Stocks to watch: SGX, Oxley, Gaylin, Federal International (2000), Valuetronics

The Singapore Exchange Centre in Shenton Way.

The following companies saw new developments which may affect trading of their shares on Monday (Nov 12):

Singapore Exchange: The Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX) have developed Delivery versus Payment (DvP) capabilities to settle tokenised assets across different blockchain platforms. “This will help simplify post-trade processes and further shorten settlement cycles,” the MAS and the SGX said in a joint statement. DvP is a settlement procedure where securities and monies are exchanged at the same time, so that delivery of securities only takes place if payment is made.

Oxley Holdings: Oxley Holdings’ wholly owned subsidiary, Oxley Docklands Quay One and National Asset North Quays DAC, has sold a 300-year lease on No 2 Dublin Landings in Ireland for 106.5 million euros (S$166.3 million). The purchaser is Landings 2 Propco SA RL. Oxley Docklands will be entitled to 76.84 per cent of the sale price.

Gaylin Holdings: Gaylin Holdings almost doubled its net loss as its revenue plunged and administrative expenses climbed for the second quarter. Net loss for the three months ended Sept 30 widened to $4.96 million from $2.45 million for the year-ago period.

Federal International (2000): Federal International (2000) posted a third-quarter net loss of $1.62 million after its revenue plunged 77.2 per cent. This came after the oil and gas procurement specialist issued a warning last Monday (Nov 5) that it expected to report a net loss for the three months ended Sept 30 due to “lower sales from trading business segment as a result of weak demand”.

Valuetronics Holdings: Valuetronics Holdings’ net profit decreased 12.8 per cent for the second quarter ended Sept 30, the electronics manufacturing services company said on Monday morning. Its net profit fell to HK$44.3 million (S$7.8 million) from HK$50.8 million a year ago, on the back of lower revenue and a provision of HK$13.6 million related to flash flooding at its Danshui factory in late September 2018.

[“source=forbes]

She Predicted the 2007 Real Estate Crisis — and Sees More Trouble Ahead

In our Zelman Homebuilding Survey, we are seeing very negative trends. Net new orders started the year strong, up double-digit percentages year on year but then decelerated to mid-single digit growth this summer, then to slightly down year over year in September. It’s likely that net sales have continued to decline at an accelerated rate in October. It could result in a pretty ugly fourth quarter if these trends continue.

Also, builders’ sales incentives are picking up. The housing-start numbers are continuing to have slower growth than the market would expect.

Zelman Picks and Pans

Picks

Pans

* “Zelman’s firm has received compensation from FBHS for non-investment banking services.”

Source: Zelman & Associates

Why is that?

As interest rates have moved up, they’ve had an impact on demand, with more difficulty for consumers, in some cases, to afford to buy a home. Compared with a year ago, the monthly payment on a $300,000 home using a Federal Housing Administration insured would be 13% higher. And home prices have also been increasing at 5% or 6%. It’s much more expensive for that entry level, medium-priced home.

There’s a hesitancy to adjust to the new rate environment, but assuming no further upside in rates that reluctance starts to diminish in roughly four quarters, which would bode well for the spring selling season.

Starts are going to be actually stronger than the market believes, not because housing is strong but due to roughly 40% of new housing starts being built on spec. That is, they don’t have a buyer. Starts are outpacing orders. Year over year we’re up about 20% in absolute new home spec building nationwide, though still near an absolute low level.

The September new homes Census Bureau data show a seven-month supply as a result of the increase in inventory and the decrease in overall new home trends. If you’re a home builder and you’ve got a lot of capital in the ground, you’re going to monetize it. You are not going to sit on a finished lot.

What does your crystal ball say about the next 12 months?

Given the strength of the economy and consumer confidence and employment growth, housing should resume growth. That said, prices will likely be under pressure and will have to adjust, even if we do see a rebound in the spring, because it’s more expensive with rates moving higher.

If mortgage rates keep rising, affordability will no longer be favorable from a historical perspective. The monthly payment as a percent of consumer gross income is still actually lower than it’s been for 40 years. But if you start to see mortgage rates go up, say above 5¾% roughly, that monthly payment as a percent of gross income would start to be higher than it’s been historically.

The other risk is the consumer’s balance sheet. That is, how much debt they have. For the single income household that can make the 3½% down payment that FHA financing allows, the trend line now is 39% for the percent of gross income being spent on the monthly payment, including mortgage insurance.

If we go above 40%, it will be more challenging for home buyers to get approval.

How are inventories looking around the U.S., and are there any regional differences?

Inventories on an absolute basis are close to about a 30-year low, although it has risen off that low base this year. It varies not only regionally but even more so by price point.

In a lot of markets that have been exceptionally strong, such as California, Washington, and Oregon, inventories are rising. New York continues to trend higher. The increase regionally is more pronounced in what had been the tightest, fastest-growing markets, because we’re starting to see slower demand there. The West Coast has been really the most negative.

Inventory is much tighter at the affordable price points than at the luxury level. The top 5% of the U.S. market inventory is very much a buyer’s market, with well above normal levels of inventory.

Ivy Zelman likes to do puzzles, big ones with 2,000 pieces. That helps explain how’s she’s able to assess thousands of disparate U.S. housing data points to assemble her closely followed market views. This ability—plus hard work and prescient calls on housing at both the top and bottom of the market—is why she’s among the best known and highest-ranked analysts in the industry. Her negative view on housing in 2006 also earned her the Wall Street sobriquet “Poison Ivy.”

What does she think about housing now? The CEO of Zelman & Associates, an ex-New Yorker with 27 years of experience, notes that home-building growth has slowed sharply of late and that inventory is rising in some regions and markets, like the West Coast and among luxury homes. Still, she sees this slowdown as a pause—but only if mortgage rates don’t go much higher. If they begin to approach 5 3/4%, affordability will become an issue, and all bets are off.

The mother of three teens, who founded her Cleveland-based firm in 2007 after a long career on Wall Street, likes Lennar (ticker: LEN), among other stocks, and doesn’t like some real-estate investment trusts.

Barron’s: How would you characterize the U.S. housing market?

Zelman: It’s at an inflection point and has definitely slowed from where we were last year.

Existing-home sales are down year-to-date about 2%. Most of that has been attributed to inventories too tight at affordable price points. It’s debatable if that negative trend is really due to an overall slowing or sellers’ unwillingness to capitulate to what buyers want in terms of price.

In our Zelman Homebuilding Survey, we are seeing very negative trends. Net new orders started the year strong, up double-digit percentages year on year but then decelerated to mid-single digit growth this summer, then to slightly down year over year in September. It’s likely that net sales have continued to decline at an accelerated rate in October. It could result in a pretty ugly fourth quarter if these trends continue.

Also, builders’ sales incentives are picking up. The housing-start numbers are continuing to have slower growth than the market would expect.

Zelman Picks and Pans

Picks

Pans

* “Zelman’s firm has received compensation from FBHS for non-investment banking services.”

Source: Zelman & Associates

Why is that?

As interest rates have moved up, they’ve had an impact on demand, with more difficulty for consumers, in some cases, to afford to buy a home. Compared with a year ago, the monthly payment on a $300,000 home using a Federal Housing Administration insured would be 13% higher. And home prices have also been increasing at 5% or 6%. It’s much more expensive for that entry level, medium-priced home.

There’s a hesitancy to adjust to the new rate environment, but assuming no further upside in rates that reluctance starts to diminish in roughly four quarters, which would bode well for the spring selling season.

Starts are going to be actually stronger than the market believes, not because housing is strong but due to roughly 40% of new housing starts being built on spec. That is, they don’t have a buyer. Starts are outpacing orders. Year over year we’re up about 20% in absolute new home spec building nationwide, though still near an absolute low level.

The September new homes Census Bureau data show a seven-month supply as a result of the increase in inventory and the decrease in overall new home trends. If you’re a home builder and you’ve got a lot of capital in the ground, you’re going to monetize it. You are not going to sit on a finished lot.

What does your crystal ball say about the next 12 months?

Given the strength of the economy and consumer confidence and employment growth, housing should resume growth. That said, prices will likely be under pressure and will have to adjust, even if we do see a rebound in the spring, because it’s more expensive with rates moving higher.

If mortgage rates keep rising, affordability will no longer be favorable from a historical perspective. The monthly payment as a percent of consumer gross income is still actually lower than it’s been for 40 years. But if you start to see mortgage rates go up, say above 5¾% roughly, that monthly payment as a percent of gross income would start to be higher than it’s been historically.

The other risk is the consumer’s balance sheet. That is, how much debt they have. For the single income household that can make the 3½% down payment that FHA financing allows, the trend line now is 39% for the percent of gross income being spent on the monthly payment, including mortgage insurance.

If we go above 40%, it will be more challenging for home buyers to get approval.

How are inventories looking around the U.S., and are there any regional differences?

Inventories on an absolute basis are close to about a 30-year low, although it has risen off that low base this year. It varies not only regionally but even more so by price point.

In a lot of markets that have been exceptionally strong, such as California, Washington, and Oregon, inventories are rising. New York continues to trend higher. The increase regionally is more pronounced in what had been the tightest, fastest-growing markets, because we’re starting to see slower demand there. The West Coast has been really the most negative.

Inventory is much tighter at the affordable price points than at the luxury level. The top 5% of the U.S. market inventory is very much a buyer’s market, with well above normal levels of inventory.

[“source=TimeOFIndia”]

With elections looming, real estate, auto sectors are likely to be at the forefront

Indian bourses had a tumultuous year hitherto with the indices rallying in the first half only to give up all the gains in September and October.

Indian indices seem to have reached an inflection point where the events that occur now could largely govern and impact the direction we take over the next year.

We saw that outperformance and underperformance this year has largely been sector-specific, unlike previous bull and bear runs which we have to know to be more inclusive.

The biggest dent has been gross underperformance from the midcap and small-cap sectors which have corrected more than 20-30 percent in some cases.

With the festivities around the corner, demand does not seem to be picking across sectors, be it auto or textile manufacturers forecasting a lackluster season this year.

On the macroeconomic front, most of the reforms brought about by the Modi government look to have long-term positives for the economy, even though the short-term implications might have been hard for many industries be it small and large to deal.

The overhang from higher crude prices and a depreciating currency will continue to cast a shadow over the Indian sentiment.

With elections looming upon us and at this inflection point let’s look at some of the sectors that might be at tomorrow’s forefront.

a) Real estate:

Real estate in India remains largely overvalued, the cultural phenomenon associated with owning a home in many cases overpowers the yield this asset pays out. Rental yields in India at between three to four percent do not warrant the premium we pay for real estate in most cases.

We feel this sector is due for a large correction and continue to remain underweight here. Systemically over the longer term, we would expect this asset class to fall in line with global peers, the advent of RERA and new regulations could go a long way in bringing about better price discovery in this sector.

b) Auto:

Weak investor and consumer sentiments ate up into the festive gains of automobile manufacturers in October resulting in tepid sales growth for leading car manufacturers.

While the market leader Maruti Suzuki saw marginal year-on-year growth of 1.5 percent in domestic sales in October at 138,100 units, Hyundai Motors India registered a 4.9 percent growth in domestic sales during the month at 52,001 units.

Slowing auto demand is one of the first precursors to foretell the health of an economy, weak auto demand today in the commercial sector may manifest into weakness in the overall economy next year.

C) IT and Pharma:

A depreciating rupee has aided this sector, which could well be considered the saving grace in the fall we are witnessing now. These sectors are largely export-oriented, and a five percent correction in the rupee will add to margins substantially. Bear in mind this advantage only lasts over a few quarters post which the macros generally realign.

To summarize the overall outlook, though most sectors look to be slowing down on a relative basis, we remain one of the fastest growing economies today.

We maintain a neutral outlook for the next 12 months and see further room for correction with the benchmark indices still trading at valuations higher than the long-term mean post this correction.

Disclaimer: The author is Co-Founder of Zerodha. The views and investment tips expressed by investment expert on moneycontrol.com are her own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

 

Bitcoin Mining (In A Mine) Without Breaking The Bank Or The Planet?

Bitcoin mining, using sophisticated computers to create new bitcoins through the peer-to-peer blockchain network, is a costly endeavor that takes its toll on the environment and resources. That’s the widely accepted perception but is it possible to mine bitcoin more cheaply and in a less environmentally damaging way?

Northern Bitcoin, a German listed company, has begun mining bitcoin and other cryptocurrencies deep within a Norwegian former metal mine and claims it has slashed the price and energy costs of bitcoin mining.

Bitcoin miners around the world have unearthed more than $4.7 billion in revenue so far this year, according to Diar, a bitcoin and blockchain research firm, but due to sky-high electricity prices and this year’s fall in the value of bitcoin and other cryptocurrencies, profits are increasingly hard to come by.

Bitcoin mining price image

The Lefdal mine near Norway’s Sandane now acts as a data center for some of the world’s biggest tech companies.Northern Bitcoin / Lefdal mine

The largest mining pool operator in the world, Bitmain, will soon be forced to average out electricity costs across all of its facilities in order to remain profitable, according to Diar.

Northern Bitcoin claims it can mine one bitcoin for as little as $2,700 in Norway’s Lefdal Mine, against a current market price of around $6,500 and giving it a profit per bitcoin in the region of $4,000.

The Lefdal Mine, which last year opened as a data center hosting the likes of computing giant IBM, uses the cold water of the fjord to cheaply cool computers and the hydroelectric and wind power generated in the region to provide cheap, renewable, electricity.

