding high on its settlement with Apple on Tuesday. Even Intel was able to draft in Qualcomm's wake, despite the fact that it actually loses in that deal.

6 out of the 7 of the top losers today were pharmaceutical or medical device companies. The entire U.S. healthcare sector is sick right now as legislation that will impact its profitability is on the horizon.

Global Markets

Here's how global markets ended the day on Monday, courtesy of koyfincharts.com:

What's the Word?

Trade Deficit

The U.S. Commerce Dept. reported today that the U.S. deficit on trade in goods and services narrowed 3.4% in February compared to January due to a pickup in exports. That could mean that U.S. economic growth in the first quarter might have been stronger than previously estimated.

The trade deficit between the U.S. and China narrowed by 9.3% from the prior month to a seasonally adjusted $30.12 billion, as the U.S. exported more to China and imported less in the month of February. Soybeans, one of the biggest U.S. exports to China, increased 55% in February compared to January. Pork exports to China also increased due to an outbreak of African Swine fever that has impacted the hog population in China, where they love their pork.

photo courtesy of SmithsonianMagazine.com

Today in Financial History

On April 17, 1837, just three weeks before the stocks market crashes, leading to the Panic of 1837, John Pierpont Morgan was born in Hartford CT to Juliet Pierpont and Spencer Morgan. Spencer, his father, was a merchant and a stockbroker. Little John was a sick baby whose parents called him Bub. That name didn't stick, and JP went on to become one of the most powerful and ruthless financiers the world has ever known. The little bank he founded is still around today.

Source: Jean Strouse, Morgan: American Financier (Random House, New York, 1999)

Read More on Investopedia: The Story of JPMorgan