Market Morning: GE Drained, Yields Back Up, JPMorgan to the Bay, Internet Inventor Worried

Market Morning

Worst October Since 2008 Is Even Worse For General Electric

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It was the worst October for the Nasdaq since 2008, despite the 3.6% melt up over the last two days. But that’s nothing compared to what happened to General Electric (NYSE:GE), only recently kicked off the Dow Jones, and now in existential danger. GE was the recipient of a huge bailout in 2008 and it is doubtful if the company can even handle another recession, whenever it occurs. Its CEO John Flannery was recently deposed after only 2 years at the helm, charged with turning around the company but failing short. GE hit a low of $9.80 a share yesterday, shares are down 16% since October 1st. The company is up to its ears in debt, assuming its ears are growing out of the top of its head, and paid nearly $700 million in interest payments last quarter. The next recession could very well wipe the company out entirely. GE announced yesterday that it was cutting its dividend to 1 cent a share, a face-saving move considering analysts were expecting the dividend to be completely eliminated.

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US 10Y Treasury Yield up 10 Basis Points in Two Days

The trek northward in interest rates seems to have continued after a brief 3 week respite. Interest rates on the 10Y US Treasury Bond have shot up 10 basis points since October 29th, representing a 3.3% plunge in bond prices over the same time period. Will this upswing take out the highs of 3.26% set back on October 9th? If so it would be yet another confirmation of the end of the 36+ year era of generally falling borrowing costs, which have been rising since 2016.

Commenting on the sustained rise in the price of loans, Susan Johnson, CEO of Any Personal Credit Loans, a company that advises clients in securing capital to pay down debt in a way that fits their personal finances, said, “We are now facing a critical time for those struggling with high interest rate debt to lock in low rates while they are still available. Financing is still historically cheap, though looking at credit conditions globally, it may not stay that way for much longer.”

JPMorgan Building New Fintech Campus in Silicon Valley

JPMorgan (NYSE:JPM) is going all in on digital payments, set now on building a new campus in the Bay Area in Silicon Valley that will house 1,000 employees. The largest bank in the US by assets will open the new campus in 2020. The move followed JPMorgan’s acquisition of WePay in 2017, a competitor to Paypal (NASDAQ:PYPL). The move signals a change in strategy in competing with tech companies for talent. JPMorgan is a high-pressure Wall Street centered firm having to compete with laid back tech giants like Google where pay is high and stress is much lower. The move to Silicon Valley may be a move in that direction.

Inventor of Internet, Tim Berners-Lee (Not Al Gore) Concerned About Tech Giants’ Power

Tim Berners-Lee, the computer scientist from London who invented the World Wide Web in 1989, said he was worried over the current state of the internet where a few enormous companies hold the power of several sovereign states. Perhaps though this is less worrying than sovereign states wielding enormous power over individuals, which has been known to happen from time to time, leading to not very good results. Berners-Lee suggested that the FAMGA giants, Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), and Apple (NASDAQ:AAPL) may have to be broken up, but cautioned that natural market shifts might do this anyway without direct competitors threatening any market share. Berners-Lee was particular disturbed by Facebook’s Cambridge Analytica scandal and the abuse of data and privacy by big internet firms.



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