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Summary of changes to the CBA outlined in the Memorandum of Understanding

With NHL PR's press release on the CBA extension and return-to-play plan, they linked a 71 page PDF of the Memorandum of Understanding passed by the NHL and NHLPA. Let's review and discuss what changes are outlined here. For reference, here is a link to the original Collective Bargaining Agreement (CBA). Friedman's How the NHL and NHLPA found labour peace in a pandemic.

Economic Issues

1) The CBA extension runs through September 15, 2026 (unless there are insufficient funds in the Escrow Account on June 30, 2025, in which case the CBA is extended an additional year)
2) The upper limit for the 2020/21 season is $81.5M, midpoint is $70.9M, and lower limit is $60.2 (same as the 2019/20 season). The cap will remain at $81.5M until Hockey Related Revenue (HRR) for a completed season reaches $3.3B. It will be between $81.5M and $82.5M on a pro rata basis in seasons where Preliminary HRR is between $3.3B and $4.8B. Then will increase by $1M per year until the Escrow Balance is paid off, unless agreed upon by both parties. After Escrow has been repaid but not earlier than the establishing of a cap for the 2023/24 season, a lag formula will be used such that the year-over-year increase in the cap will be between a maximum of the lesser of 5% and the trailing two-year average HRR growth percentage and a minimum (except for the 2026-27 season) of the lesser of 2.5% and the trailing two-year average HRR growth percentage.
3) Escrow is caped at:
Season Escrow Cap
2020/21 20%
2021/22 14% if Preliminary HRR for 2020/21 exceeds $3.3B. 18% if it is below $1.8B. Pro-rata rate in between.
2022/23 10%
2023/24-2025/26 6%
Entirety of April 15, 2020 payroll deposited into Escrow. 100% of funds held in Escrow Account for 2019/20 season; and for future seasons until 1) the Escrow Balance is less than $125M or the beginning of the 2023/24 season (whichever is sooner), and 2) HRR exceeds $4.8B in a season; are released to the League. The NHL waives it's right to reduce or eliminate player salaries for the 2019/20 and 2020/21 seasons based solely on the COVID-19 pandemic.
4) 10% of each player's 2020/21 NHL salary plus signing bonus are deferred without interest to be paid (in full) in 3 equal payments on October 15 of 2022, 2023, and 2024. This does not affect calculations of AAV towards the payroll range.
5) If the 2020/21 regular season starts after November 15, "Roster Freeze Players" (players in the NHL at 5pm ET on March 16 and who played at least 1 NHL regular season game in the 2019/20 season) signed to an SPC for the season on October 31st receive 8.1% (15/186) of their 2020/21 salary by October 31.
6) Increases the benefits credit for the 2020/21 and 2021/22 seasons and provides values for seasons through 2025/26.

Player Benefit Issues

7-31) Various changes to health insurance, life insurance, retirement plans, senior player gifting, and accounting related to those benefits.

Medical-Legal Issues

32-37) Changes to how second opinions are handled
38) Clubs cannot enter into commercial agreements that restrict their ability to select medical staff or refer players to third party service providers.
39) Parties will forma a task force to advise on minimum standards for Club medical resources and staffing on road trips
40) Changes to off season rehabilitation.
41-43) Changes to post-career medical treatment.
44) The NHL and Clubs will not oppose legislation, in Canadian provinces, to extend workers compensation benefits to professional athletes.
45) Changes to worker's compensation.
46-49) Changes to the Performance Enhancing Substances Program
50) Parties will negotiate a revised Substance Abuse and Behavioral Health Program

Player Contracting Issues

51) ELC compensation limits are:
Draft Year Maximum
2019-21 $925K
2022-23 $950K
2024-25 $975K
2026 $1M
52) Minor league compensation limits (for entry-level players):
Draft Year Maximum
2019 $70K
2020-21 $80K
2022-23 $82.5K
2024-25 $85K
2026 $87.5K
53) League-Paid Individual "B" NHL Awards Bonuses (for entry-level players) are amended (starting with the 2020/21 season) to include the Art Ross, Masterton, Messier, and Clancy Awards. These bonuses will not be counted against league-wide player compensation. The amount paid will be increased by 50% starting in the 2022/23 season.
54) Club-Paid Individual "A" and "B" Performance Bonuses are amended to include the Art Ross trophy (starting with the 2020/21 season). Starting with ELCs signed after the 2022 draft, "A" bonus maximums are increased from $850K to $1M, and the maximum per category increases from $212.5K to $250K; "B" bonus (Club-paid) maximums are increased from $2M to $2.5M.
55) NHL Minimum Salary is amended:
Season Minimum Salary
2019/20-2020/21 $700k
2021/22-2022/23 $750k
2023/24-2025/26 $775k
56) UFAs who play for a club outside North America do not need to clear waivers before December 15.
57) Revised tryout agreements.
58) No-trade and no-move clauses always travel with the player in the event of the contract moving.
59) Salary arbitration briefs are limited to: 1) 42 pages (exclusive of indices, glossaries, tables of contents, and exhibits), and 2) size 12-point Times New Roman font, double-spaced, one-inch margins (except charts, tables, headings, footnotes, citations). Arbitration may not be settled after the hearing has commenced.
60) The UFA Interview Period shall be eliminated.
61) Starting with the 2020/21 season, a "Projected Off-Season Cap Accounting" rule shall replace the "Tagging Rule". From the beginning of the regular season through June 30, Clubs may not exceed the current Upper Limit plus 10% in AAV relevant for the following season. Any amounts based on rate reflective of a player's time on the roster uses the current projected time.
62) The Performance Bonus Cushion remains in the final year of the CBA
63) Cap Advantage Recapture is charged against a Club by either: 1) equal proportions in each season over the remaining term of the SPC, or 2) in an equal amount to the contract's AAV in as many seasons required to account for the full amount (the last season is the remaining amount). The later formula (2) is applied if the value in the former (1) exceeds the AAV.
64) The 35 or older cap counting rule does not apply to contracts that have: 1) total compensation (salary and bonuses) that is either the same or increases from season-to-season, and 2) a signing bonus that is payable in the first year only.
65) Clubs cannot make trades with conditions based on a player signing with a Club (if the player has a current or future contract at the time of the trade) or based on the subsequent assignment of the traded player.
66) Players signed through the subsequent trade deadline can sign an 8-year contract without waiting until the trade deadline.
67) For "Front-Loaded SPCs" the difference in the player's salary and bonuses cannot change by more than 25% year-to-year, and the salary and bonuses be less than 60% of the highest season.
68) For contracts signed after this agreement, if the minimum qualifying offer would otherwise be greater than 120% of the AAV of the contract, the minimum qualifying offer will instead be 120% of the AAV.

Working Conditions Issues

69) Changes to how days off are accounted.
70) Changes to bye week accounting.
71) All-Star Game Weekend events will be created by the NHL in consultation with the NHLPA. There will be no All-Star Game in a season in which the NHL and NHLPA agree to participate in an international tournament.
72) Parties will discuss minimizing travel by scheduling back-to-back road games in the same city
73-82) Changes in travel, moving costs and compensation.
83-84) Changes/restrictions to fitness testing and compulsory off-season training.
85-86) Clubs will make two complimentary game-worn jerseys available to each player, provided they are for personal or charitable use rather than commercial. NHLPA will agree to restrictions on player's use of Club-provided game-used equipment.
87) Clubs will give the NHLPA electronic player payroll records.
88) The Playoff fund will be as follows:
Season Fund
2019/20 $32M
2020/21-2021/22 $20M
2022/23 $21M
2023/24 $22M
2024/25 $23M
2025/26 $24M

Other Issues

89) The NHL and NHLPA will participate in the 2022 and 2026 Winter Olympics, subject to negotiation of acceptable terms to each of the NHL, NHLPA, and IIHF (and/or IOC).
90) Changes to the maintenance of the Industry Growth Fund.
91) The NHL has a one-time option to modify revenue sharing on or before June 30, 2021. In the CBA, Recipient Clubs receive either a full or half share of the revenue sharing based on if their "Designated Market Area" has fewer or more than 3 million households (defined by Nielsen in the USA and BBM in Canada). This allows the NHL to change it so all Recipient Clubs receive a full share.
92) NHL will discuss providing footage and still images of NHL players to the NHLPA free-of-charge for non-commercial, editorial, and internal uses.
93) Parties will negotiate a 2020/21 calendar and schedule. Most statistics are pro-rated with a 70/82 factor for "Roster Freeze Players", but not for other players.
94) Tentative Critical Dates Calendar:
Date Event
July 1 2020/21 season begins (for contract signing purposes)
July 13 Training camps open
July 26 Travel to Hub Cities
July 28-30 Exhibition Games
August 1 Stanley Cup Qualifiers Begin
August 11 First Round Begins
August 25 Second Round Begins
September 8 Conference Finals Begin
September 22 Stanley Cup Finals Begin
Later of September 26 or Beginning of SCF First Buy-Out Period Begins
October 4 Last Possible Day of Final
Later of October 4 and 2 days following the last game in the final Playoff round the team plays Deadline for First Club-Elected Arbitration Notification (5pm ET)
October 9-10 2020 NHL Draft
Later of October 6 and 4 days following the last game in the final Playoff round the team plays Deadline for Qualifying Offers (5pm ET), which are not open for acceptance prior to the “Qualifying Offers Open for Acceptance (12pm ET)” date"
Later of October 8 or SCF + 6 days First Buy-Out Period Ends
Later of October 9 or SCF + 7 days Qualifying Offers Open for Acceptance (12pm ET); RFA/UFA Signing Period Begins (12pm ET)
Later of October 10 and 8 days following the last game in the final Playoff round the team plays Deadline for Player-Elected Salary Arbitration Notification (5pm ET); Deadline for RFA Offer Sheets for Players for whom Clubs have elected Salary Arbitration pursuant to First Club-Elected Salary Arbitration (5pm ET); Commencement of Second Club-Elected Salary Arbitration Notification (5:01pm ET)
Later of October 11 and 8 days following the last game in the final Playoff round the team plays Deadline for Second Club-Elected Salary Arbitration Notification (5pm ET)
October 12 Scheduling of Salary Arbitration Hearings
Later of October 18 or SCF + 16 days Qualifying Offers Expire Automatically (5pm ET)
October 20 First Day of Salary Arbitration Hearings
November 8 Last Day of Salary Arbitration Hearings
November 17 Training Camps Open
December 1 2020/21 Regular Season Begins
95-97) Phases 2-4 Protocols (not included in the document)
98) Disputes regarding Leafs broadcasting rights agreement and Pittsburgh non-resident sports facility usage fee have been settled.
submitted by sandman730 to hockey [link] [comments]

Chosing a model to forecast free cash flow of a company

Dear statiticians, experienced users,

Recently I have started trading in the stock market. An important element in choosing a stock is the intrinsic value, atleast for me. To calculate this intrinsic value, one needs to forecast the future cash flow based on past performance. I thought this would be a nice experiment to try with modeling.
I have little experience with this subject, a long time ago I used latent class mixed modeling (lcmm) to find subclasses in a population. I thought i could use this function again, as it gives you a mean condidance interval of the predicted values with a certain random effect. I would like to repeat this using only "1" subclass (therefore none actually), however the model uses data tied to certain "ID", since I am using this to calculate the same company and not different individuals like last time, I am doubting wether this is the best approach.
Therefore my question is: what model would you use to predict the future cash flow of a company if you wanted to add a certain random effect? GLMM?
There is more than one way to calculate free cash flow. You can predict free cash flow directly, for facebook this would be:
Time 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 FCF 405 943 377 2,860 3626 6,076 11,617 17,483 15,359 21,212 18,823
Numbers are in millions of dollars. Ideally you want to predict 5 years in to the future or 10 if you are less conservatie in your estimations.
Another way to calculate free cash flow, is to predict the revenue (which is easier) and then use the 'average revenue margin' to calculate free cash flow
Revenu 1974 3771 5089 7872 12466 17928 27638 40653 55383 70697 75157 Revenue/FCF 0.21 0.25 0.07 0.36 0.29 0.34 0.42 0.43 0.28 0.30 0.25
For example, if one predicted that the free cash flow was 80000 in 2021 and chose to use a conservative revenue margin of say 0.25, the predicted free cash flow in 2012 would be 20000 (80000*0.25).
Any idea's would be great and much appreciated. Since there may come as second corona wave and I have no way of predicting how it would impact the economy further, I would like to use a random effect.
Thank you much in advance.
Greetings
Pashtun
submitted by pashtun92 to AskStatistics [link] [comments]

Advice - Sell limit order got executed early?

Hi there,
I'm still trying to become familiar with Reddit, so apologies if this is the wrong place to post this or what not.
I was wondering if anyone could help me understand a situation I encountered last night when dealing with some stocks I had in Tesla. If you're invested in Tesla at all you will know that they had their margins announced yesterday after close and so because of this volatile situation I decided to place a sell limit of £1580.00 at 8:59:30. The current price at the time and also what it ended at was around ~£1590 with not much variation of change. Right as the trading time ended my order got executed as a sell order at £1593.38? Why is this? I thought the whole point of a sell limit was that it would only get executed as a sell order if it goes below or on that price? As you can imagine with hearing the news after close I'm fairly frustrated/annoyed and upset.
Thanks.
Edit[1] - Forgot to mention I have also tried to contact Trading 212 about this matter, who said they'd deal with it via email, but have yet to hear from them and obviously with trading times opening soon, I wanted to sort this situation out before hand.
submitted by Poro_Joeks to trading212 [link] [comments]

Back to Basics: Real Estate Investing

Hi All,
First of all, I’m a data scientist by profession but a history major by training. So I’ve tried to cite all relevant data points with a () tag. This allows us to separate debating the data vs. the analysis. I’m also a complete newbie to real estate investing. One of the main goals in fact of this post is to organize my thoughts so far and solicit feedback from more knowledgable individuals.
As part of a balanced portfolio, I've invested passively in real estate for several years (both public REITs and a small amount in a private platform). As my assets have grown and I'm entering the age to buy a primary residence, I've been trying to educate myself on the housing real estate market. After all, even if you don't own any investment properties the purchase of a home is the largest single financial transaction you'll likely ever make. In fact, if you look at the chart linked below (1, see Sources below) you'll see housing is the single largest asset for households with net worth below 1 million dollars, i.e. ~90% of Americans (2). In fact, even in 2010 (in the midst of the Great Financial Crisis): "The primary residence represented 62% of the median homeowner’s total assets and 42% of the median home owner’s wealth" (3). In fact, reading the Economist recently (obviously in my slippers) I was surprised to discover housing is the world's largest asset class. This HSBC report (avoiding the Economist paywall) cites housing as a $226 trillion (!) asset class at the end of 2016 (4) out of a total net worth in 2018 of ~$360 trillion according to Credit Suisse.
 
