TAOST Recap For Week Ended 10 January 2020

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Subject: TAOST Recap For Week Ended 10 January 2020

TAOST Wrap

Week Ended Friday

10 January 2020

Just think...

"If you're trading individual securities, you're almost certainly making a mistake. Because most professional managers can't outperform their benchmarks, and there's little reason to think that individuals can."

-- Richard Thaler

Greetings Traders:

Welcome to 2020... I trust you all had enjoyable holiday/year end celebrations. Mine were quite good, which these days just means my kids had fun...

As a side note, please know that this week's quote was chosen to show that even verifiable geniuses say stupid things. That said, it's good to have those voices out there, for they are why it remains possible, as ever, to make money trading short term.

1 other side note... I started trading a model account on 2 January 2020 to show how day trading can grow a small account. I post the balance each day to my blog, so if you're interested, check it out.

Last Week

In Sum

The year started out with geopolitical risks continuing to dominate the headlines. Although, this time it wasn’t tension between China and the U.S., but conflict with Iran after 45 ordered the killing of Iranian leader Qassem Soleimani. Stocks initially collapsed while oil prices rose and gold jumped to a six year high on the back of this news. However, after a week of back and forth, the markets concluded that outright war was not imminent and stocks continued higher.

Outside of the Northern Africa, the headlines this week were dominated by news out of CES in Las Vegas, Prince Harry and Meghan Markle’s surprise statement that they intended to step back as senior members of Britain’s royal family, and the much anticipated December employment report.

At the world’s biggest trade show, the exhibitors at CES were optimistic that the technology displayed would spread into the broader markets. Topics of main focus at this year’s show included: AI, 5G, IoT, Edge computing, smart cities, sustainability, transportation, cryptocurrency and blockchain. (see below for some company specific announcements).

On the employment front, the U.S. economy added a seasonally adjusted 145,000 jobs last month and the unemployment rate stayed at a 50-year low of 3.5%, marking the 10th straight year of payroll gains and the longest stretch in 80 years of data (surpassing the 1990s for the most total job growth during a decade). However, the big gain is at least partly a function of population growth. In terms of percentage increases, the 17.4% gain was the second smallest in the past 80 years.

Digging under the hood, 2019 was the weakest year for job growth since 2011 (the economy added 2.1 million jobs). The goods sector employment grew just 0.8%, service-sector employment grew 1.5% and manufacturing rose 0.4% (motor vehicles and parts, primary metals, and mining all decreased while construction employment rose). And as discussed in the past, wage growth decelerated continuing to puzzle economists. Note also that the rising prevalence of "low quality" jobs makes all of the celebration about job growth much ado about nothing in my opinion.

In other economic news this week, the Institute of Supply Management’s (ISM) manufacturing gauge slumped to its lowest level since June 2009 in December, while the non-manufacturing index rose to its highest level in seven months. The factory sector is being held back by trade tensions and weakness overseas, while the service sector remains an engine of economic growth.

On the forecast front, the World Bank released its new forecasts for the global economy, growth of 2.5% in 2020 (up from 2.4% in 2019). The slight pickup is expected to come entirely from improvements in emerging markets economies. The U.S. meanwhile, is among countries where growth is expected to slow - to 1.8% this year from 2.3% in 2019.

S&P 500 +.7%,

Nasdaq +.9%

DJIA +1.8%.

SPY -- S&P 500 ETF Trust

Fear & Greed suggests things are looking a bit "toppy."

