Thursday, October 31, 2013

Morning Memo: Thursday, October 31, 2013

"Morning Memo" begins below this "NOTE for  NEWCOMERS" to "Morning Memo"...... Each morning, we post a short bullet-point list of noteworthy events, data, etc that find their way into the assessment of global markets.  It's far from complete and is not meant to be an exhaustive reconciliation of all things that could possibly impact stocks, bonds, currencies and commodities!  Rather, it's best viewed as a cryptic memo of "highlights", noteworthy items that took place in Asia, European and US hours.....and color-coded 'Red' for seemingly negative impact on equity markets, 'Green' for positive.
This will also serve as a useful review mechanism, as scrolling through the series of "Morning Memo" posts over time ought to summarily highlight what generally drove price action.  

We hope you find this useful and informative....and as always, that you'll share feedback!!

5:00am ET...
  • Asia....lower across the board after yesterday's FOMC statement was viewed as less dovish than had been expected.  Talk of a December tapering is not off the table.  The overall statement was in line w/September's statement, but market participants had raised hopes that the Fed would view the economy as being even weaker now, and therefore would push tapering further down the road.  Did not happen.
  • Japan..BOJ left policy unched, as expected.  Raised GDP forecasts for '14 to 1.5% fr 1.3% as expected, but left inflation expectations at 1.9% for '15 excl the new consumption tax effect, which appeared to disappoint the markets who'd hoped for success in meeting Abe's 2% target by then.
  • Taiwan...Q3 GDP disappoints @ 1.58% vs 2.47% exp. on disappointing trade data showing some weakness in exports.  Taiwan is very export dependent representing 3/4 of GDP!  There was a silver lining, however, with orders in the tech sector (which is key for Taiwan) picking up, auguring well for Q4 growth.
  • Australia...building permits soar.  
  • Europe...generally lower on weak US and Asia markets and some earnings disappointments among oil companies.
  • Italy..unemployment hits record high 12.5%.
  • US....budget deficit shrinks to five year low, helped by sequestration spending cuts and increased personal taxes.
  • more later...

Please continue to visit Soos Global Market Musings for updates.
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(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs.  Positions may change at any time without notice.

Wednesday, October 30, 2013

Morning Memo: Wednesday, October 30, 2013

ICYMI....did you see yesterday's "Note to Investors" with updated comments on markets and portfolios? 

Investor Update: Note to Investors: Tuesday, October, 29, 2013

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>


"Morning Memo" begins below this "NOTE for  NEWCOMERS" to "Morning Memo"...... Each morning, we post a short bullet-point list of noteworthy events, data, etc that find their way into the assessment of global markets.  It's far from complete and is not meant to be an exhaustive reconciliation of all things that could possibly impact stocks, bonds, currencies and commodities!  Rather, it's best viewed as a cryptic memo of "highlights", noteworthy items that took place in Asia, European and US hours.....and color-coded 'Red' for seemingly negative impact on equity markets, 'Green' for positive.
This will also serve as a useful review mechanism, as scrolling through the series of "Morning Memo" posts over time ought to summarily highlight what generally drove price action.  

We hope you find this useful and informative....and as always, that you'll share feedback!!

5:00am ET...
  • Asia...up!! On the heels of a strong day in the US, Asia markets rallied ahead of today's FOMC conclusion, with markets seemingly expecting no news from the Fed and especially no imminent 'tapering' talk.
  • Australia...New Home Sales jumped in September to the highest monthly rise since  April '12.  This raised talk that the RBA is unlikely to need to keep cutting rates as they've done eight times in the past two years.
  • China...equity markets rallied despite still tightening conditions in money markets.  The Govt's one-year Tbill auction met with light demand and at higher rates than expected. This signaled investor anticipation of higher rates coming.  Overnight and one week rates tightened again in interbank lending markets.
  • Japan...Industrial Production rose 5.4% vs 5.5% exp, but still viewed positively, helped by weakening Yen this year helping exporters.
  • South Korea...a strike in the auto industry hurt Industrial Production numbers.
  • Europe...firm opening in anticipation of a 'no-tapering' Fed outcome later today.
  • Spain...economy came out of recession in the Q3!
  • Eurozone....Retail PMIs underwhelm.  From Markit:
  • Germany...unemployment rate worth watching:  From Markit:


  • US...Fed Fed Fed.....2pm press release.  No press conference.  (Bernanke still Chair.  Yellen's first meeting in March '14).
  • more later....
  • Later:
    • ADP Jobs up 130k, down from prior mth which was revised down from 166k to 145k.
Please continue to visit Soos Global Market Musings for updates.
(Sign up to "Follow by Email"!  And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs, incl CAT and DE.  Positions may change at any time without notice.

