There’s no inflation, the Federal Reserve says. You feel that’s wrong–and know what? You’re actually right
Two days after the last Federal Reserve meeting on December 11–where they told us again that inflation continues to fall below the Fed’s 2% threshold and that, therefore, there’s no inflation to worry about–I walked into my favorite New York bagel shop, Absolute Bagel, to discover that the bagel bakery had posted new prices: Bagels would climb to $1.50 each from $1.25 where they had been priced for years. (I can remember a $1 bagel at Absolute but the price is lodged somewhere in the back of my memory along with a competent Knicks basketball team and the days when Greeks actually ran Greek diners.) How can the price of a bagel go up by 20% in an economy with no inflation? You’ve probably asked yourself a similar question after getting a higher bill from your wireless phone provider, or when buying chicken, or after paying the co-pay for your kid’s last physicalFor an economy with no inflation, it sure feels like there’s a lot of inflation going on.
On Tuesday after the close of trading Netflix (NFLX) smashed through fourth quarter projections by adding 8.76 million subscribers globally in the quarter. That easily beat analyst estimates for the quarter of 7.9 million new subscribers. For the quarter earnings came to $1.30 a share against 30 cents a share in the fourth quarter of 2018. And then Netflix took all the fun out of the quarter by telling Wall Street to expect only 7.0 million net new subscriptions in the quarter versus 9.6 million in the first quarter of 2019. That was well below the 8.9 million in net new subscribers projected by Wall Street for the first quarter of 2020. So the stock tumbled on Wednesday, closing down 3.58%. Today, Thursday January 24, Netscape has rallied very strongly gaining 7.24% at the close. Let me try to disentangle the action over the last two days.
There’s no official announcement from Apple yet, but iPhone assemblers including Hon Hai Precision Industry, Pegatron, and Wistron, are planning to begin producing a new lower-cost iPhone in February. Apple is expected to official announce the new phone in March. According to sources in the Apple-supply chain the phone will look similar to the iPhone 8 with a 4.7-inch screen, a Touch ID built in the home button, and will run on the same chip as Apple’s current iPhone 11. Since there is no official announcement yet, there’s no official price either.
Stocks fall, Treasuries climb on signs that respiratory virus in China is now spreading person to person
News that a mysterious respiratory virus in China has infected medical workers, a sign that the virus has entered a new phase wherein it spreads from person to person, rocked Asian financial markets today. The death toll has climbed to six and China today raised the number of confirmed cases to 291.
The outbreak is reminiscent of the severe acute respiratory syndrome, or SARS, pandemic that killed 800 people in Asia 17 years ago. Signs that the virus is now spreading from person to person came as hundreds of millions of Chinese prepared to travel across the country and globally for the Lunar New Year holidays. CNN today reported that the respiratory virus has appeared in the United States.
In my most recent Special Report: When to sell: What to sell on my JubakAM.Com subscription site I recommended that any current rebalancing build up some cash. To implement that cash-building strategy, when you sell to rebalance a portfolio for 2020, buy fewer stocks than you sell so that the result is more cash on the sidelines. For example, in the rebalancing of my long-term 50 Stocks portfolio I’ve sold enough stocks so that this portfolio dropped to 38 stocks instead of the 50 in the headline. Today, Tuesday, January 21, I’ll be making my initial buys for 2020 to complete the rebalancing of this portfolio. But I expect to buy just four stocks, which would leave me with 42 stocks instead of 50 and about 16% in cash
Well, that certainly didn’t take long. With the ink barely dry on the Part 1 trade agreement between the United States and China, the European Union said that the deal could violate the rules of the World Trade Organization. EU Trade Commissioner Phil Hogan said his team will scrutinize whether China’s pledge to increase purchases of U.S. goods and services by at least $200 billion over the next two years is WTO-compatible. “We haven’t analyzed the document in detail, but we will and if there’s a WTO-compliance issue of course we will take the case” to the World Trade Organization Hogan told a conference on Thursday in Washington. “We’re not trigger-happy about taking cases to the WTO — we don’t want to create that impression. But we’ll stand up for our own economic interests.” I’m not a lawyer and I don’t even play one on TV, but my read of the agreement–with its provision to require China to purchase goods from the United States–does indeed violate WTO rules. In other words, see you in court.
Last night, I made Wesco International (WCC) my #11 Pick for my Special Report: 12 Bargain Stock Picks NOW on my Jubak.com subscription site. Today I’m adding Wesco International to my Jubak Picks Portfolio.