What’s new
Administrative topics and a general market recap
Well folks, first things first: we’ve expanded. Gone are the days where Market Madness will solely be a Christopher Olliney collective. I’ve tapped into my social capital and have opened up editing and writing opportunities within the Market Madness team! Welcome to the team, Julianne! Julianne is a recent college graduate (B.S. Economics and Finance, M.S. Finance) and is currently an Investment Research Associate at Pathstone. Her insights and experience are most welcome here as we present the most impactful financial news each week. She debuts a story this week and is going to be hanging out with us here whenever her busy schedule allows!
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In the meantime, if you are interested in my thought process throughout the week as we collect news and ideas for the Sunday publication, please check out my Walling page where we brainstorm and mind-map each week’s edition!
Fundamentals
Where did the markets end last week?
U.S. Indices 5 Day Performance
Dow Jones: -0.44%
S&P 500: -0.84%
NASDAQ: -1.77%
Asia and Europe 5 Day Performance
Nikkei 225: -0.14%
Hang Seng: +2.60%
FTSE 100: -0.77%
DAX: -1.26%
Rates, Spot Prices, and ‘Good to Knows’
U.S. Dollar Index: 92.75
US 10 YR: 0.842%
Crude OIL: $39.78
Spot Gold: $1,901.17
Market Madness Portfolio: +11.29% YTD
TEDRATE: 0.11
LIBOR (3 month): 0.215%
COVID 19 Global Cases: 42,810,140 (updated Oct. 25, 2020)
A mixed bag of updates
an article by Christopher
Another week is behind us, yet we still appear to be hooked on much of the same troubles. The market is hooked on every news line about stimulus like someone reading a thriller novel, and at this point I sound like a broken record for still talking about it. Each day, somehow, stimulus makes the headlines. We did see some forward momentum in the ongoing strife against COVID 19 as the FDA approved Remdesivir as a treatment method. That being said, we’re moving into what clearly appears to be a second major spike, with the US seeing several days of some of the highest new case days since the first really bad spike, hovering around 80,000 or so new cases. The same is true overseas as well, with Europe also seeing a new spike in cases.
Overall, the week was a losing one for stocks here in the states and mostly overseas too. As we said earlier, and continue to belabor the point, markets have reacted very in line with developments on the stimulus side.
On the economic side, we’re seeing activity pick up here in the U.S. with some stalling being noticed in Europe. Granted this has been a result of the loosening of restrictions and the acceleration of reopenings. The next challenge exists when this second spike hits a point where shutdowns are being reconsidered. Jobless claims also fell last week (down to 787,000 new jobless claims), signaling some recovery in the labor market, only compared to weeks prior where the new claims were much higher. Again, this area of economic reporting is largely related to the developments with stimulus as the potential for enhanced UI benefits continues to be tossed around. For now, the base UI benefits are all new claimants are getting, unless their individual state has chosen to enhance those benefits.
Fedcoin? Jerome-coin? Bitcoin’s next competitor?
Another interesting development over the week was commentary from Jerome Powell regarding the Fed’s potential exploration of digital currency.
“The Federal Reserve is in no hurry to issue a digital currency, Chairman Jerome Powell said Monday, citing unresolved concerns including the potential for theft and fraud.
Central banks around the world are stepping up research on the costs and benefits of central-bank digital currencies, which could supplement existing national currencies. China is ahead of other nations, after rolling out a homegrown digital currency in April across four cities in a pilot program.” (excerpted from WSJ article)
The concerns over fraud and funding of illicit activities remains top concern for any central bank looking to dive into the crypto space. I’ll be the first to admit I am not anywhere near an expert of digital currency, but I feel the since most money has moved digital anyway (through the use of online banking, credit cards, electronic money transfers between people) that a devoted system that is without paper currency is not really required. I also understand, at least where bitcoin is concerned, there is a finite amount of it, thus increasing value as the resource becomes more scarce. I suppose the argument for a decentralized currency that stands separate from a nation or government is fine, but only if all nations agree to implement it, not just a few. Among other things, the reputational concerns are probably one of the biggest hoops to get through when considering a larger scale, federal implementation of a digital currency.
Quibi’s six month stunt
an article by Julianne
For those who feel like headlines are flying across the screen lately, I can relate. However, there’s one story I just can’t get off my mind: Quibi’s downfall. During a pandemic where streaming has become the pastime of millions, ‘quick bite’ streaming service Quibi went under just six months after launch. CEO Meg Whitman blamed the failure on launching during a pandemic, but this year’s conditions have benefitted just about every competitor in the industry. Nielson reported in April that time spent on streaming services more than doubled from a year ago. Netflix is up nearly $100 billion in market value in 2020 alone. So why did Quibi really fail? It was clear that Quibi used the not-so-secret formula of the industry’s biggest players. Content produced by the Obamas is front and center on Netflix, Beyonce’s latest visual creation was released on Disney+ this summer, and Quibi launched the service with the help of stars like Chrissy Teigan and Liam Hemsworth. Quibi even began paying influencers to write and post about the streaming platform. The price point of the streaming service was also right in line with competitors at $4.99 a month.
Is celebrity content and affordable pricing not enough anymore? It’s possible the industry was too saturated for another player (Netflix, Hulu, Disney+, Apple TV+, HBO Max, Prime Video, just to name a few). It’s also possible that the $1.75 billion investment by Quibi wasn’t enough to break through the industry’s barrier to entry. More commonly suggested, however, is that Quibi’s focus was on the product and not the consumer. The service was intended for the young and tech-savvy, but the platform blocked screenshotting, sharing features, and social media integration. In a time when most are stuck at home, there just wasn’t a demand for on-the-go content. Quibi replicated successful product characteristics, but didn’t fill the needs of the target audience.
For a further analysis, we’ll just have to wait for the thousands of business students to inevitability be assigned this case study next semester.
Read more here.
Quick Takes
To fill in the gaps
Purdue Pharma reaches $8.34 billion settlement over opioid investigation. (via WSJ)
Potential for a new nuclear arms treaty. (via WSJ)
COVID 19 keeps Donnie on edge, now blaming Facui (and his pitching arm — c’mon man that is just wrong). (via CNBC)
Goldman pays out billons and cuts exec pay in response to corruption charges. (via WSJ)
Household access to banks improved, but could be impacted as COVID cases rise once again. (via WSJ)
The late Jeffrey Epstein creating havoc for one pension fund buyout group. (via FT)
Farmers, despite reeling from trade-war pains, still seem to side with Donnie. (via WSJ)
Wall Street donors seem to be shying away from Donnie. (via CNBC)
ConocoPhillips to purchase Concho in $9.7 billion deal. (via WSJ)
Intel enters deal to sell flash-memory manufacturer to South Korean SK Hynix. (via WSJ)
EU hires banks to launch massive joint-bond program. (via FT)
WeWork cuts plan to consult with former exec. Adam Neumann. (via WSJ)
Final debate recap for a good while, thank heavens. (via CNBC)
New Google antitrust lawsuit rings echoes of Microsoft’s antitrust lawsuit back in the day. (via CNBC) Also, see this tweet.
General Banter
What’s on the minds of our editors and writers
Please go out and vote. Everyone’s voice needs to be heard, particularly given our current political and social climate.
Reader’s Corner
A place for suggestions for readers like you
The reader might find this learning section from New Constructs that includes various financial tutorials. Find that here.
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Behind the Madness
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