The markets continued to rebound as the Dow gained 135 points today and closed at 21,993. The Dow has brushed off the mini sell-off as it is back in the black for the month of August, and never came close to dipping below its 50 or 200 day average. Tech led the way today with strong gains by Apple, Alibaba, Facebook, and Google.
There continues to be some raised eyebrows regarding the corporate high-yield bond market. With world-wide bond rates so low, investors continue to come back to corporate high-yield to find an acceptable return even at the expense of taking more risk. The recent selling of Tesla bonds perfectly illustrates this notion. Tesla issued bonds for 5.3%, which was a record low considering its credit rating and maturity, and considering the company reports negative cash flow. And what’s even more interesting, this was so attractive that they increased the bond offering an additional $300 million because of demand. However, there is a lot of confidence in Elon Musk and Tesla – the stock was up another 1.5% today.
Bitcoin has also been in high demand. The digital currency started to get a lot more attention in May when it pushed over $2,000 per “coin” and at one point was up to $2,800, for a little over a 250% gain year to date. It then hovered around $2,500 for most of June before it started a steady decline in the beginning of July due to uncertainty about a “fork” that would create a spin-off of Bitcoin called Bitcoin Cash on August 1st. At one point in July it dipped under $2,000, but then recovered once there was more clarity about the status of Bitcoin and Bitcoin Cash. By August 1st, it had returned to its previous price, and once the “fork” occurred, Bitcoin took off again, increasing by roughly $1,500 per “coin”. One interesting thing about Bitcoin is that there will be a finite number of them, topping out at 21 million. Currently, a little more than 75% of all Bitcoin has been mined, and it is believed that 99% of all Bitcoin will be mined by 2032, and then the remaining 1% will be mined by 2140.
Day 5 of “Wild Bill” at Philmont: Wild Bill is lost in the wilderness, as we have not received a status update. If he had a Samsung, we might speculate that his phone was used to start a campfire, but since he doesn’t we presume that his cell phone is simply out of the service range. By now he should be in the middle stages of a 50 mile hike and some amazing views.