Registered Investment Adviser Caleb Lawrence
Despite a difficult week that saw the Standard and Poors 500 Index lose 29 points or 1.2%, and the NASDAQ shed nearly 100 points or 1.5% the major averages look to end the week on a positive note.
The July Consumer Price Index missed expectations for a 5th consecutive month despite a gain of .1%, the year ago rate increased .1% to 1.7%. A third consecutive month below the Fed’s desired 2% target and nearly 1% below the 2.8% seen in February. Most of the price gains for the month came from food and services.
The valley’s premier Unicorn Company Uber’s travails are on their way to mythical proportions following a recent lawsuit filed against its former CEO Travis Kalanick alleging fraud, breach of contract and breach of fiduciary duty. I would think that incompetence played a leading role as well following revelations that Uber’s subprime leasing program Xchange has produced stunning losses. Designed to put their poorly paid drivers into new cars there was little incentive to keep drivers from walking away, as with a traditional lease. After racking up significant miles many drivers did exactly that leaving behind nearly 40,000 high mileage vehicles with loss ratios approaching some $9,000 per unit. Considerably more than the $500 originally estimated. Once again when the money isn’t yours it’s very easy to blow it on all sorts of poorly considered ideas. A hallmark of the post crisis zero-interest rate period that saw abundant, cheap and easy credit find its way into all manner of ill-conceived ventures that look increasingly likely to blow up in everybody’s faces once again.