| Wednesday, August 26, 2020 Headlines 1. US markets rally to record highs behind tech giants 2. Salesforce soars 25% on earnings win 3. Hurricane Laura threatens US oil complex 4. CEOs are confident, but not buying 5. These stocks hitting new all-time highs Markets Closed
 Image courtesy GettyImages/Gajus
Markets Today All major U.S. equity markets rallied today as big technology stocks topped all-time highs, taking the indexes with them. Apple returned to its winning ways, but Salesforce (CRM) was the story, streaking 25% higher as it crushed earnings forecasts. Although the Nasdaq and S&P 500 cruised to record highs, market breadth was weak across the benchmark index with three stocks declining for every two that advanced. We've seen that more than a few times this summer as the winners and losers have separated, and there are fewer winners.
CEOs say they are more confident in the future than they have been all year. That's not saying much, but what speaks volumes is how little of their own stock they have been buying in recent weeks versus how much they have been selling.
Oil prices were little changed, but that might be about to change, as Hurricane Laura intensifies as it nears the Louisiana and Texas coastlines. There are a lot of people in harm's way, and evacuation orders have been issued for key cities. That's also where the country's largest concentration of petroleum facilities are located, including the largest refineries, transport stations, platforms, and processing plants. According to the IEA, 84% of oil production in the region has been shut in as residents and the industry await what is being described as an, "unsurvivable storm surge."  Map courtesy TheWeatherChannel [NEW READER SURVEY: We are running another two-week survey of our U.S.-based readers to gauge your sentiment and see what moves, if any, you have been making with your money given the market recovery and current economic conditions. We'll share the results, as always, and we thank you for your time and participation.]
Headlines:
 Chart courtesy 2020 KPMG CEO Outlook
CEOs Are Flexing We know that consumers are feeling anxious, and individual investors are as well, based on our survey and others. Economists are also seeing storms on the horizon, based on the NABE's recent survey. CEOs, not so much. That's according to the 2020 KPMG CEO Outlook. It surveyed 315 CEOs at large companies globally, including 100 in the United States, in July and August about the business landscape over the next three years.
Key findings include:
It's not a surprise that CEOs are feeling confident. It's part of their job description. But given their bullishness, they, and other top level executives, aren't buying their own shares like they were in March. According to executive insider transactions modeled by Professor Nejat Seyhun at the University of Michigan, as reported by Marketwatch, net insider buying percent for the first half of August was 21.9%. That's a far cry from the 62.9% registered in March, when stocks were a lot cheaper.  Chart courtesy HulbertRatings.com/NejatSeyhun
Sellers Outnumber Buyers It's not just that CEOs and top executives aren't buying their company shares like they did when they were on deep discount ... they are selling shares en masse. According to The Washington Service, which tracks insider transactions, almost 1,000 corporate executives and officers unloaded shares of their own companies in July, outpacing insider buyers by a ratio of five-to-one. Only twice in the past three decades has the sell-buy ratio been higher than now.  Chart courtesy YCharts
All-Time Highs Even though market breadth was wimpy today, we did see some notable stocks, besides Facebook (FB), Alphabet (GOOG), and Apple (AAPL), hit all-time highs. Here are a few:
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(chart courtesy YCHARTS)  Shares of Salesforce.com are up by over 25.5% after the business software company reported Q2 earnings results that were nearly double what analysts expected. Netflix's stock price rose by 11.5% following the results of an investor survey, which indicated that the streaming platform's 25.86 million new subscribers in 2020 plan to stick around.  Cruise stocks, including Norwegian and Carnival, are down today amid the latter company cancelling 2021 cruises due to "restrictions and limitations with border and port access determined by government and health authorities." Oil companies, including Hess, Diamondback Energy, and Occidental Petroleum, are also down as petroleum facilities close ahead of Hurricane Laura making landfall in the U.S. Word of the Day Stakeholder CapitalismStakeholder capitalism is a system in which corporations are oriented to serve the interests of all their stakeholders. Among the key stakeholders are customers, suppliers, employees, shareholders, and local communities. Under this system, a company's purpose is to create long-term value and not to maximize profits and enhance shareholder value at the cost of other stakeholder groups.  Photo credit Bloomberg News
Today in History Aug. 26, 1935: The Public Utility Holding Company Act became Federal law, breaking up the intricately financed utility "pyramids" that had been one of the main tools with which Wall Street had sheared and fleeced the investing public in the 1920s. By 1929, utilities were the largest market sector at 18% of total U.S. capitalization; while utility revenues were fairly small, Wall Street had egged Main Street into bidding these stocks up to absurd levels. Utility stocks have never regained that illusion of grandeur.
Barrie A. Wigmore, The Crash and Its Aftermath: A History of Securities Markets in the United States, 1929–1933 (Greenwood Press, Westport, CT, 1985).
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Wednesday, August 26, 2020
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