The mine, which was previously used to harvest the mineral olivine, had been closed for almost 10 years before being transformed to a sprawling underground data center, that includes a self-sustaining water cycle.

Northern Bitcoin has found the Norway average cost for bitcoin mining is $7,700 per coin. It claims China has the lowest average of $3,100, along with Saudi Arabia. In Canada, the average cost of bitcoin mining is almost $4,000. At the other end of the scale, bitcoin mining can cost almost $10,000 per bitcoin in Australia.

bitcoin mine image

Racks of computers are brought into the mine on trucks.Northern Bitcoin / Lefdal Mine

Northern Bitcoin, which in October ditched bitcoin mining for bitcoin cash in order to have a say in the up-coming bitcoin cash fork (but plans to revert to bitcoin mining after that), hopes to eventually be mining 100 bitcoins per day—up from what the company described as “several bitcoins per day” before the bitcoin cash switch.

Meanwhile, bitcoin mining continues to attract attention for its huge energy consumption. The amount of energy required to mine one dollar worth of bitcoin is more than twice that required to mine the same value of copper, gold or platinum, according to a paper published in the science journal Nature this week.

One dollar’s worth of bitcoin takes about 17 megajoules of energy to mine, according to researchers from the Oak Ridge Institute in Cincinnati, Ohio, compared with four, five and seven megajoules for copper, gold, and platinum.

Last year it was estimated the power consumption of the bitcoin network was equivalent to that of the whole of Ireland, while another suggested it was producing the same annual carbon emissions as one million transatlantic flights.

[“source=forbes]

Tech’s big five lost a combined $75 billion in market value on Friday

Investors rushed out of tech, trampling other sectors along the way: ExpertIt was a down day for big tech.

Apple, Microsoft, Amazon, Alphabet and Facebook — the five most valuable U.S. tech companies — lost a combined $75 billion in market value on Friday. They led a 1.7 percent drop in the S&P 500 tech index and a similar slide in the tech-heavy Nasdaq. Amazon was the worst performer of the group, dropping 2.4 percent.

Stocks fell across the board Friday as declines in oil prices and skepticism about a trade deal with China raised concerns that economic growth is headed for a slowdown. Thursday’s report from the Federal Reserve pointing to future rate hikes compounded worries and sent investors fleeing from tech companies, which are particularly susceptible to swings in the economy.

Tech stocks are coming off their worst month since 2008. The Nasdaq closed October down 9.2 percent, with Amazon and Alphabet leading the decline down 20 percent and 9.7 percent, respectively.

Analysts were underwhelmed by recent tech earnings reports, including those from Amazon, Apple and Alphabet. Amazon gave lower-than-expected guidance going into the holiday season and Apple announced it would no longer disclose unit sales for iPhone, iPad and Mac devices.

Even with Friday’s losses, the Nasdaq and S&P tech index finished the week up, as did shares of Amazon, Microsoft and Alphabet.

[“source=forbes]

Foreign Investor Burnout Hits Miami Real Estate

Foreign home buyers have hit the pause button in south Florida.

Between August 2017 and July 2018, the most recent period for sales data by Florida Realtors, foreign buyers purchased $22.9 billion worth of Florida real estate, a 5% decline from the previous 12-month level.

Foreign buyer purchases accounted for 19% of Florida’s existing home sales versus 21% in the same period a year ago. Florida real estate from a foreign perspective is concentrated on South Florida, with Miami, Fort Lauderdale, and West Palm Beach the main attractions.  The foreign buyer share to dollar volume of real estate sold there is nearly twice the national foreign buyer average of 10%.

Foreign buyers, mainly from Canada and Brazil, purchased 52,000 properties, a 15% drop from the previous 12-month cycle.

All told, foreign investors made up 13% of Florida’s existing home sales, down from 15% a year earlier. On a national level, foreign investors buy around 5% of existing housing stock on the market, according to the National Association of Realtors.

Florida sales data were released late October.

See: Disney Expansion Turns Orlando Into Hotspot For Brazil Real Estate Investors — Forbes

Sculptures ‘Dancing Boy’ (center), ‘Garden Butterfly’ (left) and ‘For You’ (right) by Brazilian artist Romero Britto sit in the shops at Midtown in Miami, Florida. Brazilians remain a big driver of foreign real estate purchases in South Florida and now in Orlando. (Photo: RHONA WISE/AFP/Getty Images)

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Latin American and Caribbean buyers accounted for the largest fraction of Florida’s foreign buyers at 36%, followed by Canadians at 22%, Europeans at 19% and Asians at 11%. The Asian investors are dominated by China money.

