Thursday was the fourth ugly finish in five sessions, with the Nasdaq Composite COMP, -1.99%
skidding 2%, and the other major indexes backtracking as well.
Andrea Cicione, head of strategy at independent investment research firm TS Lombard, said excessive leverage in the market really began in earnest in July. Cicione added that was occurring in U.S. stocks wasn’t happening anywhere else in the world.
And while he’s seeing signs of a bubble, he thinks if the selling doesn’t intensify, the bubble may reflate soon.
“The leverage accumulation so far may not be enough to burst the bubble just yet,” he writes. “If the recent selloff does not intensify further, the whole episode may end up simply emboldening the bulls to buy the dip and take even more risk.”
Between 1997 and 1998, the Nasdaq experienced three sell-offs of at least 17%, only to emerge stronger and rise four-fold to the 2000 peak. “Leverage is a key characteristic of all bubbles, and almost invariably it is the mechanism that leads to their collapse. But there may not have been enough leverage for the dot-com 2.0 bubble to burst just yet,” he says.
The reason leverage is important in bursting bubbles is because it uniquely can lead to forced unwinding. “When faced with margin calls they cannot meet, investors may have to liquidate positions against their will. The resulting fall in prices can instil doubts in the mind of others, persuading them to sell,” he said.
The buzz
Consumer price data for August is due at 8:30 a.m. Eastern.
The quarterly services survey and August budget deficit are also due for release. The Congressional Budget Office, which typically gets the budget picture pretty close to the mark, estimated the August deficit was $198 billion, and said the September-ending fiscal year gap will be the highest relative to the economy since 1945.
Database software giant Oracle ORCL, +0.66% topped earnings and revenue expectations, helped by revenue from key client Zoom Video Communications ZM, -1.32%.
Oracle also declined to discuss whether it will buy the U.S. operations of social-media company TikTok, as U.S. President Donald Trump said Thursday there will be no extension of the Sept. 15 deadline for it to be sold to a U.S. company or shut.
Jean-Sébastien Jacques, the chief executive of mining giant Rio Tinto RIO, -1.67%, announced he will resign in March following the controversy over the firm blowing up ancient caves while excavating for iron ore.
Thursday marked the first day since spring when new coronavirus cases in the European Union and the U.K. exceeded the United States.
The British pound GBPUSD, +0.18%
continues to reel from its more combative stance taken against the European Union in trade negotiations.
The chart
This incredible UBS illustration of Tesla TSLA, +1.38%
shows how shares have performed compared to other tech giants since joining the $100 billion market cap club. It took Apple AAPL, -3.26%,
Alphabet GOOGL, -1.36%
and Facebook FB, -2.05%
between 4 to 11 years to achieve what Tesla did in three quarters. UBS increased its Tesla price target to $325 from $160 ahead of the company’s battery day presentation.
An experimental treatment kept mice strong in space, one that could have uses back on Earth.
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Apple Inc. countersued Epic Games Inc. on Tuesday, claiming the maker of “Fortnite” breached a contract when it introduced a new in-app payment system within the popular videogame.
The iPhone maker AAPL, -6.72%
asked U.S. District Judge Yvonne Gonzalez Rogers for punitive damages and to block Epic from continuing what it calls unfair business practices, in the escalating skirmish between the two companies. Late Friday, Epic sought an injunction to force Apple to put “Fortnite” back on the App Store, disclosing that roughly a third of “Fortnite” players access it through the App Store.
“Although Epic portrays itself as a modern corporate Robin Hood, in reality it is a multibillion-dollar enterprise that simply wants to pay nothing for the tremendous value it derives from the App Store,” Apple said in a filing Tuesday.
An Apple spokesman declined further comment, but pointed to a company statement on the Epic case called “Free Fortnite.” Epic was not immediately available for comment.
Apple shares plunged nearly 7% in trading Tuesday in another rough day for tech stocks.
The latest legal jousting comes nearly a month after Epic introduced the payment system within the “Fortnite” to side-step the 30% fee Apple and Alphabet Inc.’s GOOGL, -3.64% GOOG, -3.68%
Google charge for in-app purchases. Epic’s gambit prompted both companies to boot the game from their app marketplaces. Epic eventually sued Apple and Google in federal court in Northern California, accusing the computing giants of anticompetitive conduct.
