| | TAOST Wrap Week Ended Friday 22 November 2019 |
| Just think... "Its often said that the unpredictable nature of stock prices is reason enough to avoid trading... That may be true... Or perhaps would be traders should take the route the original sailors took when told that the unpredictable direction of the wind is reason enough to avoid sailing."
-- The Trader
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| | Fellow Traders:
A reddit user recently asked the trading community, “Why do so many traders lose money?”
As is so often the case, much of the answer to the question is embedded in the question itself. It’s kinda like when your significant other asks “would you like to go to the store for me or no?” It’s delivered in the form of a question… but the answer is definitely embedded.
It is true however that a lot of traders lose money in the markets... Assuming you define “trader” very, very loosely. There are lots of reasons why but many of the reasons for those losses are just flat out excuses. Like so...
- "The markets are rigged"
- "My broker is crooked"
- "Commissions killed my account"
You get the point…
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In Sum As earnings season came to a close for the most part, retailers were the major focus this week with Home Depot, Kohl’s and Macy’s falling on the back of missed estimates and/or lower guidance, while Lowe’s and Target rallied on strong outlooks.
The Fed minutes showed that they are comfortable that rates are “well calibrated to support the outlook of moderate growth.” However, the members also debated several options for keeping the repo market stable and highlighted that they would step in whenever needed to supply banks with reserves in exchange for ultra-safe collateral like Treasury debt.
Also, on the macro front this week, there was a lot of commentary from various parties on the state of the global backdrop that I thought was worth sharing/highlighting.
There are claims that Bridgewater, the world’s largest hedge fund, bet more than $1 billion that stock markets around the world will fall by March. The wager pays off if the S&P 500 or the Euro Stoxx 50 falls, or both do.
Christine Lagarde, in her first speech as head of the European Central Bank, warned that a “fracturing” of the global economic system means that robust rates of economic growth “are no longer an absolute certainty.” She went on to say that “ongoing trade tensions and geopolitical uncertainties are contributing to a slowdown in world trade growth, which has more than halved since last year.” Which has depressed global growth to its lowest level since the great financial crisis.
The OECD supported Lagarde's sentiment with the release of its new GDP estimates forecasting growth of 2.9% this year and next (from 3% previously). And followed up with comments stating that "It would be a policy mistake to consider these shifts as temporary factors that can be addressed with monetary or fiscal policy: they are structural.” Besides trade wars and a sharp Chinese slowdown, bigger concerns include climate change, digitalization, and the crumbling of the multilateral order.
And former Treasury secretary, Henry Paulson chimed in during a DealBook column warning on U.S.-China relations saying that "if the world’s biggest economies reach a truce, their relationship is likely to worsen.” He went on to say that “animosity between the two countries has merged military prisms and ideas into economic policies.” He believes we should be concerned that the positive-sum metaphors of healthy economic competition are giving way to the zero-sum metaphors of military competition. He also fears that if the US were to close off its financial markets to Chinese investment, it would eventually threaten US leadership in finance, as well as, New York City’s role as the world’s financial center.
I’ll leave it there for now.
Wishing everyone a very safe and Happy Thanksgiving
S&P 500 -.3% Nasdaq -.5% |
| | | | SPXL - S&P 500 Bull 3x Shares |
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| | SPXL - S&P 500 Bear 3x Shares |
| | | - There's about $1.1 trillion in revenue on the table, ripe for collection over a decade—if the U.S. commits to tougher enforcement of tax laws, according to a new estimate from University of Pennsylvania law professor Natasha Sarin and former Treasury Secretary Lawrence Summers. I suspect that number is far higher... if some of the most wealthy actually pay taxes at all.
- Global flows of goods across borders are on course to grow at the weakest pace since the financial crisis. The World Trade Organization's Goods Trade Barometer recorded signs of a pickup in export orders, container shipping and automobile shipments, offset by weakness in airfreight, and shipments of raw materials and electronic components.
- U.S. existing-home sales increased 4.6% from a year earlier, marking the fourth straight year-over-year gain. Homes in the $500,000 to $750,000 range experienced the strongest improvement, while sales of homes priced below $250,000 declined. Less than a third of sales in October involved first-time buyers.
- The Democrat-controlled House Judiciary Committee has approved a bill that would legalize marijuana across the U.S. It is also likely to clear the House itself—but it's not likely to get anywhere in the Republican-controlled Senate. Because they would never be hypocritical.
- Forrester projects that 73% of all cubicle-related jobs—think clerical tasks like data entry—will be automated by 2030, equating to over 20 million jobs eliminated. Now I'm not one to gossip, so you didn't hear it from me, 20,000,000 jobs is a lot of jobs. Hell, even if they're only half right, that's still 10,000,000 jobs.
- A new study shows that 84% of C-suite executives believe they need A.I. to achieve their growth objectives, yet 76% report they struggle with how to scale. However, there’s a group of Strategic Scalers that are getting it right, successfully moving beyond proof of concept and seeing up to 3x the return on their A.I. investments. I don't know how to use it... but I know I need it. Sounds about right.