European buyers have been trending downward since 2016 , and while it looks like it coincides with the election of President Donald Trump, the National Association of Realtors blames uncertainty about income and employment from those employed in Brexit U.K.

Foreign buyers from Mexico have been cut in half, accounting for less than 1% now, and Venezuelan buyers are almost non-existent as most people who can afford to leave and want to leave have done so already. Venezuela is mired in political and economic crisis.

Speaking of crisis, Argentina used to be on par with Brazil in terms of Latin American buyers in Miami. But an economic crisis there (yes, another one) has put its share below that of China’s.

Chinese buyers, who account for around 6% of Florida’s total foreign investors today, up from just 3% in 2017, tend to be new immigrants. Most foreign investors are buying property for real estate appreciation and income. But for the Chinese investor, only 39% are treating their purchase as a fixed-income security. Many are migrating and settling there.

Despite being known as a luxury residences market for second homes, most of the foreign buyers, in south Florida anyway, are not buying anything near million-dollar properties, according to FloridaRealtors.

A “For Sale” sign is displayed outside of a home in Miami, Florida. The National Association of Realtors says foreigners have hit the brakes on local real estate. Photographer: Scott McIntyre/Bloomberg

The median purchase price among foreign buyers was $286,500 in the recent period, versus $259,400 last year. Foreign investors tend to spend on average 20% more than the locals do, with Brazilians and Chinese investors being the biggest spenders. They dish out at least $300,000 for a property.

Some 71% of foreign investments into South Florida real estate was into properties valued at less than half a million dollars.

Due to weak emerging markets and a strong dollar, Florida real estate brokers say they worked with less foreign buyers in the 12 months ending in July. Still, some 41% of respondents surveyed by the National Association of Realtors say they worked with an international client, down from 44% last year. That’s nearly double the national average of 23% of brokers working on foreign purchased real estate deals.

Only 23% of Florida Realtors said they saw an increase in international business, down from 26% saying so last year.  And less than one-third of respondents said they saw more traffic from foreign buyers in the period ending in July, down from 33% last year.

As a result of weak emerging markets, and a strong dollar, just 34% of those surveyed by the Realtors association believe this next 12-month cycle will be better than the previous one. That’s not a huge difference from a year ago when 37% of respondents said the same thing.

South Florida real estate has also been hit with the lack of new land deals and rising prices for new development projects. Many developers have been inching further north into central Florida instead, with foreign real estate investors just starting to discover it thanks to continuous Disney World expansion.

“Thanks to Disney’s and Universal’s expansions coupled with affordable real estate pricing, we are still seeing an accelerated interest in purchasing real estate (here) with buyers from as far away as China, Brazil, Colombia, and Iceland,” says Noah Breakstone, managing partner of BTI Partners and key developer behind The Grove Resort and Water Park in Orlando. “Lots of buyers see it as a better value than Miami,” he says.

According to the National Association of Realtors, just under 11% of the state’s foreign buyers were investing in Orlando in 2018, down from 9.4% this year. Foreigners still prefer the Miami area, which stretches all the way to West Palm Beach. Some 54% of international buyers were heading there so far this year, up from 52.6% in 2017.

[“source=forbes]

Struggling commodity prices signal more trouble could be ahead for the stock market

Oil worker drilling rig

Stocks prices have bounced back nicely since entering a correction in October. But several commodities have failed to recover along with them, suggesting more trouble may lie ahead for investors.

The S&P 500 is up more than 6 percent since Oct. 29, when it closed down more than 10 percent from its all-time high reached in late September. But commodities like oil, gasoline, copper and platinum are still in a correction or in a bear market — down at least 20 percent from their 52-week highs.

Commodities are typically seen as leading indicators for global growth as they are used for everything from homebuilding to powering cities. A decline in commodity prices can signal slower economic growth moving forward.

“The question is does this mean the global economy is slowing? I think yes,” said Komal Sri-Kumar, president of Sri-Kumar Global Strategies. “I can’t see this continuing. When you get these signals, it’s hard to see equities continue to move up on their own.”

Commodities have been hit by a slew of factors, including higher rates, a stronger dollar, weakness in overseas markets and increasing friction in global trade relations.

The yield on the benchmark 10-year Treasury note is trading around 3.23 percent, near its highest levels since 2011. The 2-year yield, meanwhile, is trading at a level not seen in more than a decade.

Yields have risen this year as risen this year as the Federal Reserve continues to unwind historically accommodative monetary policy. The Fed has increased the overnight rate three times this year and is expected to hike once more before year-end.

Higher rates hurt commodities because they make it more expensive to store them for a prolonged period.

