Technology Companies granted an astonishing amount of Restricted Stock Units by value in 2017 (and banks were left way behind)

Restricted Stock Units (RSU) are company stock (or shares by another name) granted to employees as a form of compensation. Employers save some tax, and it generally aligns the long-term interest of employees (and shareholders) as it normally carries a vesting period. 2017 was great for technology company share prices and technology companies granted an eye-watering amount of Restricted Stock Units by value leaving banks way behind …

Continue reading “Technology Companies granted an astonishing amount of Restricted Stock Units by value in 2017 (and banks were left way behind)”

The S & P 500 is up 180% since the end of the last U.S. recession but the average wage is only up 21.2%, disposable income up 24.6% and GDP up 39.5%

The S & P 500 has had a stellar run of nine and a half years of gains closing at a new high in the week gone by. It is up 300% since the 9th of March 2009 when it hit a multi-year low in the aftermath of the financial crisis. Even considering the time post the end of the last U.S. recession, the S & P 500 has outperformed every major financial metric by a big margin.

SP 500 stellar rise
Data Source: U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, S&P Dow Jones

Continue reading “The S & P 500 is up 180% since the end of the last U.S. recession but the average wage is only up 21.2%, disposable income up 24.6% and GDP up 39.5%”

Something strange is happening in the global economy right now

Everyone seems to be focussing on the equity markets recently, but equity markets haven’t really moved much over the past one month. Over the past month, major equity markets have lost between 1.5% to 4%.

The real action is in bonds and commodities. And trade seems to be flourishing too.

10-year government bond yields of major economies are lower by 5% to 40% (in relative terms not absolute terms) in just the past month. 10-year German bonds are down 12 bps over the past month. That wouldn’t sound much but they are down 28% from 42 bps to 30 bps. U.K. yields are down 8%, U.S. yields down 5%, Japanese yields down 40%. Even Greek yields are down 20% over just the past month. Does the market anticipate a pause in interest rate rises? It would appear so.

Continue reading “Something strange is happening in the global economy right now”

Weekly overview: US employment numbers; Bond yields fall globally over the past month; Stock markets volatility

US employers added only 103,000 jobs in March as against 185,000 new jobs expected by economists surveyed by Bloomberg. Jobs have been added for 90 straight months, the longest phase on record. January’s job addition number was revised sharply downward from 239,000 to 176,000. Wage growth was 2.7% which was largely down to tax cuts driven wage rises earlier during the year rather than real wage inflation.

Any addition under 80,000 new jobs a month would cause the unemployment rate to rise. As we covered earlier, unemployment has always hit record multi year lows on an average 6 to 12 months before the start of a recession.

The graphs below might help visualise it better, Continue reading “Weekly overview: US employment numbers; Bond yields fall globally over the past month; Stock markets volatility”

The Athens Stock Exchange General Index has returned 19% over the last year (but lost 85% since 2007); Australian interest rates are lower than that of the US for the first time in 18 years

The Greek stock market has been one of the best performing markets in the world over the past year. The Athens Stock Exchange General Index has returned 19% over the last year. But it has lost 85% (5334.5 to today’s close at 781.14) in value since October 2007. Continue reading “The Athens Stock Exchange General Index has returned 19% over the last year (but lost 85% since 2007); Australian interest rates are lower than that of the US for the first time in 18 years”

Spotify’s direct listing (and comparison to Netflix); ECB sells bond after spotting an error after 2 years; Nomura to hire fewest graduates in five years as it spends more on robots

Spotify’s direct listing

As reported earlier, Spotify listed directly on the NYSE today at an opening price of $165.90, the stock ended the first day of trading in New York at $149.01, up from the reference price of $132 set yesterday by the NYSE.

Spotify has offered a streaming service since 2008 and has 159 million monthly active users including 71 million paid subscribers globally. It generated €4 billion (about $5billion) in revenues last year, up over 40% from 2016, and a €1.2 billion ($1.5 billion) net loss compared with about €542 million ($664 million) in 2016. The company’s average revenue per user has declined from €6.84 in 2015 to €5.32 in 2017 as it promotes its “Family Plan” which allows several users to share one account. Analyst reckon that Apple Music will overtake Spotify in terms of paid subscribers in under 2 years, yet the company is now valued at $28 billion (5.6 times revenues). Continue reading “Spotify’s direct listing (and comparison to Netflix); ECB sells bond after spotting an error after 2 years; Nomura to hire fewest graduates in five years as it spends more on robots”

The problem Asset Managers have is that they have money that must be invested

The 10 largest asset managers in the world, a list that includes BlackRock, Vanguard, State Street, Fidelity, Allianz, UBS and JP Morgan Asset Management have some $32 trillion assets under management (at the end of 2017). The entire space of asset managers have around $65 trillion of assets under management.

Fund managers have over $3 trillion of new inflows a year, primarily down to private pensions (governments keep pushing it given the looming state pension crisis). These fund managers get paid as long as they invest the money. There lies the problem – they have to invest it. It isn’t as simple as it sounds. Continue reading “The problem Asset Managers have is that they have money that must be invested”

On Equities – Do as they say, not as they do? On Bond Yields – some things from the FOMC minutes

Goldman Sachs computer model warns a bear market is near, but the firm’s analysts don’t believe it (read here). So, if a bear market arrives – they were right (well their computer model was), no bear market – they were still right.

JP Morgan has said investors are ‘overreacting’ and investors should buy the market dip for a big rally ahead (read here). How big? 13%. Which would just about take us back to the highs the market hit at the end of January. Will they do as they say? Who knows.

Meanwhile, 10-year US bond yields have fallen 12 bps (to 2.78%) in the past week since the 0.25% Federal Funds rate target increase. As the Federal Reserve pares back its bond holdings, the US government is bringing more to market, yet yields have been falling.

Here are some interesting things from the FOMC releases (text in italics are our comments), Continue reading “On Equities – Do as they say, not as they do? On Bond Yields – some things from the FOMC minutes”