- Electric vehicles may never be as cheap as their gas-powered rivals so long as they rely on lithium-ion batteries. The problem is that the steady decline in the cost of these batteries is likely to slow in the next few years as they approach limits set by the cost of raw materials, say the researchers from MIT. These findings sharply contradict those of other research groups, which have concluded that electric vehicles could achieve price parity in the next five years.
- The Federal Communications Commission, the U.S. government's telecommunications regulator, voted 5-0 on Friday to designate Chinese telecom giants Huawei and ZTE as national security risks. Carrier customers in rural areas in the U.S., where inexpensive Huawei and ZTE equipment is widely used, will no longer be able to use government funds to purchase Huawei and ZTE products.
- Jerome Powell, chair of the US Federal Reserve argued this week, in a letter to two US congressmen, that while central-bank digital currencies may provide benefits in some cases around the world, it’s not clear that those potential benefits are “relevant in the US context.” Some countries, notes Powell, may be considering issuing central-bank digital currencies because they have seen a “rapid migration by consumers away from cash.” The fear is that leaving this area completely up to private companies could introduce new risks to individuals and the economy. Why would anyone ever worry about private companies controlling our currency... Politicians are bad enough.
- Hong Kong votes in record numbers. Hong Kongers turned out to vote in large numbers in district elections that are seen as a referendum on the street protests that have gripped the city. Results are expected early Monday.
- The U.S. Justice Department charged a Chinese national who worked at Monsanto with stealing trade secrets for China. Haitao Xiang was stopped at a U.S. airport on the way back to China, and is currently being held in jail in Illinois. Authorities said Xiang was carrying proprietary farming software back to China, and said he was encouraged to steal the software through his involvement in China's "Thousand Talents Plan," a scientific researcher recruitment program that U.S. officials have called a threat to U.S. national security.
- 45 signed a short-term spending bill hours before the government was set to run out of money, as disagreements on border-wall funding again stymied progress on full-year funding bills.
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| TNX - 10 Year Note Interest Rate Interest rates are falling... which is kinda what the Fed had in mind. |
| | GLD - Gold Trust Gold Shares Gold continues to languish... but the bullish pattern remains valid. |
| | Bitcoin - USD/Bitcoin Bitcoin looked ready to bounce... but cracked last week. |
| | JNK - High Yield [Junk] Bond ETF JNK looks poised to roll over unless it can get up through the $112 area. |
| | BRN - Brent Crude Oil Futures Crude oil looks heavy... which means gas prices should continue to get more favorable to holiday travelers. |
| | VIX - S&P 500 Volatility Index The VIX indicator is clearly in the toilet... which means stocks could easily be headed higher. |
| | | - According to the company's CEO, UBER is "...very, very, very different from WeWork." That may be true, but if you have to declare that, it's probably not a good thing.
- I was asked by "interested parties" if I was considering cannibis stocks now that their on their collective butts. I was asked about CGC, ACB and APH specifically. Of the 3, the only 1 I would consider is featured below.
- TikTok’s CEO Alex Zhu is tired of the media’s portrayal of his viral video app as a backdoor for the Chinese government. So he’s on a mission to prove that you shouldn’t worry so much. In an interview wit NYT, Zhu denies it all. No, he says, the company doesn’t censor videos to appease the Chinese government. It doesn’t share user data with China or even its parent company ByteDance. Users’ data is stored in Virginia, with a backup server in Singapore. And what happens if China’s top leader, Xi Jinping, personally asked Zhu to remove a video or hand over user data? “I would turn him down,” Zhu said. Hmm... I suspect that depends on how he asks.
- Ride-hailing service Juno has shut down. The service, which operated exclusively in New York, was acquired by Israeli transportation company Gett in 2017 for $200 million. Juno launched to much fanfare from drivers in 2016, committing to be more driver-friendly than competing ride-hailing services, but the service never expanded past New York City. Juno eventually had issues following through with some promises to drivers, like stock options.
- Uber chief product officer Manik Gupta is stepping down from the company. Gupta’s last day with the company will be on December 13. He will be leaving the company on good terms and does not have any immediate employment plans after his departure.
- Amtrak may break even on its railroad service for the first time in the company’s history. While Amtrak receives state and federal subsidies, it is managed as a for-profit corporation. In 2017, Richard Anderson, a former CEO of Delta Airways and Northwest Airlines, assumed the CEO role at Amtrak, and has played a part in turning around the company by focusing on more well-traveled routes and eliminating amenities, like dining cars.
- Former Yahoo CEO Marissa Mayer has revealed that her new startup Lumi Labs will focus on developing consumer apps powered by artificial intelligence technologies, Speaking at a tech conference on Monday, Mayer didn’t reveal too many details about specific products her startup is developing, but said: “The overriding focus is on the grand challenges of A.I. such as self-driving cars and global facial recognition. But there are smaller applications that can be just as useful to benefit people every day.” I suspect this will be a nothing done as there would otherwise be more detail.
