Mid Term

Please watch my new YouTube video: Netflix, Inflation, and Demand Destruction”

Please watch my new YouTube video: Netflix, Inflation, and Demand Destruction”

My one-hundredth-and-twenty-third YouTube video “Netflix, Inflation, and Demand Destruction” went up today. Today I’m covering Netflix’s (NFLX) crash after releasing its subscriber numbers showing the loss of 200K subscribers for the quarter and predicting a loss of ten times that many for next quarter. I think we are starting to see signs of demand destruction due to ongoing inflation. That demand destruction will only get more severe as the Fed continues to raise rates.

Saturday Night Quarterback says, For the week ahead watch…

Saturday Night Quarterback says, For the week ahead watch…

I’m looking for more downgrades on projections for global economic growth as war in Ukraine gets hotter again with shift in fighting to eastern Ukraine. There’s certainly no indication that the war is about to wind down. We’ve already seen a set of lower forecasts for global economic growth. And we are likely to see another round of lower projections in the coming week or two.

Please watch my new YouTube video: Another Global Financial Crisis?

Please watch my new YouTube video: Another Global Financial Crisis?

My one-hundredth-and-twenty-first YouTube video “Another Global Financial Crisis?” went up today. In this week’s video, I’m looking at Sri Lanka’s announcement that it will default on its foreign debt as the canary in the coal mine for a new global financial crisis. A number of negative trends are lining up against emerging markets: the economic fallout of reduced tourism from the pandemic, rising costs for food and fuel, and the Russian invasion of Ukraine. We’ve seen political turmoil in developing markets surge recently, and I think this is an important area to watch with potential implications for a larger financial crisis. The ProShares Short MSCI Emerging Markets ETF (EUM), which inversely tracks emerging markets, is both a way to keep your eye on these developments as well as a possible hedge against the fallout.

Bad news with more bad news to come on China’s manufacturing sector

Bad news with more bad news to come on China’s manufacturing sector

China’s official purchasing managers’ index (PMI) fell to 49.5 in March, the government announced on Wednesday. In this index any reading below 50 signals that the sector is in contraction. This is the first time in five months that this index has shown China’s manufacturing sector to be in contraction.
The cause is obvious: In pursuit of its Zero Covid-19 policy China has locked down major technology and factory cities to combat a surge in infections. China’s manufacturing activity contracted in March as authorities locked down major technology and factory hubs, including Shenzhen (technology), and Changchun (automobiles) and Shanghai (finance), to curb a surge in Covid cases. The bad news in the bad news? The PMI survey period ended with March 25, three days before the lockdown in Shanghai.

Don’t forget those Bear Trap Rallies

Don’t forget those Bear Trap Rallies

Very timely research out of Bank of America yesterday warning that Bear Trap Rallies of 10% or more are very common during the run of a Bear market.And don’t mean that the Bear Market is over or nearing the end of its run. Yesterday’s 1.2% gain in the Standard & Poor’s 500 was the index’s ninth gain in 11 trading sessions. Today, March 30, however, the market was again in decline with the S&P 500 closing down 0.63%

Trick or trend: Bond yields have their own upward momentum now

Trick or trend: Bond yields have their own upward momentum now

Some financial trends make the transition from directional moves driven by events–the war in Ukraine or a speech by Federal Reserve chair Jerome Powell that opens there door to a 50-basis-point (instead of the “business as usual” 25 basis point move) increase in interest rates–to trends with their own momentum. These momentum trends then run until events arise to stop or reverse the trend Higher bond yields may have entered into that “momentum” phase last week. The yield on the 10-year Treasury ended Friday, March 25, at 2.47%, up 10 basis points on the day.

A Special Report preview: From buy on the dip to sell on the bounce–this is a stock market in transition

A Special Report preview: From buy on the dip to sell on the bounce–this is a stock market in transition

Today, March 17, the stocks, and especially the technology stocks, that have been pummeled in 2022 continued their three-day bounce. For another day, at least, buy on the dip proved to be a very profitable adventure. Lithium recycling startup LiCycle (LICY), for example, gained 10.18% after climbed 6.74% on Wednesday, March 16. Electronic payments platform Block (SQ), formerly known as Prince (no, I mean formerly known as Square) rose 10.26% after picking up 12.57% on Wednesday, March 16. Cybersecurity newcomer SentinelOne (S) climbed 7.48% after a gain of 13.47% on March 16. Stocks like these (and many more) were just too cheap traders decided. But there were signs of, possibly (and we’ve been down this road before so let’s just say “possibly”), of a new caution. A sell on the bounce caution.

Saturday Night Quarterback says, For the week ahead expect…

Saturday Night Quarterback says, For the week ahead expect…

The U.S. central bank meets this week and is widely expected to raise its benchmark interest rate by 25 basis points to range of 0.25% to 0.50% from the current target range of 0%to 0.25%. That move would signal the start of a cycle The Russian invasion of Ukraine has pretty much taken the possibility of a 50 basis point interest rate increase off the table–too much economic risk at a time when everything is no uncertain–and that has left the consensus firmly anchored at 25 basis points. Which has taken almost all the drama out of the Wednesday, March 16, meeting of the Fed’s Open Market Committee. Almost.

Extreme day to day volatility is hiding the stock market’s trends–and 4 ways to put this volatility to use

Extreme day to day volatility is hiding the stock market’s trends–and 4 ways to put this volatility to use

Consternation isn’t an investment strategy. Although I certainly understand that reaction to current stock market moves. The day to day volatility is that extreme. But if we focus on that volatility and on how confusing this market is, I think we’re in danger of overlooking the investable trends (up and down) in this market. So let me try, please remember that this is a work in progress and subject to revision, to tease out some of the longer trends that will drive stock prices in the medium term.

Want to know what stocks and sectors will rise and fall and when? Watch the lags

Want to know what stocks and sectors will rise and fall and when? Watch the lags

If the Ukraine war drags on into May, how quickly will grain prices retreat to something like normal? To answer that question–and similar queries for fertilizer, for chip production, and other sectors–pay attention to the lags: how much time it will take to recover from current shortfalls and to introduce new production. How the lags play out in individual sectors will be a key determinant for what stocks rise and fall–and when.