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Monday, September 30, 2019
Action Insight Daily Report 10-1-19
Clarification
 The Market Sum | Insight after the bell
By James Early Monday's Headlines 1. U.S. Treasury May Not Limit Investment into Chinese Companies After All, Maybe 2. White House Considers Investment Limits on China 3. Oil Prices Down for the Quarter, Despite Drone Strike 4. Metropolitan Museum of Art's Latest Addition: Junk Bonds Markets Closed
 Markets Today
It wasn't the best of days, but it wasn't the worst either. (Same, incidentally, goes for 2019's third quarter, which ended today.) On Monday, stocks reversed their momentum from last Friday, when Bloomberg broke a story that the White House was aiming to restrict Americans' ability to invest in Chinese companies in the name of protecting American investors. Clarification from the Treasury department over the weekend and the White House today that such plans were, in fact, not imminent brought calm, but worth noting is that those clarifying didn't clarify completely, perhaps leaving a little negotiating leverage on the table.
Baidu: UP 1.53% Alibaba: UP 0.75% NetEase: UP 2.11%
 Treasury Says it Won't Restrict Chinese Listings Don't like the news about China? Wait five minutes. Or maybe a weekend, but same idea. Markets were "all shook up" in a twitching, bad-Elvis sort of way on Friday after Bloomberg reported that the White House was brewing on ways to restrict U.S. investment into Chinese firms, including forced delistings from U.S. exchanges.
WeWork Postpones IPO No IPO is better than a wee one.
WeWork lost nearly $2 billion last year (see below), which is just shy of Neumann's net worth.  Oil Prices Down for the Quarter, Despite Drone Strike Just two weeks ago, the story about oil was how high prices had become in the wake of the drone attack on two Saudi Arabian oil plants, which reportedly shut down 5% of global oil supply. Oil peaked at $72 then (Brent oil pricing; relative to West Texas Intermediate, Brent pricing sees more international use). Now, the story is about how cheap oil has become ($61 now) despite the attacks. The minor cause is that the plants recovered quickly, but the larger one is simply that global demand is sluggish. That means something, even for people who don't care about oil (Tesla drivers, I'm talking to you).
 (credits: Macrotrends.net)
Metropolitan Museum of Art Buys Junk Bonds Like junk bonds? You've got company in high society. As reported in Barrons, The New York Metropolitan Museum of Art plunked $10 million into New Mountain Guardian III, a junk bond fund, buying 10.3% of it. Before you start wondering if some art history majors know more about the yield curve than you do, know that junk bonds tend to be larger bets on the creditworthiness of the issuer than interest rates themselves. And despite the insulting name, junk bonds aren't always as insidious as they sound: Nearly all bonds issued by small U.S. companies are junk bonds, by definition, because they're too small to be rated, and JPMorgan, IBM, and even the U.S. itself (albeit in the 1700s) have issued shaky debt. Despite assets of nearly $3.5 billion, the Met had an operating deficit of $8.3 million last year which, it hopes, is nothing a little junk won't fix.  (credits: REUTERS/Lucas Jackson)
chart courtesy www.koyfin.com  Shares of Marriott rose by nearly 3% after the company announced it will be adding Beyond Meat to its Courtyard restaurant menu. Newell Rubbermaid's stock price also increased by almost 3% today, following the company finally reducing its debt to manageable levels by selling assets as part of a turnaround plan, which began in 2018.  National-Oilwell was one of several oil companies that fell today, its shares suffering the largest drop of almost 4%; alongside it were Baker Hughes (over 3%) and Marathon Petroleum (nearly 3%). Macerich's stock price fell by more than 2% amid Forever 21 filing for bankruptcy.  Word of the Day Junk Bond Programming note: Today's Market Sum is guest written by James Early.  (image courtesy: Koyfin.com)
Today in Market History Sept. 30, 1981: Ten-year U.S. Treasury yields reach 15.84%. The Koyfin rates graph, as cited by Ritholtz Wealth Management, nearly says it all: Rates are close to one-tenth of what they were the year the Space Shuttle first launched. Good as it sounds to lend to Uncle Sam at 15%, remember that mortgage rates averaged 17% and unemployment was nearing 9%.
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