Meanwhile, the stronger dollar has also hit commodities which are priced in the U.S. currency. The greenback is up more than 5 percent against a basket of currencies.

Dollar index (left) and 10-year yield (right)

Source: FactSet

“A lot of that is a function of negative performance overseas relative to the U.S. and strength in the U.S. dollar,” said Ilya Feygin, senior strategist at WallachBeth Capital. “The metals especially have been suffering from that combination.”

The U.S. economy grew at a 3.5 percent annualized pace in the third quarter, topping expectations. In China — the world’s second-largest economy — economic growth slowed to 6.5 percent in the third quarter, missing estimates. Meanwhile, euro zone GDP growth decelerated to 0.2 percent in the third quarter from 0.4 percent in the second quarter.

On top of that, continuous trade tensions between the U.S. and China have also depressed commodity prices. Washington and Beijing have exchanged tariffs on billions of dollars worth of each other’s goods this year, sparking fears that tighter trading conditions could slow down global growth.

“What’s happening in the commodity markets has to do with trade,” said Tim Courtney, chief investment officer at Exencial Wealth Advisors. He added, however, that he does not think the commodity complex’s broad decline is signaling an economic contraction ahead.

The decline in commodities has been especially hard on emerging markets as most are net commodity exporters. The iShares MSCI Emerging Markets ETF (EEM) — which tracks a broad basket of emerging market stocks — is down nearly 14 percent for 2018 through Thursday’s close. The iShares ETFs that track Mexican and Chinese stocks are also down 13.6 percent and 11.2 percent, respectively.

Emerging markets will need to recover for the global economy to recover, Sri-Kumar said, noting: “EM now accounts for 60 percent of the global economy.”

But Matt Lloyd, chief investment strategist at Advisors Asset Management, said the sharp losses in commodities could be a buying opportunity for investors as we get closer to the end of the current economic cycle.

“We’re late into the cycle and usually value outperforms growth at these stages,” Lloyd said. “Commodities have been in a depressed market for some time and that has to do with the fact that we’ve had an anemic recovery from the global recession.”

[“source=forbes]

Funding Circle Sets Its Sights On U.S. Small Business Lending Market

Funding Circle, the UK-based small business lender that went public on the London Stock Exchange in September, is setting its sights on the small business U.S. market, hoping to become the leading lender to what it sees as an underserved market.

While fintechs and traditional banks are stepping up lending to small business owners, Funding Circle is betting its longer-term loans and competitive rates with banks will bring more business its way.  Small business lending in the U.S. is “fractured across multiple competitors,” said Bernardo Martinez, U.S. managing director at Funding Circle. “Typically banks haven’t focused on the segment. It’s an unmet need from small businesses standpoints.”

Small Business Confidence Surging

Funding Circle’s push into the small business lending market in the U.S. comes at a time when traditional banks, fintechs, and credit unions are circling. The economy is booming, unemployment is low and small businesses are making money. At the same time, big banks, regional ones and credit unions are looking to diversify their businesses into new markets.  Earlier this week Biz2Credit released its small business lending index for October, which showed the approval rates for small business loans among big banks set a record in October, increasing to 26.8% from 26.7% compared to September.

It also comes as optimism is high among small businesses with the National Federation of Independent Business’ Small Business Optimism Index hitting a reading of 107.9 in September, marking the third highest reading since the NFIB began conducting it 45 years ago. “This is the longest streak of small business optimism in history, evidence that tax cuts and regulatory rollbacks are paying off for the economy as a whole,” said NFIB President and CEO Juanita D. Duggan in a press release when announcing the results. “Our members say that business is booming and prospects continue to look bright.”

When it comes to taking on the rivals, Funding Circle views the market in three segments. There are the traditional banks that are offering small business owners term loan products that range from six months to five years, providing competitive interest rates but a process that can take months and require reams of paperwork. Then there are the fintechs, which can get money in small business owners hands quickly but don’t offer terms that are longer than two or three years. Finally, there are PayPal, Amazon, and Square which are lending to their existing customers who need access to working capital.

Funding Circle Aims To Stand Out With Longer Loan Terms

Funding Circle hopes to differentiate by offering small businesses loans that have terms that are as long as five years but also have interest rates that are competitive with traditional banks.  “A lot of the learnings in the UK market have enabled us to develop technology and processes to get a better assessment of customers,” said Martinez. “We also have investors that enable us to have access to capital at an affordable rate. As a marketplace lender, we have been able to connect those good investors looking for good returns with a more affordable price for borrowers.”  The interest rate on a five-year loan at Funding Circle ranges from 8.5% to 27.79% while the rate on a two-year loan ranges from 7.6% to 25.54%.

