The S & P 500 slid for the fourth time in five sessions.  Equities were initially flat with attention focused on the impeachment drama until the announcement that the US is unlikely to extend a waiver allowing American firms to supply China’s Huawei Technologies. Led by technology, indices closed lower between 0.25% and 0.55%.

In other words trade trumps impeachment drama.

Commenting about the economy, data continued to support the view the economy remains on solid footing but such did little to impact trading.

Changing topics, there was another high profile IPO failure. Yesterday’s debut of Peloton was a disaster, falling about 11% from its offering price, the third worst trading debut in 10 years for companies that have raised at least $1 billion according to Bloomberg.

Considerable press has been given to the collapse of both Lyft and Uber. .   And then there is WeWork, an IPO that was shelved because the expected pricing was considerably lower than private valuations.

Perhaps the greater fool theory is at hand; private investors dumping overpriced and hyped shares to the unsuspecting market.  Some can apply this theory to the most owned publically traded issues.  Historically superior returns arise from discovering undervalued/under followed companies and then waiting for others to discover as the company grows and matures.

I still can’t reconcile the thought that the largest capitalized companies in the world are considered “growth companies,”   companies whose valuations in my view are stretched at best.

What will happen today?

Last night the foreign markets were mixed.  London was up 1.11%, Paris up 0.26%  and Frankfurt up 0.89%.  China was up 0.11%, Japan down 0.77%, and Hang Sang down 0.33%.

The Dow should open nervously flat. The 10-year is off 6/32 to yield 1.72%.


The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.