foxex: Pumping

The Market Sum | Insight after the bell

By Caleb Silver, Editor in Chief

Thursday's Headlines

1. U.S. markets flat ahead of November jobs report
2. Saudi Aramco prices IPO at top end of range

3. Oil prices flat as OPEC weighs deeper cuts

4. 2019: The year of CEO departures

5. It's been a great year for stocks, but...

Markets Closed

Dow
27,677.79 +0.10%

S&P
3,117.43 +0.15%

Nasdaq
8,570.70 +0.05%

VIX
14.52 -1.89%

Bitcoin
$7,395.22 +1.56%

US 10-Yr Yield
1.797 +0.90%

credit: Getty Images

Markets Today

Investors are in a wait-and-see game as U.S. markets barely budged today. There was little news on the trade front, save for China's Commerce Ministry saying both sides are in 'close communications'. China and the U.S. have 10 days to reach a trade deal before additional U.S. tariffs on $156 billion in Chinese goods take effect. Consumer staples lagged the broader market, and oil prices barely moved after jumping 4% yesterday on hopes of steeper production cuts ahead. Economic news was light ahead of tomorrow's November U.S. jobs report.

Headlines

Saudi Aramco priced its IPO at 32 riyals per share ($8.53), putting it on track to raise $25.6 billion in what would be the largest IPO on record. At that price, the Saudi-owned oil giant would be worth $1.7 trillion, making it the largest public company in the world.
United Airlines CEO Oscar Munoz is stepping down, according to the company. He will be replaced by Scott Kirby, a high ranking United executive, who has helped steer the airline to become the second largest carrier by traffic in the U.S. Under Munoz's leadership, shares of United have climbed 53% compared to a 24% rise in the NYSE Airline Index.
Japanese leaders have approved a $120 billion stimulus program, the country's largest in more than three years, citing global economic risks that have led other central banks to cut interest rates. The new spending includes more than $50 billion to help the nation recover from a typhoon in October that killed about 100 people.
India's Central Bank left interest rates unchanged, surprising many who were expecting yet another rate cut this year. The Reserve Bank of India left its key lending rate unchanged at 5.15%. It has lowered the lending rate five times this year and most economists had expected additional easing. In a statement, the central bank said it would "continue with the accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target."
U.S. weekly jobless claims fell by 203,000 last week, according to the Labor Department. It was the lowest number of claims in seven months, which has reduced some of the concerns about the health of the U.S. job market.
The Federal Communications Commission says 5G doesn't pose new cellphone radiation threats. The U.S. regulator voted unanimously this week to keep in place standards for how much exposure to the radio-frequency energy that cellphones and antennas emit is safe.

CEO Departures

Bye, Bye, Boss...

With the United Airlines CEO stepping down and other recent chief executive departures, including McDonald's and SAP, we wondered if there have been more departures than normal this year. Staffing firm Challenger, Gray, and Christmas tracks such things and has the tally through the first 9 months of 2019, which you can see in the chart above.

Indeed, 2019 is on pace to set a record for CEO departures, with the month of August breaking the all-time monthly record since Challenger started tracking the figure in 2002. The third quarter was particularly brutal in the corner office, as 434 chief executives left their posts, the highest quarterly total on record.

CEOs depart for all kinds of reasons, although the ones that make news are usually due to bad behavior, sudden illness, or death. How and when they leave makes a difference on how investors react to the departure. If a CEO is emblematic of their firm and tightly associated with its success, their sudden departure can often be met with skepticism and a sell-off. A well-timed departure with a clear succession plan can mitigate those doubts, and that seems like what has happened at United.

Perspective is Everything

I know I say that a lot, but the 25% returns for the S&P 500 so far this year compels me to return to that phrase. It has been quite a year for U.S. markets, but very few people start investing on January 1st and keep score from that date. The financial media does it (guilty as charged) because we need a frame of reference to keep score of market performance.

But when we zoom out and look at the broader market's performance over a 2 year stretch, it's not as impressive. Still, an 8% annualized gain is something I would've signed up for two years ago. A 10-year annualized gain of nearly 11% is pretty good, too - better than the historical average. Take it back 20 years - as long as I have been investing - and the gains are not even 4%.

Now, let's look at another period in history: 1949-1999. That, my friends, was a time to be invested in the U.S. stock market. Sure, there were some big busts and bear markets, like 1987 and 1999. But the overall annualized returns in nearly every time frame beat out the 50-year annualized average, no matter how you slice it. That's why we encourage investors to consider their own time horizons as part of their investment strategy.

How long do you have to invest?
When will you need the money you have invested?
How long do you need it to last?

More News:

The Year in ETFs: Key Trends for 2019

The Future of Financial Advice according to Josh Brown

3 Tax Selling Candidates for December

chart courtesy YCHARTS

Drug maker Biogen rose 3.4% after it released new data about its Alzheimer's drug aducanumab. Fashion firm PVH rose 3.2% today, and fellow fashion company Ralph Lauren Corp rose 3.0%.

Drug maker Alexion Pharmaceuticals fell 6.4% today. Alcoholic beverage company Brown-Forman reported earnings and sales beats, but lowered their profit guidance for FY 2020, sending the stock down 6.3%. Medical device firm The Cooper Companies fell 4.8% in anticipation of earnings announced after market close today.

Word of the Day
Severance Package
A severance package is a bundle of pay and benefits offered to an employee upon being laid off from a company. The receipt of a severance package is contingent upon signing a severance agreement. The amount of money received is usually based on the length of employment prior to termination and may include payment for unused vacation and sick days, and unreimbursed business expenses.

Image Source: Spencer Platt / Getty Images

Today in History

December 5, 1996

Today in 1996 Alan Greenspan gave a speech before the American Enterprise Institute about "The Challenge of Central Banking in a Democratic Society." In it he famously asked "...how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?." Over the next year, stocks rose 34.5%, showing that America's situation wasn't especially similar to Japan's.

Source: https://www.federalreserve.gov/boarddocs/speeches/1996/19961205.htm