Interesting 5G data point

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!

CBO on Budget

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!

Mr Duy on Fed and baseline view

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. “

Close to ending recession watch?

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 and Mr Toad’s ride … Whew!

The drop on the 10yr below the YTD trendline is material, imho

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.”

Collaboration – Lens #2

A recent post described a competitive lens on this data

Infographic: The State Of Global Renewable Energy Employment | Statista

The collaborative lens would ask …

  • what is China doing that the rest of us should copy?
  • what can we do to help others increase their renewable energy employment?
  • what are the constraints keeping employment less in some countries?
  • what are the strongest forces in all countries to grow employment in this field?

The gist of the discussion becomes how to increase EVERYBODY rather than find winners and losers. Learn and share to the benefit of all. … how strange, right?

Mr Duy on Fed

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.

A new financial blog

Jeff Miller in WTWA this week pointed to a blog I had not seen before

This post was excellent and gave me a ton to think about. Piling this on to a Heisenberg post this weekend is pushing my bias more strongly in the US investment grade debt.

Here is a chart of G7 projected growth to help (if you believe these numbers are even close)

Compete or stifle competition? – Lens #1

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.

Infographic: The State Of Global Renewable Energy Employment | Statista

Mr Toad’s Wild Interest Rate Ride – July so far

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


Mr Duy on Fed – Monday 7-15-19

Mr Duy’s full article is worth the read today … his summary does not carry the same value imho

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.


After all the Fed speak today, the current interest rate futures are a bit strange, maybe confused

Near term rates are surely going down (wisely or not tbd) yet longer rates are mixed w/ 10yr flat and 30yr up … the superficial interpretation: fed lowers front end, increases inflation and “perfecto!”. Such BS – nothing is that simple. I am holding capital until some of this falls out. Younger more risk accepting traders can get in the saddle – and many will make money for sure. I just, as i’ve said countless times, want a return of my capital, not necessarily fantastic returns on my capital.

Mr Duy on Fed

Quote: “Bottom Line: The data is not supporting a 50bp cut, nor does there seem to be much stomach for a such a move at the Fed. The story emerging is one of an insurance cut to reverse December’s hike. A 25 basis point cut this month looks likely; given the dovish direction of the Fed as revealed in the SEP, the odds favor still another 25bp, but that looks more fragile than I believe a few weeks ago.

this seems like the most likely scenario – anything less than this will get market pushback

A couple of resources on 5G

First from Statista, technical contributions … no surprise here on the total number. Unfortunately a breakdown on what part of the value chain, e.g., end point, transmission, management, etc, is not available (at least yet).

Infographic: Huawei is Leading the Race to Develop 5G | Statista

One of my followed authors on Seeking Alpha posted an interesting view on why US is behind in technology, leadership and deployments. Some of this is new to me, and I do not have additional sources to support the view published here.

Regardless, US is not leading, and the current political strategy (blacklisting and tariffs) are hard for me to paint a path of success. Seems like a collaborative effort with government investment in technology and deployments would have higher probability of success.