Macro News

Amid escalating tensions over the killing of Qassem Soleimani, Iran said that it would not fulfill any of its commitments under the 2015 Nuclear Accord—an agreement European countries had been desperately trying to keep alive. That means Iran will no longer limit the number of centrifuges used for uranium enrichment, increasing the possibility that the country will develop a nuclear weapon.
The U.S. and Iran appear to be backing down from outright conflict, after a press conference Wednesday by 45 signaled no new attacks on Iran, after missile strikes by the country on Iraqi airbases housing American forces produced no casualties. However, 45 did say the U.S. would move ahead with "punishing economic sanctions."
After initially being attributed to a technical failure, U.S. officials said late Thursday that they had intelligence that the crash of the Boeing 737 just outside of Tehran, which killed 176 people, was actually downed by a missile fired by Iranian military forces.
US companies and government agencies should “pay close attention” to critical systems and to Iranian tools, tactics, and procedures in the wake of US killing of Iran’s top general, Qassim Suleimani, a senior cybersecurity official at the Department of Homeland Security warned.
Some of the worst wildfires in decades have been burning across Australia in recent months, exacerbated by hot, dry, and windy conditions and rising global temperatures. Almost 15 million acres of land have burned so far, compared to "just" two million acres in California in 2018.
China's chief trade negotiator will travel to Washington next week to sign a phase-one trade deal with the U.S., China’s Commerce Ministry said Thursday, the first official confirmation by Beijing on the signing of an agreement that could help ease bilateral tensions.
This month marks the end of the so-called 'Double Irish'—a much-used tax avoidance strategy that involves setting up operations in Ireland to take advantage of its low corporate tax rates. Under pressure from the OECD, the EU, and the U.S., Ireland closed the loophole, while a similar one in the Netherlands—the 'Dutch sandwich'—has also shut.
A new budget proposed by California Governor Gavin Newsom includes a plan to allow the state to contract with generic drug makers to provide medicines to all Californians. He believes that the government's purchasing power may be sufficient to cut drug prices to the state's 40M residents, almost 33% Medicaid enrollees. Newsom is also in favor of authorizing the California Department of Health Care Services to negotiate drug prices for international buyers, a situation that could potentially enable the state to achieve discounts on par with Canada.
The market for low-rated corporate loans has suffered sharp declines in recent months, a sign of growing aversion to earnings shortfalls or other strains at indebted companies. In the U.S. at the start of December, some 2.5% of leveraged loans were trading at less than 70% of face value, the most since September 2016, according to S&P Global Market Intelligence’s LCD, the loan market research service.
Bond issuers extend maturities by decades to avoid downgrades. Some borrowers could be over 100 years old by the time their student loans mature. About $11.5 billion of outstanding bonds have been pushed back by as much as 54 years, as borrowers take longer to pay off debt.
For several years, lawmakers have been talking about regulating A.I.—but it will finally happen in 2020. For instance, on Tuesday, the White House introduced guidelines that federal agencies like the Federal Drug Administration and Department of Transportation must adhere to when crafting A.I. regulations, like whether their rules ensure that A.I. is “fair” to everyone {Whatever that means...}. The principles, while vague, are a precursor to separate and more formal regulations that could impact how businesses use specific A.I. technologies like facial recognition. Even if federal A.I. rules fail to be enacted in 2020, local and state governments will continue to fill in the regulatory gaps, as cities like San Francisco have done for the use of facial recognition by law enforcement.
Michael Bloomberg and 45's 2020 campaigns have both secured 60-second advertising spots during the Super Bowl on Feb. 2 at a likely cost of at least $10 million each, Politico reports.
Thailand opened its first medical-marijuana clinic this week, and is embarking on a public-education campaign featuring a plush toy named Dr. Ganja.
The U.S. population is growing at the slowest pace in about a century. The big causes: One is falling fertility—the number of children each woman can be expected to have over her lifetime dropped to the lowest on record in 2018. The other is less immigration. "As the country faces continued population stagnation, the 2020s will become a crucial period for understanding the role of immigrants in our economy and society," demographer William Frey writes at the Brookings Institution.

Bitcoin - USD/Bitcoin

The only way for Bitcoin to show clear strength to me is by breaking up through the down trend line.