Tuesday, October 29, 2013

Investor Update: Note to Investors: Tuesday, October, 29, 2013



For some time I’ve been maintaining a defensive posture in the portfolios, manifested by higher than usual levels of cash, generally greater sector weightings in counter-cyclical sectors, mostly ‘indirect’ exposure to Emerging Markets via developed country companies that have > 50% of their revenue from those regions, and an emphasis on higher-dividend paying assets such as utilities and selective reits.  I’ve also exited fixed income exposure some time ago as the risk/reward at these still low interest rate levels seemed unfavorable especially when the market has been so laser-focused on ‘tapering’.

In one of my recent missives, I noted the stocks and/or ETFs that were on my ‘shopping list’ should the market step back and hit more compelling valuations.  In some cases that’s happened so I’ve used those opportunities to put cash to work.  Still, however, cash levels are high, and with the recent earnings parade revealing solid earnings but uninspiring top-line revenues and even more uninspiring forward guidance, I’m not rushing to put all the cash to work, but rather being patient for better buying opportunities.

Globally, I think we are where we’ve been for a while: 
  •   sluggish growth in the US, slowly (too slowly) improving labor market, housing continuing to climb off the bottom but plagued by fiscal crises at all levels of government which ought to remain a significant headwind, and as yet un-quantified consequences of the government shutdown, not to mention the ticking clock on facing the debt ceiling and budget issues yet again in early ’14.
  • a stability at fragile and vulnerable levels in Europe that while keeping the word “crisis” out of the dialogue for now, does certainly seem ripe for some debt or fiscal austerity related trouble despite recent signs of life in some sectors of the economy, (I find it hard to ignore high levels of unemployment, in the case of youth, in some countries hitting levels close to 50%!), and
  •  Asia where the Chinese bubbles remain contained for now, but again, ripe for bursting in a way that could cause significant ripple effects across the region.  That said, I do think that Asia is still a source of global growth, and many countries are benefiting from the increase in wages in China which is pushing manufacturing in many industries to other countries such as Taiwan, Indonesia, Thailand, etc.

From the perspective of investment ‘themes’ around which the strategies are positioned, one notable shift in recent months has been the move to lighten up on the ‘industrial infrastructure’ build-up of the emerging world and to shift more of an emphasis towards consumer discretionary and tech positions that stand to benefit from the emerging middle classes in EM countries. The former strategy is likely to continue to provide value, but much of the low-hanging fruit for companies such as Caterpillar (CAT) and Deere (DE) has probably been picked.  They also face more global competition for their products than before, and inventories of these durable, long-lasting goods are higher than they were several years ago.  By contrast, emerging middles classes in many EM countries are creating new buyers of discretionary items such as clothing, sneakers, fast-food, smart-phones, tablets and ‘phablets’ (combinations of smartphones and tablets), and the latest innovations in ‘wearables’!

So for now, the overall market appears to be in a choppy, and at times, quite volatile, sideways to slightly upward move.  I think that continues, but with meaningful risk to the downside based on over-valuations at these levels when faced with the various headwinds to earnings growth.  What would change this view to a more outright bullish or bearish tone?  Any meaningful change in US growth (up or down), some dramatic break (or lack thereof) on the US budget and debt ceiling issues, Europe’s growth picture (either continuing to improve robustly, or being set back by fiscal austerity and possible social unrest driven by heightened tensions caused by massive unemployment), and Asia’s overall growth scenario (with China as a key component).

While I remain on the lookout for any significant change in all of those issues, in addition to our ‘usual suspect’ geopolitical issues, I’ll continue to look for value opportunities within the various portfolio themes.
Will keep you posted.
Best,
Ed

Please continue to visit Soos Global Market Musings for updates.
(Sign up to "Follow by Email"!  And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs, incl CAT and DE.  Positions may change at any time without notice.

Morning Memo: Tuesday, October 29, 2013

"Morning Memo" begins below this "NOTE for  NEWCOMERS" to "Morning Memo"...... Each morning, we post a short bullet-point list of noteworthy events, data, etc that find their way into the assessment of global markets.  It's far from complete and is not meant to be an exhaustive reconciliation of all things that could possibly impact stocks, bonds, currencies and commodities!  Rather, it's best viewed as a cryptic memo of "highlights", noteworthy items that took place in Asia, European and US hours.....and color-coded 'Red' for seemingly negative impact on equity markets, 'Green' for positive.
This will also serve as a useful review mechanism, as scrolling through the series of "Morning Memo" posts over time ought to summarily highlight what generally drove price action.  

