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Mnuchin Instigates Market Stampede

Daniel Chase

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There comes a time in every person’s life when they reach an impasse. When I say, “impasse,” I’m speaking about one of life’s many obstacles that present itself to us at incredibly inopportune moments. For you cinephiles in the audience, you’ve witnessed the man/woman standing on a street corner, who just lost their job and screams at the top of their lungs, “how could this get any worse,” only to be drenched in sewer runoff following a taxicab who drives right through a puddle. For those of us less entrenched with stereotypical vehicles of slapstick in film, everyone, more or less, has a bad day. Well, suffice to say that the US stock market has had a series of rough days over the course of the last several weeks, and several analysts believe that our nation may be headed for a recession a la 2008. 

Over ten years have gone by since our country underwent an industry-collapsing recession, and, although activity measures like retail sales, industrial production, and employment are at an all-time high, a growing number of economists and financial experts believe we are due for another recession in the next twenty-four months. Market growth has shown significant signs of slowing down over the last few months, with the Dow and several other indices dropping hundreds of points every week or so. 

“Traditional signals of a U.S. recession from the shape of a yield curve to a fall in housing investment to corporate bond spreads are suggesting in late 2019, early 2020.”

Constance Hunter, Chief Economist, KPMG

According to several media outlets, all eleven sectors of the S&P 500 have received a decrease in expected earnings growth in the last few months, “led by utilities, materials, and industrials.” 

Before he even took office, President Trump made it clear that he wanted every product, service, and commodity to be manufactured in America and only America. As it relates to the oil industry, this has translated to a rush to pump oil out of shale fields around the country, most notably in West Texas, miraculously leading to record-high levels of production for black gold. Though domestic oil production couldn’t be higher, concerns about oversupply have sent oil prices every which way but loose. 

As of Monday, the Dow Jones Industrial Average dipped below 22,000 following a statement issued by Treasury Secretary Steven Mnuchin that was intended to calm nervous investors in the space. In his ill-timed statement, Mnuchin said that:

“We continue to see strong economic growth in the U.S. economy with robust activity from consumers and businesses. With the government shutdown, Treasury will have critical employees to maintain its core operations at Fiscal Services, IRS, and other crucial functions within the department.”

Statement from Treasury Secretary Steven Mnuchin 

Following Mnuchin’s statement, several major US indexes dropped due to the fact that his words were viewed as off-base and arguably unnecessary in the grand scheme of it all. One analyst told CNN that “this type of announcement raises the question of whether Treasury sees a problem that the rest of the market is missing.” Why else would Mnuchin call executives from every major US banking institution on Christmas Eve? In addition to Mnuchin’s bizarre statement, I can’t imagine it being helpful that President Trump shutdown parts of the federal government until further notice. Though many understand that the shutdown will have no major effects on the US economy, investors and executives across all sectors are concerned with the inability of lawmakers and the current administration to set aside their differences and approve the federal budget. 

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Walmart (WMT) Stock Price Jumps On Latest Earnings Beat

Jon Phillip

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BENTONVILLE, Ark.–(BUSINESS WIRE)–Walmart Inc. (NYSE: WMT):

  • Total revenue was $130.4 billion, an increase of $2.3 billion, or 1.8%. Excluding currency, total revenue was $131.7 billion, an increase of $3.7 billion, or 2.9%.
  • Walmart U.S. comp sales increased on a two-year stacked basis by 7.3%, which is the strongest growth in more than 10 years. Segment operating income increased 4%, marking the fifth consecutive quarter of growth.
  • Walmart U.S. eCommerce sales growth of 37% includes strong growth in online grocery.
  • Sam’s Club comp sales increased 1.2%, and eCommerce sales grew 35%. Reduced tobacco sales negatively affected comp sales by 300 basis points.
  • Net sales at Walmart International were $29.1 billion, a decrease of 1.1%. Excluding currency, net sales were $30.4 billion, an increase of 3.3%. Strength in Walmex and China were offset by softness in the U.K. and Canada.
  • Operating income declined 2.9%, or 2.4% in constant currency, which was better than planned with strong results in the U.S. businesses. As expected, the inclusion of Flipkart this quarter negatively affected profit results.
  • Adjusted EPS excludes an unrealized loss, net of tax, of $0.01 on the company’s equity investment in JD.com for the second quarter of FY20.
  • FY20 adjusted EPS is now expected to range between a slight decrease and a slight increase compared with FY19 adjusted EPS.
  • Walmart U.S. surpassed 1,100 grocery delivery locations and has more than 2,700 pickup locations.
  • The company’s NextDay delivery service from Walmart.com now covers about 75% of the U.S. population.