Even with my casual research, it's clear that real estate is divided into multiple segments including residential, commercial, industrial, farm land, etc. Even the subsector of residential is divided into single family, multi-family, commercial, mobile homes, etc. These segments are further divided across geographies with wildly different tax, capital, and regulatory regimes. So far I’ve limited my research to the US residential sector: single family homes, multifamily, and small commercial apartment buildings. Therefore moving forward when I say real estate I will limit the scope to the above US residential housing market, i.e. acquiring individual or personal portfolio of US housing properties.
 
More formally, the purpose of my analysis below is:
Note: I considered posting this in /realestateinvesting, but ultimately my goal is to evaluate real estate vs. other asset classes. Obviously some people will simply prefer real estate for a variety of reasons, but personally my goal is to achieve the greatest return for the least risk and work. I should stress that I love my career (data scientist) and have no intention of quitting, so the last point is particularly important.
 
Analysis
 
One thing that immediately strikes me as an investor accustomed to public securities, e.g. bonds / stocks, is how odd the real estate market (in particular housing) is in comparison. Having a margin account from a broker, i.e. getting leverage, is often a difficult process reserved for “advanced” investors. In residential real estate, it’s considered “conservative” for an individual to have leverage of 4-5 to 1 (FHA loans, for example, only require 3.5% down in some cases!) . What’s even crazier is that the loan is often issued at only 2-4% over the 10 year US treasury rate. For example today, April 26th, the 10 year treasure is 0.606% while NerdWallet has a rate of 3.3% for a prime credit score, single family home, primary residence 30 year loan.
 
Perhaps because real estate is the only avenue available for newer investors to take on large amounts leverage immediately, I've seen extreme and, in my opinion, irrational positions on the subject. Even a cursory glance at BiggerPockets, /realestateinvesting, etc. uncovers multiple posts along the lines of either "real estate investing is the best investment ever!" vs. "the real estate market is a massive bubble and will crash soon". I've summarized a few of the common tropes I've seen below with my analysis.
 
Real estate is a huge bubble, and is going to collapse any day!
As noted above, real estate / housing has numerous segments that are further divided across geographies with wildly different tax, capital, and regulatory regimes. Saying that "real estate" will crash is like saying the “food industry” will crash. What segment and where? US soybean growers? Fast Food? Argentinian ranchers? McDonalds in particular?
Limiting our discussion to US housing: the Case-Shiller national price index (7) shows that home prices dropped ~27% from peak to trough in the Great Financial Crisis over a period of almost 6 years (Mid 2006 to early 2012). The reason this was such a catastrophic event is that housing had never decreased nationally in a significant way before in the modern era (see Case Schiller home price index). Of course, it’s worth noting that housing had rarely increased rapidly against inflation before.
Let’s assume we had an equivalent event occur. The Jan 2020 index was at 212, so home prices would decrease by 27% to ~155 (mid 2008 levels). Crucially though, this price drop would be expected to play out for years! During that time vested interests (more on that later) would lobby governments extensively for support, foreign and US investors could form funds to take advantage of the situation, etc. As a reference point there is ~$1.5 trillion available in US private equity funds alone as of January 2020.
However, it is worth pointing out that this is at the national level. Local real estate markets, particularly those dependent on select industries or foreign investors, could easily see more dramatic price movements. The US census has a really cool chart (22) that shows the inflation adjusted (as of year 2000) median home values every decade by state from 1940 to 2000. We see that Minnesota home values actually dropped from $105,000 in 1980 to $94,500 in 1990, a fall of more than 10%.
 
Everyone needs a place to live, therefore housing can never go down
Everyone needs a place to eat, but restaurants and grocery stores are famously low margin businesses (5). Farms supply an even more basic need, but many go bankrupt (6). The question isn’t whether housing will go down or not, but whether it will return an attractive rate of return compared to alternative investments.
It’s also worth pointing out that for most “retail” US housing real estate investors, they are investing in a narrow geographic area. Migration and births/ deaths can play a huge role in the need for housing in a given area. Case in point, NYC may have actually begun losing population to migration in 2017 / 2018 (23). Even more interesting, NYC has experienced a substantial loss due to domestic migration which is almost balanced by foreign immigration / new births (24). If foreign immigration decreases in the post-COVID we would expect NYC’s population to decline more rapidly given current trends.
It is entirely possible for national housing prices to modestly increase while expensive coastal markets decline significantly, for example.
 
It's supply and demand. There's a nationwide housing shortage so prices can only go up!
This one has some factual basis. Freddie Mac put out a study in Feb 2020 (18) which indicated that there is a shortage of housing units between 2.5 - 3.3 million units. Some interesting notes about this study is that they consider the “missing” household formation and extrapolate interstate migration trends. As noted below, the US builds ~1.3 million housing units a year, so this reflects ~2 years of housing construction. It’s also worth noting the geographic variation, with “high growth” states like Massachusetts, California, Colorado, etc. seeing ~5% housing deficits vs. states like Ohio, Pennsylvania, etc. seeing housing surpluses of ~2-4%.
However, a Zillow analysis on our aging population (11) points to a slightly different conclusion. Based on their analysis, an additional ~190,000 home will be released by seniors between 2017-2027 compared to 2007-2017. That number increases by another 250,000 homes annually between 2027-2037. Combined, this is about ~50% of the average annual homes constructed in the US between 2000-2009 at ~900,000.
Given these slightly conflicting reports, let’s get back to basics. First, let's separate housing into single family homes, multi-family units, and large apartment buildings. Single family homes, particularly near dense and economically vibrant metros, are far more supply constrained. In contrast, multi family units / apartment towers are, barring regulatory issues (see California), less constrained by available land. See Hudson Yards in NYC, the Seaport area in Boston, the Wharf in DC, etc. It's worth noting that due to costs / market demand most of these developments cater to the entry level luxury category and above, but they are new supply.
I actually wound up looking at US Census projections to get a sense of the long term outlook. By 2030 the Census estimates the population will grow from 334.5 million to 359.4, for a total increase of 24.9 million or an annual increase of 2.49 million (8). In 2019 the Census estimated 888,000 private single family units and 403,000 units in buildings w/ 2+ units were constructed for a grand total of 1,291,000 units (9). The average number of people per US household is 2.52 (10). Some simple math suggests that if we assume each new single family home contains the average number of Americans and each apartment conservatively contains only a single person we get 888,000 * 2.52 + 403,000 = ~2.64 million.
Now, talking about averages in a national real estate market reminds me of a joke about Mars: on average it's a balmy 72 degrees. But the point still stands that at a high level, theoretical sense there is sufficient "housing" for the US population. The question, as always, is at what price and location?
 
Real estate is a safer investment than the stock market!
This one honestly irritates me. While there are many advantages to real estate I can see, safety is not one of them. It is a highly leveraged, illiquid, extremely concentrated asset when bought individually (i.e not in a REIT). Let’s use an example here. Is there a financial advisoy in the world who would recommend you put your entire investment portfolio in Berkshire Hathaway? Of course not, diversification is the bedrock of modern personal finance. And yet Berkshire Hathaway is an extremely diversified asset manager with well run and capitalized companies ranging from Geico to Berkshire Homes to Berkshire Energy. Oh, and it also has $130 billion (with a B) in cash equivalents.
I honestly think this impression stems from 3 factors:
 
You won’t build your wealth in the stock market
One common theme I’m already noticing listening to podcasts, reading blogs, etc. is that many people started investing in the aftermath of the Great Financial Crisis (2009 - 2011). And, in retrospect, it was clearly a great time to buy property! But it was also a great time it turns out to buy almost every investment.
I plugged in the average annual return of the S&P 500 from December 2009 to December 2019 with dividends reinvested (and ignoring the 15-20% long term tax on dividends) (12). It was 13.3%. If you managed to buy at the market bottom of Feb 2009 it was 15.8%!
The long term annual average of the S&P 500 from 1926 - 2018 is ~10-11% (with dividends reinvested). (13). The S&P has never lost money in a 30 year period with dividends reinvested, see the fantastic book Stocks for the Long Run (14). In fact, if you’re investing before 30 the worst 35 year period (i.e. when you would turn 65) is 6.1% (15).
Housing, in general, has tracked at or slightly above inflation ( 16). Even a click bait CNBC article (17) about “skyrocketing” home prices states that homes are rising 2x as fast as inflation (i.e. ~4%). If you look at the CNBC chart for inflation adjusted prices, you’ll see a compound annual growth rate (CAGR) of 2.3% from 1940 to 2000. Let’s do this same exercise again with the Average Sales Price of Homes from Fred (i.e. Fed economic data) (18). In Q1 1963 the average sales price of a house was $19,300. In Q4 2019 it was $382,300. That is a CAGR of ~5.38% over ~57 years.
Another thing to keep in mind is that while real estate does have some tax advantages, there are also property taxes, maintenance, etc.
But it’s harder than that. Because real estate is an illiquid asset. In general, illiquid assets require higher returns than the equivalent liquid asset because of the inconvenience / risk of not having the ability to transact frequently.
 
Case study of real estate purchase:
I’d like to focus the rest of my analysis on an area that many members of BiggerPockets, /realestateinvesting, etc. seem to gloss over: credit. I was surprised to see that for first time home buyers, 72% made a down payment of 6% or less according in Dec 2018 according to (27). This would imply prices only have to decrease 6% to put these new homebuyers underwater, i.e. owe more after a sale than their mortgage. But this fails to take into account costs associated with buying a property, which are substantial at 2-5% for closing according to Zillow (28). Costs for selling a property are even more substantial, ranging from 8-10% according to Zillow (29). This means that sellers only putting down 6% could be underwater (in the sense that they couldn’t sell without providing cash during the sale) with even modest price decreases when taking into account these transactional costs.
 
Obviously there are ways to reduce these costs, so let’s walk through a hypothetical example of the median valued home of ~$200,000.
 
A young, first time home-buyer puts down 10%, or $20k, and takes out a mortgage for $180,000. They also pay (optimistically) closing costs of 2% for $4000. Luckily, they bought in a hot housing market and prices increased 5% (real) over the next 5 years. Their house is now worth ~$255,000. They sell their house and again, optimistically, closing costs are only 4%. This means they pay $10,200. Consequently, after netting out costs we calculate naively that they would make $255k - $10k - $4k - $200k (original purchase price of home) = $41k. Given they only invested $20k of their own money, this is a compound annual growth rate (CAGR) of ~15.4%, which is handily above the S&P 500’s average. This is the naive calculation I first made, but as we’ll see it is deeply flawed. First, let’s look at costs.
 
WalletHub has a really nice chart that shows (conveniently) property taxes on a $205,000 home across all 50 states (30). The average American household spends $2375 on property taxes, so let’s assume a little less and go for $1500. So 5 years x $1500 = $7500.
 
For home maintenance, the consensus seems to be ~1% annually for home maintenance with wide variation. We’ll assume that’s $2000 off the base price, so $2000 * 5 = $10,000. (31).
 
For homeowner’s insurance, Bankrate (32) provides a nice graph that shows the average annual cost for a $300,000 dwelling across all states and then a separate chart for costs based on dwelling coverage. For a $200,000 dwelling coverage we have a figure of $1806 per year, so over 5 years we have $1800 * 5 = $9000.
 
Finally we need to calculate the interest on the debt. One thing that I didn’t realize until I looked at an amortization table how front-loaded the interest payments are. Case in point, I plugged in the $180,000 loan into the amortization calculator (34) using a 3.5% interest rate and saw that we pay on average ~$6000 each year in interest vs. only ~$3800 to principal.
 
So lets’s run the new numbers.
You sell your home still for $255,000. After 5 years, your mortgage is now ~$160000 (i.e. you paid off 20,000 over 5 years, or ~$4k per year). So after the sale you are left with ~$95,000. The buying and selling costs remain the same as before, so we subtract the $14k for $81,000. We also then subtract $7500 (property taxes), $10,000 (home maintenance), $9000 (homeowners insurance) which gives us $54,500.
 
We paid ~$9,700 each year in mortgage interest + principle (~6000 interest and $3700 principal). So 5 * 9700 = $48,500.
 
So, net of everything we get $255,000 - $160,000 (remaining mortgage) - $48,500 (mortgage payments over 5 years) - $14k (buying / selling costs) - $7500 (property taxes) - $10,000 (home maintenance) - $9000 (home insurance) = $6000. And we put down $20,000 as a downpayment, for a net compound annual growth rate (CAGR) of negative $21.4%.
 
That is truly an astounding result. We had 10x leverage on an asset that went up 5% each year for 5 years and we somehow lost money on our “investment” of a down payment? Keep in mind we also used fairly optimistic numbers (particularly home price appreciation) and didn’t factor in PMI, etc. On the flip side, this home provided shelter, i.e. you didn’t pay rent. That’s a massive “avoided” cost and I don’t mean to minimize it. But the point here is that many homebuyers I’ve spoken to fail to account for the substantial costs of home ownership and expect their primary resident to generate a substantial return.
 
Now, of course, for real estate investing you would likely either a) hold the property for less time and attempt to flip it via forced appreciation or b) have tenants in the property. Let’s focus on b) because frankly that’s more of my interest. From what little research I’ve done flipping houses requires much more time that’s incompatible with my day job.
 
I went ahead and used the rental price calculator I found online at (36) to calculate the return. I used a rent of $1300 monthly, a bit lower than the average national rent of $1476 (35) because our home price was also lower than the national average. I assumed a low vacancy rate of 5%, and no other expenses beyond the ones cited above (i.e. I didn’t assume property management, higher loan interest rate, higher property taxes).
 
The calculator spit back a 5 year internal rate of return (a metric in this case useful to compare against the securities markets) of 27.79% return, i.e. a profit of $63k on an initial investment of $20k. The IRR as I understand it captures the time value of money, basically accounting for when you made various returns (37). E.g if an investment over 30 years pays nothing then gives you a lump sum payment at the end that’s very different than if it pays 1/30th of that lump sum every year. It’s useful in this case for comparing against the stock market because the IRR takes all future cash flows back to a net present value of 0, i.e. as if we invested all the money immediately.
 
&Now let’s do some scenario modeling (originally we had 10% down, 3.5% interest rate for an IRR of ~28%):
This scenario for me demonstrated a number of interesting properties.
 
