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Cash Bans Coming to Your Town Next: 3 Stocks Driving The Trend

Cash Bans Coming to Your Town Next: 3 Stocks Driving The Trend

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Cash Bans Coming to Your Town Next: 3 Stocks Driving The Trend

Before the pandemic, the U.S. was already on a path to becoming a cashless society. Each year, more and more Americans come to rely solely on credit cards or smartphones to make payments. But, there is always that one place: the small store that is “cash only,” the gas station that charges less if you pay in cash, or the eclectic food truck with awesome tacos, that definitely doesn’t take cards.

These exceptions to the increasingly cashless world ensured that I always carried around at least a few twenties, just in case. No more.

The pandemic has very rapidly accelerated the move to “contactless delivery,” “cashless” stores, and an aversion—by anyone concerned with catching the virus—to touching bills and coins that may be a transmission mechanism for COVID-19.

Companies that were literally built for contactless delivery, and digital movement of currency, are prospering. This transition has also been a boon for certain other companies, but it is causing issues—some expected and others unexpected—for other companies across the country.

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Additionally, low-income individuals who do not have access to digital banking are not faring as well. In response, some major cities, including Los Angeles and New York City, are even going as far as making it illegal for businesses to not accept paper money.

The move to cashless has also disrupted our money supply. The Federal Reserve has cut back on coin production in an effort to maintain the safety of its workers. And, as people spend less paper money and coins, retailers that take cash are having trouble getting access to coins, and in some cases demanding exact change only.

Square (SQ) is one of the companies seeing a surge in business as more and more transactions move to digital. Square, which was created as a replacement for the cash register at small businesses, was originally designed as a point of sale system.

The company recently received an upgrade from Sun Trust with a $150 price target. This after the company had already seen multiple rating raises from a variety of brokerage analysts to the $120-$130 range.

Square technology allows small businesses to take payment in the form of credit cards or smartphone payments. Even businesses doing under $10K in revenue can get a Square reader and accept credit cards at craft shows or one-off pop-up events.

But, SQ stock has not been rising rapidly only because of the original Square technology. A new app, Cash App, is driving growth at the company, and has Wall Street aglow. The app, which has grown from 7 million users at the end of 2017 to almost 24 million users today, allows you to transfer funds seamlessly from individual to individual, or to a business to pay for a service or good.

The Cash App is easy to set up and use, and has caught on with millennials and younger users who use the app for everything from online shopping to paying for their friend’s Starbucks (SBUX).

In Q1, the Cash App generated $528 million in revenue for Square, a 197% year-over-year increase. It is safe to say Square is “squarely” in the middle of the new cashless society, and the stock likely has more room to run.

Another company benefiting from the acceleration of the cashless trend is Visa (V). Visa, as the New York Times reports, is benefiting from the promotion of cashless payments as “governments from India to Kenya to Sweden, as well as the United Nations, are promoting cashless payments in the name of public health.”

Not only is Visa benefitting from an increased number of payments being processed, but from new regulations that have raised the cap on contactless payments. Originally, shoppers in Europe had to enter their pin number for purchases over 20 euros. But, to address COVID-19 that cap has been raised to 50 euros, increasing purchases easily made using contactless payments.

In its recent first quarter report, Visa beat on both earnings per share—coming in at $1.39, higher than estimates of $1.35—and revenue, which was $5.58 billion versus an estimate for $5.75 billion. And, this was as the company reported that “underlying business drivers slowed” due to COVID-19.

Finally, Paypal (PYPL) stock has been on a major run recently, from the low $80s in March, to over $180 today, as the company has been a big beneficiary of digital payments.

Pre-COVID-19, many small businesses attempted to dodge the 3-4% fees imposed by digital payments by imposing minimum purchase amounts in order to use credit. These companies, which just a few years ago could see 10% of payments in the form of credit cards, are now seeing digital payments breach the 80% level.

Such a groundswell in digital is nearly impossible to fight, and plays directly to the strength of a company like Paypal. Dan Shulman, Paypal CEO, recently said about the pandemic, “[N]ow it’s morphing into a psychological crisis as well. People are redefining how they think about things they used to do every day, thinking about what the new normal is going to look like. This is resulting in an immense shift from physical to digital.”