Epic’s stand against Apple has prompted voices of support from Microsoft Corp. MSFT, -5.41%
, Spotify Technology Inc. SPOT, -3.30%
, and others.
The Apple-Epic case has set evolving battle lines on market definition, according to antitrust attorney Paul Swanson.
“Market and product definition may end up being the central battleground in this case. Does Apple have to open up the app-purchasing and in-app purchasing space to competitors, or are those intrinsic parts of Apple’s products that it can rightfully control?” Swanson told MarketWatch.
Chip equipment makers led technology stocks lower Tuesday following reports that U.S. sanctions could spread to businesses like Semiconductor Manufacturing International Corp., China’s largest chip fabricator.
Shares of KLA Corp. KLAC, -7.74%,
Lam Research Corp. LRCX, -6.86%,
and Applied Materials Inc. AMAT all fell more than 6% as U.S. stock markets opened on Tuesday following Labor Day holiday weekend, while the PHLX Semiconductor Index SOX was down nearly 3%.
Meanwhile, the U.S. tech-heavy Nasdaq Composite Index COMP, -2.33%
was down 2.6% and the S&P 500 index SPX, -1.50%
was off 1.8% Tuesday.
Investors may be worrying that SMIC is just another one of many Chinese companies to get added to the list, given President Donald Trump’s recent bellicosity toward Chinese-owned apps TikTok and WeChat .
“Will the Trump Administration stop with only Huawei and SMIC?” speculated Evercore ISI analyst C.J. Muse in a Tuesday note. “Hard to say,” he said, warning that other chip makers in China could be next. Should the potential ban be limited to SMIC, then chip-related stocks have been oversold, Muse said.
Morgan Stanley analyst Joseph Moore said adding SMIC to the list “certainly would be a negative impact to our semiconductor capital equipment coverage”. Moore noted that SMIC had plans of spending $6.7 billion in capital equipment this year alone.
“The bigger issue is that the China risk factor for semiconductor capital equipment continues to grow, as U.S. Commerce Department actions continue to impact new areas,” Moore said.
Susquehanna Financial analyst Mehdi Hosseini took a much less fearful view of the development, remarking that “policy has also proven a double edged sword as efforts of the past few years in isolating China have not really proven a winning strategy”.
Hosseini said “with secular trends suggesting a bright future for chip consumption and thus [semiconductor capital equipment], especially as more of the demand shifts to cloud/commercial end markets, the pull backs caused by such headline risks can also offer a buying opportunity, in our view.
Up until she fell ill with COVID-19, Yvonne Cassidy, a New York-based novelist, said she thought there were only three types of COVID: “The mild version, the version that put you in hospital and the version that killed you. I didn’t know there were others like me, stuck on a post-COVID plateau, not sick anymore, but not better either.”
Two months after being diagnosed with coronavirus, she found it difficult to even walk one block. “It turned out we were a group who had a name: We were COVID long-haulers. The Mayo Clinic and medical journals had published pieces about us,” she said. “We had support groups on social media. We even had a hashtag. We were frustrated and afraid.”
“With my doctor’s guidance I introduced a very slow five-minute jog into my already slow walking schedule. The first time I did it, my chest burned and I doubled over, hands on knees, gasping for breath,” Cassidy, who had toyed with training for a marathon, wrote in an essay for MarketWatch. And today? “The goal isn’t 26 miles. Today’s goal was 30 minutes.”
Cassidy was fortunate. Some younger COVID-19 patients who were otherwise healthy have had blood clots and strokes. Many “long-haulers” — COVID-19 patients who have continued showing symptoms for months after the initial infection — report neurological problems including confusion, difficulty concentrating, heart and lung issues, fatigue, insomnia, plus loss of taste and/or smell.
“There is evidence now that the virus can directly attack heart muscle cells, and there’s also evidence that the cytokine storm that the virus triggers in the body not only damages the lungs, but can damage the heart,” according to John Swartzberg, a clinical professor emeritus of infectious diseases and vaccinology in the the UC Berkeley-UCSF Joint Medical Program.