 
401k analysis
As I mentioned above, one of the big questions around real estate investing that I rarely see asked is “is it an appreciably better investment than the alternatives”? For W2 workers, which is ~50% of private sector workers, this question becomes even more pertinent because 401ks have massive tax benefits. In fact, only 33% of US households own taxable accounts outside of a 401k, which means the vast bulk of US households either have no accounts, 38%, or own only a retirement account like a 401k, 29%, according to (39). Let’s assume we have a middle to upper middle class worker making ~70k (this puts them roughly at the 75% percentile). They want to invest, and see two options:
 
At a salary of $70k and assuming you took the $12k standard deduction, you would still see much of your income fall into the 22% tax bracket. While certain states charge no income tax, they generally make it up in much higher sales / property taxes, so let’s also assume a 3% state income tax (40). This means that if you invest $19,500 in a 401k (the maximum in 2020) that’s equivalent to only $14,625 post-tax (because the $19,500 would be taxed ~25% before it got to you). That leaves almost $6000 when compared with the down payment figure above, which is coincidentally the exact IRA contribution limit for 2020! The math for deductions for the IRA gets painful, but we can assume a deduction of ~$1500 (i.e. 25% of 6000). Now, if your work offers an HSA it gets even better, because those contributions are tax-free even from social security (which is typically a 6.2% tax) + medicaid (1.45%). This means that if you contribute the $3500 limit, that’s equivalent to only $2300 post-tax.
 
This is getting rather long, so for the sake of simplicity we can basically say that in lieu of putting down a $20,000 post-tax downpayment on an investment property you could instead invest $19500 + $6000 + $3500 = $29000 into the stock market. What’s more, fees for well managed 401ks through Vanguard, Schwab are often ~0.25% (i.e. $72 annually on the $29k above).
 
If we assume the average S&P 500 index returns of 10% (we’ll ignore the $72 annually in expenses and of course there are no taxes), we would see $29k compounded over 5 years = $47,809. Since we’re investing the money all immediately, this is (I believe) more or less equivalent to the IRR rate.
 
So, what do we need to achieve to beat that return with our investment property? Well, we previously assumed a blistering 5% real home price appreciation. With inflation at ~2%, that’s a nominal 7% home price appreciation. According to both Zillow and Core logic, Idaho is the state with the fastest home appreciation values pre-COVID at ~9%. We’re essentially predicting close to this level for 5 years, which is quite rare. In August 2019, US home prices nationally were gaining ~2.6% according to (41).
Let’s plug those numbers into our rental property calculator from above. At a 10% down payment, 3.5% interest rate, and 2.6% home price appreciation we see an IRR of 18% per year. Game, set, match, real estate, right?
 
Well, sort of. Right now we are assuming optimistic projections about maintenance (1%), closing costs (2%), and selling costs (4%). What if we bump those up to the averages cited by Zillow (3% and 8%)? Uh-oh, now we’re down to 12.38%. Okay, but what if we assume rent goes up by the same amount, ~2%? Great! Now we’re back up to 14% IRR. But if we assume all the other expenses like home insurance and maintenance go up 2% a year as well, we’re back down to 11%.
 
We could go on forever, but the point is that real estate (particularly for rental properties) are extremely sensitive to assumptions you make on a number of factors. Given the risk, illiquidity, and work involved with a real estate property I would want to see a substantially higher return than the tax advantaged, hands off 10% my 401k gives me. I didn’t even include the typical 3% match for the 401k, which would have added $2100 to the initial investment amount and increased the 5 year return to $51,272.
 
The bottom line in my mind is that for most W2 workers who have access to pre-tax investments, they should max them out first. If you’re lucky enough to be able to max out all of the above pre-tax accounts + get a 3% match (i.e. $31k total) every year, after 15 years at a 10% return you’ll have $1.2 million. In 30 years you’ll have $6.8 million. And again, keep in mind that maxing out your pre-tax accounts only “costs” you ~$20k, because that’s what you would get after taxes. And you’ll have “made” those millions without spending a single hour outside of your day job working.
 
Based on the above analysis and calculations, here’s what I’ve come away with as a newbie to real estate investing:
 
Some thoughts on the future:
Forecasting is always risky, but at the same time we all have to form an opinion on where the future is headed. My general thoughts are that crisis tend to accelerate existing trends rather than create new ones. There were already recession concerns in late 2019, and US GDP growth expectations had been downgraded to ~2.0% by the OECD even before COVID (45), albeit with slight optimism around the Phase 1 trade deal with China. Geopolitical tension and capital controls in China had led to mainland Chinese investors slowing their investments in US real estate and increasing dispositions (47).
From my point of view, I’m interested in seeing how the market reacts over the next 3-6 months. Do sellers react by rapidly putting properties on the market before it’s “too late”? Are there enough prime buyers given the tightening credit, particularly for expensive coastal markets, to absorb a spike in listings? As Warren Buffett once said: “"At rare and unpredictable intervals...credit vanishes and debt becomes financially fatal. A Russian-roulette equation--usually win, occasionally die--may make financial sense for someone who gets a piece of a company's upside but does not share in its downside.” We shall see.
Sources:
submitted by cooleddy89 to investing [link] [comments]

Hey WSB, WTF is logistics?

Hey WSB, WTF is logistics?
Good evening autists,
I've decided to make this post in order to give you all insight of what I see as a underexamined area of weakness (especially in this sub) and I believe is a possible harbinger of what lies ahead, which is the logistics industry. There are many moving parts and niches in the industry and most businesses rely on logistics services to support their operations (from the supply of raw materials, moving product from manufacturer to distribution center, clearing freight through customs, storage, or delivering final products to stores or customer's door). There are steamship lines (SSLs), airlines (ALs), freight forwarders, customs brokers, truckers, distribution centers, warehouses and they all participate to assist companies who import their products to different markets get them there as fast as possible (unless you're an SSL) at the lowest cost.
These services have allowed products to be made more cheaply internationally due to low labomaterial costs, mainly, which in turn allows markets to buy them cheaper. For the US, this is critical because it doesn't really manufacture much anymore as it's moved on from a manufacturing economy to a more service based economy over a handful of decades (trade deficit for March increased to $44.4 billion difference in imports over exports https://www.census.gov/foreign-trade/data/index.html ).
We're on a downtrend due to trade war, which is good, but $44 bil on 3month avg is basically impossible to make up for in any kind of short-term basis.
With this change from a manufacturing economy to a more service based economy, basic logistics services have seen steady growth for multiple decades. In general, when an industry is in its infancy, you have many small players (usually) and over time they consolidate. Well, this is similar to what's happened in the SSL sector of the logistics industry and this is where I'll start.
SSLs
You can do your own research, or just take my word for it, but SSL alliances have picked up starting the last decade or more ('08 recession put upward pressure on this) as record losses were prominent for almost all carriers due to over-supply and reducing demand. This fact then pushed them into rate wars (SSLs undercutting freight rates to push out competition). Rate wars then forced alliances among the SSLs. Larger players forming pacts with similar larger players in order to wipe out the smaller players, which in turn has forced the smaller players to build pacts in order to fight back. If you're wondering how this isn't an antitrust issue, it has been brought up and investigated by the DOJ though I'm not going full on into the weeds on that but basically, "Antitrust investigators believe that due to a history of legally having the ability to discuss pricing under antitrust immunity, the industry lacks a disciplined culture and is therefore susceptible to illegal activity. For example, the DOJ regularly issues a statement raising concerns after the FMC allows a shipping alliance or major vessel-sharing agreement (VSA) to take effect" * https://www.joc.com/maritime-news/container-lines/us-antitrust-probe-container-shipping-ends_20190226.html (think OPEC-ish). With the formation of these pacts came investment in new containerships at a record pace. It was a race to see who could buy the largest ship in order to save cost through economies of scale and crush the competition on the highest traffic lanes globally (i.e. major import lanes like Shanghai to Los Angeles or Shanghai to Rotterdam). The first major player to fall was Korean SSL Hanjin just over 4 years ago. At the moment, we only have 3 alliances that control~80% of the capacity of ocean cargo transported globally. The breakdown of alliances is below (https://www.morethanshipping.com/the-impact-of-the-container-shipping-alliances/ ).
Pick your poison
However, unfettered competition remains within these main trades regardless of the alliances made. It is tantamount to a war of attrition and that is going to be devastating in the current environment. See below recent reports on SSLs.
An April 8th article in WSJ ( https://www.wsj.com/articles/container-ship-operators-idle-ships-in-droves-on-falling-trade-demand-11586359002 ) stated the below points
  • Container ship operators have idled a record 13% (OP Note: this easily beats the '08 recession) of their capacity over the past month as carriers at the foundation of global supply chains buckle down while restrictions under the coronavirus pandemic batter trade demand.
  • Alphaliner, based in Paris, said more than 250 scheduled sailings will be canceled in the second quarter alone, with up to a third of capacity taken out in some trade routes. The biggest cutbacks so far have hit the world’s main trade lanes, the Asia-Europe and trans-Pacific routes.
  • Ship brokers say giant ships that move more than 20,000 containers each now are less than half full.
  • Sailing cancellations grew from 45 to 212 over the past week, according to Copenhagen-based consulting firm Sea-Intelligence. The “blanked” sailings are stretching into June, indicating operators expect the traditional peak shipping season, when retailers restock goods ahead of an expected buildup in consumer spending in the fall, will be muted this year by the lockdowns extending across economies world-wide.
  • France’s CMA CGM SA, the world’s fourth-largest container line by capacity, said this week it is idling 15 ships because retailers are pulling back orders over falling demand from European and American consumers.
  • The decision to idle, or “lay up,” ships is a difficult option for owners, as the vessels continue to generate costs without offsetting income. There are two ways to idle ships. In a “warm layup” vessels are anchored and staffed, ready to go relatively quickly when demand resumes. This means saving on operating costs such as fuel but continuing to pay crew salaries and insurance fees and make charter payments. In a “cold layup” a skeleton crew is kept on board for general maintenance but most of the ship’s systems are shut down. Returning the ship to service can cost millions of dollars and requires extensive testing to certify that the ship is safe to sail.
A May 4th article in WSJ ( https://www.wsj.com/articles/some-shipping-lines-may-not-survive-downturn-hapag-lloyd-chief-says-11588612964 ) stated the below points.
  • Some container shipping companies may collapse if the global trade downturn stemming from coronavirus lockdowns extends to the end of the year or beyond.
  • The shipping lines that handle the biggest share of the world’s international trade in retail and manufactured goods have canceled up to a quarter of their sailings since late February amid extensive lockdowns and collapsing demand in the U.S. and Europe.
  • The world’s top 10 liner companies, which collectively handle more than three-quarters of the world’s oceangoing container trade, are looking at steep losses from the falling business.
  • Germany’s Hapag-Lloyd, the world’s fifth-largest container line by capacity, according to industry data group Alphaliner, has canceled about 15% of its scheduled sailings on major ocean trade routes, including Asia-Europe and trans-Pacific operations.
  • Some carriers are trying to preserve cash by taking longer trips around Africa instead of crossing the Suez Canal, saving on canal toll costs that can reach around $500,000 for a single big ship. With fuel prices sliding under the crash in oil prices, the cost of the longer sailing makes sense. (OP Note: This increases lead times for buyers and further disrupts company's supply chains)
  • Hapag-Lloyd has thousands of land-based employees working from home and has frozen management salaries and returned leased ships to charterers. It is not looking at layoffs for now. But the carrier is pushing back an order of six megaships that move more than 20,000 containers each, to add to the six it already operates. Those megaships are the big losers with volumes crashing since many are sailing half full, giving up the benefits operators gain from the ships’ economies of scale.
Knowing the above, see a Feb 28th report ( https://splash247.com/liner-bankruptcy-potential-at-highest-levels-recorded/ ) stating the below points.
  • The collective Altman Z score of the 14 container shipping companies that publish their financials deteriorated markedly in the 12 months ending September 30, 2019, falling to 1.16 from 1.35 in all of 2018 and thereby signifying a rising probability of bankruptcy.
  • "IMO 2020 was already going to make this a year of huge disruption for the entire maritime industry," said Marc Lampieri, a managing director in the transportation and infrastructure practice at AlixPartners. "Throw in the coronavirus, the recent deterioration of some key financial measures and whatever other unforeseen disruptions lie ahead, and it's clear that preparing for the worst may be the best way to avoid the worst."
If you're unfamiliar with the Z score formula it is a calculation that predicts the probability that a firm will go into bankruptcy within two years. Anything below a score of 1.8 is considered a "very high" risk of bankruptcy.
So, if this industry sector was reduced to a 1.16 Z score for the 12 months ending Sept 2019 (5 SSLs produced a scores of less than 1 and all were under the 1.8 level), it's probably a safe bet this score has not gone up since. If more SSLs were to go bankrupt, this would further constrain capacity to even fewer SSLs who are already trying to minimize port calls and slow down how fast ships cycle through their scheduled port calls (their "string"), causing backlogs that in turn send freight rates higher. Part of the reason they do this is because of the headhaul vs. backhaul issue that occurs on many vessel strings (i.e. lots of freight moving from a ship's origin to particular destinations, but not from the destinations back to the ships origin or future port calls) causing them to issue "blank sailings" for some ports, which is their notice that the port will be skipped by a particular vessel. This causes many problems with equipment (container) availability and can further distort freight rates and cause backlogs. If they can only make money going one way, they're losing money more often than not. Furthermore, inactive containership capacity through 2020 is projected to move even higher, increasing the recent record statistic for the sector. Below articles for support.
April 8th article (https://shippingwatch.com/carriers/Containearticle12067889.ece) stating the below points.
  • The large scale sailing cancellations could push the inactive container ship fleet to over 3 Mteu in the coming weeks in the worst capacity crisis that the container shipping industry has ever seen.
  • Several routes with usually large capacity will be fully canceled in the second quarter, including 2M's major AE-2/Swan service, where 12 ships of 23,000 teu sail between Asia and North Europe. "No market segment will be spared, with capacity cuts announced across almost all key routes," writes the firm.
An article dated May 1st ( https://theloadstar.com/europe-asia-ocean-rates-hit-new-heights-as-exporters-fight-for-what-space-remains/) via the Loadstar provides an example of how capacity and rates can fluctuate and go haywire relatively quickly. Summary below.
  • Normally freight from Asia to Northern Europe is the headhaul (large volume) and the backhaul is NE to Asia (lower volume). However, due to lockdowns happening at different times in Asia vs Europe, this volume has fluctuated highly. Freight rates for NE to Asia in Jan were $500 for a 40' GP (40 ft. general purpose container), as China was in lockdown and demand was poor and space was plentiful. However, now that Europe is in lockdown and Asia is up and running, demand has spiked on the NE to Asia backhaul (as China lifted out of lockdown) and space is basically non-existent and has forced the rate for a 40' GP from a low of $500 in January to $2000 now in May. This is due to the fact that SSLs reverted to blank sailings for NE ports as demand in Europe dropped due to beervirus and caused freight rates to fall from Asia origins. They've been able to steady the rates at Asia origins at the cost of backlogs and rate spikes at backhaul ports.
For SSLs, the game is complicated and tricky while margins are razor thin and the coronavirus exacerbates this. They're trying to manage rates, whether or not to park vessels and how they should do that, which ports do they skip to save money, and how to keep cash flow (as most of them are very much in debt). Their actions then affect shippers and buyers worldwide and it becomes very difficult to manage costs through out global supply chains. When things are this uncertain, for all parties in logistics, sometimes it's like trying to catch a falling knife when moving cargo. If shippers/buyers time it right they can avoid extra costs but if they are trying to ship at the wrong time they're going to feel the pain in the form of high freight rates, delays (which increase storage/demurrage costs), and chargebacks from shipper's/buyer's customer who receive cargo late (depending on terms and conditions of their contracts).
SSL TL;DR - Steamship lines have been broken for a while but beervirus has potential to be the catalyst to push many over the edge into insolvency. In order to stabilize freight rates, SSLs have been parking container ships at a record pace with capacity projected to shrink by more than 3 million TEU (20' container equivalent), which has never happened before. The more SSLs revert to parking vessels in order to stabilize freight rates, the closer it pushes them to bankruptcy (a double edge sword, if you will) and in turn the more companies will pay to move freight in the future. Even if no SSLs go bankrupt, companies will be paying more to move freight regardless due to virus disruption.

