The Money Grab is On     

By   Todd Horwitz

 The U.S. dodged a bullet last week when Category 5 hurricane Dorian skirted the East Coast. Most of the major population centers did not receive a full blast and those that did were greeted with a storm that didn’t have the punch that was predicted for the South East. But our neighbors to the south, the Bahamas got flattened. The smaller outlying islands got absolutely smashed. It will take them years to recover if they every do. Paradise Island and the hotels that generate much of the income for the nation were spared. This event will be remembered for 100 years in the Bahamas.

In the meantime, business went on as usual on Wall Street and the fact that the Fed has lowered interest rates again to zero means that the big boys cannot possible lose money if they borrow as much and as fast as possible. And so, the big firms are taking advantage of this as long as they can. Apple, John Deere and Company and Walt Disney Co. sprinted to the banks as soon as they opened.

Apple launched a bond deal on Wednesday for the first time since 2017, selling $7 billion in debt thru Bank of America. All three companies issued thirty year debt with a yield under 3 % for the first time ever. Twenty more companies joined the carousel later in the week with more expected to follow this coming week. The reason is the same, slowing growth and rising issues on the trade war with China. This has been the theme in the market for the past six weeks while Congress has been on their traditional summer break.

I have been doing this for more than 43-years and I am going to let you in on a clue. There will always be recessions. Usually they begin with a selloff and fear entering the market. I don’t care if it is a yield curve inversion, a terrorist attack, a hurricane or some other man made or natural event, you can’t avoid the business cycle and this time will not be different. No matter how much president Trump tells the world that there will be no recession on his watch, he won’t be able to stop the cycle. Believe me, the Dems who have completely ignored the economy for three years will be the first to let us know!

 

Todd “Bubba” Horwitz