| Tuesday's Headlines 1. US markets rip higher as China backs banks amid virus crisis 2. Nasdaq hits a record high powered by Tesla 3. Royal Caribbean cancels more cruises and takes earnings hit 4. Which sectors are feeling the coronavirus impact most? 5. Are fossil fuel stocks becoming fossils? Markets Closed
 Markets Today The buying started early in Asia and stayed strong all day traveling around the world as investors ignored growing concerns about the spread of the coronavirus and bought risky assets across the board. Airline and hotel stocks were on that list, as were semiconductor stocks of companies like Micron and Nvidia, which have manufacturing and customer exposure throughout China. Even shares of Carnival Cruise Lines rallied nearly 2% after admitting yesterday that a former cruise line passenger tested positive for the virus. Oil stocks did not make it into the shopping cart, however.
Tuesday's bounce was amplified by a Reuters report that said China's central bank could cut its key lending rate as well as banks' reserve requirement ratios (RRRs) in the coming weeks to support economic growth. The report came a day after the People's Bank of China unveiled liquidity injection measures totaling more than 1 trillion yuan, and added another 400 billion yuan today.
And then there's Tesla (TSLA). Shares of the electric car maker have been lighting up the pinball machine since last week, adding another 13% today on very little news. Its market cap, nearly $160 billion, surpassed that of McDonald's at one point today. McDonald's produced $6 billion in net income in 2019. Tesla lost $862 million in net income in 2019. That's the parabolic cycle we are in right now.
Headlines:
chart courtesy of Goldman Sachs  The Impact of the Coronavirus on Securities We wrote yesterday about the potential impact of the coronavirus on global GDP. Today, we are looking at the impact it has had on various securities, as of this morning. Past superbugs, like SARS, have proven to have an immediate - but not long-lasting impact on global equities. The coronavirus has already surpassed SARS in terms of the number of people it has infected, and while it is still too early to ascertain how much it will impact securities, and for how long, it has had a major impact on oil-related sectors.
That makes sense given that China is the largest importer of crude oil in the world and the country has been partially immobilized by the spread of the virus. But oil-related securities have been in a downward cycle for the past five years, save for a few rallies here and there. The fossil fuel economy, while still enormous, is tired and investors are losing patience and belief in it. The coronavirus may be one of those watershed moments that the fossil fuel economy does not fully recover from.
The Shunning of Big Oil Giant money managers like BlackRock and State Street are starting to divest from companies that emit excessive carbon like coal producers and oil E&P companies. Even the Church of England Pensions Board, which manages around $3.7 billion, this week announced the launch of an index that rewards companies working to curb their carbon-dioxide emissions in line with the targets of the 2015 Paris agreement, and bars companies that fall short.
We can see this trend in the rise of assets flowing towards ESG (environmental, social, and governance) criteria and SRI (socially responsible investing). We can also see it in the performance of ETFs that track big oil and renewables. Here's the SPDR S&P Oil & Gas Explorers ETF in purple, and the iShares Global Clean Energy ETF in orange over the past five years. Follow the money, and as my wife likes to remind me, "play the long game."
chart courtesy YCharts 
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(chart courtesy YCHARTS)  Tesla rose again today, possibly helped along by short sellers needing to cover their shorts. Mall REIT Taubman Centers rose today after reports from Bloomberg that it was in talks to merge with rival mall REIT Simon Property Group. Aviation conglomerate Textron rose after news broke that Bombardier is in talks to sell its business-jet segment to Textron.  Healthcare company Premier fell today after announcing the acquisition of two subsidiaries of the Greater New York Hospital Association. Intercontinental Exchange, the owners of the New York Stock Exchange, fell today after they announced an offer to buy eBay. IT and consulting firm Gartner fell on disappointing guidance for 2020 despite an earnings beat. Word of the Day Disinvestment is the action of an organization or government selling or liquidating an asset or subsidiary. Absent the sale of an asset, disinvestment also refers to capital expenditure reductions, which can facilitate the re-allocation of resources to more productive areas within an organization or government-funded project.  Image Source: Business Insider
Today in History February 4, 2004 Today in 2004, the first version of Facebook, then known as "The Facebook," was launched by Mark Zuckerberg for students at Harvard University. The launch came one year after he launched an online program called "Facemash", which let users compare photos of fellow Harvard students and decide which was "hotter." There had been websites showing students' pictures and information, called "face books", but there was no unified site for the whole school. Facebook expanded to other schools and in 2005 the name was changed to just "Facebook". By 2006, Facebook had expanded to allow people all over the world to make accounts. Fellow students Cameron and Tyler Winklevoss and Divya Narendra alleged Mr. Zuckerberg had stolen the idea for Facebook after they'd asked for his advice on creating a social network at the school called "HarvardConnection." The resulting lawsuit was settled in 2008, with Zuckerberg giving the three 1.2 million shares of Facebook stock each. Facebook went public in 2012, and now boasts over 2 billion monthly users.
Source: https://www.independent.co.uk/life-style/gadgets-and-tech/facebook-when-started-how-mark-zuckerberg-history-harvard-eduardo-saverin-a8505151.html
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Tuesday, February 4, 2020
Parabolic
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