ALs
There has been much already addressed and available about the ALs and I'm just going to assume you're more aware of their history as compared to the SSLs, so I'll make this section short and only provide the details most of you might not get if you're not really involved with logistics.
An article published on May 4th (https://www.stattimes.com/news/global-air-cargo-capacity-down-by-29-seabury-reports/ ) stated the below points (w/ visuals).
You already knew this but ALs getting hammered due to passenger decline related to beervirus. That in turn has affected the flow and capacity of airfreight
Passenger aircraft belly capacity reached an all time low at the beginning of April. It has rebounded slightly, but forecasts shows capacity will not be returning to normal in 2020
  • Global air cargo capacity is -29% on a YOY basis. (OP Note: A 23% increase in capacity was seen the week of April 22nd-28th for passenger belly aircraft, which is heartening, but considering capacity dropped well over 80%, this recent gain would only constitute ~ 4.5% return to previously normal capacity seen at the beginning of February)
  • US- Europe lanes have have had the largest impact so far, but disturbances have been felt on every lane globally and the Europe/Africa, Europe/South America routes are still seeing capacity constraints between 60% and 88%.
So, matching the economic data we've seen recently, airline capacity data is abysmal.
Another article release today by the NY Times also states the dire circumstances ALs face currently (https://www.nytimes.com/2020/05/10/business/airlines-coronavirus-bleak-future.html?auth=link-dismiss-google1tap). This article isn't particularly logistics focused, but it provides insight into the passenger side of ALs, which is where they make a majority of their revenue. I've added important points below.
  • Passenger traffic is down about 94% and half the industry's 6,215 planes are parked at major airports and desert airstrips.
  • To get through the next few months, airlines successfully lobbied for a huge federal rescue. But half of that money was intended to cover payroll and that will run out by the end of September.
  • Desperate to preserve cash, the airlines have also aggressively discouraged customers from seeking refunds, offering vouchers for future travel instead...(and) the industry trade group Airlines for America, said that refunding all tickets could lead to bankruptcy.
  • Payrolls have largely been spared the ax, for now, because Congress set aside $25 billion to pay workers through September as long as airlines refrain from imposing furloughs or pay cuts. But some airlines have already tested those limits, and executives have signaled that layoffs will come when those protections expire.
  • Most industry analysts and executives expect years to pass before airlines fly as many passengers as they did before the pandemic. Even then, a rebound may come in fits and starts, propelled by medical advancements, an economic rebound and shifts in the public’s tolerance for risk.
  • Take China, for example. The number of domestic flights there started to recover in mid-February, but plateaued in early March at just over 40 percent of levels before the outbreak, according to the International Air Transport Association, a global industry group. (OP Note: The gain back to 40% could be attributed to the large backlog left from China lockdown and Lunar New Year holiday at the beginning of Feb)
  • The airlines are triaging. Even as they slim down to preserve cash, they are finding ways to make what little money they can. Many have put otherwise unneeded planes to use transporting cargo, including medical supplies, taking advantage of a spike in freight prices.

ALs TL;DR - With beervirus, passenger belly space has shrunk to unprecedented levels, causing air freight rates to increase by 5 or 6 times their normal costs on many lanes as planes are parked. Companies are forced to pay through the nose for air freight when cargo critical to their operations is needed due to SSL capacity constraints and the extended lead times across all modes of transportation. Companies trying to utilize air cargo will be paying higher costs indefinitely as air capacity doesn't look to return to normal within 2020.

Last, I'd like to move on to look at US inventories and US consumer spending as they are the major catalyst when it comes to freight demand. Using US census data, summarized in the below table (this is preliminary data, so not reflecting recent update today but breakdown takes this into account) , tradingeconomics.com ( https://tradingeconomics.com/united-states/wholesale-inventories ) provides this breakdown of Us inventories: "Wholesale inventories in the US fell 0.8 percent month-over-month in March of 2020, less than an initial estimate of a 1 percent drop. Still, it is the biggest decline in inventories since September of 2011. Stocks of nondurable goods slumped 2.7 percent (vs –2.6 percent in the preliminary estimate), while durable goods inventories edged up 0.5 percent (vs 0.1 percent in the preliminary release). Year-on-year, wholesale inventories were down 1.7 percent in March."
https://www.census.gov/econ/indicators/tab2adv.pdf
Typically, high inventory points to economic slowdown, while a low reading points to stronger growth. However, this generality is not true in the current environment. We're seeing inventories lower due to supply shocks presented by the beervirus but at the same time we're seeing major demand shocks so we have this peculiar instance where inventories have fallen the most in over a decade, but still did not fall as much as expected.
Now look at consumer spending ( https://tradingeconomics.com/united-states/consumer-spending ).
Splash Mountain
And now with tradingeconomics.com forecast.
https://preview.redd.it/657ykdocy1y41.png?width=875&format=png&auto=webp&s=76997dad3a5c80c6fe82186241cf690bf94f7cf6
I argue that this shows supply is catching up to demand, as we can see that consumer spending has fallen off a cliff and is projected to fall further.
So, you might be wondering, what does all of this means and what am I getting at?
Within logistics there is a phenomenon that occurs when supply and demand are not managed and become dislocated. This is called the Bullwhip Effect. With the turmoil associated around major players in the logistics industry (SSLs & ALs) and general uncertainty in regards to the the economic outlook, we can expect increased costs associated with inventory, if companies have too much inventory (which is looking like the lesser of two evils IMO depending on the situation), or increased cost in freight spend, if companies don't have enough inventory (which, considering the wild swings in rates, could be devastating in cost). Either way, the point is cost. Costs are going to go up to move all the consumer goods we have been accustomed to buying so cheapy over the last decades of the expansion of the global market place that was supported by the expansion of capacity in global SSLs and ALs. That is why I'm not buying the deflation narrative that is being passed around currently and supported by the FED. Logistics services have been widely overlooked as a major contributor to the deflation in CPI we've seen over the last decade or so, as this coincides with the alliances created in SSLs and rate wars that ensued. We will see consumer prices increase and inflation will return whether the economy rebound quickly or not. I am short gold, silver, and select precious metal equities, long on global risk assets until this mess can be sorted out.


TL;DR - Logistics services have expanded with globalization and have become key players in keeping companies operating smoothly. SSLs have been creating alliances over the last decade, which caused rate wars (lowering freight costs). Due to beervirus, SSLs and ALs are severely hampered and are parking assets at a record pace, severely reducing capacity that is extremely difficult to expand in any kind of short-term basis. The disruption to supply chains will cause bullwhip effects across supply chains worldwide. This will raise prices for most goods with certainty. I am short gold, silver, and select precious metal equities, long on global risk assets until this mess can be sorted out.
submitted by xcessinmoderation to wallstreetbets [link] [comments]

My trading blog: first > 100-million-ISK-profit trade

Today is Day 45 of my trading "blog" and the first major activity since day 22 (link to previous blog post: https://www.reddit.com/Eve/comments/fcp2g3/my_trading_blog_finally_doubled_my_wealth/)

I started trading 44 days ago, on February 11, 2020, with the intention of making the majority of my wealth trading. As you can see, I have stuck to that promise, making 99.3% of my money in trade (although I did go out and do some of the tutorial pvp missions, as I was bored of sitting in a station all day, and for other ... reasons ... as you will see)
My current income sources
So anyway, not much happened between Day 22 and Day 30. I traded some fuel blocks, bought some skills, etc.
I also had my first few major unsuccessful orders. I tried to buy a lot of things, my orders stagnated for several days, and it felt absolutely awful to cancel those orders and waste the broker's fee. But it's always better to admit that you made a mistake and move on**, rather than irrationally invest because you don't want to hurt your pride.** I then bought and sold a couple of cruisers and made some cash, enough to bring my balance up to around 90 million ISK when all was said and done.
I don't know whether to call this luck or skill, but I somehow found a ship where there was (relatively) a lot of trading activity going on, and yet the profit margin was over 60%. So I took a gamble and spent nearly all of my roughly 90 million ISK balance on it. This occurred on March 12, 2020, or Day 31.

Oh, and by the way, the Broker Relations update was on March 10 ... yeeaaahhh ... so every time I needed to update my single extremely risky order, that was another 400k ISK down the drain. Which seems like a small number, but is definitely a very large number when your total balance is only a few million ISK and you have no other way to make money (remember, I promised to not supplement my income too much with explo or mining or anything else).

So anyway, I felt extremely stupid sitting there and wasting a million ISK a day for an order that was never going to get satisfied. I realized that I was going to actually run out of ISK, and wouldn't be able to sell it again! This would be catastrophic! So I did what any self-respecting noob in my position would do: I boarded a free corvette and played the pvp tutorial missions!! Which were actually pretty fun. I didn't feel like I was cheating at my challenge, since my overall income from this was probably no more than 2 million ISK.

And one day later, someone fulfilled my order!! But this was going to be the REALLY tough part, because I was re-selling it for a lot more, which means that the re-listing costs would be proportionally higher as well. Every update now costed a whopping 1.1 million ISK. I was running out of cash FAST. I limited myself to only 1 update per day but it was still super scary...

My time was ticking and I had only 2 more day's worth of cash left. At this point, I was really desperate, and I placed some overpriced buy orders for frigates so that I could re-sell them quickly. The problem is, no one actually sold to them. I still have no idea why. So I had now worked myself into a hole: I had only 1 more order update worth of cash remaining.

In a last Hail-Mary of desperation, I decided to vastly under-price my sell order. I was officially out of cash. Like, completely out. I had only 17,212 ISK left.
And with my luck, someone undercut me by 100,000 ISK the next day. Big RIP. I felt like quitting EVE for a few weeks. Then I thought I might as well try to tour the various star systems in the neighboring regions, because I like spaceships and stars and space stations and they look cool. And then someone shot my frigate down in high sec space (????) but luckily I escaped with my pod. But either way, I was on a total downward streak. Like tilting, except it wasn't my fault - just random unlucky occurrences one after another.
There was one silver lining: all the other sellers, besides that one guy, decided to stay at their original prices. And they would have been stupid to follow me anyway. I was acting out of desperation.

Fast-forward two more days and it finally sells. This was my longest-running buy/sell ever. It took 9 days for my buy order to be satisfied and 5 days for my sell order to be satisfied - i.e. 2 weeks in total. But when all was said and done ... over 100 million sweet ISK in profits, from 1 single order! (I guess, 2, if you count the buy and sell separately) Very cool, very nice. I really had to work for that money!

P.S. this ship is now in extremely high demand with very few sellers, so it's not like you or I can just use this to make a free 100 million ISK every month.
P.P.S. I have a secret admirer on eve that downvotes my post as soon as I post it. It's happened 3 times so far! ILY, secret admirer! ❤️
submitted by Agent-008 to Eve [link] [comments]

25, single, living in London, 28k a year (possible promotion) + freelance job. Is it possible to FIRE in my 40s if I move up north?

I'm 25 years old, I moved to London in March 2019 with 1k to my name, and so far have around 15k+ in savings. Investing and saving is pretty new to me and I never considered retiring early, but its dawning on me as I'm doing nothing with my money. I would appreciate what to do with my spare money rather than letting it rot in my bank account.
Of my 15k savings: I have 7.5k in the bank, 3k in wealthily S&S ISA (2019/2020 tax) and 4k on my Trading 212 ISA account (this tax year) it's in cash atm - I sold all early last month :( invested 3.5k made about £500, probably could've done more.... I also perhaps have about 1k in crypto but haven't checked in like a year (I invested around 4.5k during the bubble two years ago).
I work two jobs. My main full time job is 28k per year, take home pay is around 1.8k a month. It is an entry level position, so I imagine in a couple years time I could be on 32k at least. My freelance job is variable but I'm hoping I will get around £300-400 extra a month. This may mean working 7 days a week some months.
Currently (under normal circumstance without Covid-19) I pay a mates rates rent at £220 a month in London and travel costs are usually £100 a month. I live a frugal life. Since I moved to London in 2019, I've been a loner so don't socialize with others when I have spare time - partly a reason why I choose to work a second job actually. I probably spend £300 on food, entertainment and random crap. Probably less actually. I shop at Lidl, buy the cheapest pasta, sauces etc. Never go restaurants, only get the odd kebab here and there - and only if it's cheap! Only thing I treat myself to is videogames, and even then, I only buy when there's a good deal.
Changes in circumstance: DUE TO COVID-19 I will no longer be able to pay £220 a month, where I live as one of the people I lived with is an elderly person and does not want me in the household anymore. I've moved back up north and currently living rent-free but will be moving back down south once lockdown ends. I don't want to live in a shitehole neither do I want to live far away and commute 2 hours to work for cheap rent. So I assume after lockdown restrictions are over I will be paying around £800 per month rent.
SALARY MINUS EXPENSES (Conservative estimates)
Income (take home): £2000/month wage Expenses: £800 Rent (not yet but will be soon), £100 Travel and £300 Food/Entertainment etc. Total: £1200
Save approximately £800/month. Should save 9.6k a year, but I'm gonna be optimistic and say I should be able to get up to 10k a year actually - after all at the moment I'm saving 1.5k-2k a month until covid-19 lockdown ends (moved back uo north with parents remote working). Not to mention in a couple of years I should get a pay rise so it may jump to 15k a year.
PROJECTIONS (conservative again)
Based on current projections. If I save 10k a year for 3 years (30k). Assuming a pay rise and some passive-investing and I'm able to save around 17k per year after that over the next 12 years (204k) I should have in total 250k by the time I'm 40 years old. I come from an area where 3-bed houses are selling for 80k. Sure inflation will affect the prices, but they have risen only marginally over the last ten years.
submitted by elld to FIREUK [link] [comments]

Covid-19 update 2nd March

Good morning from the UK.

