Industrial Output – not much attention

The Industrial Output report was published this morning and not much was said about it … my thought is that the GM strike and impact muted folks’ interest. I found it a bit alarming, even if you discount GM impact

Yes, i know services are more important than manufacturing, but where does the money come from to pay for the services? Tourists? Seems rather parasitic if all the money made in services originated in services, right?

I’m keeping my eye on manufacturing and industrial production regardless of what the talking heads spew …

Healthcare REITs from Hoya Capital

This was a pretty good post on Healthcare REITs, though my perspective is similar to Hoya’s (preference on lower risk segments) creates a bit of echo chamber here.

DOC and WELL are each ~2% of my actively traded portfolio within the income growth segment. LTC is a much, much smaller allocation mostly because their management team is excellent, but the SNF is a tough business and to be mostly avoided. I am not expecting continued stock price appreciation and have recently trimmed my DOC position, but all 3 will remain in portfolio unless business changes materially.

5G End to End early tests

NOK reported out today some preliminary end to end test results from Indonesia

This is interesting data and will be good to watch over time as independent 3rd parties and more extensive testing gets rolling in different countries / different networks.

QUOTE: “Multiple tests were conducted on the 28 GHz spectrum, obtaining the highest data download speeds of up to 1.62 Gbps with 11ms latency while upload speeds of 75.9 Mbps were measured. The trial also included a voice call test, which was initiated on the 5G trial network and realized over VoLTE (voice over existing LTE network) to demonstrate how basic telephony services would be handled in 5G. “

Trade or Product? – answer impacts strategy

Heisenberg posted a quick one this morning on China autos … i verged off a bit on this snippet: “America’s loss in terms of Chinese market share is Germany and Japan’s gain. “As GM and Ford’s China sales extend declines, US car companies’ share of total China passenger vehicles sales fell to 9.5% in the first eight months of this year from 10.7% in the year-ago period”, Reuters wrote this week. “Over the same period, German car makers’ share has risen to 23.8% from 21.6% and Japanese auto makers’ to 21.7% from 18.3%”.

Ok, so is this decline from all the trade noise (US / China), or something far more problematic … is this that US autos are not hitting the market w/ the right products? If I was either an auto exec or investor (i am neither, tho i do find BYD interesting for their battery possibilities), I would surely want to know the answer to that question and adjust my strategic planning accordingly.

Heisenberg’s post

Mr Toad’s wild interest rate ride

so many variables marching around driving these vectors: China, Turkey, UK, QE-lite (or not), US debt, and that does not even start with economic cycle influences. My guess, the ride is not over yet and selective fixed rate purchase opportunities will surface from time to time – but i am running out of patience on the short (3 month) – (depending on your objectives of course) – i am watching the 2-5year zone and influences.

Words chosen matter

Over the last couple of days, financial news headlines from mainline sources, especially Marketwatch, CNBC, and their peers, have chosen headlines that I see with strong bias toward painting events more negative, more bearish – interest rates and economic data.

An example from today was the jobless numbers this morning. The data was below the aggregate estimate, but MarketWatch headline was: “Jobless claims inch up in mid-september” … a true statement, but the probable audience reaction for the headline tilts negative, rather than “the number was better than anticipated” which would have been more positive.

My point here is not to highlight an incorrect bias, but that we as readers have to carefully respond and look at the data ourselves – not just the headlines. They are deliberately chosen for a narrative by that source and their motivation will always be to sell more content – not really help us make better investment decisions.

I worked with a brillant strategy person not long ago – truly brillant – and in a meeting this phrase was spoken with everlasting impact: “You have failed to realize the power of the English language”. Words chosen by news outlets have a purpose and it just may not be the same as ours.

Bank card delinquency month to month – not so good

That link will take you to an interactive table (see below pic). I just scanned June to August and all are higher except BAC. Not a good sign of healthy consumer that everybody seems to be postulating. This is a new data set for me, so I cannot pose materiality or significance to the month to month increases, but surely is something to watch.

Heisenberg on ECB QE

note: if you are unfamilar with the terms above, you probably will want to skip this post

There are two points in the excellent post that I found worth making a mental note.

First, quote:

“But beyond that, BofA’s Barnaby Martin notes that one “overlooked” aspect of QE is the way in which it “‘transforms’ sovereign debt-to-GDP ratios by moving bonds from risk-averse investors towards more risk-tolerant central banks”.

Central banks are actually sequestering fixed rate risk. That surely makes it easier for investors to stretch out their risk beyond what under non-QE times would be irrational.

Second quote: (my bold)

“Indeed, the ultimate manifestation of new era stimulus (MMT) requires close coordination between fiscal and monetary policy, something Stephanie Kelton will be more than happy to tell you all about. Additionally, Martin describes central banks as “buy-and-hold”, which pretty much by definition means these asset purchases are arm’s length deficit financing, one step removed from MMT. (He doesn’t say that, nor does he advocate for it, we’re just doing some common sense extrapolating.)”

It seems politicians have been spineless to make the needed fiscal policy decisions and debt financing needs exceeded traditional methods … so put in some QE and you get a) ‘off the Treasury books debt financing’ and a risk floor for both investors and politicians. Sounds fishy to me and one has to ask just how stable this would be with another major global financial uh oh? … CB folks have a tough row to hoe.

Mr Toad’s Interest Rate Ride – oh my!

August was this long steep slide, and September so far is a BIG bounce up … hold on to your hats ladies and gentlemen and welcome to a new level of stability and predictability – the next big news will be if the 10yr crosses over 3m and even louder will be the 2yr crossing back over the 10yr.

A plausible bleak scenario

Scenario planning across many domains works for me – thanks to my early study of Shell’s work. I think thru the different scenarios and try to weed thru Plausible, Probable and Unlikely. From that, plans and contingencies and mitigations are created.

Portfolio managers in today’s environments can easily be overwhelmed with the different scenarios birthed by the seemingly irrational events surfacing around the world.

However, that does not mean you can dismiss them without considering the scenario plausible or probable. This scenario posted today is plausible – tho it bothers me greatly.

Thanks to Heisenberg report for diligently working through this over the last few weeks … it’s not crazy, but it’s scary. How do we plan for it is the key question.

EV & Heavy Metals

I previously posted about EV heavy metal impacts with the intent of balancing out the ‘environmental costs’ of selecting an EV (which most people think is the less evil compared to combustion engine vechicles).

A post today has another angle on heavy metals in batteries – concentrated supplies in countries with their own issues. In this case, nikel and batteries and Indonesia. I am not looking at this as investment or trade (commodities are way beyond my comfort zone today), but as another clue in building a solid plan on EV investing (and perhaps my own purchase when trucks are available at value pricing).

Quote: “The country of Indonesia, which reportedly accounts for 27% of the world’s nickel supply, announced last week that it was accelerating its export ban for the metal. The original plan was to stop exporting nickel after 2021, but there were thoughts recently that the timeline would be moved up perhaps a year or so. Last week’s shocking news was that the ban would start after December 2019, partly an effort to stop the country’s rising government deficit. “

For Tesla stock investors, I think this is just one more big red flag waving in the wind.