Micro News

Impossible Foods unveils new pork, sausage products at CES 2020. Hmmm... that doesn't exactly sound good... but what do I know?
A cyber attack on Travelex, the world's largest retail currency dealer, has been ongoing since New Year's Eve, forcing the company to go back to basics: manual calculators, for one. A group that claimed responsibility for the attack was reportedly demanding millions to prevent them from releasing customer information after first hacking the company six months ago.
Automaker BYD and ride-hailing service Didi are expanding their collaboration on ride-hailing services in China. BYD said that while it has spent about 10 years gaining market share in the taxi services industry, it is making efforts to expand its presence in the ride-hailing space.
Uber and Lyft are refusing to abide by a new California law that compels the companies to classify their drivers as employees. Assembly Bill 5, or simply AB5, is a law that went into effect in California on Wednesday that could completely change the face of the gig economy in its aims to make it harder for businesses to hire workers as contractors. Uber and Postmates filed a lawsuit in federal court challenging AB5, alleging that the law is unconstitutional. The companies claim that it’s arbitrary that direct salespeople, travel agents, grant writers, construction truck drivers, commercial fishermen and others are exempted from the law. At the risk of siding with unicorns... the ride hailing companies are right... you can't just bring the hammer down wherever you like and claim that it's still equitable. No employer would continue to employ someone who comes to work when they want...to work where they want... for as long as they want
Uber drivers will now be able to see a trip's time, distance, destination and estimated price ahead of time, and can reject requests without penalty, essentially giving them more freedom to refuse less-profitable trips. The latest changes are meant to give drivers more choice about which rides they accept, making them appear more independent in the eyes of the law. Add this to the other changes... tipping and charging for time and suddenly Uber doesn't look all that different from traditional taxis.
In hopes of achieving “financial independence,” Lime is exiting dozens of markets across the U.S. and Latin America. With the changes, Lime will be eliminating about 100 workers, or roughly 14 percent of its staff. About a quarter of the job cuts will be tied to the elimination of those dozens of markets. Among the cities Lime is exiting include San Diego and Atlanta, previously two of the company’s largest markets in terms of scooters deployed and rides. However, both cities have adopted stricter scooter regulations, which may have caused the exit. Lime president Joe Kraus told Axios that he believes Lime will become profitable in 2020, has no plans to sell itself to another company and is not currently looking for a fresh cash infusion. Sounds like the beginning of the end.
Zume, a food automation startup best known for pizza-making robots, is looking at laying off 80 percent of its staff, according to a media report. Silicon Valley-based Zume previously raised $375 million from Softbank, and is one of several heavily funded companies in its portfolio to see high-level departures in recent months.
Car-rental startup Getaround plans to lay off roughly 150 employees, or about a quarter of its staff, in a bid to reduce rising costs, people familiar with the matter said. Getaround joins multiple companies backed by SoftBank’s Vision Fund, the world’s largest tech investor, that have made significant staff cuts recently, as pressure grows for these businesses to demonstrate that they have a path to profitability.
In what was likely the biggest surprise of CES on Monday, Sony unveiled a prototype electric vehicle. The Vision-S is loaded with Sony technology, from image sensors to a dynamic sound system, and was built to showcase how the company’s technology could be adapted for the mobility space.
Hyundai and Uber are collaborating on an urban air taxi concept, the S-A1. Hyundai developed the “urban air mobility vehicle” for use on Uber’s future Elevate air taxi service. The vehicle seats five, including the pilot, and features four electrically-driven props in a vertical orientation. The companies hope that the design will make the vehicle quieter than a traditional helicopter, ideal for use in urban environments.
SpaceX launched another 60 satellites in its Starlink network last night, becoming the largest commercial satellite operator. The launch aboard a Falcon 9 rocket brings to 182 the number of spacecraft the firm has now put in the sky as part of its plan to beam broadband internet service to Earth.
IBM quantum computing service tops 100 clients. The announcement suggests that quantum computing is no longer a lab or university experiment, said Matthew Brisse, an analyst at research and advisory firm Gartner. By 2023, a fifth of organizations, including businesses and governments, are expected to budget for quantum-computing projects, up from less than 1% in 2018.
McDonald's is expanding its pilot of Beyond Meat burgers to 52 restaurants across Canada after rolling out the plant-based meat burgers in 28 local outlets in October.
GM last year posted its biggest-ever sales drop in China. The world’s largest auto market has now become a trouble spot for many makers, foreign and domestic, as economic growth tapers off and the government cuts back on subsidies for buyers.
The makers of TikTok, the smartphone app used to make short videos, had serious vulnerabilities that may have allowed hackers access to personal information and the ability to manipulate user data, according to a report from a cybersecurity company in Israel. The company said it has patched the security flaws and had no indication that a breach or an attack had occurred.
Baidu’s “Xuperchain” is just the beginning of China’s blockchain rush. The country wants to become a world leader in the technology’s development.
Ring has fired employees for watching people’s private videos. Staff secretly accessing customer data is a problem across the industry, but this is a particularly sensitive case.
Walmart hopes robots will help it to sell more groceries online.
Its 1.5 million human workers might feel less cheerful about it.
A proposal advanced by the SEC takes aim at a two-tier system that allows trading platforms like the New York Stock Exchange and Nasdaq to charge their largest customers higher fees for faster proprietary feeds, leaving smaller players to rely on a slower public stream.
Verizon Packages: The telecom is eliminating traditional cable bundles and making it easier for households to switch video packages, allowing Fios customers to select home internet speeds and television packages separately, at preset rates.
Facebook stands firm on political advertising. The social network won’t take down ads with misleading information. The company based its decision on “the principle that people should be able to hear from those who wish to lead them, warts and all, and that they should be scrutinized and debated in public,” Rob Leathern, a FB executive, wrote in a blog post.
U.S. music streams on services including Spotify, Apple, and YouTube collectively rose 30% last year—topping one trillion for the first time ever. That was led by major artists like Taylor Swift, Billie Eilish, and Post Malone, and unsurprisingly, it heralded the continued slide of physical CD sales.
Yum Brands is reportedly offering a $100K per year salary for manager-level positions at select Taco Bell locations in the Midwest and Northeast. The development is just one of many examples of the wage inflation pressure being felt in parts of the restaurant sector.