Virus update

The WHO dashboard (NB: doesn't work that well on mobile phones) currently reports global infections are at 88,913 at time of writing. 62 countries have now reported cases; notable countries include China (80,174, up from 79,251 on Saturday), South Korea (4,212, up from 3,150 on Saturday), Italy (1,689, a significant jump from 888 on Saturday), Iran (978, up from 593 on Saturday) whilst Germany, France and Singapore are now all into triple digits. Indonesia - the fourth most populated country in the world has also now reported 2 cases. An article in Canadian media claimed two days ago that the state of British Columbia had so far tested more people than the whole of the USA (link).
Reactions to the virus are varying by country; South Korea has extended school shutdowns until March 23rd according to CNN (Link), Milan's famous La Scala opera house and Paris's Louvre museum (home to the Mona Lisa) were both shut down (also from the CNN link), Nike has shutdown its European HQ in the Netherlands after an affection there (Sydney Morning Herald, link) whilst the Spring sumo tournament in Japan (one of their six major sumo tournaments each year) will be held behind closed doors (The Guardian, link). NZ meanwhile is reporting panic buying in some areas according to a large radio station there (link) leading the prime Minister Jacinda Ahern to comment "I'm absolutely confident ... the health system is responding as we would expect. What has been beyond our control have been what I would call irresponsible headlines. If you need a bottle of milk, go and get it. If you don't, do not react in any other way than you would on any other day."

China supply chain

Air pollution significantly drops - hat tip to BuffaloTurkey78 who beat me to it (Link to his post here) - the BBC has run a report from NASA which says that Nitrous Dioxide emissions have fallen sharply in China suggesting that manufacturing activity was much reduced. If you're more interested, the original source article from NASA is available here; the NO2 emissions were between 10-30% below normal levels. Another article is in Time magazine (link) which estimates CO2 emissions to have dropped by 100m metric tonnes - the equivalent of Chile's annual output.
Guardian: China has been transferring detained Uighurs to factories used by global brands - Articles have emerged in both the Guardian Link and the FT (Link, hat tip u/xlxlxlxlxlxlxlx) from a report by the Australian Strategic Policy Institute that Chinese authorities are using up to 80,000 detained Muslim minority Uighurs in alleged forced labour for manufacturing. The articles go on to say that companies that these factories supply include Apple, Huawei, VW and Nike. The transferred workers typically undergo “ideological training outside working hours, are subject to constant surveillance, and are forbidden from participating in religious observances”, according to ASPI. Exporting products made by prison labour is against Chinese law, as well as the World Trade Organization’s member rules, although prison labour has been documented across various parts of China’s export supply chain. Case studies highlighted in the report, titled Uyghurs for Sale, include Qingdao Taekwang Shoes, a factory in eastern China that produces shoes for Nike. Apple, Nike and VW all provided statements to the Guardian, the TLDR of which is they all remain committed to the highest standards of supply chain integrity and that use of forced labour is banned by them. (Personal note to the above: This can seriously damage a company's credibility with CSR - corporate social responsibility. Another example was with the major UK supermarket Tesco in the run up to last Christmas; a six year old girl opened a box of cards to discover a plea for help inside them saying "We are foreign prisoners in Shanghai Qinqpu prison China*. Forced to work against our will. Please help us and notify human rights organization.”* Link to a story on that particular incident for anyone interested).

Supply chain specifics update

Largest annual container shipping event cancelled just hours before opening - Splash247 reports (link) that TPM, which was expected to attract 2,400 delegates from around the world - was cancelled just hours before it was scheduled to begin, citing the deteriorating situation with regards to the virus.

Disrupted supply of goods from China hurting Eastern Africa - Another example of how China exports all over the world; the key seaport of Mombasa in Kenya reports that four big cargo ships that ply the seas back and forth between China and East Africa have failed to dock for the second month in the row. The port is the gateway for cargo imports and exports for Kenya, Tanzania, Uganda, South Sudan, Rwanda as well as parts of Ethiopia and the DRC. The article goes on to discuss impact to air cargo traffic (Kenyan Airlines has lost $8m USD in revenues so far) while multiple other African airlines have also cancelled flights to China Link

West Africa also experiencing the same problems - Leadership magazine in Nigeria reports (Link) that the seafreight disruption is costing an estimated 1bn Naira per day (approx $2.7m USD). Port calls fell an estimated 30% in February with some importers afraid to receive cargoes that have arrived from China. Oil prices also dropping significantly which will add to the economic problems in the country - they account for 2/3 of state revenues (source: FT, behind paywall)

iPhone camera supplier closes South Korean factory due to infections - The LG Innotek factory that supplies iPhone camera modules has closed in Gumi, South Korea after the first case of coronavirus was discovered in the workforce, delivering yet another blow to the Apple supply chain says AppleInsider (link). The factory is known to provide camera modules for the iPhone 11 although whether it's involved in production for the iPhone 12 is not known (if that's the case, it may impact the launch date of the iPhone 12). The factory hopes to reopen tomorrow (Tuesday).

Indian automotives getting hit by parts shortages - the Indian newspaper Deccan Herald reports that Tata, M&M and MG are reporting shortages of automotive parts due to the virus outbreak (link) with a senior executive at M&M quoted as saying the shortages are expected to last for several more weeks at a minimum.

Other automotives setting up war rooms - CNBC says (link) that several automotives have set up specialist "war rooms" to work to keep automotive parts rolling into factories to avoid expensive stoppages. The CEO of Llamasoft, a specialist analytics supply chain firm said that it too had followed suit after a large influx of requests for help from their clients which include Detroit automotives, Boeing, and Walmart. They provide an example where they helped a client find an alternative brake pads supplier within 48 hours and airfreighted four weeks supply.

Global and domestic travel freeze for non essential travel for Amazon employees - Multiple sources including techrepublic (link) are reporting that Amazon has banned non essential travel both domestically and internationally until the beginning of April at the earliest. Google has taken a softer approach, for now banning travel for its employees only to those countries/areas with significant outbreaks. The list of cancelled tech expo/events continues to grow; these include F8, MWC, Facebook's annual marketing conference, DEF CON China amongst others.

American supermarkets preparing for surge in demand in staple food and cleaning products - the WSJ reports (link) that various supermarket firms in the US are ramping up efforts to keep products in stock amid an expected jump in demand particularly for hand sanitizer, tissues, disinfectants and other related products. (Personal note: shortages for now appear to be limited, I'm not seeing reports of significant issues in the US).

American surgeon general pleads with the public to stop buying masks - The NY Times reports (link) that Jerome Adams has asked the general public to stop buying masks to avoid exacerbating the shortages (personal note: this is a classic example of the bullwhip effect mentioned before). “Seriously people — STOP BUYING MASKS!” the surgeon general, Jerome M. Adams, said in a tweet on Saturday morning. “They are NOT effective in preventing general public from catching #Coronavirus, but if health care providers can’t get them to care for sick patients, it puts them and our communities at risk!”. The WHO said on Friday that there is now severe strains on supply chains for healthcare protective equipment around the world. The article adds that price gouging is now starting to become a problem.

For the benefit of any Americans worried about drugs shortages - I found the FDA list here.

Cannabis supply chain also affected - Bloomberg reports (link) that Cannabis retailers in North America are being affected by products shortages. Curaleaf Holdings Inc., the largest U.S. cannabis company by market value, recently stocked up on about $2 million worth of vapes from a U.S. supplier, which should last it about five months, Executive Chairman Boris Jordan said in an interview, adding he expected competitors to run out of stock soon. Margins are thin in the industry, and there is the possibility of a shake up with raw material prices going up. Jordan expects the situation to return to normal by April.

Port of Los Angeles Sees 25% Decrease of Expected Feb. 2020 Traffic - An article by the Wall Street Journal (Link) that the port expects volumes to be 25% down vs February last year meaning 176,000 fewer containers passing through the port. This is leading to empty containers and exports piling up adding to the congestion problems.
EDIT: Corrected FDA link.
submitted by Fwoggie2 to supplychain [link] [comments]

[Austria] The one broker choice thread to finish them all

Servus to all personal finance gurus - I just wanted to ask for your advice and open a bit of a discussion regarding best brokers available in Austria for different uses. I am breaking this post down into three main parts - best brokers for ETFs, casual long-term investment into stocks and day trading. In the future, I personally anticipate all three uses for myself, with a money distribution of something like 65/30/5 percent.
For each of the uses, I am listing the main priorities I have identified and the broker of choice - however, this list is by no means final, and I would very much like to listen to your thoughts and considerations on the matter!
1. ETF broker (looking to invest consistently in S&P + EM, as well as time-to-time into thematic ETFs such as AI, Machine learning etc.) - Flatex
What I prioritise:
Other existing options: conventional banks like Erste (too expensive), Trade Republic (has a Sparplan, still not open in Austria, not steuereinfach), DADAT/Hello Bank (too few ETFs to choose from)

2. Long-term stock portfolio broker (to invest consistently in a portfolio of 10-15 companies for a long term, with sums under 1000EUR pro transaction) - Degiro or Trading 212? Both non-steuereinfach, both low-cost (T212 is no-commission) - which would you recommend and why? (or maybe even Flatex?)
What I prioritise:
Other existing options: Flatex (steuereinfach, but expensive (up to 5,90 per trade)), Revolut (using it currently, but the spreads seem bad, there are no limit orders etc., there are reports of users getting locked out for weeks, as well as reports of app malfunctioning when trading volumes go up), Interactive Brokers (Inactivity fees).

3. Day-trading or option broker (looking to have some fun with trading on short term-basis, ready to lose the entire deposit for the sake of learning) - Trading 212
What I prioritise:
Other existing options: Flatex (steuereinfach and has a day trader flat fee account), Interactive brokers (seems very 1990s from their website), Degiro (almost the same as T212, seems to have a more limited CFD/options array, short position and leverage fees are higher)
  1. Bonus level - Crypto trading (never tried yet, may be up for some signal-based day trading + a small speculative investments portfolio) - Binance. Priorities: a secure platform + low fees.

I would be incredibly grateful for any analysis / critique of the above - and let’s together make the definitive list that all our Austrian co-redditors could use!
submitted by a-rain-in-rotterdam to Finanzen [link] [comments]

Sweden’s Famously Stealthy Submarine Is Now Even Quieter

Go Sweden! Thanks for that job done!
What's the difference inSweden and Switzerland. Switzerland has an economy more like The United States. They complain over there that the Franc is overvalued and they are not paid enough to live. Sweden has progressive taxation and income distribution and has a more stabler economy because of it. Stockholm is the Capital of Sweden since 1523 A.D. It shares the Scandinavian Peninsula with Norway. Coming up is the Difference between Norway and Normandy.
Here's a map of Sweden and Norway:

Location of Sweden Map from Encyclopedia Britannica Online.
Encyclopedia Britannica States," The country has a 1,000-year-long continuous history as a sovereign state, but its territorial expanse changed often until 1809. Today it is a constitutional monarchy with a well-established parliamentary democracy that dates from 1917. Swedish society is ethnically and religiously very homogeneous, although recent immigration has created some social diversity. Historically, Sweden rose from backwardness and poverty into a highly developed postindustrial society and advanced welfare state with a standard of living and life expectancy that rank among the highest in the world. "
Here are the Facts of Sweden according to Merriam-Webster:
Official Name: Konungariket Sverige (Kingdom of Sweden)
Form Of Government: constitutional monarchy with one legislative house (Riksdag, or Parliament [349])
Head Of State: King: Carl XVI Gustaf
Head Of Government: Prime Minister: Stefan Löfven
Capital: Stockholm
Official Language: Swedish
Official Religion: none
Monetary Unit: Swedish krona (SEK)
Currency Exchange Rate:
1 USD equals 9.879 Swedish krona
Population:
(2019 est.) 10,284,000
Population Rank:
(2018) 89
Population Projection 2030:
11,261,000
Total Area (Sq Mi)**172,750
Total Area (Sq Km)**447,420
Density: Persons Per Sq Mi(2018) 64.7
Density: Persons Per Sq Km(2018) 25
Urban-Rural Population:
Urban: (2018) 87.4%
Rural: (2018) 12.6%
Life Expectancy At Birth:
Male: (2017) 80.7 years
Female: (2017) 84.1 years
Literacy: Percentage Of Population Age 15 And Over:
Male: 100%
Female: (2008) 100%
GNI (U.S.$ ’000,000)
(2017) 529,460
GNI Per Capita (U.S.$)
(2017) 52,590
Here's what The CIA World FactBook has to say about Sweden: (Here are some highlights):
Sweden’s small, open, and competitive economy has been thriving and Sweden has achieved an enviable standard of living with its combination of free-market capitalism and extensive welfare benefits. Sweden remains outside the euro zone largely out of concern that joining the European Economic and Monetary Union would diminish the country’s sovereignty over its welfare system.
Timber, hydropower, and iron ore constitute the resource base of a manufacturing economy that relies heavily on foreign trade. Exports, including engines and other machines, motor vehicles, and telecommunications equipment, account for more than 44% of GDP. Sweden enjoys a current account surplus of about 5% of GDP, which is one of the highest margins in Europe.
GDP grew an estimated 3.3% in 2016 and 2017 driven largely by investment in the construction sector. Swedish economists expect economic growth to ease slightly in the coming years as this investment subsides. Global economic growth boosted exports of Swedish manufactures further, helping drive domestic economic growth in 2017. The Central Bank is keeping an eye on deflationary pressures and bank observers expect it to maintain an expansionary monetary policy in 2018. Swedish prices and wages have grown only slightly over the past few years, helping to support the country’s competitiveness.
In the short and medium term, Sweden’s economic challenges include providing affordable housing and successfully integrating migrants into the labor market.
Agriculture - products:
This entry is an ordered listing of major crops and products starting with the most important.
barley, wheat, sugar beets; meat, milk
Industries:
This entry provides a rank ordering of industries starting with the largest by value of annual output.
iron and steel, precision equipment (bearings, radio and telephone parts, armaments), wood pulp and paper products, processed foods, motor vehicles
Unemployment rate:This entry contains the percent of the labor force that is without jobs. Substantial underemployment might be noted.
6.7% (2017 est.)7% (2016 est.)country comparison to the world: 101
Population below poverty line:National estimates of the percentage of the population falling below the poverty line are based on surveys of sub-groups, with the results weighted by the number of people in each group. Definitions of poverty vary considerably among nations. For example, rich nations generally employ more generous standards of poverty than poor nations.
15% (2014 est.)
Household income or consumption by percentage share:Data on household income or consumption come from household surveys, the results adjusted for household size. Nations use different standards and procedures in collecting and adjusting the data. Surveys based on income will normally show a more unequal distribution than surveys based on consumption. The quality of surveys is improving with time, yet caution is still necessary in making inter-country comparisons.
lowest 10%: 3.4%highest 10%: 24% (2012)
Budget:This entry includes revenues, expenditures, and capital expenditures. These figures are calculated on an exchange rate basis, i.e., not in purchasing power parity (PPP) terms.
revenues: 271.2 billion (2017 est.)expenditures: 264.4 billion (2017 est.)
Taxes and other revenues:This entry records total taxes and other revenues received by the national government during the time period indicated, expressed as a percent of GDP. Taxes include personal and corporate income taxes, value added taxes, excise taxes, and tariffs. Other revenues include social contributions - such as payments for social security and hospital insurance - grants, and net revenues from public enterprises. Normalizing the data, by dividing total revenues by GDP, enables easy comparisons acr . . . more
50.6% (of GDP) (2017 est.)