We hope you find this useful and informative....and as always, that you'll share feedback!!

5:00am ET...
  • Asia...after mixed data yesterday in the US (worse than expected Pending Home Sales, but slightly better than expected Industrial Production and Capacity Utilization), and ahead of tomorrow's Fed FOMC meeting conclusion, markets were mixed in a cautious mode.
  • India...raised rates by .25% to 7.75%, aimed at fighting inflation. This was expected, and was greeted well by equity markets.  Seen as a sign of stabilizing the fundamental economic picture, taking rising inflation expectations down a few notches, and coupled with other forms of easing to promote growth, these moves by new RBI Gov Rajan have bolstered confidence in equity markets.
  • Australia....Central bank Gov Stevens told a conference that he expects the AUD to fall from its recent highs as commodity based export prices fall and overall demand in the sector declines.  The higher AUD has raised concerns of snuffing out non-commodity based exports.
  • China..recent fears of a repeat of last June's liquidity drain and rate spike were calmed today when the central bank added liquidity to the market.  At the same time, the central bank set one week rates slightly higher, indicating a bit of monetary tightening, but in a more controlled way. 
  • Europe....mixed cautious opening as earnings dominate the news.  Banks in particular have reported underwhelming results, offset by strength in some energy companies
  • US...Fed starts two-day FOMC meeting today.
  • more later... 
  • Later
    • Retail Sales..drops 0.1% in Sept, worse than forecast of unched.  Ex autos inline.  See CalculatedRiskBlog
    •  

    •  
Please continue to visit Soos Global Market Musings for updates.
(Sign up to "Follow by Email"!  And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs.  Positions may change at any time without notice.

Monday, October 28, 2013

Morning Memo: Monday, October 28, 2013

"Morning Memo" begins below this "NOTE for  NEWCOMERS" to "Morning Memo"...... Each morning, we post a short bullet-point list of noteworthy events, data, etc that find their way into the assessment of global markets.  It's far from complete and is not meant to be an exhaustive reconciliation of all things that could possibly impact stocks, bonds, currencies and commodities!  Rather, it's best viewed as a cryptic memo of "highlights", noteworthy items that took place in Asia, European and US hours.....and color-coded 'Red' for seemingly negative impact on equity markets, 'Green' for positive.
This will also serve as a useful review mechanism, as scrolling through the series of "Morning Memo" posts over time ought to summarily highlight what generally drove price action.  

We hope you find this useful and informative....and as always, that you'll share feedback!!

5:00am ET...
  •  Asia...markets start the week in the 'green', undoing some of the damage done last week when the Nikkei fell over 3% and China fell 2.8%.  
  • Japan...In the absence of any key economic news, a slightly weaker Yen in early hours helped propel the Nikkei up over 2%.     Interesting charts from WSJ:
  •  
  •  
  • Australia.... hit a new five-year high.  
  • China... rallied, despite ongoing concerns about recent spike in short-term interbank lending rates.  That said, Chinese press and many analysts are playing down risks of a repeat of the liquidity crunch that hit markets last June.  Today's seven-day repo rate came down a bit, which promoted optimism.
  • Thailand...Industrial Output declined for the six straight month at an annual rate of 2.9% as weaker domestic demand outweighs increased overseas demand.
  • Europe...markets higher on the heels of Asia and ahead of this week's US Fed's meeting where tapering is expected to be put off for a later date.
  • UK...southern England hit with big storm, disrupting all kinds of transport.   Despite delays and disruptions to business, analysts do not think that the storm will have a big impact on overall economic growth.
  • US...with egg on its face, acknowledges that the NSA has been spying on foreign heads of state for years!
  • US...Earnings parade continues in earnest this week.  For the current status of earnings reported so far, see FactSet's commentary which focuses on their view of Apple, but includes detail across the entire S&P 500 at
  • www.factset.com/earningsinsight
  •  
  • more later....
Please continue to visit Soos Global Market Musings for updates.
(Sign up to "Follow by Email"!  And share with others!)

(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
Disclaimer: Please read and consider important information related to all communication made by Soos Global on this site by clicking here.
Additional Disclaimer: currently long many stocks/ETFs.  Positions may change at any time without notice.