“One thing we didn’t anticipate was that the virus seems to accelerate a great deal of scarring in the lungs,” he said in an interview with the university. “What we really fear is long-term shortness of breath that could extend anywhere from being very mild to severely limiting.” He found it “disturbing” that one report of CT scans of asymptomatic patients were left with some scar tissue.
Some of these symptoms can persist for months, according to the Mayo Clinic. “The virus can damage the lungs, heart and brain, which increases the risk of long-term health problems.” Most people recover completely within a few weeks, “but some people — even those who had mild versions of the disease — continue to experience symptoms after their initial recovery,” it added.
“Older people and people with many serious medical conditions are the most likely to experience lingering COVID-19 symptoms,” the clinic added. “Although COVID-19 is seen as a disease that primarily affects the lungs, it can damage many other organs as well. This organ damage may increase the risk of long-term health problems.”
Yvonne Cassidy: ‘My chest burned and I doubled over, hands on knees, gasping for breath.’
Although COVID-19 patients can suffer long-term lung and heart damage, there is some good news for these long haulers. There’s more evidence that such aftereffects improve over time, according to a paper by a team of researchers presented at the European Respiratory Society International Congress, which studied patients in a COVID-19 “hot spot” in the Tyrolean region of Austria.
Some 86 patients out of a sample of 150 people were scheduled to return for evaluation 6, 12 and 24 weeks after their discharge from hospital. During these visits, clinical examinations, laboratory tests, arterial blood analysis of oxygen and carbon dioxide, lung function tests, computed tomography scans and echocardiograms (on the heart’s chambers and valves) were carried out.
At the time of their first visit, more than half of the patients had at least one persistent symptom, predominantly breathlessness and coughing, and computer tomography or CT scans showed lung damage in 88% of patients. However, by week 12 after discharge, symptoms improved and lung damage was reduced to 56%.
“
‘The good news is that the impairment tends to ameliorate over time, which suggests the lungs have a mechanism for repairing themselves.’ ”
— Sabina Sahanic, a clinical Ph.D student at the University Clinic in Innsbruck, Austria
“The bad news is that people show lung impairment from COVID-19 weeks after discharge; the good news is that the impairment tends to ameliorate over time, which suggests the lungs have a mechanism for repairing themselves,” said Sabina Sahanic, a clinical Ph.D student at the University Clinic in Innsbruck and part of the team that carried out the study.
The average age of the 86 patients was 61 and 65% of them were male. Unlike Cassidy, nearly half of them were current or former smokers and 65% of hospitalized COVID-19 patients were overweight or obese. Eighteen (21%) had been in an intensive care unitÜ, 16 (19%) underwent invasive mechanical ventilation, and the average length of stay in hospital was 13 days.
The CT scans indicated that overall lung damage decreased from week 6 to week 12. Damage from inflammation and fluid in the lungs caused by COVID-19 was present in 74 patients (88%) at 6 weeks and 48 patients (56%) at 12 weeks. “We did not observe any severe coronavirus-associated heart dysfunction in the post-acute phase,” Sahanic said.
“The findings from this study show the importance of implementing structured follow-up care for patients with severe COVID-19 infection,” she added. “Importantly, CT unveiled lung damage in this patient group that was not identified by lung function tests. Knowing how patients have been affected long-term by the coronavirus might enable symptoms and lung damage to be treated much earlier.”
COVID-19 patients can suffer long-term lung and heart damage but, but there is some good news for these long haulers. (Photo: Getty Images)
This study is also supported by an article for primary-care physicians that was published last month in the British Medical Journal. It said that around 10% of patients who have tested positive for SARS-CoV-2 remain unwell beyond three weeks, and a smaller proportion for months. This was based on a study in which people log their ongoing symptoms on a smartphone app.
This percentage, however, is lower than that cited in many published observational studies. A recent U.S. study found that only 65% of people had returned to their previous level of health 14 to 21 days after a positive test, which has been the case with people who like Yvonne Cassidy who no longer have the virus, but have the antibodies.
Dr. Dixie Harris, a pulmonologist at the Intermountain Healthcare hospital system in Utah, told MarketWatch that coronavirus long haulers suffer shortness of breath, fatigue, memory issues, and even depression, but she too said there is “improvement over time.” She added, “Things such as prolonged symptoms — fatigue, that kind of thing — [have] been reported in MERS and SARS.”