Now for Switzerland:

Map of Switzerland
It's rights next to France and Austria and is the size of Half of Scotland according to Encyclopedia Britannica online; This map is from their page.
According to Merriam-Webster:
Dialing code: +41
Population: 8.57 million (2019)
Currency: Swiss franc
Swit·​zer·​land | \ ˈswit-sər-lənd \variants: or French Suisse \ ˈswʸēs \ or German Schweiz \ ˈshvīts \ or Italian Svizzera \ ˈzvēt-​tsā-​rä \ or Latin Helvetia \ hel-​ˈvē-​sh(ē-​)ə \

Definition of Switzerland

landlocked country (a federal republic) in western Europe in the Alps; capital Bern area 15,937 square miles (41,277 square kilometers), population 8,293,000
see also SWISS entry 1 sense 1
Britannica states: " For many outsiders, Switzerland also evokes a prosperous if rather staid and unexciting society, an image that is now dated. Switzerland remains wealthy and orderly, but its mountain-walled valleys are far more likely to echo the music of a local rock band than a yodel or an alphorn. Most Swiss live in towns and cities, not in the idyllic rural landscapes that captivated the world through Johanna Spyri’s Heidi (1880–81), the country’s best-known literary work. Switzerland’s cities have emerged as international centres of industry and commerce connected to the larger world, a very different tenor from Switzerland’s isolated, more inward-looking past. As a consequence of its remarkably long-lived stability and carefully guarded neutrality, Switzerland—Geneva, in particular—has been selected as headquarters for a wide array of governmental and nongovernmental organizations, including many associated with the United Nations (UN)—an organization the Swiss resisted joining until the early 21st century. "
According to CIA"S World Factbook. Switzerland's Economy is as such:
Switzerland, a country that espouses neutrality, is a prosperous and modern market economy with low unemployment, a highly skilled labor force, and a per capita GDP among the highest in the world. Switzerland's economy benefits from a highly developed service sector, led by financial services, and a manufacturing industry that specializes in high-technology, knowledge-based production. Its economic and political stability, transparent legal system, exceptional infrastructure, efficient capital markets, and low corporate tax rates also make Switzerland one of the world's most competitive economies.
The Swiss have brought their economic practices largely into conformity with the EU's to gain access to the Union’s Single Market and enhance the country’s international competitiveness. Some trade protectionism remains, however, particularly for its small agricultural sector. The fate of the Swiss economy is tightly linked to that of its neighbors in the euro zone, which purchases half of Swiss exports. The global financial crisis of 2008 and resulting economic downturn in 2009 stalled demand for Swiss exports and put Switzerland into a recession. During this period, the Swiss National Bank (SNB) implemented a zero-interest rate policy to boost the economy, as well as to prevent appreciation of the franc, and Switzerland's economy began to recover in 2010.
The sovereign debt crises unfolding in neighboring euro-zone countries, however, coupled with economic instability in Russia and other Eastern European economies drove up demand for the Swiss franc by investors seeking a safehaven currency. In January 2015, the SNB abandoned the Swiss franc’s peg to the euro, roiling global currency markets and making active SNB intervention a necessary hallmark of present-day Swiss monetary policy. The independent SNB has upheld its zero interest rate policy and conducted major market interventions to prevent further appreciation of the Swiss franc, but parliamentarians have urged it to do more to weaken the currency. The franc's strength has made Swiss exports less competitive and weakened the country's growth outlook; GDP growth fell below 2% per year from 2011 through 2017.
In recent years, Switzerland has responded to increasing pressure from neighboring countries and trading partners to reform its banking secrecy laws, by agreeing to conform to OECD regulations on administrative assistance in tax matters, including tax evasion. The Swiss Government has also renegotiated its double taxation agreements with numerous countries, including the US, to incorporate OECD standards.
GDP (purchasing power parity)
$523.1 billion (2017 est.)
$514.5 billion (2016 est.)
$506.5 billion (2015 est.)
note: data are in 2017 dollars
GDP (official exchange rate)
$679 billion (2017 est.)
GDP - per capita (PPP):
$62,100 (2017 est.)
$61,800 (2016 est.)
$61,500 (2015 est.)
note: data are in 2017 dollars
Gross national saving:
33.8% of GDP (2017 est.)
32.3% of GDP (2016 est.)
33.9% of GDP (2015 est.)
GDP - composition, by end use: 53.7% (2017 est.)
government consumption: 12% (2017 est.)
investment in fixed capital: 24.5% (2017 est.)
investment in inventories: -1.4% (2017 est.)
exports of goods and services: 65.1% (2017 est.)
imports of goods and services: -54% (2017 est.)
GDP - composition, by sector of origin:
agriculture: 0.7% (2017 est.)
industry: 25.6% (2017 est.)
services: 73.7% (2017 est.)
Agriculture - products: grains, fruits, vegetables; meat, eggs, dairy products
Industries: machinery, chemicals, watches, textiles, precision instruments, tourism, banking, insurance, pharmaceuticals
Industrial production growth rate: 3.4% (2017 est.)
country comparison to the world:92
Labor force**:**5.159 million (2017 est.)
country comparison to the world:81
Labor force - by occupation:
agriculture: 3.3%
industry: 19.8%
services: 76.9% (2015)
Unemployment rate:
3.2% (2017 est.)
3.3% (2016 est.)
country comparison to the world: 40
Population below poverty line:
6.6% (2014 est.)
Household income or consumption by percentage share:
lowest 10%: 7.5%
highest 10%: 19% (2007)
Budget:
revenues: 242.1 billion (2017 est.)
expenditures: 234.4 billion (2017 est.)
note: includes federal, cantonal, and municipal budgets
Taxes and other revenues:
35.7% (of GDP) (2017 est.)
country comparison to the world: 60
Budget surplus (+) or deficit (-):
1.1% (of GDP) (2017 est.)
country comparison to the world: 33
Public debt:
41.8% of GDP (2017 est.)
41.8% of GDP (2016 est.)
note: general government gross debt; gross debt consists of all liabilities that require payment or payments of interest and/or principal by the debtor to the creditor at a date or dates in the future; includes debt liabilities in the form of Special Drawing Rights (SDRs), currency and deposits, debt securities, loans, insurance, pensions and standardized guarantee schemes, and other accounts payable; all liabilities in the GFSM (Government Financial Systems Manual) 2001 system are debt, except for equity and investment fund shares and financial derivatives and employee stock options
country comparison to the world: 119
Fiscal year:
Inflation rate (consumer prices):
0.5% (2017 est.)
-0.4% (2016 est.)
country comparison to the world: 30
Current account balance:
$66.55 billion (2017 est.)$63.16 billion (2016 est.)
country comparison to the world: 7
Exports:
$313.5 billion (2017 est.)
$318.1 billion (2016 est.)
note: trade data exclude trade with Switzerland
country comparison to the world: 17
Exports - partners:
Germany 15.2%
US 12.3%
China 8.2
%India 6.7%
France 5.7%
UK 5.7%
Hong Kong 5.4%
Italy 5.3%
(2017)
Exports - commodities:
machinery, chemicals, metals, watches, agricultural products
Imports:
$264.5 billion (2017 est.)
$266.3 billion (2016 est.)
country comparison to the world: 18
Imports - commodities:
machinery, chemicals, vehicles, metals; agricultural products, textiles
Imports - partners:
Germany 20.9%, US 7.9%
Italy 7.6%, UK 7.3%
France 6.8%
China 5%
(2017)
Reserves of foreign exchange and gold:
$811.2 billion (31 December 2017 est.)
$679.3 billion (31 December 2016 est.)
country comparison to the world: 3
Debt - external:.
$1.664 trillion (31 March 2016 est.)
$1.663 trillion (31 March 2015 est.)
country comparison to the world: 12
Exchange rates:
Swiss francs (CHF) per US dollar -0.9875 (2017 est.)
0.9852 (2016 est.)0.9852 (2015 est.)
0.9627 (2014 est.)
0.9152 (2013 est.)
And their Military is such as CIA states:
Military expenditures**:This entry gives spending on defense programs for the most recent year available as a percent of gross domestic product (GDP); the GDP is calculated on an exchange rate basis, i.e., not in terms of purchasing power parity (PPP). For countries with no military forces, this figure can include expenditures on public security and police.
0.68% of GDP (2018)0.68% of GDP (2017)0.68% of GDP (2016)0.66% of GDP (2015)0.66% of GDP (2014)country comparison to the world: 138
Military and security forces**:This entry lists the military and security forces subordinate to defense ministries or the equivalent (typically ground, naval, air, and marine forces), as well as those belonging to interior ministries or the equivalent (typically gendarmeries, bordecoast guards, paramilitary police, and other internal security forces).
Swiss Armed Forces: Land Forces, Swiss Air Force (Schweizer Luftwaffe) (2019)
Military service age and obligation**:This entry gives the required ages for voluntary or conscript military service and the length of service obligation.
18-30 years of age generally for male compulsory military service; 18 years of age for voluntary male and female military service; every Swiss male has to serve at least 245 days in the armed forces; conscripts receive 18 weeks of mandatory training, followed by six 19-day intermittent recalls for training during the next 10 years (2019)
Refugees and internally displaced persons:
refugees (country of origin):
34,072 (Eritrea)
16,565 (Syria)
12,282 (Afghanistan)
5,744 (Sri Lanka) (2018)
stateless persons:
49 (2018)
Illicit drugs
a major international financial center vulnerable to the layering and integration stages of money laundering; despite significant legislation and reporting requirements, secrecy rules persist and nonresidents are permitted to conduct business through offshore entities and various intermediaries; transit country for and consumer of South American cocaine, Southwest Asian heroin, and Western European synthetics; domestic cannabis cultivation and limited ecstasy production.
Here's an article about an International Dispute with the European Union (EU): https://www.express.co.uk/news/world/1283471/eu-news-switzerland-rejected-membership-bloc-twice-spt
When looking to solve problems with countries, look at their economy and study it.



submitted by jeskalana to u/jeskalana [link] [comments]

[Austria] The one broker choice thread to finish them all

Servus to all personal finance gurus - I just wanted to ask for your advice and open a bit of a discussion regarding best brokers available in Austria for different uses. I am breaking this post down into three main parts - best brokers for ETFs, casual long-term investment into stocks and day trading. In the future, I personally anticipate all three uses for myself, with a money distribution of something like 65/30/5 percent.
For each of the uses, I am listing the main priorities I have identified and the broker of choice - however, this list is by no means final, and I would very much like to listen to your thoughts and considerations on the matter!
1. ETF broker (looking to invest consistently in S&P + EM, as well as time-to-time into thematic ETFs such as AI, Machine learning etc.) - Flatex
What I prioritise:
Other existing options: conventional banks like Erste (too expensive), Trade Republic (has a Sparplan, still not open in Austria, not steuereinfach), DADAT/Hello Bank (too few ETFs to choose from)

2. Long-term stock portfolio broker (to invest consistently in a portfolio of 10-15 companies for a long term, with sums under 1000EUR pro transaction) - Degiro or Trading 212? Both non-steuereinfach, both low-cost (T212 is no-commission) - which would you recommend and why? (or maybe even Flatex?)
What I prioritise:
Other existing options: Flatex (steuereinfach, but expensive (up to 5,90 per trade)), Revolut (using it currently, but the spreads seem bad, there are no limit orders etc., there are reports of users getting locked out for weeks, as well as reports of app malfunctioning when trading volumes go up), Interactive Brokers (Inactivity fees).

3. Day-trading or option broker (looking to have some fun with trading on short term-basis, ready to lose the entire deposit for the sake of learning) - Trading 212
What I prioritise:
Other existing options: Flatex (steuereinfach and has a day trader flat fee account), Interactive brokers (seems very 1990s from their website), Degiro (almost the same as T212, seems to have a more limited CFD/options array, short position and leverage fees are higher)
  1. Bonus level - Crypto trading (never tried yet, may be up for some signal-based day trading + a small speculative investments portfolio) - Binance. Priorities: a secure platform + low fees.

I would be incredibly grateful for any analysis / critique of the above - and let’s together make the definitive list that all our Austrian co-redditors could use!
submitted by a-rain-in-rotterdam to eupersonalfinance [link] [comments]

Help - I don't know what broker to choose

I have a custody account on DeGiro and I have been investing in some ETFs for almost 2 years, now I want to diversify between platforms so I am thinking to open a new account and also because now I'm living in Denmark (DeGiro is available) but I'm planning to move back to Romania.
I am looking for a broker that has low/free fees, is well established and has a big variety of stocks/bonds and ETFs.
I read some reviews about Interactive Brokers and Trading 212 but I feel I'm missing something.
So my questions for you guys are:
1) What are the fees that you pay with your broker ?
2) Can I have a cash account on Trading 212 (I do not want to use margin) ?
3) What broker do you recommend for long term (10+ years) investment?
4) Can I buy fractional share on a cash account on IB?
5) Are there any "hidden fees" on IB or T212?
submitted by radugeorgee to eupersonalfinance [link] [comments]

Wall Street Week Ahead for the trading week beginning August 26th, 2019

Good Saturday morning to all of you here on stocks. I hope everyone on this sub made out pretty nicely in the market this past week, and is ready for the new trading week ahead.
Here is everything you need to know to get you ready for the trading week beginning August 26th, 2019.