- Intel held a media event in San Francisco last week where it showed off its two new A.I. chips called Nervana Neural Network Processors. One of the chips is for training deep learning systems and the other is used to help computers act on the data, a process called inference.
- Fortune’s Businessperson of the Year was out this week and this year’s winner is: Satya Nadella, who has engineered an amazing turnaround at Microsoft.
- UPS’s David Abney said his company had received the first FAA license to experiment with drone delivery, which he predicted will become a reality, in certain controlled situations, within the next year. Good for customers and stock maybe... bad for employees.
- Joining the growing ranks of large U.S. companies phasing out guaranteed retirement benefits, FedEx is closing its pension plan to new U.S. hires starting in 2020. This is a big deal folks... This was once one of the major reasons to bust your tukus working for Federal Express.
- American Express wants more businesses to accept its cards. So it is paying them. In a bid to catch up with Visa and Mastercard, the company is offering sign-on bonuses to some businesses that don’t take its cards. The payments range from under $10,000 to about $450,000.
- Chick-fil-A said it would limit its focus on charitable-giving starting next year to education, homelessness and hunger. The move follows controversy over its donations to groups whose positions some perceive as antigay.
- T-Mobile: John Legere, who has been CEO of T-Mobile since 2012, is stepping down in April after his contract expires. As notes the New York Times, the announcement comes at a "crucial time" for the company, which is still in the process of acquiring smaller rival Sprint. The flamboyant Legere said in a call with investors that he isn't leaving to take the role of CEO of WeWork and that he was "never in discussions" to run the co-working start-up.
- China's third-biggest Internet company ($72 billion market value), the food delivery and services platform Meituan-Dianping, exceeded market expectations with a a 44% surge in third-quarter revenue and a second straight quarterly profit. Meituan, which is backed by Tencent, dominates China's food delivery market with a growing 65.8% market share.
- Alphabet X, the company’s early research and development division, has unveiled the Everyday Robot project, whose aim is to develop a “general-purpose learning robot.” The idea is to equip robots with cameras and complex machine learning software, letting them observe the world around them, and learn from it, without needing to be taught every potential situation they may encounter.
- Tesla unveiled its all-electric pickup called Cybertruck. The futuristic, trapezoid-shaped vehicle will start at a competitive $39,900 - with 7,500 pounds of towing capacity and 250 miles of range per charge. Dual motor ($49.9K) and tri-motor models ($69.9K) extend towing capacity to 10K and 14K pounds, as well as a 300 and 500 mile range. Expected to arrive in late 2021 and 2022, the pickups also feature a cargo bed that can hold and charge an electric ATV.
- WeWork Cuts: The troubled office-space startup said it would shed around 2,400 jobs, or about 17% of its workforce, in an effort to reduce mounting losses.
- Loon, the Alphabet subsidiary that aims to use its high-altitude balloons to expand mobile internet access around to remote locations, has struck a deal with Internet Para Todos Perú (IpT) to move into parts of the Peruvian Amazon, where 200,000 people live. IpT Perú is an open access wholesale rural mobile infrastructure operator owned by Telefónica, Facebook, IDB Invest and CAF.
- Google is the latest Big Tech firm to place a limit on political advertising. It's not a Twitter-style ban, but Google will no longer let political advertisers target its users based on their political affiliation. It will also ban "deepfake" doctored videos and "demonstrably false claims," as well as misleading claims about the census.
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| Interesting Stocks From Last Week |
| Uber [UBER] Don't even think about it until price clears at least $36. |
| | Amphenol Corp [APH] This is the 1 cannabis stock I've seen that looks ready to rip higher. |
| | Intel [INTC] Price played just as I said in a post from several weeks ago. Now it looks ready to break higher again. |
| | Federal Express [FDX] Price looks set to continue making lower lows and lower highs. |
| | UPS [UPS] Price went right to resistance around $124 after collapsing, but holding the low. |
| | American Express [AXP] Guess we got our answer... |
| | Visa [V] Higher, higher... |
| | Mastercard [MA] Different card... same look as V. |
| | Tesla [TSLA] Now that Tesla has ripped the shorts a new one and introduced a truck, the stock looks like it could have fresh legs. |
| | | | | | | | | | | | | | | | | - Monday: Agilent, Hewlett Packard, Arrowhead Pharmaceuticals
- Tuesday: Analog Devices, Dell Technologies, Autodesk, Inc., HP, Inc., Best Buy, Inc., Dick's Sporting Goods
- Wednesday: Deere & Co., Tiffany & Co., Frontline Ltd
- Thursday: Thanksgiving
- Friday: Nothing worth noting; Early mkt close
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| | | As always, make up your own mind and, more important, minimize your risk no matter what you do.
KIS,
The Trader
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| | | P.S. Was this email forwarded to you? Get your own free ticket to the $ party here.
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