Biggest IPO Ever

The state-controlled Saudi Arabian Oil Co. (or, Saudi Aramco) just went public, raising $25.6 billion. Based on the 1.5% stake that was sold, the price puts the full company valuation at $1.7 trillion. This issue is now the biggest IPO of all time. See article here, WSJ.

The New Whiskey Dividend

When companies provide dividends in the form of products as opposed to actual cash, it is often referred to as a "whiskey dividend," since a distillery was one of the first companies to follow this approach. More recently, BrewDog (a Scottish craft brewer) floated the idea of a bond that pays coupons half in cash and half in beer. This may create a very loyal investor base. See article here, Yahoo! Finance.

Broker Price War

In a "race to the bottom," Schwab has rattled the industry with its latest decision to eliminate trading commissions on online stock trades. In response, other online brokers followed suit. See article here, WSJ.

Yields: Stocks vs. Bonds

Dividend yields on stocks are typically lower than the yields on bonds. This relationship reflects the added upside associated with stock prices. However, for only the second time in the past 40 years, the dividend yields exceeded bond yields. This relationship suggests that stocks are cheap RELATIVE to bonds. It doesn't necessarily mean that stock prices are cheap in absolute terms. See article here, AAII.

German Yields Below Zero

In an unusual event, German bond yields across the entire yield curve are below zero. So, the government could borrow for ten years (or more) and pay back less than the original principal. Typically this is a sign of a "flight to quality." See article here, Marginal Revolution.

Rhino Bonds

Bonds can come with some unusual terms -- think catastrophe bonds. In a unique offering, newly offered rhino bonds pay out based on an increase in the population of African black rhinos. See article here, Marginal Revolution.

ETF Growth Continues

ETF assets reached a new milestone, passing the $4 trillion mark. Amazingly, the growth from $3 to $4 trillion took only two years. See article here, Investopedia.

Active Managers Underperform Again

Active managers are supposed to do better in volatile markets, such as in 2018. However, the results are in, and a lower percentage of active managers outperformed the market -- just 38%. Over the past ten years, this drops to 24%. See article here, WSJ.

Strengthening Dollar Hurts Profits

Exchange rates can impact the return that investors earn when investing abroad. However, even investors who focus domestically can be impacted by exchange rates. For example, the strengthening dollar will hurt earnings for firms that generate large amounts of revenue outside the US. See article here, WSJ.

Recession Coming?

From an economic perspective, leading indicators are designed to forecast the likelihood of a recession. Recent movements in the data, particularly the spread between 3-month and 10-year Treasury yields, suggest an increasing probability. See article here, WSJ.

Members Exchange (MEMEX)

In a recent move, some large financial firms such as Morgan Stanley and Fidelity have banded together to create the Members Exchange, or MEMEX. The idea is to create a trading venue that has lower fees than the NYSE and is controlled by its members as opposed to stockholders, similar to how the NYSE was originally created. The success of this new exchange is yet to be determined. See article here, WSJ.

Passive Funds Continue to Grow

As of the end of 2018, passively managed funds now represent about 48 percent of fund investment, and Bloomberg is reporting that they expect passively managed funds to overtake actively managed mutual funds by the end of 2019.