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china (36)

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Growth in the global electric-vehicle market

With the recent announcement from Volvo that all vehicles will have electric engines in 2019 and phase out combustion engines, it becomes shockingly clear that electric is growing.................and faster than we have previously believed. Clearly Tesla (TSLA) has more competition than ever before so I bring you this piece from McKinsey to give you the breakdown. By the way, what does this mean for crude oil?  Just tossng it out there.

New research on electric mobility reveals Chinese OEMs produced 43 percent of EVs worldwide in 2016 and highlights other trends in supply and demand.

China has increased its lead in electric-vehicle (EV) production,…

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Trump Comes Out On China And Russia

President-elect Donald Trump suggested he would be open to lifting sanctions on Russia and wasn’t committed to a longstanding agreement with China over Taiwan—two signs that he would use any available leverage to realign the U.S.’s relationship with its two biggest global strategic rivals.

In an hourlong interview, Mr. Trump said that, “at least for a period of time,” he would keep intact sanctions against Russia imposed by the Obama administration in late December in response to Moscow’s alleged cyberattacks to influence November’s election. But he suggested he might do away with those penalties if Russia proved helpful in battling terrorists and reaching other goals important to the U.S.

“If you get along and if Russia is…

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Luxury Brands Will Have To Work A Lot Harder In 2017

Last year was a bad one for many companies selling expensive fashion, handbags, and jewelry. For the first time since the financial crisis of 2008, the global market for personal luxury goods failed to grow, stalling at €249 billion (about $258 billion).  Will Trumps tax proposal send their sails soaring or will his proposed tariffs interfere?

The good news is that 2017 should see a return to growth, according to a Dec. 28 report on the global luxury market by management consulting firm Bain & Company, only it won’t look anything like the boom years from 2010 to 2015, when global sales of such goods jumped 45%, fueled by Chinese consumers with high-end appetites. The slowing of China’s economy and its government’s ongoing crackdown on…

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Industries Most At Risk In A Trade War With China

The U.S. and global economy has reacted in mixed fashion since the election of Donald Trump as 45th President of the United States. One of the most significant potential fallouts though, is a trade war with China. Trump has spoken out against the current situation with China on a great number of occasions. Now he is in a position to potentially see through his pledges, some fear the emergence of a tit-for-tat trade war between the two countries. As the infographic below shows, the industries most endangered by any such war would be transportation and tech.…

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Tactically Cautious On Global Equities

A December Fed rate hike, uncertainty regarding the U.S. presidential elections, weak earnings growth, diminished buyback activity and concerns about European banks pose near-term risks to global equities.  Comments in italics are mine.

DIN-20161011-091957

The summer rally has left equity valuations looking stretched. The median U.S. stock now trades at a higher P/E ratio than even at the 2000 peak. The Shiller P/E ratio stands at 27, but would be 37 if profit margins over the preceding ten years had been what they were in the 1990s. The fact that interest rates are low gives stocks some support, but with the Fed likely to hike rates in December, that tailwind will begin to fade.

Lackluster earnings growth remains another concern. S&P 500 and economy-wide profit margins have rolled over. Granted, the collapse in profits in the energy sector has been the major…

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The Global Economy: April 2016

The global economy has regained some composure, according to asset management firm Schroders. In their view, markets have regained a risk appetite following action by central banks, the normalization of commodity prices, and a lack of materialization for tail risks such as a U.S. recession or a Chinese hard-landing:

While volatility is indeed near its YTD low with the benchmark VIX down 32% since the start of the year, we would point out that this is potentially some calm before the storm.

Here are some upcoming waves, and we’ll see how they break:

Earnings and Buybacks: The blended earnings decline for the S&P 500 so far in 2016 Q1 is -8.9%, according to Factset.…

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What Might Happen In China In 2016

In debates about whether growth is a percentage point up or down, we too often lose sight of the absolute scale of China’s economy. No matter what rate the country grows at in 2016, its share of the global economy, and of many specific sectors, will be larger than ever. My snapshot of China in 2016? An increasingly diverse, volatile, $11 trillion economy whose performance is becoming more and more difficult to describe as one dimensional.

