E Powell Failure

There is a break today in the news load so I can chat on politics. The Biden stimulus plan has lost part of its money and its link to the minimum wage to get through the narrowly Democrat-held US Senate. Having been worried about the size of the program I am now relieved. Meanwhile, there is a far more important measure to be made into law, stopping states with Republican majorities in state legislatures from disenfranchising minority voters by rules against Sunday or early voting. For the party of Lincoln to engage in this kind of gerrymandering is a shock.

Stock markets are negative despite the lower stimulus risk which should cut T-bond interest rates going forward. But so far the biggest prior year winner, Nasdaq, lost all its gains in 2021 today, after falling another 1%. While some experts question the linkage between higher bond yields and lower stock prices for high-flying tech companies, historically they do move inversely, although usually at much higher bond yield levels. Powell's testimony failed to boost markets.

The drops came despite last week's jobless claims level was down 5,000 from the estimate at 745,000

Today the market was a bit more mixed, with Q flat after falling 3.7% this week, the S&P 500 down 0.1%, and the large-cap dominated Dow Jones off 550 points—another triple-digit loss for this week and last. Europe and Asia markets fell before the unemployment numbers.

Business newspaper article

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Analyst Adam Rozencwaijg (of Goehring & R) put out a paper discussing the excess valuation of carbon-emissions which he calls “fuzzy math”, both by companies and by the International Energy Agency, which overstates both energy growth and demand. He states that the BP analysis of the climate change forecast that 25% less energy will be consumed over the next 2 decades is flawed. There has never been such a steep drop in energy consumption since data began being collected in 1965. In fact, developed economies increased their share of global consumption from 40% then to 60% now. And developing economies in the current century upped their demand by 65%--but it is still 70% below that of the OECD group of rich countries. Even the most committed country for cutting emissions (Germany with its Engergiewende) only cut carbon emissions over the past 4 decades by 12% versus a target of 40%. Ignoring reality will not help the planet. More on energy below.

Reporting companies

*Trip.com, a new holding, TCOM, is holding its annual general shareholders' meeting on March 18 in Shanghai where there will be a vote about splitting its ADR shares 8 for one to the Hong Kong stock. The share is now at $39.68, up today but down on the news which went out yesterday. I think penny stocks lose credibility and voted nay. It reported on its FY 2020-1 Q4 today with good Q4 earnings despite revenue falling 40% y/y to $761 mn, in line with analyst forecasts. The biggest hits were to transportation ticketing revenues, down 51% to $260 mn and package tour ones down 67% to $40 mn. Accommodation revenues were $344 mn, down only 24% y/y while corporate travel revenues held up at only down 17% but from a low base, at $47 mn. The best news is that gross margin was 82% vs 79% in Q4 2019 while expenses for product development dropped by 20%; those for marketing by 50%; and those for administration by 53% vs prior Q4. However, operating margins were zero vs 7% in the prior Q4 and net income was nearly halved to $155 mn. GAAP earnings per share at 25 cents beat the consensus forecast of a loss of 10¢.

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Vivian Lewis 1 month ago Author's comment

dear William K, I think that your theory about wage levels assumes that the workers have the ability to get what they deserve from their bosses. But in my lifetime as theie unions were enfeebled, this is no longer true most of the time. Only teachers still can get the pay and conditions they demand, not factory workers, Amazon pickers, drivers, etc.

As for vaccine reactions by Japanese men, it may be a coincidence but it probably was not. The fault may not have been in the AZ jab but in something else about the administration of the vaccine. When we got ours (me and my husband) we had to stay at the hospital for a half hour after the injection to make sure everything was ok. I may not have been the same procedure in Japan. We got the Moderna not the AZ jab but they all do have risks. A vaccine is potent.

William K. 1 month ago Member's comment

There is an intrinsic flaw in the whole concept of a minimum wage, which is that the amount is linked to the recipients needs. The pay amount is normally linked to the value delivered, just like purchasing products at a store, at least, at some stores. Employment is not a charity operation, usually. Folks are mostly paid based on the value they can provide to the employer. The exception is primarily CEOs and boards of directors, who seem to be paid based on their ability to "speak sunshine" to investors, both current and potential.

The A-Z vaccine scare is unusual because ao much is unknown about the details. Consider how many folks have had the stuff and not had any problems at all is my point. If a million used the vaccine with no problems and then two did have problems, the evidence points far more at the two, as I see it.