In an unseemly signing ceremony, with a plethora of US CEOs and government officials, 3-4 dignitaries from China, and much bravado from President Trump, the Phase One US-China trade deal was signed and presented to the world. Markets cheered. Aside from the spectacle of it all, there is some cause for short-term optimism over a…

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Chinese_draak

What a start to the year. CJF’s contrarian prediction of 1,860 on the S&P came to be on January 20th. Subsequently, the market rallied strongly on the hint of more quantitative easing out of the ECB, and the adoption of negative interest rates by the Bank of Japan. Any doubts that 2016 will be a…

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Nike (NKE) is in the midst of a strong 3-year run; operating trends are at cycle-high growth rates, health & wellness as a category is growing around the world, and Nike’s brand stewardship is incredibly on point across all major sports. The stock price followed results this year, up over 37% ytd, and the 35th…

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Apple posted an excellent Q3 result; 48 million iPhone shipments exceeded expectations, gross margin approached 40% (32 bps above last year), and EPS grew 43%, an impressive growth rate for the largest company in the world by market capitalization. Mac computer units grew 3% despite a 11% contraction in the overall global PC market. Iterations…

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aflac duck

2015 is shaping up to be a challenging year for investments. The market swoon in mid-August caught most off-guard, and the subsequent violent recovery arrived right after several prominent investors turned bearish, or at least hedged. Markets don’t need to make any sense, and at times, understanding “why” the market is getting crushed, or exploding,…

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Maybe the economy in China isn’t collapsing. Nike reported a bone crusher of a quarterly report last night; a stark wake-up call for China bears. Nike management credibility is higher than that of the Chinese government, and this earnings report, at this juncture, is stunningly good. Nike segment reports its future orders by geography, adjusted…

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Zhou_Xiaochuan

News out of China is opaque; often altered, editorialized, or outright censored. It is rare to receive a straightforward assessment, based in fact, irrespective of the congruence with the China governmental aims. Zhou Xiaochuan (ZX) is a maverick Central Bank governor, versed in global economics, and financial markets. ZX is a reformer, pushing to open…

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yuan

China is at the end-game of its great economic transformation. Multiple iterations of 5-year plans, and flawed central economic planning, created a massive build-up in debt that can no longer be continued. China’s debt fueled growth is understood, but the impact of the deleveraging phase is becoming evident in real time. Various estimates of China…

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gusher

This weekend’s Jackson Hole speeches, and subsequent commentary, outlined the guideposts for a Fed rate hike, potentially in September. The explosion in crude, if it holds for two more weeks, will pressure the Fed to hike. The Fed clearly highlighted the USD, employment, and oil, as drivers of inflation. The fast 10-point in rally in oil, from sub-$40,…

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China had an interesting announcement after the close of trading last night which entails opening up the mainland securities markets to Hong Kong investors. According to regulators, China National Radio reports the government is going to trial quota issuance to Hong Kong securities firms for mainland investment. Securities brokerages and fund management firms will be…

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The Rogue Economist, located in Canada, wrote a provocative piece discussing the similarities between the USD/Yuan peg and the EMU construct. I agree with Rogue that currency pegs and distortions lead to predictable real world economic outcomes that become evident in the balance of trade. Many financial market participants confuse cause and effect when identifying…

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china prices

Overnight, China released inflation data for October, which came down as expected and declined meaningfully from the previous month. Chinese consumer inflation, which includes food and energy prices, rose 6.1% in September, and 5.5% in October. This data shouldn’t be a complete surprise because China is on a tightening campaign with higher interest rates, lower…

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china factory workers

China’s official PMI was released over the weekend (after financial markets closed on Friday) and the September data point came in slightly higher than last month and slightly higher than expected. The total manufacturing PMI index came in a 51.2 which is the strongest month of the past 4-months. As important as the slight uptick,…

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china great wall

Slowdown fears in the market have shifted to China. The past two days has seen the start of a shift in sentiment with China exposures viewed more as risk than as opportunity. There is clearly some slowing in China, and there should be, because the government has been trying to slow the economy to help…

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