Displaying items by tag: China

Thursday, 07 March 2019 11:45

Sell the US-China Deal

(New York)

When and if the US-China trade deal finally happens, make sure to sell. At least that is what Bloomberg is arguing. In a classic case of buy the rumor, sell the news, Bloomberg thinks the completion of a deal should be a sell trigger. The trade situation itself is shaping up as a lose-lose for investors. Either it will be a symbolic-only deal that is short on details and does little to actually resolve tension, or Trump may walk away from the table with no deal (like with North Korea). In either situation, it is hard to see the market celebrating.


FINSUM: We tend to agree with this view. The way this is shaping up, it does not seem like there is going to be some grandiose trade accord that solves everyone’s issues.

Published in Politics
Tuesday, 05 March 2019 11:41

JP Morgan Says Stocks Headed Higher

(New York)

JP Morgan is joining the bullish bandwagon. While fear that the rally has been too fast permeates across the markets, JP Morgan is stepping in to say that they think the market has plenty of runway higher. The bank thinks stocks have a good tailwind behind them as a trio of positive factors exist: a dovish fed, a stable yield curve, and pending US-China trade deal. The bank thinks that stocks look like they did right after the 2015-2016 correction cycle, a period right before a big bull run.


FINSUM: We are starting to think that shares may have some good runway left. The correction in P/E ratios was a very healthy adjustment to end the year, and the macro situation is looking positive.

Published in Eq: Total Market
Monday, 18 February 2019 09:43

A US-China Deal is a Sell Trigger

(Washington)

In what sounds like a classic case of “buy the rumor, sell the news”, a major Wall Street figure is arguing that as soon as the US and China reach a trade deal, the big rally in risk assets will be over. The former CEO of Cantor Fitzgerald, Shawn Matthews, argues that “Right now, it’s a risk-on mentality -- you want to be long riskier assets until you get a deal with China … When that happens you certainly want to be looking to scale back”. One of Matthews’ worries is that bond markets are following suit, signaling to him that this is a false rally. “If it was truly a risk-on world and people believed it and it was an extended trade, then you would see the 10-year start to back up. That’s a clear sign there’s some concern about what’s going on out there”, said Matthews.


FINSUM: This is quite an interesting take on the whole situation. We are going to hold off on giving our full view until we have had more time to digest, but we thought this angle was definitely worth sharing.

Published in Eq: Total Market
Monday, 18 February 2019 09:38

Big Slowdown Coming to US?

(New York)

Is the US headed for a major slowdown? That is the big question, especially as the economic clouds darken around the globe. The rest of the world, from Europe to China, is slowing, but the US continues to hum along nicely. So are we the last ship that is going to sink, or will the US manage to defy the tides and keep growing strongly? Looking to markets, yields around the world have fallen (including a dramatic increase in negative yielding European bonds), showing that investors are growing more bearish about the economic outlook.


FINSUM: With the Fed paused, we do not see an imminent recession by any means. We do, however, feel the US economy and markets lack a strong narrative at the moment, which makes us slightly nervous.

Published in Eq: Total Market
Monday, 11 February 2019 11:03

More Warning Signs on the Economy

(New York)

The topic of the next recession has faded a bit from the mainstream media discussion over the last month, and understandably so. Not only has the market jumped, but the Fed seems to have completely backed off the rates gas pedal. That said, we are keeping an eye on primary and secondary data on the economy to see what the future may hold. Here is some data that is worrying us a bit: global freight shipping rates are tumbling. China’s weak spending and a global slowing of growth has sent shipping rates way down, a sign of excess supply and demand weakness across the world.


FINSUM: This kind of info, along with metals demand etc, are great leading indicators of what might happen in the economy. Add this to the warning signs.

Published in Eq: Total Market
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