About Walmart

Walmart Inc. (NYSE: WMT) helps people around the world save money and live better – anytime and anywhere – in retail stores, online, and through their mobile devices. Each week, over 275 million customers and members visit our more than 11,300 stores under 58 banners in 27 countries and eCommerce websites. With fiscal year 2019 revenue of $514.4 billion, Walmart employs over 2.2 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity.

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Facebook (FB)’s LIBRA Sees Warning Bells Even Before Launch

Jon Phillip

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Libra – which is the name of Facebook (FB)’s upcoming cryptocurrency- has already managed to cause quite a stir among bankers and politicians across the world. Along with the present difficulties with the regulations and the consequences it would bring, the currency is now also dealing with opposition and cautions from international communities. Needless to say that this move has also boosted tech stocks related to cryptocurrency as well

Policymakers Worldwide Speak Against The Crypto-Currency

France was one of the many countries to resist making Libra a sovereign currency. Bruno Le Maire, the Finance Minister of the nation protested vehemently against Libra, claiming that the idea of a private company becoming a state doesn’t sit well. The country further is levying a new tax on the technology giants like Amazon pay, Google, etc which has caused some controversy. Even Jerome Powell, the Chairman of Federal Reserve disputed against the cryptocurrency being anxious about privacy and consumer protection.

Mark Carney, the Governor of Bank of England, also spoke against Libra claiming that it could either succeed or fail, but it would have no scope for improvement and development once it is launched. If successful, it would definitely prove to be a great asset; however, there can be no guarantee that it would be rock solid from the very beginning without which it is bound to fail. These types of scope around currencies demand strict and definite vigorous regulations to be set. The hurdles seem to be big enough to delay the launch of Libra into the market- which has been scheduled for next year.

Tech Giants Ban Together For Crypto?

Uber, Mastercard, Visa, and Facebook came together as an association to oversee the launch of Libra. This is a cryptocurrency different from bitcoin which is aimed to have a stable value without any volatility. It would help the World Bank-claimed 1.7 billion adults to have access to financial institutions and banking services. At the same time, it could help Facebook make big money through its app wallet -Calibra.

Facebook’s executive David Marcus maintained that the company knows of the risks that Libra might pose if proved unsuccessful. Therefore the company requested the help of bankers, lawmakers, and regulators so as to do away with issues of money laundering, terrorist financing, etc.

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Citigroup (C) Set To Supercharge Its Investment Banking

Joe Samuel

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With a vision to bolster its investment banking, Citigroup (C – Stock Info) is poaching a number of senior dealmakers from its rival banks. In order to secure a spot among the top three investment banks globally ranked by revenue, the company slew senior officials from many banks viz Deutsche Bank, Goldman, and Barclays PLC.

The company has seen some major movements in the past one year – right from the coming together of its corporate lending and mergers-and-acquisitions advisory business with its unit that helps clients raise debt and equity to hire senior officials recently. The bank combined its corporate and investment bank with its capital markets business to streamline its product offerings to clients.

It gave a promise of allowing bankers to cross-sell lending, underwriting, advisory, and other related services to clients together. It is partly designed to be a key selling point for attracting new investment bankers. With these constant efforts, the company clearly looks to supercharge its investment banking business.

Hiring Senior Officials From Rival Banks

The New York-based bank hired three executives away from Deutsche Bank including 13-year veteran Mark Keene, who will become global co-head of technology, and three executives from Goldman Sachs. This includes Elizabeth Milonopoulos who will co-head the bank’s internet investment banking unit with Brian Yick. He joins the bank from Barclays. The hiring of Deutsche Bank AG’s Mark Keene is among the major asset of the company as it is the highest profile among the new hires.

citi bank stock C stock

Knee co-headed the German lender’s global technology, media and telecom team in San Francisco. He is proficient in the semiconductor sector and will be in charge of the technology investment banking globally. Knee will do this together with the bank’s Herb Yeh. It’s anticipated that Knee enhances business with his expertise in the semiconductor sector as the industry is gradually consolidating. Earlier this month, German chip maker Infineon Technologies AG struck a $9.4 billion deal to acquire the U.S.’s Cypress Semiconductor Corp.

The Citigroup has stood on the 5th rank in the past two years of the global investment bank. However, the foundation of the bank seems strong outside America. It ranked among the top three in Europe, Middle East, and Africa. The list of hires also include tech bankers Elizabeth Milonopoulos from Goldman Sachs and Brian Yick from Barclays.

They will act as global co-heads of internet investment banking. Doretta Mistras joins from Goldman in the health care sector. His work includes advising on the $32 billion deal between Shire PLC and Baxalta Inc. Others in the list are Michael Marcus from Goldman and Mark Hantho and John Eydenberg from Deutsche Bank.

According to Manolo Falco, co-head of Citigroup’s Banking, Capital Markets, and Advisory unit, “If we get the right talent, we have a big opportunity.”

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