SA posted a quick update on SK Telecom 5G users and data usage – quote (bold is mine, and there is no more to the SA post):
SK Telecom (SKM -1%) says it’s built up 1M 5G subscribers just four months after launching service. That’s twice as fast to a 1M milestone as SK accomplished with its 4G launch in 2011. The South Korean company says the 5G subscribers are using 33.7 GB of data each month, vs. 20.4 GB from 4G subscribers. The million subs make up about 3.6% of the total subscriber base of 28M.
This will be an important indicator to watch as deployments roll forward beyond ‘super / power users’ … data usage will be critical to the narrative behind data center, network and storage companies’ future. This one data point suggests >50% increase in data usage … extrapolate that one out!
The non-partisan CBO published their regular budget update report. Heisenberg referenced in a post this morning, so I will not recopy the salient points as Heisenberg did a great summary.
Some of these points are very important for investors and every US voter. At minimum, please read Heisenberg’s post.
Update 8-22 – IHS PMI print this morning throws a bit of cold water on CBO estimates (even as bad as they were) – Heisenberg put a good narrative around this and waxed a bit political (deservedly). Here is the key point to my update – quote:
Moore called the August numbers “a clear signal that economic growth has continued to soften in the third quarter”, and said the data “collectively point to annualized GDP growth of around 1.5%”. That is woefully short of the administration’s lofty 3% goal, and lower than CBO’s estimate which accompanied the group’s worrisome budget forecast released Wednesday.
Needless to say, a good phrase here would be: Uh Oh!
Cisco reported annual earnings today. Wall Street, so far, responded unfavorably to future guidance provided by the company. I am not sure I fully agree, but acknowledge that the crystal ball is opaque at best with the current irrationally moving economic parts … so one key question: “Is CSCO hedging the future with very, very conservative guidance?”
This financial block really got my attention given the service provider order drop – quote, with my bold: ” In terms of orders in Q4, total product orders growth was flat. Looking at our geographies Americas was up 1%, EMEA was up 4% and APJC was down 8%. Total emerging markets was down 8% with the BRICS plus Mexico down 20%. In our customer segments, enterprise was down 2%, commercial grew 7%, public sector was up 13% and service provider was down 21%. “
CEO continued on: “Let me double click on service provider just a bit. The Americas was generally the same from an order perspective from the prior quarter, so no real shift positive or negative. Europe was actually positive in the SP space. In Asia, we saw continued weakening in our China service provider business and we had two massive build outs in India a year ago that just didn’t replicate this year with the two major players there. That’s the net of the service provider situation it’s not more complicated than that. “
Bottom line – if CSCO was not one of my largest stock positions, I might be backing up the truck over the next few downturns (I am assuming them to occur), so I’ll watch and back up the little red wagon when opportunity knocks with a >3% yield.
Mr Duy’s post this morning was a bit longer than normal yet worth every character … his summary took me by surprise (see my bold below)
Bottom Line: I agree with the assessment that risks to the economy have grown in the past 6 months. Boiled down to the essentials, the economy is slowing to trend and the multiplying downside risks leave it vulnerable to slowing below trend. The yield curve is telling me that these shocks will not overwhelm the Fed. Powell & Co. can still sustain the expansion and are expected to do so. “Expected” is key of course; the slower the Fed moves, the more likely they are to miss the opportunity to avoid recession. A policy error is a very real potential outcome here. To enhance the odds of avoiding recession, I would advise the Fed to get a 50bp cut done at the next meeting. While I fully expect the Fed to ease at the September meeting, at the moment the Fed seems likely to stick with the less aggressive 25bp cut.
I’m watching these variables and the subsequent analysis as a guide to when / how much to gather more bonds / t-bills / utility stocks.
Update 8-15: Mr Duy updated his post yesterday given the bucket of economic data today fit into his paradigm perfectly – quote: “Bottom Line: It remains too early to see a recession in the data. It’s reasonable to worry about the pessimistic signal from the yield curve but even if it does foreshadow recession, a recession call now is likely still too early. “
New Deal Democrat (SA author) made a clear statement in weekly update that I found interesting. I am not sure that I agree, but the case made is rational and data-driven – quote: “The nowcast remains positive. The short-term forecast, which has been very volatile recently, and two weeks ago was briefly positive, since then has been slightly negative. But the big action has been in the long leading indicators, especially interest rates, which have now turned very positive. If Q2 corporate profits increase in the 2nd GDP report in three weeks, as they have in S&P corporate earnings, almost certainly I will go off recession watch.” (my bold)
Time will tell … careful observations and patience are my focus
Mr Duy comments on employment with 6 points; here is #6: quote – “6.) Still, there is a risk the Fed holds steady. In June, the Fed clearly signaled a rate cut in July. In July, we don’t have such a strong signal for September. It’s not in the bag. Things that I don’t think the Fed has come to terms with yet: 1.) if they want higher interest rates in the future, they need to keep rates lower now and 2.) the whole idea of getting rates well above 2% in a world where the major economies can’t hold 0% is just not going to work.”
