foxex: Taxed

The Market Sum | Insight after the bell

By Caleb Silver, Editor in Chief

Monday's Headlines

1. Stocks flop on bank earnings.

Markets Close

Dow
26,384.77 -0.10%

S&P
2,905.58 -0.06%

Nasdaq
7,976.01 -0.10%

VIX
12.32 +2.58%

INV Anxiety Index
104.45 High

US 10-Yr Yield
2.553 -0.27%

U.S. Markets Fizzle on Bank Earnings

What a difference a weekend makes. Maybe it was a 'Game of Thrones' hangover, or perhaps investors in the U.S. were focused on filing their taxes, but markets were quiet and relatively lackluster today to open the week. The DJIA, S&P 500 and the Nasdaq all ended the day slightly lower. Only healthcare related stocks were able to break through.

It is tax filing day in the U.S. for individuals and families, although that traditionally has nothing to do with market performance. That said, Bespoke Investments says that over the past 20 years the S&P 500 has averaged a near 1 percent gain in the week following the federal tax filing deadline and has been higher 75% of the time. By the second week after April 15, the S&P has been up 1.5% and was higher 75% of the time. That could be simply a seasonal coincidence and should not be the basis of your investing decisions.

$1.6 Trillion

That's how much the Federal government collected in income taxes for fiscal year 2019, according to the U.S. Treasury. It paid out $2.19 trillion in outlays. That's what we like to call a deficit. Here's what it looks like, courtesy of the Treasury Dept.

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Treasury Yields Rose Last Week With Fed Balance Sheet Unchanged

How Cannabis Craze May Spread To The Futures Markets

Big Banks Underwhelm

Goldman Sachs and Citigroup both reported first quarter results this morning, and their results were underwhelming. While both banks managed to beat earnings expectations, Goldman reported a decline in revenue as its institutional businesses showed some weakness. Citigroup also reported weakness in its equity trading division. The takeaway from both of these banks is that their institutional businesses like trading, mergers and acquisitions, and investment banking, are weakening - at least right now. These are massive profit centers for the banks, and they are responding by cutting jobs and pushing deeper into retail banking and credit cards. There is a reason that Goldman Sachs is partnering with Apple and Mastercard on the new Apple card. That's where the customers are.

If you have ever wondered where Goldman Sachs makes its money look no further than its annual report or quarterly 8-k filing.

Top Movers

Charts courtesy of Koyfin

Around the World

The eyes of the world were on the Notre Dame cathedral in Paris this afternoon, which was in flames for several hours. The footage of the historic steeple falling to the ground is one that will be impossible to forget. As we write this, it looks like firefighters were able to get the blaze under control and save the cathedral from total destruction.

Global Markets

It was a mixed bag for global markets today with Brazil and Argentina posting solid gains as the rest of world was flat to down. It is the beginning of Holy Week, or Semana Santa, as they say in South America, so expect trading volumes and business activity to be lower than usual.

On Wednesday we will get a reading on China's first quarter GDP. Economists forecast 6.3% growth, which is down from 6.4% last quarter.

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

What's the Word?

Remuneration

Given the news that Goldman Sachs cut compensation and benefits for its employees in the past quarter given lackluster performance, we've chosen remuneration as our word, today.

Remuneration is payment or compensation received for services or employment. This includes base salary and any bonuses or other economic benefits that an employee or executive receives during employment.

In Goldman Sachs' earnings report, the bank said it cut employee compensation and benefits, aka 'remuneration', by 20% to $3.26 billion for the quarter. That boils down to an average salary and benefits package of $90,780 for each of the bank's 35,900 workers. In 2018, that figure was $119,323 for each of the bank's 34,000 workers.

Chart of the Day: Controversy Sparks Cryptocurrency Volatility

Two major offshoots (otherwise known as 'hard forks') of Bitcoin – Bitcoin Cash and Bitcoin SV (Satoshi's Vision) – diverged sharply on Monday after Binance, one of the world's largest cryptocurrency exchanges, delisted the latter token. The delisting occurred after Binance accused Bitcoin SV founder Craig Wright of attacking those who disputed his claim of being Satoshi Nakamoto, a pseudonym for the legendary creator of the original Bitcoin. As a result of Binance's move, Bitcoin SV dropped around 17% on Monday, while Bitcoin Cash surged around 7%.

On a larger time frame, cryptocurrencies overall have been on the move of late. Early this month, many cryptos surged sharply on the heels of a large upswing by Bitcoin. It's unclear exactly what drove that move, but reports at the time suggested that a buy order for over 20,000 bitcoins (worth around $100 million) may have triggered further algorithmic trading activity that boosted prices dramatically. The resulting buying frenzy also lifted most of the smaller cryptocurrencies (or 'altcoins') in a wave of bullish contagion.

As of mid-April, the bullishness has sputtered a bit, but some cryptos remain strong. The noted Bitcoin Cash, which is not far off its early April high after Monday's jump, is the leader at a whopping gain of over 90% year to date. The original Bitcoin has also fared well at over a 30% gain YTD. Ethereum has gained a respectable 15%. And Ripple continues to lag in significantly negative territory. Finally, Bitcoin SV has been having a rough time this year thus far, even before Monday's drop. It's down well more than 30% since the beginning of the year, and may see further downside as the founder's conduct and claims come under further scrutiny.

Today in Financial History

On April 15, 1955 Ray Kroc opens his first McDonald's in Des Plaines, Illinois. The attention-getting red and white tiled building with the Golden Arches was designed by architect Stanley Meston in 1953. First day sales are $366.12.

In 2018 McDonald's posted $21.03 billion in revenue. Its market cap is $146.5 billion.

For those of you who don't know McDonald's history, it's worth reading.

Here's McDonald's version of events.

Here's the Museum of American Finance's version