 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief Thursday's Headlines 1. Markets Rise for Second Straight Day 2. U.S. and China Plan October Trade Talks 3. Semiconductor Stocks Keep Popping 4. WeWork Cuts Valuation Ahead of IPO Markets Closed
 Credits: REUTERS/Ints Kalnins Markets Today
Make that two straight days in the green for global markets. Stocks continue to push higher in the face of economic headwinds and trade concerns. Some of those concerns may have eased today as the U.S. and China say they plan to meet next in October to work towards a deal. Despite the fact that both countries have applied a new round of tariffs on each others' goods as of a few days ago, and more are planned for December, news of a meeting on the calendar next month is a positive development, and sentiment has shifted yet again.
The semiconductor industry has proven to be super sensitive to the trade talks, and the last few days have been Exhibit A.
The VanEck Vectors Semiconductor ETF (SMH), one of the most popular exchange traded funds that holds companies like Intel, Applied Materials, Nvidia, and Micron, is up 9% over the past five sessions.  It's only up 12% in the past year, underperforming the broader market, which shows just how sensitive it is to trade.
Financial Stocks Rise Along with Bond Yields The recent rally in stocks has also flushed some money out of the U.S. Treasury market, where investors have been hiding it for safety. Yields on the 10-year U.S. Treasury climbed from 1.456% on Wednesday to 1.59% today. Over the past five days, yields are up 9%, but that jump is off of a pretty low base.
Over the past year, yields on the 10-year have fallen 46%.  As yields rise—even off of a low base—so do financial stocks. Financial stocks, which include the largest banks and money managers in the world, have been suffering as the Federal Reserve has become more dovish. They have also been suffering as fears of a global recession have rattled markets. Low interest rates and slowing economies, or even contracting ones, are bad new for banks, and we've had a whole bunch of both in these past few months.
While banks can loan money at whatever rate they can get, irrespective of where the Federal Reserve sets the federal funds rate, they do base a lot of their loans off of that rate. Lower lending rates impact their net interest margins, and thus their profitability. While interest rates in the U.S. are probably heading lower in a couple of weeks, positive signs from the trade talks can assuage some of the fears of slowing economic growth, which is good news for banks.
On a side note, banks, including Goldman Sachs, UBS, and Deutsche Bank, are cutting jobs, reducing the amount of partners, and planning broad restructurings.
Here's the past year for financial stocks, as seen through the XLF ETF, which holds the biggest banks in the world. It kinda looks like the S&P 500, as seen through the SPY ETF (in orange), only about 6% worse.  WeWork slashes valuation ahead of IPO
We can't say we didn't see this coming... a lot of people did. WeWork, which wants to be known as "The We Company," slashed its own valuation just weeks after it filed to go public. The reduction, which was first reported by the WSJ, comes as the company was having trouble generating interest from investors for its IPO. WeWork last raised private capital at a $47 billion valuation, despite posting steep losses.
The company lost $900 million for the first six months of 2019 on revenue of $1.54 billion, according to its prospectus. It has 528 locations, with plans to open 169 new locations around the world, and half of its members are outside the U.S.
While the idea of office sharing and short-term sublets to businesses seems useful, WeWork and prospective investors may have seen how the public markets have shunned ride-sharing companies like Uber and Lyft since their public debuts before taking an axe to their own valuation. It hasn't been pretty. 
chart courtesy www.koyfin.com  Ipg Photonics continues its rise that started yesterday—its stock price now up by nearly 8%, boosted by recently scheduled trade talks between the company and Rockwell Automation, which many investors are hoping will lead to a deal. Shares of the Mosaic Company increased by almost 7% after its Brazil-based business unit announced it had resumed normal operations at its Araxá and Tapira mines.  Shares of Newmont Mining fell by over 4% today following the announcement of its plan to offer senior unsecured notes, which is a result of the company needing to repay an outstanding 5.125% of senior notes by the beginning of October. Concho Resources' stock price decreased by almost 4% after the company revealed that it intends to sell all of its New Mexico Permian Basin assets.   Word and Chart of the Day: A price target is the projected future price level of an asset as stated by an investment analyst or adviser. The price target is based on assumptions about the asset's future supply and demand, technical levels, and fundamentals. For individual traders, who may develop their own price targets for the assets they are trading, the price target is where they will look to exit their position as the originally expected value of the trade has been recognized. Price targets may change over time as new information becomes available.
Given that... the chart above caught our attention. It shows the wide range of price targets that investment strategists have for the S&P 500 for the end of the year. Typically, investment strategists' predictions are fairly clustered into a tight range. But, given the uncertainty over the trade war, interest rates, corporate profits, and other unknowns, the price targets are all over the map.  source: https://www.pebblebeach.com/timeline/ Today in Real Estate History Sept. 5, 1990: In the latest high-profile Japanese purchase of landmark U.S. properties, real-estate developer Minoru Isutani buys the Pebble Beach golf resort for $841 million from a private American partnership. U.S. commentators go ballistic, whining that Japan will soon own the entire American economy. But by March, 1992, Isutani is on the verge of bankruptcy and sells Pebble Beach for $500 million, a $341 million loss in less than a year-and-a-half, probably the most disastrous real-estate deal known to man, says California banker David Paris. The Wall Street Journal, Sept. 6, 1990; Feb. 21, 1992, p. A1; March 9, 1992, p. C9
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Thursday, September 5, 2019
Rally Mode
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