Tag Archives: market

Warren Says Breaking Up Tech Giants Will Keep Market Competitive

Warren Says Breaking Up Tech Giants Will Keep Market CompetitiveThe Massachusetts senator spoke Saturday at the annual South by Southwest cultural festival in Austin, Texas, a day after proposing to take steps to break up companies like Facebook Inc. and Alphabet Co.’s Google if she’s elected. On Friday she called for legislation that would designate large technology companies as “platform utilities,” and for the appointment of regulators who’d unwind technology mergers that undermine competition and harm innovation and small businesses.



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Chuck Schumer and Bernie Sanders Have a Plan to Kill the Stock Market

Chuck Schumer and Bernie Sanders Have a Plan to Kill the Stock MarketSenators Chuck Schumer of New York and Bernie Sanders of Vermont want to penalize “self-indulgent” corporations that buy back their own stock. In a recent article in the New York Times, they argued that when companies repurchase shares, not only do the vast majority of Americans not benefit, but income inequality is exacerbated since only wealthy shareholders and corporate management profit.Despite decades of extraordinary success that the United States has enjoyed and that we enjoy today, Schumer and Sanders believe that something sinister is taking place in the corporate world. They call buybacks a form of “corporate self-indulgence.” Why? Because> corporate boardrooms have become obsessed with maximizing only shareholder earnings to the detriment of workers and the long-term strength of their companies. . . . Companies, rather than investing in ways to make their businesses more resilient or their workers more productive, have been dedicating ever larger shares of their profits to dividends and corporate repurchases.Now even some Republicans are getting on board. Florida senator Marco Rubio has suggested changes in the tax law to discourage buybacks because he says they “inflate” the prices of stock “at the expense of future productivity & job creation.”These senators don’t seem to fully understand that the purpose of a business is to allocate resources in a way that maximizes per share results over the long run. To think that this can be achieved at the expense of workers, at the expense of investing in research, at the expense of developing new and better products, at the expense of investing in equipment to both lower the cost and increase the quality of production, etc. is sophomoric. This underscores their lack of knowledge about investing and financial markets.Companies have several options with regard to the use of excess cash. They can (1) retain the funds in the company, (2) invest in the capital needed to grow the company, (3) make acquisitions, (4) pay out the excess cash in the form of dividends, or (5) repurchase shares from existing shareholders.These senators see little value in share buybacks, but they should listen to Warren Buffett, who is unequivocally a long-term investor. His financial success is a result of making exceptional long-term investments in resilient companies. Unlike Schumer and Sanders, Buffett is an enthusiastic proponent of utilizing excess cash to repurchase shares when conditions are favorable (or opportune).Here is what he said in his 1984 annual report: “The companies in which we have our largest investments are all engaged in significant share repurchases at the times when a wide discrepancy exists between price and value.” He has made this point repeatedly throughout the years. These companies repurchase shares and continue to grow, continue to invest in research, in capital that will improve the quality and lower the cost of products. He has even bought back $ 1 billion of shares of his own company, Berkshire Hathaway, not because he is “self-indulgent” but because he thinks the firm is undervalued.Schumer and Sanders—and in some cases they are joined by Rubio—provide two main reasons we are in a stock buyback “crisis”:> First, stock buybacks don’t benefit the vast majority of Americans.> > Second, when corporations direct resources to buy back shares on this scale, they restrain their capacity to reinvest profits more meaningfully in the company in terms of R&D, equipment, higher wages, paid medical leave, retirement benefits and worker retraining.The first point is utter nonsense. More than 100 million average Americans own stock. Americans invest in mutual funds and index funds and buy and sell stock every day. Tens of millions more have 401K plans, and most union pension funds have hundreds of billions of dollars invested in stocks.The second point is equally absurd. A corporate board of directors is elected by shareholders, the owners of the company. When a board makes the decision to repurchase shares, it is a sign of confidence in the firm’s long-term profitability. It raises share values, which obviously benefits shareholders and puts firms in better financial shape — which also benefits the employees. Essentially, Schumer and Sanders believe, and Rubio seems to believe, that they have the right to tell the owners of a corporation the best way to allocate their profits.Studies show that firms that buy back their own shares have strong long-term growth.Consider Apple. It has become the most valuable company in the world. This exceptional success was achieved because of the enormous investments they made to develop revolutionary products. Companies cannot develop revolutionary products by underpaying talented workers or without investing billions of dollars in research, factories, and equipment. Not incidentally, Apple has repurchased billions of dollars of its own stock.The hyper-competitiveness and efficiency of U.S. companies is a major reason that unemployment is at a near 50-year low. Today, no company can survive if its workers are treated poorly. Walmart, which Schumer and Sanders attacked in their article, and many other companies recently raised their wage rates substantially, starting with entry-level positions.What is most disturbing about Schumer and Sanders’s proposal is their hubris in believing that they know how every company should handle its excess cash better than the CEOs, the boards of directors, and shareholders do. That is a rather all-encompassing statement. One would be hard-pressed to find a more vivid example of what Friedrich Hayek called “the fatal conceit,” the distorted notion that one knows more than is knowable. Would Buffett invest in a company if Schumer and Sanders were in charge of allocating its resources?We doubt it. Who in their right mind would?If approved, what Schumer and Sanders propose would not only hurt U.S. companies. It would harm the entire U.S. economy and financial system. It would raise the cost of capital for companies. What they advocate would tell domestic and foreign investors that our government is interfering with how companies allocate their resources.What is the difference between going after a large company with lots of shareholders and a small company with one owner? How long before Senators Schumer and Sanders tell the tire-shop owner that he has not paid his employees enough and that therefore he has withdrawn too much of the profit as an owner distribution?Every shareholder and business owner in America should rise up in loud protest against what these senators are proposing.Thomas A. Smith is the president of the Smith Foundation and ran a successful investment company for 40 years. Stephen Moore is a senior fellow at the Heritage Foundation and an economic consultant with FreedomWorks.



