Andy Wang spoke with Nicole Petallides, host of the Watch List, about financial markets, Spirit Airlines, and Fiserv — two stocks that will benefit from the reopening of the economy.
How Entrepreneurs Make the World a Better Place
Beerud Sheth co-founder and CEO of Gupshup and founder of Elance (now Upwork) talks about building businesses, money, and the positive power of entrepreneurship.
Black swan watch: European banks
In 2007, Nassim Taleb published his best-selling book “”The Black Swan: The Impact of the Highly Improbable.”” Taleb contends that banks and trading firms are very vulnerable to hazardous Black Swan events and are exposed to losses beyond those that are predicted by their defective financial models. This proved to be right on the mark as one year later, the financial system almost collapsed due to poor financial models that predicted real estate prices would go up forever.
Will Derivatives Be The Next Black Swan?
“It's déjà vu all over again.” – Yogi Berra
The stock market has long been classified by economists as a leading indicator of the economy. It tracks and reflects the nation’s economy and industry fundamentals. The market often seems able to anticipate positive or negative change before it happens. Since the beginning of the bear market in August of 2015, the prices of many bank stocks, especially European and Japanese banks, have declined steadily and precipitously. Deutsche Bank has lead the way by dropping below the level it reached in 2009. Shares of HSBC, Citibank, Bank of America, Credit Suisse, Goldman Sachs as well many other big banks have also taken a beating of 25-45%.
Earnings Recession: Big Negative For the Market
Many media pundits like to skew numbers to fit their narrative and a lot of people out there believe the Wall Street storytelling that “”earnings excluding energy are fine”” and “”sales excluding currency are growing.””
Well we disagree. It's too bad that in the real world, many energy companies are nearing bankruptcy and multinational corporations have to deal with currency fluctuations. Therefore, investors can't simply ignore all the bad news and go about life hunky dory. The ugly truth is that S&P reported earnings have declined for 5 consecutive quarters and are in a full blown earnings recession.