Jobs – Lance Roberts

This guy has a great way of pushing aside the noise and superficial headlines that do not help.  This set of questions is incredibly important to really dig thru the noise to find your view on job-based inflationary pressures.  Other than prices, this is the other big element; after reading these questions, one has to ask how much employment pressure there really is.

Another take on China – Heisenberg on SA

There are some nuggets in the post and in the comments.   Here is my favorite (bold mine):  “Read an interesting article that the currency bottomed Friday afternoon. It was a good article about how the Chinese guys have been wanting to do this but couldn’t. Now they did it & blamed it on the trade war & not on the real reason that they need a weaker currency to stimulate domestic growth. Sneaky guys with a 3000 yr old civilization. What do they know about social order?

Not to emphasize ‘sneaky’, but that the Chinese leaders have a long history of trials, failures and successes.  They also have the ability to influence the Chinese economy with precision and agility that other countries just cannot do.  I keep watching for irrational bargains surfacing.

Blackrock on China

This report helps a bit … while superficial  data brush (it’s free afterall) … their summary that a) growth deceleration is not that bad, b) the economic policy transition to consumption is working (while early), c) tech and consumer companies do not carry the same level of troubled debt that manufacturers carry, and d) the trade war is the biggest risk.

This has not changed my favorable long term view on both China technology and Tencent specifically

Lance’s weekly update has a very interesting data set that I assumed was true, but had not seen it so easily / clearly described.   I am leaning toward another longer term position in SPY Puts …

Here is the data set – “copied”

However, with the ongoing trade war rhetoric brewing between China and the U.S., a negative surprise certainly maintains a high enough probability to pay attention to.

As I noted over the last few weeks, participation remains concerning as Bob Farrell’s rule #7 states:

“Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.”

For the year, 10 stocks have made up almost entirely all of the gains of the market. Actually, a better way would be to say:

“The top-10 stocks have more than offset the losses from the rest of constituents so far this year given the markets are only up 3.22% ytd.”

S&P Expected Revenue Growth – Brian Gilmartin

This is an absolutely critical data set to watch thru the Q2 earnings reporting … any company that misses their segment revenue growth is a prime short candidate; any sector collectively less than this, trouble.  What i am most interested in is the next version of this w/ >75% of reporting complete.  Will these revenue growth rates hold, or will they be revised downward?   I am not that interested in earnings at this point.

Trade War is Politics (not economic)?

Heisenberg (SA Author that many love to hate but many read) posted a great review of the recent trade war … 

There are two points that really surfaced for me … a) the tit-tat between US and China are moves that actually go against each’s best economic interests, and b) the timing of the US FED interest rates being used as a political cataylst to control further trade actions (this surfaces nicely in the comments).  Some of this analysis is disturbing if political intentions are really behind these moves (US moves).  That signifies that policy makers may not really care too much about the near / intermediate impact to workers (and consumers) for their own political gain.  If that is the core of the strategy, it is very, very sad

Q2 Look Back – Source: Fear and Greed Trader

This is pretty good surface layer summary across different markets, instruments and  geographies.  I did find it, at least through my lens, more positvie leaning than I see.  I will stipulate though that his S&P view works for me UNTIL the herd realizes that the earnings comps in 2019 are going to be  very hard w/out associated revenue growth.  The window of tax change and earnings thru buy-backs and other engineering is closing .. when?  who knows, but i keep preparing for that transition whether it is fast or slow


Will we repeat Japan’s trials?

A great post this morning on how US (all developed countries really) may or may not repeat the trials of Japan as they worked to overcome debt and demographics.  While the precision in this post baffles me (who can really be that accurate), the points and risks are very relevant and something that i am  paying attention to and weaving threads thru multiple sources w/ similar take-aways … conclusion quote: 

“While the four factors identified in my earlier article are bad enough for the US domestic economy and were termed the four horsemen of the apocalypse, the change of trend in central bank balance sheet growth is going to be Thor’s Hammer to asset markets worldwide.  Even robust national government spending in 2019, with a government deficit injecting over $900B into the economy, will not offset the impact of synchronous central bank asset selling.”