Week ahead: Stocks could be rocky on trade, economy fears, as August breaks low volatility streak - (Source)

The final week of August — the bittersweet end of summer for many— could be highly volatile, as markets fret over the economy and the latest developments in trade wars.
President Donald Trump joins the G-7 leaders in France over the weekend, and markets will be watching to see if the meeting exposes new fault lines in the shaky relations among a once fairly congenial leadership group that fought the Great Recession together. Trump is expected to discuss the U.S. economy and highlight the U.S. pro-jobs, pro-growth agenda, under his leadership.
The U.S. trade war with China escalated sharply in the past week, with a new round of tariffs from China on U.S. goods announced Friday and new threats from Trump, who “ordered” American companies to find alternatives to China. That immediately triggered speculation that the trade war will be extended and more contentious, and the U.S. economy risks falling into recession.
After the close Friday, Trump retaliated against China’s tariffs by raising existing tariffs on $250 billion in Chinese goods to 30% from 25%, as of Oct. 1. In a tweet, he also said he was raising new tariffs on $300 billion in Chinese goods that have not yet gone into effect to 15% from 10%.
Friday’s trading was volatile, and stocks fell by about 2.5%, erasing what would have been a second positive week for the market. Treasury yields, which move opposite price, continued to go lower amid worries about the economy and fears the Fed will not act aggressively enough to head off a recession.
Stocks have been volatile, and the S&P 500 is down about 4.5% in the month of August.
Michael Arone, State Street Advisors chief investment strategist said the first seven months of the year were more certain for investors in terms of their expectations for Fed rate cuts and a possible trade deal. But the trade tensions have worsened, and the trade war could escalate even further.
Fed Chairman Jerome Powell spoke at Jackson Hole Friday morning, but while he left the door open for rate cuts, he did not explicitly promise rate cuts.
“The Fed has become a lot less certain. Until we get more clarity, you’re likely to see this volatility, and stocks will trade sideways,” Arone said. Even though corporate earnings weakened, “investors took a big leap of faith in the first seven months of the year, expecting both a trade deal and monetary policy easing.”
The escalation of the trade war makes a deal unlikely anytime soon. This, however, did drive market expectations for rate cuts higher Friday afternoon, and the market was expecting three more cuts this year.
Trump tied his feuds with China and the Fed together Friday, when he tweeted that the Fed is not helping with easier rate policy, along with a question about “who is the bigger enemy” — China President Xi Jinping or Fed Chairman Jerome Powell.
“I think the Fed is in uncharted territory, and I continue to have empathy for Chairman Powell. I think markets want faster and more aggressive policy. He’s dealing with challenges the Fed has never had,” said Arone.
”[Powell] is literally walking a tight rope. He has the president who is daily bashing him,” he said. “Bond markets are demanding a much greater number of rate cuts, and he’s got geopolitical challenges, whether it’s Brexit or trade. He’s also got dissension among Fed voting members. That’s a lot to balance.”
There is some important data in the coming week, including durable goods Monday and personal spending and consumption data Friday, which also includes the PCE deflator, the Fed’s preferred inflation indicator.
“The data will give us some indications on business spending. Durable goods has capital expenditure orders. It looks look consumer confidence will come out [Tuesday] as well,” Arone said. Business spending has been taking a hit from the trade wars, and economists are concerned it will continue to weaken, ultimately leading to weakness in the consumer economy.
The week ahead could see some swings ahead of the long Labor Day Holiday weekend. “Given high absentees and low volumes, my guess is it’s going to add to volatility,” said Arone.
Frank Cappelleri, Nomura executive director, said he also expects volatility, and the S&P could test the outer limits of its recent range.
Of the 17 trading days this month, nine of them saw absolute 1% moves in the S&P 500. The last time that occurred was in December, when there were 10 days with 1% moves, according to Cappelleri. The most in one month was February, 2018 when there were 12. Contrast that to the entire year of 2017, when there were just eight.
Friday’s action was volatile, and the S&P 500 was down as much as 3%.
“This is the third-biggest decline we’ve had this month. Each of them started within 10 points of each other, near the top of the range,” said Cappelleri. The top of the range is 2,943, its Aug. 13 high, and the bottom is 2,820, near the Aug. 5 low.
“We’re obviously still in a trading range that has been characterized by sharp moves and acute turns, so I think when we had that initial drop on Aug. 5, the question is where is it going to stop,” he said, adding traders are watching that Aug. 5 level to see if it will act as a floor.

This past week saw the following moves in the S&P:

(CLICK HERE FOR THE FULL S&P TREE MAP FOR THE PAST WEEK!)

Major Indices for this past week:

(CLICK HERE FOR THE MAJOR INDICES FOR THE PAST WEEK!)

Major Futures Markets as of Friday's close:

(CLICK HERE FOR THE MAJOR FUTURES INDICES AS OF FRIDAY!)

Economic Calendar for the Week Ahead:

(CLICK HERE FOR THE FULL ECONOMIC CALENDAR FOR THE WEEK AHEAD!)

Sector Performance WTD, MTD, YTD:

(CLICK HERE FOR FRIDAY'S PERFORMANCE!)
(CLICK HERE FOR THE WEEK-TO-DATE PERFORMANCE!)
(CLICK HERE FOR THE MONTH-TO-DATE PERFORMANCE!)
(CLICK HERE FOR THE 3-MONTH PERFORMANCE!)
(CLICK HERE FOR THE YEAR-TO-DATE PERFORMANCE!)
(CLICK HERE FOR THE 52-WEEK PERFORMANCE!)

Percentage Changes for the Major Indices, WTD, MTD, QTD, YTD as of Friday's close:

(CLICK HERE FOR THE CHART!)

S&P Sectors for the Past Week:

(CLICK HERE FOR THE CHART!)

Major Indices Pullback/Correction Levels as of Friday's close:

(CLICK HERE FOR THE CHART!

Major Indices Rally Levels as of Friday's close:

(CLICK HERE FOR THE CHART!)

Most Anticipated Earnings Releases for this week:

(CLICK HERE FOR THE CHART!)

Here are the upcoming IPO's for this week:

([CLICK HERE FOR THE CHART!]())
(NONE SCHEDULED FOR THIS WEEK.)

Friday's Stock Analyst Upgrades & Downgrades:

(CLICK HERE FOR THE CHART LINK #1!)
(CLICK HERE FOR THE CHART LINK #2!)

Second Half August Trading: Historically Weak Too

Following three straight days of gains, the market has recovered a sizable portion of its losses from earlier in the month. Losses earlier in the month and gains over the past three days (prior to today) have tracked August’s typical trading pattern for over the last 21-years quite closely. The magnitude of the moves this year has been larger than average, but the pattern has been tracked.
Due to the magnitude of this year’s moves, August’s performance over the past 21-years has been plotted on the left vertical axis in the chart above and 2019 is plotted on the right. From right around mid-month or now through the end of August, the historical trend has been weaker. DJIA, S&P 500, NASDAQ, Russell 1000 and 2000 have all averaged a loss in August from 1998 to 2018 and they are on track to repeat this year.
(CLICK HERE FOR THE CHART!)

Is a Small-Cap Labor Day Rally Coming Soon

In the below chart, forty years of daily data for the Russell 2000 index of smaller companies are divided by the Russell 1000 index of largest companies, and then compressed into a single year to show an idealized yearly pattern. When the graph is descending, large-cap companies are outperforming small-cap companies; when the graph is rising, smaller companies are moving up faster than their larger brethren. The most prominent period of outperformance generally begins in mid-December and lasts until late-February or early March with a surge in January. This period of outperformance by small-caps is known as the “January Effect” in the annual Stock Trader’s Almanac.
(CLICK HERE FOR THE CHART!)
In recent years, another sizable move is quite evident just before Labor Day. One possible explanation for this move is individual investors begin to return to work after summertime vacations and are searching for “bargain” stocks. In a typical year, small-caps would have been lagging and could represent an opportunity relative to other large-cap possibilities. As of Friday’s close (August 16, 2019), Russell 2000 is up 10.8% compared to the Russell 1000 being up 15.5% year-to-date. Lagging small-caps and resilient U.S. consumers could be the ideal setup for a repeat of this pattern this year. However, the small-cap advantage does historically wane around mid-September.

September Almanac: No Respite in Pre-Election Years

The start of business year, end of summer vacations, and back to school made September a leading barometer month in first 60 years of 20th century, now portfolio managers back after Labor Day tend to clean house Since 1950, September is the worst performing month of the year for DJIA, S&P 500, NASDAQ (since 1971) and Russell 1000 (since 1979). Sizable gains in September 2012, 2013 and 2017 have lifted Russell 2000 to second worst (since 1979). September was creamed four years straight from 1999-2002 after four solid years from 1995-1998 during the dot.com bubble madness. September gets no respite from positive pre-election year forces.
(CLICK HERE FOR THE CHART!)
Although the month used to open strong, S&P 500 has declined eight times in the last eleven years on the first trading day. As tans begin to fade and the new school year begins, fund managers tend to sell underperforming positions as the end of the third quarter approaches, causing some nasty selloffs near month-end over the years. Recent substantial declines occurred following the terrorist attacks in 2001 (DJIA: –11.1%), 2002 (DJIA –12.4%), the collapse of Lehman Brothers in 2008 (DJIA: –6.0%) and U.S. debt ceiling debacle in 2011 (DJIA –6.0%). However, September is improving with S&P 500 advancing in ten of the last 15 Septembers and DJIA climbing in nine.

Leading Indicators Signal Growth Ahead

U.S. leading indicators rebounded in July, a good sign for the durability of the expansion.
The Conference Board’s Leading Economic Index (LEI) rose 0.5% month over month, the biggest gain since September 2018, and above consensus expectations for a 0.3% increase. As shown in the LPL Chart of the Day, Leading Indicators Slowing But Growing, the LEI climbed 1.6% year over year.
(CLICK HERE FOR THE CHART!)
The LEI, which we include as one of the “Five Forecasters” of our Recession Watch Dashboard, has yet to turn negative this cycle. The index has fallen negative year over year before all nine recessions since 1955.
“Some investors have pointed out slowing LEI growth as a reason for caution,” said LPL Financial Chief Investment Strategist John Lynch. “However, the LEI is signaling moderate U.S. economic growth ahead, with no signs of an imminent recession.”
The LEI is calculated from 10 individual leading data sets, including weekly jobless claims, building permits, and stock prices. This year, the majority of LEI components have boosted month-over-month growth in the index, but more internationally exposed data sets have turned into net drags.
In July, 6 of 10 components rose month over month, but four components—average hours worked, manufacturers’ new orders, new orders for nondefense capital spending, and interest rate spreads—fell month over month. Historically, breadth in LEI components has deteriorated further before a recession began. In contrast, at the end of each of the past six economic cycles, more than half of the LEI components were in decline.
While evidence of slowing growth in leading indicators is disappointing, we are encouraged by what we see outside of manufacturing. Global manufacturing has been the sector hardest hit by prolonged trade tensions and weakened demand, and we don’t expect to see much improvement until a U.S.-China trade resolution is reached. Even then, a recovery in manufacturing may take some time.

Crude Oil's Descending Triangle

Earlier this week, crude oil was trading well over 2% higher than last Friday's close. Over the past few sessions, though, oil has given up all of those gains. The catalyst for today's declines are the Chinese retaliatory tariffs on US crude which are expected to dampen demand. This week's negative reversal comes as the commodity ran into multiple points of resistance. For starters, the rally began to stall out mid-week when it met the converging 200 and 50-day moving averages. This also coincided with a downtrend that traces itself all the way back to the highs from late last year. In fact, crude is down around 30% from these previous highs.
Overall, the technical picture for crude oil is not in a great place as the chart is forming a descending triangle pattern. Despite the big gains at the beginning of 2019, over the past few months, crude has been making consistent lower highs and lower lows. Given this most recent failure to retake the moving averages and break out of the downtrend, the next major support level to watch is around $50 which is a level that has held up at multiple times in the past few months. This support also draws back to late last year prior to the collapse in December.
(CLICK HERE FOR THE CHART!)

Yield Curves: Another Record Streak Bites the Dust

After the 3-month vs 10-year US Treasury yield curve first inverted earlier this year, the market has shifted its focus to the 2-year vs 10-year part of the curve which had yet to reach inverted levels. That was, until yesterday. While the 10s2s curve flirted with inverted territory for the last few days on an intraday basis, Thursday was the first time in more than a decade that the closing yield on the two-year US Treasury was above the yield on the 10-year. And with another closely watched part of the curve moving into inverted levels, recession fears increased.
(CLICK HERE FOR THE CHART!)
As the chart above illustrates, it has been a while since the 10s2s curve was inverted. In fact, the streak that just ended was the longest on record going back to 1977, and it wasn't even close. Going back to 1977, there have only been three prior streaks where the 10s2s curve was inverted for more than 1,000 days, and never before had the curve been positively sloped for more than 2,000 days. The current streak, though? 3,054 days. It was fun while it lasted!
(CLICK HERE FOR THE CHART!)

Adapt or Die

A common characteristic of most investors and traders is to always be on the lookout for patterns and connections between various asset classes. Whenever one correlated asset confirms the move in another it adds a layer of confidence to an investor's thesis. One long-held example is the Dow Transports as a leading or coincident indicator for the broader market. For decades now, many investors have followed the transports for confirmation of the broader market moves. If the transports — which move all of the physical goods in the economy — rally, it suggests that the broader market will be strong, while periods when the transports start to roll over are read as a signal that there's an underlying weakness in the economy.
As the US economy has become more service and digital-oriented in nature, there has been a valid argument made that the transports have lost some of their importance as an indicator of the broader economy. Along these lines, we have suggested that rather than transports, semiconductors may represent this century's 'transports' as they are a part of just about everything in this digital age. Whether you agree with this or not isn't important, but the important takeaway is that just because two asset classes have been highly correlated in the past doesn't mean that they will remain that way in the future. It's one thing to recognize a correlation between two asset classes, but it's much more important to understand why they are correlated and be on the lookout for factors that may change the status quo in the future.
One example of a radical change in a relationship between two asset classes is the interaction between the relative strength of growth and value stocks versus the slope of the yield curve. From 2002 through 2011, the two were closely correlated. As the curve flattened in the early part of this century, growth stocks underperformed value by a wide margin (falling blue line). Then in mid-2007, as the curve steepened and came out from inverted territory, growth stocks started to rip higher relative to value. Beginning in 2009, though, the curve stopped steepening and the relative strength of growth relative to value stalled out. The two series were so closely joined at the hip during this ten-year stretch that the correlation coefficient between the two was +0.82, which is indicative of two series moving in lockstep with each other.
(CLICK HERE FOR THE CHART!)
If the paths of the yield curve and the relative strength of growth versus value couldn't be separated from 2002 through 2011, the relationship soured in 2012 when the two came down with a case of the ten-year itch. At that point, they couldn't separate fast enough. The chart below shows the same two series from the start of 2012 through the present. Now, when one goes up the other goes down and vice versa, as the paths are nearly exact opposites. In fact, in the nearly eight years since 2012, the correlation between the two is -0.90.
(CLICK HERE FOR THE CHART!)
In the chart below we have shown the two series over the entire time period spanning 2002 through 2019. The non-shaded area represents the period covered in the first chart, while the shaded area covers the second period. Right around the time where the shaded period starts is when the positive correlation turned on a dime, and beginning in 2013 when the curve started to flatten, investors who were still hanging on to the idea that a flatter yield curve was a green light for value stocks, saw what turned out to be an extended period of misery relative to the performance of growth stocks. In the words of Intel Founder Andy Grove, "Adapt or Die."
(CLICK HERE FOR THE CHART!)