The reality is that China’s economy is today made up of multiple subeconomies, each more than a trillion dollars in size. Some are booming, some declining. Some are globally competitive, others fit for the scrap heap. How you feel about China depends more than ever on the parts of the economy where you compete. In 2015, selling kit to movie theaters has been great business, selling kit to steel mills less so. In your China, are you dealing with a tiger or a tortoise? Your performance in 2016 will depend on knowing the…

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3Q Earnings Worst Since 2009

This U.S. earnings season is on track to be the worst since 2009 as profits from oil & gas and commodity-related companies plummet leaving many to wonder, is the worst behind us or is there more to come?  Is China's growth story over or taking a 'rest'?  We've lived on ghost cities creating demand for so many years; where is the next growth story?

So far, about three-quarters of the S&P 500 have reported results, with profits down 3.1 percent on a share-weighted basis, data compiled by Bloomberg shows. This would be the biggest quarterly drop in earnings since the third quarter 2009, and the second straight quarter of profit declines. Earnings growth turned negative for the first time in six years in the second quarter this year.

The damage is the biggest in commodity-related industries, with the energy sector showing a 54 percent drop in quarterly earnings per share so far in…

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Chart Palooza

I'm continually saving charts and data points which I find interesting but generally don't post enough to share the data.  That being said, I thought "wth" and decided to share some of my most recent.  Perhaps you can find a few of interest or maybe you can translate one into a trade.  It certainly can't hurt.  Your comments would be of interest and will be answered.  Happy trading.

Online shoppers by income group.  It certainly seems Amazon benefits by middle income buyers.  Possibly they just don't have the 'time' to shop in a store, working 60+ hours a week and balancing soccer games, football, cheerleading practice, dinner, laundry, etc.

Jet[dot]com is now selling some items at a loss to gain marketshare from Amazon…

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Why Commodities Are Back To The 1990s

The chart above is the Bloomberg Commodity Index. It consists of baskets of common commodities, including energy, metals, foodstuffs, softs and precious metals.

After a fairly flat period in the 1990s, the index leapt upward beginning in the early 2000s. The context explains the jump: High inflation, weak dollar and low interest rates. From 2001 to 2007, the dollar lost 41 percent of its value, and all commodities priced in dollars skyrocketed. At the same time, China began a huge expansion of its infrastructure, transportation, housing and manufacturing sectors. The BCOM index moved from around 90 to almost 240.

You know the rest of the story: Inflation is nowhere to be found, and the Federal Open Market Committee is concerned about deflation. The…

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Cash Flow Out Of Emerging Markets

Worldwide money flows are of interest to a long term investor and the flight out of emerging markets has been striking.  Weren't emerging markets supposed to where our expansion was to take place?  What now?

According to the IIF, the volatile market conditions have taken a toll on capital flows to emerging markets, with net non-resident portfolio flows in August falling into negative territory for the first time in 2015, according to the Institute of International Finance’s latest EM Portfolio Flows Tracker. Outflows were estimated at $4.5 billion in August compared to inflows of $6.7 billion in July.

“Portfolio flows to emerging markets have retreated sharply in the last few weeks,” said Charles Collyns, chief…

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Admin

Apple Apps Infected. What Would Steve Jobs Do

Apple has owned up to a rare incursion of malicious software into its App Store, forcing it to pull some of the most widely used mobile apps in China from the service.

Late on Sunday in California, the iPhone and iPad maker confirmed reports by security researchers who had warned that a swath of popular Chinese apps had been created using developer tools that were infected with the malware, resulting in the compromised apps.

“Hundreds of millions” of users of the popular Chinese apps were at risk of having their personal data exposed, including people who use Tencent’s WeChat mobile messaging service and ride-hailing app Didi Kuaidi, according to Palo Alto Networks, a US cyber security…

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Admin

Chinas Desperate Attempts To Stabilize

Most of the time, weekly data published by the China Securities Depository and Clearing Corporation (CSDC) is as dull as the organization’s name would suggest. But of some interest this year has been the weekly number of people opening trading accounts that allow them to buy and sell stocks.

