Market Morning: FANGs Angry, Buffett Loves Banks, Pound Pounded, USPS Losses Explode

Market Morning

Up Down Twirl Around, Which Way Today?

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If Wall Street were a car, everyone would be carsick by now. Futures up, stocks down, stocks up, futures down, the numbers are lying and nobody knows where they’ll go today. For the sake of citing the here and now, S&P 500 futures are up 0.4% and the Nasdaq looks like it will open up about 0.8% higher, for now, but that could change any second. Treasury yields are down to 3.1% on the 10Y as investors fly to the generally agreed upon save haven, and Asian markets are up on the day except for Japan. However, despite what futures indicated yesterday on equity openings, everything pretty much reversed itself as the day went on. The same could happen again today, as volatility keeps rising by the week. Oil has been just as volatile, a strong spike yesterday on the reverse today, to lows below $55.70 on West Texas Intermediate.

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Berkshire Hathaway Loading Up On US Banks

Warren Buffett loves the financials. Berkshire Hathaway (NYSE:BRKA) disclosed a $4B stake in JPMorgan (NYSE:JPM) accumulating 35M shares in the last quarter. Berkshire’s stake in Bank of America (NYSE:BAC) is its second-largest holding and grew by 29 percent in the third quarter. Berkshire also holds stakes in Wells Fargo (NYSE:WFC), Goldman Sachs (NYSE:GS), U.S. Bancorp (NYSE:USB-PO) and Bank of New York Mellon (NYSE:BK). Most of these stocks are near 52 week lows so Buffett is playing by the book here. Hopefully for his sake there won’t be another financial crisis any time soon.

FAANGS Turn On Each Other in Facebook Apple Feud

Apple (NASDAQ:AAPL) Tim Cook doesn’t like Facebook (NASDAQ:FB) CEO Mark Zuckerberg, as the latter has encouraged his management team to stop using the iPhones of the former and only use Android phones, which is nice for Alphabet Inc. (NASDAQ:GOOGL). The two tech giants are duking it out over privacy issues, and meanwhile both of them are in a bear market, with Alphabet on the verge of one.

Pound Gets Pounded as Brexit Secretary Resigns, Again

Dominic Raab is upset about Theresa May’s Brexit deal, which would effectively keep the United Kingdom in the European Union without calling it the European Union. Hence Raab is resigning, since he actually wants to be out of the European Union whether or not the arrangement is actually called such. This follows the resignation of former Brexit Secretary David Davis, who resigned back in July for the same reasons. Forex traders are mad at the Pound for Raab resigning, and have decided to sell it hard to the point that it is down 1.5% against the US dollar, quite a big move for a currency pair. The FTSE 100 though doesn’t seem to mind, with British stocks going basically nowhere in response to the move.

Stamp Inflation On the Way As USPS Losses Explode

The US Postal Service loses money these days, whether rain or shine. So the USPS asked for and received a record price hike for the price of stamps, which really won’t help solve their problem of falling volumes, since higher prices don’t tend to attract more business. Losses for 2018 were $3.9B, one billion more than the losses for 2017. Worker compensation and retiree health benefit costs increased by more than $800M and $221M this year, and the government sponsored company couldn’t pay the $6.9B it owes taxpayers for stepping in to fund the gap, but what’s another $6.9B in national debt anyway? The US Postal Service has more than $120B in debt and unfunded liabilities. Somebody call the Federal Reserve. We’re going to need another bailout soon. The price of stamps will increase by 5 cents to 55 cents, along with a slew of other price increases that should push the CPI higher.


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