Nasdaq 100 to S&P 500 Ratio

Below is a chart of the Nasdaq 100 going back to 1990. While it took 15+ years for the index to make a new all-time closing high following its March 2000 peak, the index is currently 65% above those March 2000 highs.
(CLICK HERE FOR THE CHART!)
Below is a ratio chart of the Nasdaq 100's price versus the S&P 500's price since 1990. The ratio started well below 1 in early 1990 but quickly overtook the S&P in price by the mid-90s. As you can see, the ratio spiked dramatically above 3 during the peak of the Dot Com bubble in late 1999. The Nasdaq 100 then gave up much of that outperformance versus the S&P 500 over a 2-3 year period where the ratio got all the way back down to 1, but since then it has been steadily trending higher to its current level of 2.65. While it went through a bubble and a burst over a 5-year period, the Nasdaq has been outperforming the S&P 500 for a long time now.
(CLICK HERE FOR THE CHART!)

STOCK MARKET VIDEO: Stock Market Analysis Video for Week Ending August 23rd, 2019

([CLICK HERE FOR THE YOUTUBE VIDEO!]())
(VIDEO NOT YET POSTED)

STOCK MARKET VIDEO: ShadowTrader Video Weekly 08.25.19

([CLICK HERE FOR THE YOUTUBE VIDEO!]())
(VIDEO NOT YET POSTED)
Here are the most notable companies (tickers) reporting earnings in this upcoming trading week ahead-
  • $BBY
  • $MOMO
  • $OKTA
  • $DG
  • $VEEV
  • $ULTA
  • $OSIS
  • $BILI
  • $DLTR
  • $TIF
  • $NTNX
  • $ICLK
  • $ADSK
  • $SJM
  • $PLAN
  • $WDAY
  • $ANF
  • $DELL
  • $BURL
  • $FIVE
  • $BWAY
  • $JT
  • $MRVL
  • $BNS
  • $BMO
  • $HPE
  • $COTY
  • $TD
  • $ITRN
  • $HEI
  • $EXPR
  • $JILL
  • $WMWD
  • $MOGU
  • $CAL
  • $GES
  • $CPB
  • $BOX
  • $PVH
  • $BIG
  • $CHS
(CLICK HERE FOR NEXT WEEK'S MOST NOTABLE EARNINGS RELEASES!)
(CLICK HERE FOR NEXT WEEK'S HIGHEST VOLATILITY EARNINGS RELEASES!)
(CLICK HERE FOR MOST ANTICIPATED EARNINGS RELEASES FOR THE NEXT 5 WEEKS!)
Below are some of the notable companies coming out with earnings releases this upcoming trading week ahead which includes the date/time of release & consensus estimates courtesy of Earnings Whispers:

Monday 8.26.19 Before Market Open:

(CLICK HERE FOR MONDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)

Monday 8.26.19 After Market Close:

(CLICK HERE FOR MONDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!)

Tuesday 8.27.19 Before Market Open:

(CLICK HERE FOR TUESDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)

Tuesday 8.27.19 After Market Close:

(CLICK HERE FOR TUESDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!)

Wednesday 8.28.19 Before Market Open:

(CLICK HERE FOR WEDNESDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)

Wednesday 8.28.19 After Market Close:

(CLICK HERE FOR WEDNESDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!)

Thursday 8.29.19 Before Market Open:

(CLICK HERE FOR THURSDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)

Thursday 8.29.19 After Market Close:

(CLICK HERE FOR THURSDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!)

Friday 8.30.19 Before Market Open:

(CLICK HERE FOR FRIDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)

Friday 8.30.19 After Market Close:

([CLICK HERE FOR FRIDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!]())
NONE.

Best Buy Co., Inc. $66.21

Best Buy Co., Inc. (BBY) is confirmed to report earnings at approximately 7:00 AM ET on Thursday, August 29, 2019. The consensus earnings estimate is $0.99 per share on revenue of $9.57 billion and the Earnings Whisper ® number is $1.06 per share. Investor sentiment going into the company's earnings release has 72% expecting an earnings beat The company's guidance was for earnings of $0.95 to $1.00 per share. Consensus estimates are for year-over-year earnings growth of 8.79% with revenue increasing by 2.04%. Short interest has decreased by 10.2% since the company's last earnings release while the stock has drifted lower by 4.1% from its open following the earnings release to be 0.6% above its 200 day moving average of $65.83. Overall earnings estimates have been revised higher since the company's last earnings release. On Tuesday, August 13, 2019 there was some notable buying of 2,003 contracts of the $65.00 put expiring on Friday, December 20, 2019. Option traders are pricing in a 9.6% move on earnings and the stock has averaged a 6.1% move in recent quarters.

(CLICK HERE FOR THE CHART!)

Momo Inc. $31.83

Momo Inc. (MOMO) is confirmed to report earnings at approximately 4:10 AM ET on Tuesday, August 27, 2019. The consensus earnings estimate is $0.72 per share on revenue of $581.18 million and the Earnings Whisper ® number is $0.76 per share. Investor sentiment going into the company's earnings release has 73% expecting an earnings beat The company's guidance was for revenue of $579.00 million to $593.00 million. Consensus estimates are for year-over-year earnings growth of 22.03% with revenue increasing by 17.58%. Short interest has increased by 2.4% since the company's last earnings release while the stock has drifted higher by 13.4% from its open following the earnings release to be 2.2% below its 200 day moving average of $32.55. Overall earnings estimates have been revised lower since the company's last earnings release. On Thursday, August 8, 2019 there was some notable buying of 5,000 contracts of the $24.40 put expiring on Friday, October 18, 2019. Option traders are pricing in a 13.7% move on earnings and the stock has averaged a 10.7% move in recent quarters.

(CLICK HERE FOR THE CHART!)

Okta, Inc. $132.46

Okta, Inc. (OKTA) is confirmed to report earnings at approximately 4:05 PM ET on Wednesday, August 28, 2019. The consensus estimate is for a loss of $0.10 per share on revenue of $131.09 million and the Earnings Whisper ® number is ($0.07) per share. Investor sentiment going into the company's earnings release has 84% expecting an earnings beat The company's guidance was for a loss of $0.11 to $0.10 per share on revenue of $130.00 million to $131.00 million. Consensus estimates are for year-over-year earnings growth of 33.33% with revenue increasing by 38.59%. Short interest has increased by 13.6% since the company's last earnings release while the stock has drifted higher by 15.7% from its open following the earnings release to be 39.4% above its 200 day moving average of $95.03. Overall earnings estimates have been revised lower since the company's last earnings release. On Monday, August 12, 2019 there was some notable buying of 1,949 contracts of the $135.00 call expiring on Friday, August 30, 2019. Option traders are pricing in a 10.4% move on earnings and the stock has averaged a 9.1% move in recent quarters.

(CLICK HERE FOR THE CHART!)

Dollar General Corporation $136.99

Dollar General Corporation (DG) is confirmed to report earnings at approximately 6:55 AM ET on Thursday, August 29, 2019. The consensus earnings estimate is $1.58 per share on revenue of $6.89 billion and the Earnings Whisper ® number is $1.61 per share. Investor sentiment going into the company's earnings release has 76% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 3.95% with revenue increasing by 6.93%. Short interest has decreased by 28.9% since the company's last earnings release while the stock has drifted higher by 9.8% from its open following the earnings release to be 12.4% above its 200 day moving average of $121.87. Overall earnings estimates have been revised higher since the company's last earnings release. On Tuesday, August 20, 2019 there was some notable buying of 757 contracts of the $149.00 call expiring on Friday, September 6, 2019. Option traders are pricing in a 6.7% move on earnings and the stock has averaged a 6.1% move in recent quarters.

(CLICK HERE FOR THE CHART!)

Veeva Systems Inc. $158.13

Veeva Systems Inc. (VEEV) is confirmed to report earnings at approximately 4:05 PM ET on Tuesday, August 27, 2019. The consensus earnings estimate is $0.49 per share on revenue of $259.26 million and the Earnings Whisper ® number is $0.51 per share. Investor sentiment going into the company's earnings release has 83% expecting an earnings beat The company's guidance was for earnings of $0.48 to $0.49 per share on revenue of $259.00 million to $260.00 million. Consensus estimates are for year-over-year earnings growth of 40.00% with revenue increasing by 23.69%. Short interest has decreased by 34.5% since the company's last earnings release while the stock has drifted higher by 7.1% from its open following the earnings release to be 22.9% above its 200 day moving average of $128.66. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 9, 2019 there was some notable buying of 1,273 contracts of the $155.00 put expiring on Friday, September 20, 2019. Option traders are pricing in a 7.3% move on earnings and the stock has averaged a 7.2% move in recent quarters.

(CLICK HERE FOR THE CHART!)

ULTA Beauty $322.10

ULTA Beauty (ULTA) is confirmed to report earnings at approximately 4:00 PM ET on Thursday, August 29, 2019. The consensus earnings estimate is $2.79 per share on revenue of $1.68 billion and the Earnings Whisper ® number is $2.80 per share. Investor sentiment going into the company's earnings release has 83% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 13.41% with revenue increasing by 12.89%. Short interest has increased by 28.5% since the company's last earnings release while the stock has drifted higher by 2.1% from its open following the earnings release to be 1.3% above its 200 day moving average of $318.11. Overall earnings estimates have been revised higher since the company's last earnings release. On Thursday, August 15, 2019 there was some notable buying of 1,211 contracts of the $330.00 put expiring on Friday, September 20, 2019. Option traders are pricing in a 8.2% move on earnings and the stock has averaged a 6.3% move in recent quarters.

(CLICK HERE FOR THE CHART!)

OSI Systems Inc. $100.83

OSI Systems Inc. (OSIS) is confirmed to report earnings at approximately 9:00 AM ET on Monday, August 26, 2019. The consensus earnings estimate is $1.05 per share on revenue of $303.70 million and the Earnings Whisper ® number is $1.11 per share. Investor sentiment going into the company's earnings release has 62% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 2.94% with revenue increasing by 5.70%. Short interest has increased by 13.3% since the company's last earnings release while the stock has drifted higher by 6.1% from its open following the earnings release to be 9.9% above its 200 day moving average of $91.73. Overall earnings estimates have been revised higher since the company's last earnings release. Option traders are pricing in a 6.6% move on earnings and the stock has averaged a 9.2% move in recent quarters.

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Bilibili Inc. $14.70

Bilibili Inc. (BILI) is confirmed to report earnings at approximately 7:00 PM ET on Monday, August 26, 2019. The consensus estimate is for a loss of $0.12 per share on revenue of $212.73 million and the Earnings Whisper ® number is ($0.14) per share. Investor sentiment going into the company's earnings release has 65% expecting an earnings beat The company's guidance was for revenue of $211.00 million to $217.00 million. Consensus estimates are for earnings to decline year-over-year by 200.00% with revenue increasing by 37.16%. The stock has drifted lower by 11.9% from its open following the earnings release to be 10.7% below its 200 day moving average of $16.47. Overall earnings estimates have been revised lower since the company's last earnings release. On Tuesday, July 23, 2019 there was some notable buying of 6,011 contracts of the $12.50 put expiring on Friday, October 18, 2019. Option traders are pricing in a 20.4% move on earnings and the stock has averaged a 9.1% move in recent quarters.

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Dollar Tree Stores, Inc. $95.16

Dollar Tree Stores, Inc. (DLTR) is confirmed to report earnings at approximately 7:30 AM ET on Thursday, August 29, 2019. The consensus earnings estimate is $0.96 per share on revenue of $5.72 billion. Investor sentiment going into the company's earnings release has 69% expecting an earnings beat The company's guidance was for earnings of $0.64 to $0.73 per share. Consensus estimates are for earnings to decline year-over-year by 16.52% with revenue increasing by 3.52%. Short interest has decreased by 16.6% since the company's last earnings release while the stock has drifted lower by 1.1% from its open following the earnings release to be 3.3% below its 200 day moving average of $98.41. Overall earnings estimates have been revised lower since the company's last earnings release. On Wednesday, August 7, 2019 there was some notable buying of 3,596 contracts of the $80.00 put expiring on Friday, September 20, 2019. Option traders are pricing in a 7.9% move on earnings and the stock has averaged a 9.8% move in recent quarters.

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Tiffany & Co. $81.32

Tiffany & Co. (TIF) is confirmed to report earnings at approximately 6:40 AM ET on Wednesday, August 28, 2019. The consensus earnings estimate is $1.05 per share on revenue of $1.07 billion and the Earnings Whisper ® number is $1.06 per share. Investor sentiment going into the company's earnings release has 49% expecting an earnings beat The company's guidance was for earnings of up to $1.16 per share. Consensus estimates are for earnings to decline year-over-year by 10.26% with revenue decreasing by 0.55%. Short interest has increased by 28.9% since the company's last earnings release while the stock has drifted lower by 13.6% from its open following the earnings release to be 13.3% below its 200 day moving average of $93.75. Overall earnings estimates have been revised lower since the company's last earnings release. On Wednesday, August 14, 2019 there was some notable buying of 3,129 contracts of the $80.00 put expiring on Friday, September 20, 2019. Option traders are pricing in a 7.9% move on earnings and the stock has averaged a 7.8% move in recent quarters.

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DISCUSS!

What are you all watching for in this upcoming trading week?
I hope you all have a wonderful weekend and a great trading week ahead stocks.
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