Mid Term
March 30, 2022 | Daily JAM, Mid Term |
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.
March 30, 2022 | Daily JAM, Mid Term |
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%
March 26, 2022 | Daily JAM, Mid Term, You Might Have Missed |
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.
March 23, 2022 | Daily JAM, Mid Term, You Might Have Missed |
This counts as optimism about the global economy these days. Yesterday International Monetary Fund Managing Director Kristalina Georgieva on Tuesday advised the fund will cut its 4.4% global forecast for 2022 when it releases its fresh outlook next month. And the pessimists? They’re looking at a very empty glass.
March 17, 2022 | Daily JAM, Mid Term, Special Reports |
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.
March 12, 2022 | Daily JAM, Mid Term |
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.
March 9, 2022 | Daily JAM, Mid Term |
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.
March 7, 2022 | Daily JAM, Mid Term |
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.
February 24, 2022 | Daily JAM, Mid Term, Volatility |
Oil and other fossil fuels aren’t going to go quietly. And it’s extremely unlikely that the countries whose global power is predicated on oil are going to give up that power easily. From this viewpoint, the Russian invasion of Ukraine is the first in the next generation of energy wars, as fossil-fuel powers fight to extend their power into a new global energy age.
February 21, 2022 | Daily JAM, Mid Term |
The People’s Bank of China increased its cash injections into the financial system via reverse repos to 100 billion yuan ($15.8 billion). That resulted in a net injection of 90 billion yuan. The PBOC had been draining cash in the last two weeks, which is routine following the Lunar New Year holiday.
February 19, 2022 | Daily JAM, Mid Term, You Might Have Missed |
Margin debt has dropped again in January, according to FINRA (Financial Industry Regulatory Authority). The month to month drop for January is a big 8.8%. Margin debt is a useful indicator of market direction and top and bottoms. It tends to peak near a market top and signal a coming retreat in the market as lower levels of margin debt means some buyers are moving out of the market. On the other hand, corporations are buying back their own shares at a record pace.
February 8, 2022 | Daily JAM, Mid Term |
America’s gross national debt topped $30 trillion for the first time last week. In January 2020, before the pandemic, the Congressional Budget Office projected that the gross national debt would reach $30 trillion by around the end of 2025. The question to me isn’t “Does this matter?” But “In what way does this matter?”
