| Friday's Headlines 1. US markets moved little today but were higher on the week 2. Consumers remained confident in January 3. What COVID-19 looks like up close 4. Bonds see biggest inflows ever 5. What's ahead next week Markets Closed
Year-to-Date
 (Programming note: We'll be off on Monday for Presidents Day, but we will send you some thoughts on the Oval Office. I'll be visiting family all next week, but James and Gabe will have the wheel. Enjoy the weekend. -Caleb)
Markets Today U.S. markets ended the day relatively flat, but closed higher for the week. We've seen a lot of conflicting, new, and fabricated information about the spread of the coronavirus. At latest count, there have been more than 64,000 confirmed cases and 1380 deaths linked to COVID-19. The lack of clarity and containment is making its way into the supply chains of nearly every multinational business that sells products to or sources products from China. The auto sector is the latest to issue warnings about sales and supply forecasts.
Tesla warned yesterday that COVID-19 could have a material impact on its business saying, "... It is unknown whether and how global supply chains, particularly for automotive parts, may be affected if such an epidemic persists for an extended period of time." Chinese automakers are bracing for at least a 10% hit to overall sales in the next six months. European and American automakers are warning about supply chain disruptions at their plants in other countries due to the outbreak as well. Fiat Chrysler said it planned to halt operations at its factory in Serbia due to a shortage of Chinese parts. The United Auto Workers said disruption was a possibility in U.S. plants. Ford is working on a tiered schedule to restart plants in China, while Honda expects workers to return on Feb. 24. Nissan and Toyota expect to restart factories over the next two weeks.
In a world of global supply chains, global health emergencies are proving to be an unpredictable obstacle. Headlines:
 Record Week for Bond Inflows At the risk of beating a proverbial dead horse it's worth pointing out that this week has seen a record amount of money flowing into the bond market. According to Bank of America, $23.6 billion flowed into bonds, which is a record annualized rate of nearly $1 trillion. $12.5 billion flowed into equity funds, an annualized rate of $443 billion - also a record.  This tells us that investors are being cautious, which we already knew. It also tells us that there is a lot of money on the sidelines - especially among institutional investors. Half of the flows into the bond market went into investment-grade corporate bonds. That tells us that big money wants to back corporate debt, which is a little riskier than government debt, but can produce better returns assuming corporations can pay their bills and service their debt. That has not been an issue in the last decade, thanks in part to low interest rates, and those appear to be here to stay.  chart courtesy Pew Research
Is Tax-Free Investing Coming? According to CNBC, the White House is considering ways to incentivize U.S. households to invest in the stock market. The proposal would see a portion of household income treated as tax-free for the purposes of investing outside a traditional 401(k). Under one hypothetical scenario described by multiple officials who spoke to CNBC, a household earning up to $200,000 could invest $10,000 of that income on a tax-free basis.
Money put into the account would be done so on an after-tax basis, and taxed when withdrawn as well; but any accumulation of profits during the investment timeframe, known as capital gains, would not be taxed.
According to a survey by Gallup, 55% of Americans reported owning stock in one way or another. That's about the same percentage that owned stocks at the end of the financial crisis, but down from 62% in the years 2001-2007. The top 1% of the wealthiest Americans have benefited most from the rise in the stock market in the past decade since they have the most money in the market (see chart above).
While this would be a game changer for the investment industry and could potentially bring more investors into the market, it is still just a proposal, and one that is tied to a new tax cut proposal the Trump Administration is said to be considering ahead of the 2020 election. No one thinks that the House of Representatives, which is under Democratic control, will approve a tax cut before the election or even if Trump is re-elected. However, if this idea catches hold, it could be a path to greater wealth for millions of Americans. The Week Ahead: Here are the year-to-date returns of different asset classes so far:  Here are some of the key economic events on the calendar for the week ahead:
Tuesday February 18
Wednesday February 19
 SPONSORED BY FIDELITY INVESTMENTS
(chart courtesy YCHARTS)  Chemical firm Chemours rose substantially after a better-than-expect earnings report. Nvidia also rose after releasing earnings which showed very strong sales to data centers.  Streaming TV company Roku fell after saying that increased spending would likely put downward pressure on earnings over the next year. Transportation firm Ryder System also fell after giving a weaker-than-expected forecast. Word of the Day A secondary offering is the sale of new or closely-held shares by a company that has already made an initial public offering (IPO). There are two types of secondary offerings. A non-dilutive secondary offering is a sale of securities in which one or more major stockholders in a company sell all or a large portion of their holdings. The proceeds from this sale are paid to the stockholders that sell their shares. Meanwhile, a dilutive secondary offering involves creating new shares and offering them for public sale.  Today in History February 14, 2005 Today in 2005, three PayPal employees, Chad Hurley, Steve Chen, and Jawed Karim started YouTube. It was initially conceived of as a dating site, but this was not successful. However, they saw that users were uploading videos of all kinds to the site and they decided to remake YouTube into a free video sharing website. They uploaded the first video to the newly restructured YouTube in May and viewership grew rapidly. The first video to get 1 million views was a viral Nike ad that aired that September, before the site was even out of its beta version. By October 2006, the company was purchased by Google for $1.65 billion, with each of the three founders making almost $400 million. The first video to reach 1 billion views was the music video for the song "Gangnam Style" by South Korean Rapper, Psy. The current record holder for the video with the most views is the music video for the song "Despacito" by Luis Fonsi, featuring Daddy Yankee, which currently has 6.6 billion views. In its Q4 2019 financials, Alphabet finally revealed Youtube's revenue, having previously grouped all Google properties together. Youtube generated $15.1 billion in revenue in 2019, more than mutual fund giant BlackRock, and nearly as much as Bank of New York Mellon.
Source: BusinessInsider
How can we improve the Market Sum? Tell us at marketsum@investopedia.com
Enjoy the Market Sum? Share it with a friend. Or share the link below to invite friends to sign up.
CONNECT WITH INVESTOPEDIA
Email sent to: geezers.mail@gmail.com To update your newsletter preferences or unsubscribe, click here.
114 West 41st St, floor 8 New York NY 10036 © 2020, Investopedia, LLC. All Rights Reserved | Privacy Policy |
The Geezer'$ Alert ...
Friday, February 14, 2020
A Little Love
