Weekly Dividends: July 12th

This past week, education took center stage as worries about international students traveling back to American institutions and potentially spreading the virus became a political bargaining chip.

ICE announced a ban on foreign students who plan on coming to the US for strictly online classes. Meanwhile, many of the nation’s top universities responded saying they could provide a single credit, in-person class that are strictly for international students and also are preparing to fight the government in court.

It’s interesting to see how the virus can be the basis for not letting thousands of young people learn in a different country, yet some still can’t understand the logic of wearing a mask, right?

Coronavirus Isn’t Over… and it Might Never Be

Spain recently carried out a study with the country’s top epidemiologists, and discovered herd immunity may not be “unachievable”. Spain was the second hardest hit country in the world during the earliest days of the pandemic. They averaged over 6,000 new daily cases throughout March and April. After a strict government lockdown, there’s been fewer than 500 new daily cases since June 4th.

Now their study is showing us some daunting findings about the virus. Mainly one thing: Covid almost never goes away.

Their study found just 5% of Spainards have antibodies to the Coronavirus. On top of that, 14% of test subjects who tested positive for antibodies in the early stages of the clinical study, later tested negative for antibodies. The immunities people built up are actually only temporary.

After the report was released, a pair of scientists commented on the discoveries, and what they had to say was not promising: “In light of these findings, any proposed approach to achieve herd immunity through natural infection is not only highly unethical, but also unachievable.”

What is Going to Happen to Malls?

Brooks Brothers has filed for bankruptcy. The same company that has dressed 40 presidents, became synonymous with luxury business attire, and the unofficial outfitter of Wall Street can not weather the current economic storm.

The list of household retailers who have filed for bankruptcy continues to grow. Brooks Brothers joins other mall staples such as GNC, J.C. Penny, Aldo, Neiman Marcus, J. Crew, True Religion, and Pier One.

Don’t rush to put your mask on, get in the car and drive to these stores just yet. Most have plans to restructure their business organization and keep their brick & mortar locations. Yet the bankruptcies show the market as a whole is not doing great by any means.

One more brief retail news tidbit takes us to the athletic wear sector of the market. Nike’s quarterly performances were released this past week, and just like their sponsored athletes, they didn’t do much this past quarter.

Nike reported a quarterly revenue of $6.31 Billion, down 38% from this time last year. Nike’s CTO Matthew Friend saying “we modified our near-term inventory buying plans and proactively canceled pre-COVID-19 factory purchase orders for the fall and holiday seasons by roughly 30% on a unit basis.”

If the largest activewear provider already announced they expect demand to drop by more than 30%, just imagine how their competitors will fare.

US Airlines: Bailouts & the Boot

The money printing machine at the Federal Reserve is in high demand. Just about every industry is waiting in line, with it’s hands out, waiting to be handed a fresh new government bailout. However, airline companies continue to get back in line.

After receiving a $25 Billion bailout in April, a group of air carriers headed by American Airlines asked for $8 billion more last week.

But the money doesn’t stop there, it’s also been going towards airplane adjacent companies such as Gate Gourmet. The airline food provider received $177 Million through the Payroll Support Program, which was meant for large businesses to pay employees.

Yes, Gate Gourmet and American Airlines are different companies with individual functions but both are contributing to a larger problem for the aviation industry: massive employee layoffs.

American Airlines said earlier this week that they are laying off 20,000 workers.

Their competitor, United, said it’s exploring the possibility of dismissing half their employees, which is looking to be more fact than myth after they sent out 36,000 federal mandated 60-day notices to their employees.

Gate Gourmet, the nation’s largest airline food supplier, got approved for grants based on their pre-pandemic level of employment, then proceeded to layoff workers over the past few months.

Term Of The Week:

Insider Buying & Selling

Everyone can trade stocks. That idea is something that our company is built around. There’s no difference between you or someone in a suit on Wall Street. Yet there is a difference between you buying and selling shares, and a company executive making moves involving their company’s stocks.

Insider buying or selling occurs when someone heavily involved with a company’s finances — typically an executive, manager, beneficiary who owns more than 10% of the company’s stock, or employee with knowledge of important company activity — decides to buy or sell more of that company’s stock.

Insider buying and selling can be a good indicator of whether a company will enter a bullish or bearish trend, since insiders have a very strong understanding of a company’s position and outlook in the market. Insider buys and sells are reported publicly to maintain transparency in the markets and these trades are commonly taken by outside investors as indicators of a stock’s future price trends.

NOTE: Insider buying and selling are different from Insider Trading. Insider Trading occurs when an individual who fits the definition as an “insider” acts on information that is not available to the public. Think about Martha Stewart. She is phenomenal at making cupcakes, but she violated SEC rules when she sold her large stake in biotech company, ImClone, after their product wasn’t FDA approved. The stock price dropped 16% after the news and Stewart, who sold days before, saved herself from losing $46,000. However, she did end up paying a $195,000 fine and went to a federal prison for 5 months where she became known as M. Diddy (no, like actually). Try to cross the SEC and they just might get ya.