Canadian cannabis has a cash problem while household debt is skyrocketing and more in today’s Closing Bell on Money and Markets.
The Top Story
Americans are borrowing more money for houses, refinancing or just about anything you can think of.
U.S. household debt reached a record-breaking $14 trillion, according to the Household Debt and Credit Report, released by the Federal Reserve Bank of New York.
That is $1.5 trillion more than the previous high in the third quarter of 2008. Total household debt is nearly 27% higher than in the second quarter of 2013.
Mortgage balances in Q4 2019 increased $120 billion to $9.56 trillion. Another big increase came in student debt. That debt increased to $1.51 trillion from $1.4 trillion at the end of 2018. More than $100 billion of student loan debt is actually held by people age 60 and over.
Additionally, one in nine holders of student loans is 90-plus days delinquent or in default and nearly half of all student loans are in deferment or forbearance.
Auto loan debt jumped to $1.33 trillion and credit card debt reached a record of $930 billion.
Total household debt has gone up for 22 straight quarters.
Money and Markets: Closing Bell*
S&P 500: 3,357 (+5 points, +0.1%)
DOW: 29,276 (no change)
NASDAQ: 9,638 (+10 points, +0.1%)
GOLD: $1,567.60 (-$4.20, -0.2%)
BITCOIN: $10,273.76 (+$403.06, +4.1%)
U.S. 10-YEAR YIELD: 1.59%
*- as of 4:04 p.m.
A Big Win
In Tuesday’s Wall Street Wake-Up, we mentioned watching for Calloway Golf Co. (NYSE: ELY). The company reported a quarterly loss and noted the coronavirus will have a negative impact on future sales. Calloway shares were down 8.5% Tuesday afternoon.
Another apparel maker, Under Armour Inc. (NYSE: UAA) reported a quarterly loss. Company shares fell 18.8%.
M&A News
Indian-based IT and consulting company Infosys Ltd. ADR (NYSE: INFY) is acquiring cloud consulting company Simplus, which has a solid focus on working with the Salesforce cloud platform. Terms of the deal were not disclosed.
Golden Nuggets
Gold and silver prices were down, thanks to positive market comments by Fed Chair Jerome Powell. A drop in coronavirus cases also helped sink safe haven prices.
The price of gold was down 0.2% to $1,567.60 an ounce while silver prices fell 0.7% to $17.62 an ounce.
Platinum prices did move up 0.9% to $976 an ounce. Palladium jumped to $2,268 an ounce.
Cannabis Corner
Canadian cannabis companies have a liquidity problem.
According to a report from Bloomberg, large Canadian pot producers average only 6.5 months of cash on hand. U.S. companies average 14.4 months by comparison.
Aurora Cannabis Inc. (NYSE: ACB) has about 2.3 months of cash while Canopy Growth Corp. (NYSE: CGC) has less than 10 months of cash on hand.
The issue is cannabis companies lack large financial backing, something they sorely need to become profitable. Ello Capital chief executive Hershel Gerson said investors would buy into pot companies, but only if the circumstances were right.
“I think people are looking for quality management teams that can effectuate a turnaround and have experience operating in a tighter environment than some of these early C-level teams,” Gerson said.
Aurora was one of many cannabis companies who have announced their top executives are leaving in recent weeks.
Stock Market Update
There aren’t nearly as many job openings as there were two years ago.
According to Labor Department data, the U.S. job market continued to tighten as there were just 6.4 million job vacancies in December. That’s down from the 6.8 million openings in November and is the lowest it’s been in two years.
Manufacturing had a 24% year-over-year decline in job openings while the total number of job openings was down more than a million from where it was last February.
In other market news, U.S. equities were marginally higher in afternoon trading.
The Dow Jones Industrial Average was up flat. The S&P 500 and Nasdaq Composite were both up 0.1%.
Today’s Big Winners:
T-Mobile US Inc. (Nasdaq: TMUS) +11.7%
Dish Network Corp. (Nasdaq: DISH) +7.1%
DaVita Inc. (NYSE: DVA) +6.9%
Xilinx Inc. (Nasdaq: XLNX) +4.4%
American Airlines Group Inc. (Nasdaq: AAL) +3.6%
Today’s Big Losers:
Under Armour Inc. (NYSE: UAA) -18.8%
Masco Corp. (NYSE: MAS) -4.2%
Facebook Inc. (Nasdaq: FB) -2.7%
Verizon Communications Inc. (NYSE: VZ) -2.5%
Microsoft Corp. (Nasdaq: MSFT) -2.2%
Check back for the most important news and numbers each day after the Closing Bell, only on Money and Markets.
Don’t forget about “Marijuana Markets: a POTcast,” featuring the biggest cannabis news and investment notes from Banyan Hill’s Anthony Planas, here on Money and Markets each Saturday morning.