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IEA Says Venezuela Crisis Risks Disrupting Global Crude Market

IEA Says Venezuela Crisis Risks Disrupting Global Crude MarketThe U.S., Venezuela’s biggest customer, is banning oil imports from the country as it condemns President Nicolas Maduro for fraudulently clinging to power after disputed elections. Venezuela’s output is already at the lowest in decades as a spiraling economic crisis takes its toll on oil infrastructure. While global markets remain comfortably supplied, disruption in Venezuela poses a threat because production of the heavier, higher-sulfur crude it pumps is being reduced elsewhere, the IEA said in a monthly report.



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British cryptocurrency market sold in one of industry's biggest ever deals

British cryptocurrency market sold in one of industry's biggest ever dealsA British cryptocurrency company founded by former bankers has been bought for at least $ 100m (£77m) in what is being described as one of industry's largest ever deals.  London's Crypto Facilities, which allows trading in Bitcoin futures and derivatives, has been acquired by San Francisco-based Kraken, one of the world's largest cryptocurrency exchanges, for a “nine figure sum”. Kraken did not disclose the exact number but lawyers at Hogan Lovells who advised the British company on the deal confirmed it was “one of the largest M&A; deals the emerging crypto industry has seen”.  The deal merges one of the world’s largest global websites for trading Bitcoin and other coins with the most popular futures markets. It will boost confidence that the cryptocurrency industry, which appeared to have fizzled out somewhat after hitting a peak at the end of 2017, still has life in it. Bitcoin has fallen to around $ 3,500 (£2,700), well below its peak of $ 20,000.  Crypto Facilities is regulated by Britain’s finance watchdog and allows customers to trade futures on six cryptocurrencies including Bitcoin. The company launched its exchange four years ago and was founded by Timo Schlaefer, a former Goldman Sachs executive in London, and Jean-Christophe Laruelle, who worked for BNP Paribas. Kraken chief executive Jesse Powell said that he believed the industry no longer presented “a get rich quick opportunity or mentality as there was 12 months ago” but compared cryptocurrency to the stock market. “If there’s a bear market it does not mean stocks are dead and everyone should abandon working in securities,” he said.  Total value of all cryptocurrency on the market He claimed the company had been “grateful” for the cryptocurrency chill after a period where “everything was on fire and we are no longer getting 50,000 people signing up per day” as it relieved pressure on technology, giving some respite for improvements before the next wave.   Crypto Facilities is regulated by Britain’s finance watchdog and allows customers to trade futures on six pairs of cryptocurrency including Bitcoin, Ethereum, Ripple, XRP, Litecoin and Bitcoin cash. Kraken has been on a shopping spree since 2016, acquiring Coinsetter, Cavirtex and CleverCoin along with wallet – or crypto storage – service Glidera and tracking website Cryptowatch. It is backed by private investors. It is understood to have laid off a number of staff in its California headquarters toward the end of last year.



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Why the stock market is headed for a swift recovery

Why the stock market is headed for a swift recoveryEverywhere I look, people seek negatives and ignore positives. When that happens, better times lie ahead for the stock market.



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Saudis Say OPEC+ Oil Cuts on ‘Right Track’ to Balance the Market

Saudis Say OPEC+ Oil Cuts on ‘Right Track’ to Balance the Market“The action we have taken, quickly in December and that we’re seeing implemented as we speak, is a lifeline to U.S. shale producers,” Khalid Al-Falih said at a conference in Abu Dhabi. The Organization of Petroleum Exporting Countries, led by Saudi Arabia, agreed to cut oil output this year to support prices. Crude producers in the U.S. are pumping a record 11.7 million barrels a day, according to the Energy Information Administration.



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Tuna sells for record $3 million in auction at Tokyo's new fish market

Tuna sells for record $  3 million in auction at Tokyo's new fish marketThe 613 pound fish caught off the coast of northern Japan's Aomori prefecture was bought by the owner of a Japanese sushi restaurant chain.



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Record $3.1 million paid in New Year's tuna auction at Japan's new market

Record $  3.1 million paid in New Year's tuna auction at Japan's new marketA Japanese sushi entrepreneur paid a record $ 3.1 million for a giant tuna Saturday as Tokyo’s new fish market, which replaced the world-famous Tsukiji late last year, held its first pre-dawn New Year’s auction. Bidding stopped at a whopping 333.6 million yen for the enormous 278-kilogramme (612-pound) fish — an endangered species — that was caught off Japan’s northern coast. Self-styled “Tuna King” Kiyoshi Kimura paid the top price, which doubled the previous record of 155 million yen also paid by him in 2013.



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Trump touts 'big progress' with China's Xi on trade deal amid market swings

Trump touts 'big progress' with China's Xi on trade deal amid market swingsPresident Donald Trump said Saturday that he spoke with Chinese President Xi Jinping amid an ongoing trade dispute that has roiled markets.



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Global Stock Angst Snowballs as Nikkei 225 Enters Bear Market

Global Stock Angst Snowballs as Nikkei 225 Enters Bear MarketShares in China, the other major Asian market open on Tuesday, also declined as investors shrugged off a pledge by the government to do more to support companies. Investors got mixed signals from Washington heading into the resumption of U.S. stock futures trading at 6 p.m. New York time. President Donald Trump said a partial U.S. government shutdown will continue until funding for a U.S.-Mexico border wall is secure.



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