“Strong Earnings For Banks...But No Celebration Yet”- July 18, 2020
JPMorgan Chase, Goldman Sachs, and Citi all announced expectation-beating earnings from Q2 of the Coronaconomy. There are a few ways that these banks are making more money now than before:
The Fed has been stocking up on corporate bonds, lending money to companies at near-zero interest rates (and banks got to underwrite and trade all those bonds).
Stock trading also surged due to volatility from corona and because lots of people are at home with nothing to do. (banks make money on these trades too).
However, many feel that it’s still too early for celebration despite this good news. The economy is getting to a point where the economic stimulus plans are starting to end (the extra $600 unemployment is set to end at the end of July and there is no plan for more stimulus checks). The economic stimulus is ending but the coronavirus cases are still raging in most states and banks think that the worst of the recession might still be up ahead.
Let’s take a look at some of the biggest business updates from this week.
Several high-profile Twitter accounts were hacked the other day and posted tweets promoting free Bitcoin. Some of the accounts targeted belonged to Joe Biden, Elon Musk, Jeff Bezos, Barack Obama, Bill Gates, and Kanye West.
This was one of the most pronounced security breaches that the site has experienced thus far and it continued for several hours. Twitter responded that they are still looking into what happened.
On the surface, this may seem like an insignificant news event. However, the implications of what could happen are what makes it newsworthy. Millions of people are active on Twitter and politicians/CEOs/celebrities lean heavily on it to communicate with their followers.
What if the hackers, instead of asking people to send them Bitcoin, had hacked Donald Trump’s Twitter account and tweeted misinformation about a global security threat. Events like this highlight the need for strong cybersecurity.
Microsoft, Google, Facebook Sue Trump Admin
The Trump Administration announced new legislation recently that would force all foreign students to leave the country if classes in the Fall are done online (which most schools are leaning towards).
● On July 13th, Harvard and MIT filed a lawsuit against the Dept. Of Homeland Security.
● Now the trio of tech companies is also joining the suit.
The companies think that the new policy would impact hundreds of thousands of foreign students throughout the U.S and could have a negative impact on the economy.
As of now, The Trump Administration has folded under the pressure and rescinded this new fule.
Another Competitor In The Streaming Wars
Introducing: Peacock, from NBCUniversal. There’s one big difference that separates them from Netflix, Amazon, Hulu, Disney+...it’s free! You can either sign up for:
1. A free version that has limited content.
2. Peacock Premium which is $4.99/month with ads.
3. Ad-Free Peacock Premium for $9.99.
The launch comes at a pretty good time as lots of places in the U.S. are still experiencing WFH or quarantine measures. It will be interesting to see how they stack up against other streaming services over the coming months.
That’s it for this week -- Join us next week for another market update.
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This material is not intended as an offer or solicitation for the purchase or sale of a security or an other financial instrument. Past performance does not guarantee future performance.
All the views expressed are those of Chris Simpson and not those of Sierra Ridge Wealth Management or NEXT Financial Group Inc. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks.