Is Market Sanity Around the Corner?
Rodney Johnson | October 29, 2019 | I never understood WeWork. The company either purchased or took long-term leases on commercial properties, dressed them up with Millennial-friendly details like beer taps and cool art, and then re-leased the space in very small increments for a higher price. Leave out the cosmetics, and you’ve got a traditional commercial leasing company that tries to control space at one price and lease it at a higher price. WeWork blended in things like a mission to “elevate the world’s consciousness” and have people arrive as individuals but leave as part of a group. That’s nice, but as the old saying goes, the stars might lie but the numbers never do. WeWork counted on some emotional buy-in that would tether people to the leases even when it makes sense to go elsewhere. Call me skeptical... A Necessary Correction WeWork came crashing down just before it went public, perhaps saving millions of investors from an idiotic investment built on a house of cards. Is this the beginning of sanity returning to the markets? Peloton, the gym equipment and membership company dressed up as a tech offering, is trading around $22, almost 30% off of its IPO price, and Uber, the no-profit, “don’t-call-us-a-cab” company is crossing the tape at $33.25, more than 25% off of its IPO price. When Amazon reported much lower earnings than expected last week, investors sent the shares down 6%... and that company actually earns money! It looks like investors are migrating from growth stories to profits, and it’s about time. Equity markets are facing a number of threats as we close out 2019, including trouble on the political front and problems in the boardroom. You can love President Trump or hate him, but there’s no question that he’s helped propel equities to record levels. Lower regulations and falling corporate taxes filled corporate coffers, which enriched shareholders. As the impeachment drums beat louder, investors will take note and begin preparing for a regime change. This doesn’t mean it will happen, but we’d be remiss if we didn’t think about how to protect our investments if we see greater regulation, increased taxes, and more pressure on companies to be socially responsible on the horizon. In the boardroom, companies are spending less to buy back their own stock. Goldman Sachs reports that stock buybacks fell 18% in the second quarter and appeared to dwindle in the third quarter, as well. Overall corporate spending could fall as much as 6% as the cash flood from tax reform recedes. Declining stock buybacks could hit the equity markets particularly hard because it takes out of the market a buyer who is price insensitive, which makes stocks more vulnerable to selloffs. Add these risks to the global economic slowdown and domestic economic troubles in China as well as the EU and you get a brewing equity storm. On the Bright Side There are a couple of bright spots, even if they’re transitory. The U.S. and China are still reporting progress in trade talks. Any deal should give us a quick boost. And I think shoppers will open their pocketbooks a little wider than expected this year. Unemployment is the variable most negatively correlated to consumer spending, so very low unemployment would mean higher spending. And there can always be another mania, which Tesla proved when it announced earnings last week. The company surprised the street by delivering just over 100,000 cars and banking a profit, which sent the company stock up 25% over the next two days. Investors were thrilled that Tesla might deliver 360,000 cars this year. I consider it a “mania” because the higher stock price values Tesla at $56 billion, which happens to be the same valuation as General Motors, which plunked out 10 million cars last year. It might be fun to watch Tesla’s stock, but at this point in the markets I wouldn’t want to own it and get taken for a ride. 
Rodney Johnson |  Trump to End the Dollar as We Know it on October 30th?
This move is long overdue… But it has nothing to do with all of the trade wars you've been reading about. Instead, I'm talking about a major UPGRADE to the paper dollar. It could transform everything familiar to you about saving... spending... investing... retiring... and banking... Click here now for the urgent details. You must act quickly... this opportunity will slip away FAST. | Trending Stories... It's no secret to you that I am still more bearish on gold than bullish. And it's no secret to me that a lot of our subscribers still like gold and feel that it is still a safe haven and a good store of value long term. Despite having argued that gold was one of... Yesterday morning, I hopped on the line with Dent Senior Research Analyst Dave Okenquist to catch up on all the goings on around the world at present moment. First on our agenda was China, who's shown itself to be quite fragile lately, with big decisions being made in the wrong ways for the wrong reasons.... Many Democrats really want to impeach President Trump. According to a Pew Research poll conducted after the latest round of Democratic debates, 40% of Democratic respondents said that beating Donald Trump was the number one issue in the upcoming election. It's not domestic policies, not foreign policy, not protecting any class of people, but simply... There's one thing that is always true: Most people are not good investors. They buy the most near a long-term top and they sell the most near the bottoms that follow. We have lived in a rare period since World War II wherein housing was first boosted by the first middle class generation (The Bob... My family moved a lot when I was a kid. In our travels, we spent a couple of years near where I live now, on the Texas coast south of Houston. Back then, we lived on the beach where cable was something you could only dream of. We spent this part of our youth flipping... | 
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