Ok … sometimes you just need to confess up to making an error and then working a way out of a hole.
Yesterday with Fitbit due to report earnings, I thought that it may surprise on upside … boy, was I wrong!
With all the published information wrt FIT, I added the following inputs:
Apple reported decent growth in Apple Watch sales
Almost everybody I know uses a FIT device and does NOT want to buy the more expensive Apple Watch (i offered to buy them for wife and daughter and both declined and chose to stay w/ FIT)
I scaned the blogosphere and Stocktwits for any noise – it all came back neutral in RECENT posts
I purchased a total of 300 shares (not much capital intentionally so for a speculative earnings trade)
FIT earnings were good, but the company reduced revenue and margin targets … to sell more cheaper devices (?) … the FIT watch device is NOT selling well.
I am in a hole … I did not sell, I bought a bit more to lower my entry price. Why? User data. The data FIT has is not reproducible. If the current management team cannot figure out how to monetize it, somebody else will … I will keep working (trading) to make a bit of $ of this – a bit of lemonade from really sour lemons.
Key learning: when hunting for noise in blogosphere, retracing steps backward longer in time is worth it.
This is another big FED week, but everybody seems to expect the same outcome … per Mr. Duy (seems consistent generally with others) – quote:
“I think the Fed will be attempting to signal that absent a substantial improvement in the data, the ongoing risks will justify another 25bp rate cut (it would still be a hard sell for the hawks) and that this is expected to be that baseline scenario. But anything more than another 25bp requires more evident deterioration in the outlook or an intensification of risks.Powell will not want to feed into any perceptions that the Fed is already locked into 75bp or more of easing.
Bottom Line: Look for 25bp from the Fed this week with a signal that they are prepared to do more but that they remain data dependent and are not committed to a specific policy path. “
When ‘everybody’ expects same outcome, the risk impact of a different outcome is very, very high … it’s just the probability of a different outcome keeps shrinking, lowering the risk.
Update: I reflected on this post and find it overly filtered thru a win / lose lens, and there are other lens that can be used (like that fancy tool in the eye doctor’s office). There will be a second post shortly on same data but from a cooperative lens – Lens #2.
If you have confidence in your strategy and resources, then competing is best. It does not have to be a kill or be killed, but I think best to when all are focused on engagement and competition to derive the best outputs.
A recent view from Statista suggests that China is winning in the transition to renewable energy. I strongly believe that this will be a key predictor of the leader in the next 10-20 years.
Lance Roberts posted on Seeking Alpha an update on if FED 50 point decrease will really matter. Within that post, he has a great table comparing specific data points between 2009 and 2019 – of course the FED balance sheet is the WOW!
Hold on to your hats folks; the ride has not ended yet!
Mott Capital published piece on their view of S&P probability, and included a great view of 10yr rates vs S&P dividend yield. While I am not sure i fully agree with their inferences, this chart shows another view of Mr Toad’s ride
quote: “Bottom Line: I am still anticipating a 25bp rate cut this month. Policymakers advocating for a rate cut do not appear sufficiently motivated to argue for 50bp while a nontrivial contingent doesn’t believe a rate cut is necessary. It appears that getting consensus on anything more than 25bp would be a challenge considering the current state of the economy.“
Here are a couple of other good quotes – bolds are from source
“It still looks like the Fed will opt for 25bp rather than 50bp at the July meeting. The message from Powell and others is that the primary motivation for a rate cut is a recalibration of policy considering greater downside risks while the underlying economy, in the words of Powell, remains in “a very good place.” A 50bp rate cut seems inconsistent with what seems to be the general assessment of the state of the economy.”
The same is likely true for the degree of cutting that occurs after this July cut.Again, the Fed is recalibrating policy, not reacting to a turn in the business cycle. At this point, only roughly half of Fed policymakers expect rate cuts this year, and then only 50bp. That argues for Evans’ “couple” of cuts given the current data flow. Obviously, weaker data will yield more rate cuts. At the risk of oversimplification, I would anticipate ultimately 75bp or more of cuts if the preponderance of data begins to suggest that the economy is slowing enough to push unemployment higher.“
GDP is powered by population growth – workers, buyers, innovators … Most of the developed world is slowing, shrinking in some cases (political questions withheld). From a portfolio management perspective, I acknowledged that I am woefully under invested in India. This just makes my error more painful