In a second presentation to the European Respiratory Society International Congress on Monday, Yara Al Chikhanie, a Ph.D student at the Dieulefit Santé clinic for pulmonary rehabilitation and the Hp2 Lab at the Grenoble Alps University, France, said that the sooner COVID-19 patients started a pulmonary rehabilitation program after coming off ventilators, the better and faster their recovery.
She studied 19 patients who had spent an average of 3 weeks in intensive care and 2 weeks in a pulmonary ward before being transferred to the Dieulefit Santé clinic. The lack of physical movement in addition to severe infection and inflammation, lead to severe muscle loss, she said. The muscles for breathing are also affected. Most were unable to walk when they arrived at the clinic.
They underwent a test to see how far they could walk in six minutes. At the beginning, they were only able to walk barely a fifth of that distance on average, but after three weeks of pulmonary rehabilitation, this increased to an average of 43%. That is obviously still far from normal, but supervised rehabilitation helped to increase their lung capacity.
“
‘The sooner rehabilitation started and the longer it lasted, the faster and better was the improvement in patients’ walking and breathing capacities and muscle gain.’ ”
— Yara Al Chikhanie, Ph.D student at Dieulefit Santé, a clinic for pulmonary rehabilitation
“The sooner rehabilitation started and the longer it lasted, the faster and better was the improvement in patients’ walking and breathing capacities and muscle gain,” Al Chikhanie said. “Patients who started rehabilitation in the week after coming off their ventilators progressed faster than those who were admitted after 2 weeks.”
COVID-19 has now killed at least 890,064 people worldwide, and 189,114 in the U.S., Johns Hopkins University says. As of Labor Day, the U.S. still has the world’s highest number of COVID-19 cases (6,292,206). Worldwide, there have been at least 27,208,206 confirmed cases, which mostly does not account for asymptomatic cases.
The Dow Jones Industrial Index DJIA, -0.56%,
the S&P 500 SPX, -0.81%
and the Nasdaq Composite COMP, -1.26%
ended lower Friday. Doubts about traction for further fiscal stimulus from Washington may be one factor discouraging investors who have been betting on Republicans and Democrats striking a deal to offer additional relief to consumers and businesses.
India has reported 4,204,613 COVID-19 cases, surpassing Brazil (with 4,137,521) as the country with the second highest number of coronavirus cases in the world behind the U.S. India has a rate of COVID-related death per 100,000 people of 5.3 and a case-fatality rate of 1.7%. In contrast, the U.S. has a fatality rate of 57.7 per 100,000 people and a case-fatality rate of 3%.
‘The sooner rehabilitation started and the longer it lasted, the faster and better was the improvement in patients’ walking and breathing capacities and muscle gain.’ (Photo: AFP via Getty Images)
The tech-heavy Nasdaq Composite Index, after a long and steady rally this year, suffered its biggest two-day loss since mid-March to close out the week.
Before those declines, there were warning signs from Wall Street analysts who ordinarily shy away from rating any stock a “sell.” Shares of Tesla TSLA, +2.78%
had more “sell” ratings than “buy” ratings, and so did 62 other stocks in the Russell 1000 Index RUI, -0.85%.
The U.S. Centers for Disease Control has ordered a moratorium on evictions through the end of the year to keep people from being displaced during the COVID-19 crisis. Treasury Secretary Steven Mnuchin expects the moratorium to protect about 40 million renters. But if you rent your home, you need to understand important details of the order to make sure you are eligible, as Jacob Passy explains.
Alessandra Malito helps a man 15 years older than his wife who wishes to stop working. They are both high earners, but they have a problem with expenses.
Quentin Fottrell — MarketWatch’s Moneyist — helps a woman who is concerned about how much of her husband’s debts she might be liable for if he dies. These affairs may not be so simple, depending on which state you live in.
Getty Images
Don’t Social Security benefits keep increasing over time?
Vanguard revises a tax estimate ‘downward by a factor of 15’
Vanguard founder John Bogle supported a small tax on financial transactions, but Vanguard itself argued against it in January. But now the mutual fund giant has revised its estimates of how much investors and traders would actually pay, by quite a bit. Michael Edesess explains the math and why Vanguard is still against a transaction tax.
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