Given how this market shakes and shakes it off, another record for the Dow may well be in the offing.
That’s after the DJIA
hit its 47th record high yesterday, and as some investors look to the next round of earnings — big banks are up to bat this week — to keep juicing stocks higher,.
It’s no secret, then, that this can’t-go-wrong bull market has pumped up the demand for low-cost, passive mutual funds and ETFs. According to The Wall Street Journal, investors poured nearly $300 billion into Vanguard Group index funds in the first nine months of this year — almost matching the total for all of 2016.
That revelation leads us to our call of the day, a warning that predicts this passive frenzy will end eventually, but it’ll come as a sucker punch to unsuspecting retail investors. Here’s what Daniel Wiener, editor of the Independent Adviser for Vanguard Investors — a newsletter that tracks those funds — told the WSJ, according to that article:
“I don’t think that there’s much that changes these flows until we have a negative market,” Wiener said. “I can’t tell you when that happens, but when it does there will be a lot of very surprised investors.”
Sound familiar? Last month, this column featured famed investor Jim Rogers, who had a specific warning for holders of popular ETFs.
“When we have the bear market, a lot of people are going to find that, ‘Oh my God, I own an ETF, and they collapsed. It went down more than anything else.’ And the reason it will go down more than anything else is because that’s what everybody owns,” Rogers said.
One key issue is that index fund users may indeed panic in case of a selloff — though robo adviser giant Betterment has said in the past that it hasn’t seen that from its own clients.
Reformed Broker’s Josh Brown touched on the robo theme in a blog on why the VIX
volatility index has been so drama-free. He blames it on non-panicky software programs and algorithms replacing human “cowboys” who used to make big directional bets.
“These days, it’s ‘close your eyes and allocate’ coupled with relentlessly steady machine-buying,” says Brown.
Key market gauges
Ahead of Federal Reserve minutes, Dow
, S&P 500
futures are tilting slightly south. Gold
SIZ7, -0.27% are off, while WTI crude
prices are headed the other way.
stocks are mixed, but in Spain
they’re soaring as worries over Catalan independence have eased up for now. The euro
popped higher on that news yesterday, but is stepping back a bit now, hovering at around $1.18.
— BBC Breaking News (@BBCBreaking) October 11, 2017
, the Nikkei
See the Market Snapshot column for more.
is sitting right near $4,750. Can bitcoin reach over $10,000 in six to 10 months? This guy thinks so.
Check out the chart of Kobe Steel
, Japan’s third-largest steelmaker, which has lost 35% so far this week.
Over the weekend, Kobe fessed up to falsifying inspection data on some 20,000 tonnes of metals it shipped out to customers. On Wednesday, Kobe said a steel powder product, which is used to manufacture parts such as gears, could also be a problem.
Kobe’s big customers include Boeing
, and they are now reportedly scrambling to check the safety of their products with those problem metals.
is up a bit after results. Delta
earnings are still to come. For the rest of the week, we’ve got J.P. Morgan Chase
on Thursday, and Bank of America
and Wells Fargo
on Friday. And check out this earnings preview for Netflix
says it’s tripling its R&D investment to more than $15 billion over three years — seen as a bid to keep pace with Amazon
is off 3.4% in premarket after the memory-chip group said it would sell $1 billion in fresh stock late Tuesday. Shares are trading at the highest since the dot-com boom.
is schooling everyone in cutting corners. At its investor day, the retailer said it saved $20 million by swapping out its plastic bags and more than $7 million by shortening its receipts. It also plans to invest in more than 1,000 online grocery pickup locations.
There will be no World Cup for the U.S. men’s soccer team for the first time since 1986, after a brutal loss to Trinidad & Tobago last night. A bummer for all those closet soccer fans, and 21st Century Fox’s
Fox Sports, which spent nearly half a billion dollars to get the rights to broadcast 350 hours of coverage in the U.S. next year. But hey, not everyone is so cut up:
I was really disappointed the USA men’s team didn’t qualify for the World Cup. Then I remembered I couldn’t care less about soccer.
— US Rep Brendan Boyle (@RepBrendanBoyle) October 11, 2017
has come up with a superchip that has to be kept in temperatures that are “250 times colder than deep space.”
It’s a sparse, but important, economic docket today, with Fed minutes due at 2 p.m. Eastern Time. Ahead of that, we get job openings for August at 10 a.m. Eastern.
43 kilograms, or $1.8 million — That’s how much gold makes it through the wastewater of Switzerland every year, according to scientists at the Swiss Federal Institute of Aquatic Science and Technology. Let’s not forget this is the country where 500 euro notes get flushed down toilets, too.
“When he walked out of his bungalow, the flames were right there, so he bounced out of there, and because so many people didn’t have cars, he was taking them all to the next hotel. He made multiple trips.” — That was Eric Byrnes, recounting the drama for his baseball-legend pal Barry Bonds, when the Napa fires swooped down on a bunch of Hall-of-Famer athletes early Monday.
Puerto Rico deaths reach to 45, says governor
Cop caught on video forcibly arresting Utah nurse has been fired
FireEye says North Korea hackers are targeting U.S. election power companies
When you forget your child in the Crazy Corn Maze
$50,000 for the taking if you can guess the next Oreo flavor
Lindsay Lohan may be one of Harvey Weinstein’s last friends in Hollywood
Eminem unleashed a freestyle rap on POTUS at a hip-hop awards show
MacArthur Foundation names ‘Genius Grant’ winners for 2017
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