Funding Circle is optimistic about its prospects in the U.S. market but that doesn’t mean it isn’t paying close attention to what is going on in the economy both here and abroad. The stock market is in a near decade bull run, the economy has been surging for years now and interest rates still remain low. But there are signs that we are entering the late stage of the economic cycle and if things worsen due to trade wars or other unforeseen reasons, there are some concerns small business owners will have a hard time paying back their loans. That’s not to say any of that is happening yet, but some lenders to consumers have been reigning in the amount they are willing to lend. Take credit card issuers Capital One Financial and Discover Financial Services, two of the nation’s biggest credit card companies. According to a recent Wall Street Journal report the two are tightening lending standards, becoming more cautious in how they deal with credit limits. There isn’t any evidence that customers are having a hard time paying back their balances but the companies realize the party can’t last forever.  “In so many ways, one can’t help but be struck by … just how good the economy [at] this point is,” Capital One Chief Executive Richard Fairbank said on the company’s earnings call, which was covered by The Wall Street Journal. “And in some ways, it almost feels too good to be true.”

Martinez said the executives at Funding Circle pay close attention to the macroeconomic environment and have robust lending and risk management tools in place to assure investors the lending being provided to small business owners can support a recession. “We are always mindful at some point we need to adjust if we don’t think the market can sustain the lending activity,” said the executive.  Having said that, Martinez is confident the market will remain strong with opportunities to grow. “We see a lot of demand in the U.S. They are looking for opportunities to invest in their businesses and we are here to help.”

[“source=forbes]

Stocks skid as tech companies fall; oil plunge continues

Trader Vincent Napolitano, left, works on the floor of the New York Stock Exchange on Friday.

U.S. stocks fell Friday as a combination of weak economic data from China and disappointing earnings hurt technology and internet companies. Crude oil prices fell for the 10th day in a row.

Auto sales in China fell in October for the fourth month in a row and are down 13 percent from a year ago, the latest sign its economy is under pressure. Concerns about China’s economy and its trade dispute with the U.S. contributed to the global stock market skid in October. The stocks that fared the worst during that time included tech and internet companies and retailers, which all took sharp losses Friday.

“China has played such a critical role in driving global growth,” said Kristina Hooper, chief global market strategist for Invesco. “(Investors) are having concerns that these tariff wars are essentially going to kick China when it’s down.”

U.S. crude oil slipped 0.8 percent to extend its losing streak. It’s fallen for five weeks in a row and tumbled 21 percent since Oct. 3. Energy companies have suffered steep losses during that time.

Weak forecasts from companies including video game company Activision Blizzard and chipmaker Skyworks Solutions also contributed to Friday’s decline.

The S&P 500 index dropped 25.82 points, or 0.9 percent, to 2,781.01. The Dow Jones Industrial Average fell 201.92 points, or 0.8 percent, to 25,989.30.

The Nasdaq composite sank 123.98 points, or 1.6 percent, to 7,406.90. The Russell 2000 index of smaller companies gave up 28.72 points, or 1.8 percent, to 1,549.49.

The Labor Department said wholesale prices in the U.S. jumped, and Hooper said that could be linked to the tariff dispute as well. Wholesale prices rose by the most in six years in October as gas, food, and chemical prices increased. The Labor Department’s wholesale price index has climbed 2.9 percent over the last year.

Video game maker Activision Blizzard tumbled after its forecast for the critical holiday season fell short of analysts’ projections. The stock fell 12.4 percent to $55.01, and Electronic Arts lost 5.3 percent to $88.89.

Major technology and internet companies also turned lower. Apple fell 1.9 percent to $204.47 and Facebook shed 2 percent to $144.96. Amazon lost 2.4 percent to $1,712.43.

Benchmark U.S. crude fell to $60.19 a barrel in New York, its lowest in almost eight months. Brent crude, used to price international oils, has fared almost as badly as U.S. crude, and it declined 0.7 percent to $70.20 a barrel in London.

West Coast utility companies tumbled as wildfires worsened in South California, with tens of thousands of people forced to flee in Los Angeles and Ventura counties. PG&E plunged 16.5 percent to $39.92 and Edison International skidded 12.1 percent to $61.

General Electric sank another 5.7 percent to $8.58 after a JPMorgan Chase analyst cut his price target on the stock to $6 a share from $10. Stephen Tusa said six of GE’s eight divisions might be unprofitable in 2020.

Bond prices rose. The yield on the 10-year Treasury note fell to 3.18 percent from 3.23 percent.

