🍨 Daily Scoop: Bye Bye Commissions!
By Thu, Oct 3, 2019
Hello Scoopers!
It looks like the stock market is just not happy with the start of the fourth quarter. After all, who is happy that it’s October already? Not us! Anyhow, all three indices lost at least 1.5% of their value on Tuesday after investors learned about the lower growth in the private sector hiring. Aside from the overall market, one weight management stock sweat the threat of new competitors, and Tesla of China may have resurrected from the land of bankruptcy with a jolt of cash by none other than the government of China. Oh, and by the way, it looks like that trade commissions are gone for good!
For those stories and more, scroll down to the “Economy,” “What’s up?” and “What’s down?” sections.
MARKETS
- U.S. markets: Similar to Monday, all three major indices agreed on the direction of the market and ended the day at least 1.5% lower than where they started. Scroll to the “Economy” section to learn more.
- Cryptocurrency: Bitcoin’s price is still in the $8,000 per coin range. Despite that, McAffee, technologist, investor, and Bitcoin enthusiast, still believes that the scarcity of Bitcoin will force the price much higher than what it is now.
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ECONOMY
Lower hiring growth in the private sector.
On Tuesday, the U.S. Purchasing Managers’ Index came out at the lowest level in the last decade. On Wednesday, The ADP National Employment Report came out, and the news wasn’t better either. The payroll growth in the private sector has slowed down.
While the number of new payrolls in September grew, the growth was slower than August. Companies hired 135,000 more workers in September, compared to 157,000 in August. Also, the initially reported number for August was 195,000 payrolls, and it is now down to 157,000.
What does this mean?
Just like how the Purchasing Managers Index (PMI) is an indicator of growing or shrinking economic activities, the ADP National Employment Report is also another economic indicator.
You may hear a lot of noise and get a pessimistic vibe from the media. Remember that the economy usually goes through cycles. We are still in the 11th year of a more-than-a-decade-long economic boom. It shouldn’t be surprising to anyone that the economy is going through a downward cycle. Remember the overall context to avoid getting too emotional about what you read and hear on the news.
WHAT’S UP
Resurrected from the land of bankruptcy.
So, what happened?
Shares of NIO (Ticker: NIO), also known as Tesla of China, were up more than 19% on Wednesday. The company is almost running out of cash. Last week, it had to delay its quarterly earnings reports’ call, and it has been struggling to secure funding from investors. In all honesty, building a new electric vehicle is hard and consumes way too much cash than what startups care to admit. Tesla (Ticker: TSLA) is in the same boat. The good news may have arrived, though. While we haven’t found the press release, but investors are reporting that the government of China is about to bail out the company and give it a second chance to resurrect. That’s what pushed the stock price high up.
WHAT’S DOWN
Sweating the threat of new competition.
So, what happened?
Shares of WW, formerly known as Weight Watchers, (Ticker: WW) dropped more than 10% on Wednesday. The company has been struggling to appeal to younger consumers, and even having Oprah Whinferry as an investor and advocate hasn’t yet solved the issue. Now, WW has to worry about a powerhouse of Noom (another weight management platform) and Novo Nordisk (a pharmaceutical company with extensive knowledge of the behavioral aspects of chronic disease management.) Noom and Novo Nordisk announced a partnership to help people manage their weight using behavioral sciences, and investors are losing confidence in WW for staying relevant in the market.
WATER COOLER
Trade commissions are gone for good!
So, what happened?
Yesterday we told you about the commission-free war that is bringing the entire brokerage industry to its knees. It all started with Robinhood App a few years ago. This privately-held unicorn amassed more than 6 million users by offering commission-free investing to you and me. Yesterday, Charles Schwab mirrored Robinhood’s offering and dragged down the stock price of other brokerage firms such as TD Ameritrade (Ticker: AMTD). It only took 24 hours for almost all of the main brokerages to match the commission-free offer. TD Ameritrade did it, E*trade did it too, and so on.
Now the question is whether Robinhood can keep up its multi-billion-dollar valuation?! Nevertheless, it looks like that trade commissions are gone for good.
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