In its most recent quarter, Paypal reported revenue of $4.96 billion, up 17% year-over-year.

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Cash Bans Coming to Your Town Next: 3 Stocks Driving The Trend
Eddy Elfenbein

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Fighting the Surveillance State Begins with the Individual

It’s a well-known fact at this point that in the United States and most of the so-called free countries that there is a robust surveillance state in…

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October 23, 2023

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It’s a well-known fact at this point that in the United States and most of the so-called free countries that there is a robust surveillance state in place, collecting data on the entire populace. This has been proven beyond a shadow of a doubt by people like Edward Snowden, a National Security Agency (NSA) whistleblower who exposed that the NSA was conducting mass surveillance on US citizens and the world as a whole. The NSA used applications like those from Prism Systems to piggyback on corporations and the data collection their users had agreed to in the terms of service. Google would scan all emails sent to a Gmail address to use for personalized advertising. The government then went to these companies and demanded the data, and this is what makes the surveillance state so interesting. Neo-Marxists like Shoshana Zuboff have dubbed this “surveillance capitalism.” In China, the mass surveillance is conducted at a loss. Setting up closed-circuit television cameras and hiring government workers to be a mandatory editorial staff for blogs and social media can get quite expensive. But if you parasitically leech off a profitable business practice it means that the surveillance state will turn a profit, which is a great asset and an even greater weakness for the system. You see, when that is what your surveillance state is predicated on you’ve effectively given your subjects an opt-out button. They stop using services that spy on them. There is software and online services that are called “open source,” which refers to software whose code is publicly available and can be viewed by anyone so that you can see exactly what that software does. The opposite of this, and what you’re likely already familiar with, is proprietary software. Open-source software generally markets itself as privacy respecting and doesn’t participate in data collection. Services like that can really undo the tricky situation we’ve found ourselves in. It’s a simple fact of life that when the government is given a power—whether that be to regulate, surveil, tax, or plunder—it is nigh impossible to wrestle it away from the state outside somehow disposing of the state entirely. This is why the issue of undoing mass surveillance is of the utmost importance. If the government has the power to spy on its populace, it will. There are people, like the creators of The Social Dilemma, who think that the solution to these privacy invasions isn’t less government but more government, arguing that data collection should be taxed to dissuade the practice or that regulation needs to be put into place to actively prevent abuses. This is silly to anyone who understands the effect regulations have and how the internet really works. You see, data collection is necessary. You can’t have email without some elements of data collection because it’s simply how the protocol functions. The issue is how that data is stored and used. A tax on data collection itself will simply become another cost of doing business. A large company like Google can afford to pay a tax. But a company like Proton Mail, a smaller, more privacy-respecting business, likely couldn’t. Proton Mail’s business model is based on paid subscriptions. If there were additional taxes imposed on them, it’s possible that they would not be able to afford the cost and would be forced out of the market. To reiterate, if one really cares about the destruction of the surveillance state, the first step is to personally make changes to how you interact with online services and to whom you choose to give your data.

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Stock Market Today: Stocks turn higher as Treasury yields retreat; big tech earnings up next

A pullback in Treasury yields has stocks moving higher Monday heading into a busy earnings week and a key 2-year bond auction later on Tuesday.