Despite the losses Friday, the S&P 500 still gained 2.1 percent this week. It climbed 2.4 percent last week but would need to rise another 5.4 percent to reach the all-time high it set on Sept. 20.

Walt Disney’s net earnings were better than expected, as the entertainment giant raked in revenue from movies including “Avengers: Infinity War,” “‘Incredibles 2” and “Ant-Man and the Wasp.” The stock gained 1.7 percent to $118.

A federal judge blocked a permit from the Trump administration for the construction of TransCanada’s Keystone XL pipeline, pending an environmental review. The long-delayed $8 billion project pipeline would begin in Alberta and run through a half dozen states to terminals on the Gulf Coast. U.S. District Judge Brian Morris ruled that the potential impact had not been considered as required by federal law after environmentalists and Native American groups sued to stop the project, citing property rights and potential oil spills.

In Toronto, shares of TransCanada lost 1.7 percent.

Online reviews company Yelp nosedived after it posted weak third-quarter revenue and its forecast for the fourth quarter also fell short of Wall Street’s estimates. The company said part of the problem is an advertising model that is intended to encourage advertisers to try the site without signing a long-term contract. Yelp said that has made its results more sensitive to short-term problems. Its stock fell 26.6 percent to $31.93.

In other commodities trading, natural gas prices jumped 5 percent to $3.72 per 1,000 cubic feet. That helped gas companies stem their losses. Heating oil was little changed at $2.17 a gallon and wholesale gasoline fell 1.4 percent to $1.62 a gallon.

Gold fell 0.3 percent to $1,208.60 an ounce. Silver lost 2 percent to $14.14 an ounce. Copper slid 1.9 percent to $2.68 a pound.

The dollar slipped to 113.76 yen from 113.99 yen. The euro fell to $1.1333 from $1.1356.

The French CAC 40 and the FTSE 100 in Britain both fell 0.5 percent. Germany’s DAX was little changed.

Tokyo’s Nikkei 225 retreated 1 percent and Hong Kong’s Hang Seng fell 2.4 percent. Seoul’s Kospi gave up 0.3 percent.

[“source=forbes]

Real Estate Agents Answer: What Are The Worst Mistakes Sellers Make?

Selling a home is an emotional process, one that can make sellers susceptible to all sorts of pitfalls along the way. In an effort to help make the transition easier, we asked top real estate agents to point out the biggest mistakes that sellers make. Read them over so you don’t fall into the same traps.

Forgetting about curb appeal:

“If you can’t get the buyer’s through the front door, any interior improvements might not matter. Take time to lay new sod, plant hedges, or colorful flowers to create an inviting entrance to the home and set the stage for your buyers to fall in love. The old saying still reigns true: you never get a second chance to make a first impression.”

– Les Waites, Agent, The Keyes Company

Pricing your home too high:

One of the biggest mistakes a seller can make is to price their home high. Sellers will think they can always reduce the price if needed. However, the problem with this approach is the home will sit on the market until the home is priced right and it may become stigmatized. Price your home right  from the start – based on comparable recent sales, upgrades, and condition – and it will sell fast.”

– John Myers, Broker/Owner, Myers & Myers Real Estate

Not preparing the home for sale:

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“The biggest mistake I see is sellers who try to rush to put a property on the market without the proper preparation. Too often, I see sellers disregard easy steps like decluttering and staging their home. If they would’ve taken the extra time to do these things, they could very well see a higher purchase price and save time on the market. Real estate is like any other product — proper delivery is paramount to success.”

-Talbot Sutter, President/Broker, Sutter & Nugent Real Estate

Neglecting to make necessary repairs:

“Many homeowners who are planning on selling within a few months or years tend to put off maintenance because ‘it won’t be their problem for long,’ but this can prove to be a costly mistake. Once you sell the property, you will have to disclose all known defects to a potential buyer. It’s likely that the repairs will be more expensive to fix later and will come off the sales price of your home.”

– Craig Mracek, CEO of Keylo

Investing in unnecessary upgrades:

“One of the biggest mistakes sellers make is investing into upgrades that a new buyer may or may not want. Remodeling a kitchen or bathroom can be a large undertaking and involves a lot of preference. Doing so right before selling rarely leads to a return in investment, especially when carrying costs during the renovations are considered.”
– Jamie Klingman, Broker/Owner, Boutique Realty Florida
Taking low offers too personally:
Sellers who are trying to get top dollar for their property need to recognize that the buyers are trying to pay the least amount possible for that property. If a low offer comes in, try not to take it personally. It may be a starting point for negotiation or it may be an automatic ‘no’, but either way, it’s important to keep a level head while making your final decision. “
[“source=forbes]