Earlier, Quartz reported that a record 3.3 million individuals had rushed to join China’s stock market in the single week ending April 17. That was far above this year’s previous average weekly sign-up rate of 800,000.

After that week the market continued to grow until June 11, when it began a dramatic, prolonged crash…

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Chinas Move Won't Help U.S. Tech Firms

China’s moves to spur its slowing economy and restore investor confidence are having an important but less obvious effect on the tech sector: Strengthening Chinese companies that already were making life difficult for U.S. rivals, many of whom have staked their growth plans on the world’s second-largest market.

The government’s surprise decision in early August to devalue China’s currency, in particular, could make it harder for U.S. companies to sell into the country by making their products more expensive to local buyers.

At the same time, a cheaper yuan makes Chinese-produced goods less costly abroad—dovetailing with government policies that have been promoting foreign sales by Chinese technology vendors.

“We see the key driver [of government action] being exports,” said Handel Jones, a consultant at International Business Strategies Inc. who…

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(Edited 2:00pm)  I especially enjoy the part when the commentator withdrew his request for an interview after Schiff refused to blame everything on China.  Yes, MSM wants us to believe it's all China's fault.  Don't drink the koolaid.  Use your head.

Hat tip Ed

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Admin

Doubts Begin Chipping Away At The Stock Market

In the stock market, until recently, just about any news was good news.

Company earnings stumbled? Investors shrugged them off, sending shares higher. Economic growth was disappointing? So what.

But now that is changing.

Consider the recent trading in Apple, the world’s most valuable public company and a certifiable stock market darling. Apple announced…

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China, Their Market, Demand For Our Products, Etc.

China’s market downfall has been dramatic and painful for the investors involved. But so far there has been little immediate impact on the rest of the world, because China tightly limits foreign investment in mainland stocks.

China’s stock markets are, for the most part, a mom and pop affair—about 80% of the trading that happens in Shanghai and Shenzhen is done by Chinese individuals. They represent at most 14% of the total Chinese population.

But there’s little doubt the effects of this downturn will be felt globally—it just may take some time. After all, Chinese investors have lost more about $3.4 trillion in equity value from the markets mid-June peak until the July 7 close:

And although the government is…

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Admin

Remain Long China. The QE Continues

I see no reason why not to stick with Shanghai at this point.  They're behind us at in terms of supporting their economy and it's not an easy ride (as Ben Bernanke will attest). 

According to BusinessInsider, a bunch of data about the state of China's economy came out Tuesday night, and altogether it told us one thing — nothing the government has been doing to save its economy from falling deeper into a slowdown is working.

Since November, China has cut benchmark interest rates three times, including once Saturday. It has also loosened mortgage policies to prop up the housing market.

But none of it's enough. Especially when you look at the data from Tuesday night.

Lets walk through the scariest…

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For the love of Pete.  I can only imagine what's going through the minds of investors.  First fears of energy name defaults and now China's real estate (bubble) may have it's first big default?  It'll be a fun Sunday night when futures open. 

The Chinese real-estate developer Kaisa Group Holdings had a healthy balance sheet, according to investors and observers alike. It was the top-rated residential-property-sales firm in the city of Shenzhen, in the first half of 2014. It was known for fast, reliable work.

But on Thursday, Kaisa appeared to become the first Chinese development firm to default on offshore debt,…

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Sunday Reading

  • What BMW’s China sales say about their economy.  “Xubao” or false reporting; who knew!  Quartz
  • Pay your bills or we take your cat (seriously)  TheMoscowTimes
  • A $1.65 billion buyout, 300 hours of video uploaded every minute,  300 million hours streaming per day, a “farm” of sorts where prominent studios are paying huge sums to acquire companies that bundle together YouTube channels,  an ever-expanding ad platform, a new premium service (Music Key) and a new marketing strategy aimed at turning YouTube starts into, well true stars.  Aand imagine; YouTube is still an experiment.…

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