Investors look out, one of the most respected names in financial media has just warned that stocks are set to unravel quickly. The WSJ is arguing that the quick run-up in stock prices this year, and tight trading range, is akin to a coiled spring that will pop once prices finally move outside their band. Last week was the tightest trading week since 1972, with prices moving only very slightly. Historically speaking, such tight trading ranges have been followed by big bouts of volatility. The stock market is up almost 400% since its 2009 bottom.
OxWFD: We know we have been harping on about this for awhile, but yet again, this is a warning without a catalyst. We think it is useless to warn that stocks are going to fall merely because they are in a tight trading range. What will trigger the move lower?
Source: Wall Street Journal
The wealth management industry has rarely looked healthier. The sector’s top 40 firms are growing at an eye-watering clip. As a group they manage over $7 tn in accounts with $5m or more, and have collectively grown at a 19% annualized rate in 2017 by this metric. In 2016 and 2015, the growth figure in AUM was just 2%. The top 10 players in the industry control about 80% of all assets, but interestingly, their share of the growth was lower than the firms ranked 11-40 this year.
OxWFD: The rising stock market and big rally seem to have done wonders for wealth management AUM growth, but then again the industry was thriving for the several years prior as well.
The stock market is having a major panic about demand for the iPhone 8. Supplier stocks, such as Honhai and Pegatron, are seeing big stock losses as reportedly weak demand for the new model weighs heavy. Suppliers of iPhone components are very concentrated in Taiwan, so the market there has been taking the brunt of the selling. Orders for the iPhone are reported to be “substantially lower” than for the iPhone 6 or 7.
OxWFD: Of course they are lower, the iPhone X is about to come out! A much bigger worry for us would be if people were buying the iPhone 8 heavily, which would have meant the pricing strategy for the iPhone X had failed.
In a sign of escalation of the tension between the US and North Korea, the US sent war planes flying very near to the country over the weekend. The act is seemingly the first outside of simple rhetoric undertaken by the US. North Korea warned in the UN on Saturday that it would take “merciless pre-emptive action” if provoked by the US. In response, the US flew its planes closer to North Korea than at any time in the 21st century, intended as a show of force to Pyongyang.
OxWFD: The tension just keeps building and building and we wonder where it is headed. Hopefully both sides continue to stick to words only.
Source: Financial Times
Amazon made huge waves when it acquired Whole Foods, with many thinking it may have its sights set on conquering the grocery sector. Well, based on a new deal it is working on, it may have an even larger goal: food as a whole. Amazon has just sealed a deal with a tech company company called Olo which helps streamline online deliveries for restaurants. The company has huge clients like Chipotle, and Shake Shack, and partnering means Amazon will have a quicker and more seamless entry into the food delivery business.
OxWFD: Other food delivery businesses, like GrubHub, should look out. Getting these big established names on their delivery platform will give Amazon a big leg-up in this race.
The biotech sector looks poised for a major scientific breakthrough, and a number of stocks look well-positioned to take advantage. Gene therapy, or the approach of trying to replace dysfunctional genes with healthy ones, is showing some promising lab results, which means a number of different ailments might have very effective treatments ready in the near-term. Spark Therapeutics, for instance, may get FDA approval in January for a new drug which fights an inherited retinal condition causing blindness. Other stocks to look at in the area are AveXis, Regenxbio, Audentes Therapeutics, and Voyager Therapeutics.
OxWFD: This sounds like some very cutting edge new medicine that could open the door to a whole new class of treatments.
The fiduciary rule is definitely on its back foot. The rule has been delayed 18 months and the DOL is now trying to get rid of its key enforcement mechanism—the private right of action clause. Now, Congress is going for a knockout punch. The new spending bill in the House contains a so-called rider that would kill the rule entirely. The $1.23 tn spending bill is certain to pass the House, but its odds in the Senate could be long. That said, a new Congressional measure to kill the DOL’s rule is back in play, and given current wrangling, anything could happen.
OxWFD: The Democrats really want Trump to reverse his position on Dreamers, which means they might be willing to trade a lot to make that happen. Could a swap for the fiduciary rule be on the cards?
Source: Investment News
The bull run in US stocks is getting long in the tooth by any standard. While stocks are still very strong, valuations are high and fears over a correction or bear market abound. However, the bull market in emerging markets looks like it is just beginning. Bank of America thinks that emerging market stocks may double in the next two years as this current run looks similar to previous ones. EM stocks have risen 60% since early 2016, but many fear the tensions in North Korea could end the run. On the contrary, Bank of America thinks prices will keep moving higher and will only eventually be derailed by recession or overvaluation.
OxWFD: Emerging markets did not have nearly the gains that US stocks had over the last five years or so and now might be their time to break out.
North Korea is continuing to antagonize its neighbors and the US. Despite being much smaller, the country appears to be trying to antagonize its enemies, especially South Korea, China, the US and Japan. Upset at sanctions against his country, yesterday North Korean leader Kim threatened that the US will be reduced to “ashes and darkness”. The country also said it would obliterate Japan, a threat that seems less empty after it fired an ICBM over the the Japanese archipelago only a couple weeks ago.
OxWFD: There are two ways of thinking about North Korea. The first is that they are crazy and hell bent on war. The second is that they are trying to maintain their regime by aggressively over-threatening.
Source: Financial Times
There has been a lot of hype about the new features that Apple has added recently. Between its new screen and upgraded camera and facial recognition technology, one could be forgiven for overlooking perhaps the company’s biggest advantage—its chips. Apple seems to have made major advances in its chip technology, which is allowing it to cut down the size of devices while still packing them with more features. The new Apple Watch is a good example, as it has full wireless connectivity, including phone, but is literally half the size of comparable Android devices. Such advances also enhance the upgrade cycle for Apple, as new operating systems like iOS 11 will be so sophisticated that older phones won’t be able to handle them, forcing people to upgrade.
OxWFD: Apple has made some big gains in chips after boosting their R&D budget for the last few years, and it now appears to be paying off.