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October 23, 2023

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Updated at 11:52 am EDT U.S. stocks turned higher Monday, heading into the busiest earnings week of the year on Wall Street, amid a pullback in Treasury bond yields that followed the first breach of 5% for 10-year notes since 2007. Investors, however, continue to track developments in Israel's war with Hamas, which launched its deadly attack from Gaza three weeks ago, as leaders around the region, and the wider world, work to contain the fighting and broker at least a form of cease-fire. Humanitarian aid is also making its way into Gaza, through the territory's border with Egypt, as officials continue to work for the release of more than 200 Israelis taken hostage by Hamas during the October 7 attack. Those diplomatic efforts eased some of the market's concern in overnight trading, but the lingering risk that regional adversaries such as Iran, or even Saudi Arabia, could be drawn into the conflict continues to blunt risk appetite. Still, the U.S. dollar index, which tracks the greenback against a basket of six global currencies and acts as the safe-haven benchmark in times of market turmoil, fell 0.37% in early New York trading 105.773, suggesting some modest moves into riskier assets. The Japanese yen, however, eased past the 150 mark in overnight dealing, a level that has some traders awaiting intervention from the Bank of Japan and which may have triggered small amounts of dollar sales and yen purchases. In the bond market, benchmark 10-year note yields breached the 5% mark in overnight trading, after briefly surpassing that level late last week for the first time since 2007, but were last seen trading at 4.867% ahead of $141 billion in 2-year, 5-year and 7-year note auctions later this week. Global oil prices were also lower, following two consecutive weekly gains that has take Brent crude, the global pricing benchmark, firmly past $90 a barrel amid supply disruption concerns tied to the middle east conflict. Brent contracts for December delivery were last seen $1.06 lower on the session at $91.07 per barrel while WTI futures contract for the same month fell $1.36 to $86.72 per barrel. Market volatility gauges were also active, with the CBOE Group's VIX index hitting a fresh seven-month high of $23.08 before easing to $20.18 later in the session. That level suggests traders are expecting ranges on the S&P 500 of around 1.26%, or 53 points, over the next month. A busy earnings week also indicates the likelihood of elevated trading volatility, with 158 S&P 500 companies reporting third quarter earnings over the next five days, including mega cap tech names such as Google parent Alphabet  (GOOGL) - Get Free Report, Microsoft  (MSFT) - Get Free Report, retail and cloud computing giant Amazon  (AMZN) - Get Free Report and Facebook owner Meta Platforms  (META) - Get Free Report. "It’s shaping up to be a big week for the market and it comes as the S&P 500 is testing a key level—the four-month low it set earlier this month," said Chris Larkin, managing director for trading and investing at E*TRADE from Morgan Stanley. "How the market responds to that test may hinge on sentiment, which often plays a larger-than-average role around this time of year," he added. "And right now, concerns about rising interest rates and geopolitical turmoil have the potential to exacerbate the market’s swings." Heading into the middle of the trading day on Wall Street, the S&P 500, which is down 8% from its early July peak, the highest of the year, was up 10 points, or 0.25%. The Dow Jones Industrial Average, which slumped into negative territory for the year last week, was marked 10 points lower while the Nasdaq, which fell 4.31% last week, was up 66 points, or 0.51%. In overseas markets, Europe's Stoxx 600 was marked 0.11% lower by the close of Frankfurt trading, with markets largely tracking U.S. stocks as well as the broader conflict in Israel. In Asia, a  slump in China stocks took the benchmark CSI 300 to a fresh 2019 low and pulled the region-wide MSCI ex-Japan 0.72% lower into the close of trading.
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iPhone Maker Foxconn Investigated By Chinese Authorities

Foxconn, the Taiwanese company that manufactures iPhones on behalf of Apple (AAPL), is being investigated by Chinese authorities, according to multiple…

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October 23, 2023

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Foxconn, the Taiwanese company that manufactures iPhones on behalf of Apple (AAPL), is being investigated by Chinese authorities, according to multiple media reports. Foxconn’s business has been searched by Chinese authorities and China’s main tax authority has conducted inspections of Foxconn’s manufacturing operations in the Chinese provinces of Guangdong and Jiangsu. At the same time, China’s natural-resources department has begun onsite investigations into Foxconn’s land use in Henan and Hubei provinces within China. Foxconn has manufacturing facilities focused on Apple products in three of the Chinese provinces where authorities are carrying out searches. While headquartered in Taiwan, Foxconn has a huge manufacturing presence in China and is a large employer in the nation of 1.4 billion people. The investigations suggest that China is ramping up pressure on the company as Foxconn considers major investments in India, and as presidential elections approach in Taiwan. Foxconn founder Terry Gou said in August of this year that he intends to run for the Taiwanese presidency. He has resigned from the company’s board of directors but continues to hold a 12.5% stake in the company. Gou is currently in fourth place in the polls ahead of the election that is scheduled to be held in January 2024. The potential impact on Apple and its iPhone manufacturing comes amid rising political tensions between politicians in Washington, D.C. and Beijing. Apple’s stock has risen 16% over the last 12 months and currently trades at $172.88 U.S. per share.  

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