News for the Week of 01/09/2017 – 01/13/2017
by David Abuaf, CFA
Investment Manager, RJFS
Government / Political / non-Economic
- The White House plans to launch a formal complaint to the WTO over subsidies the US says China provides to its aluminum industry
- China said Xi will stress for global cooperation and free trade at the Davos Summit coming up – hmmm, seems like he’s not paying attention to what has happened in the US, UK, Germany, Turkey, etc.
- The DoJ has launched an internal investigation into how the head of the FBI and his deputy handled Clinton probes
General Markets / Economic
- China’s central bank stepped up supervision of bitcoin trading
- US toys firms are bracing for a tax change likely to hit hard an industry that makes most products abroad
- US mortgage applications slid 21% during the fourth quarter from the prior period after rates rose
- The EU proposed new rules that would curb how companies like Google and Facebook track users to deliver targeted ads
- China’s foreign exchange reserves fell to a nearly six-year low last month, testing the central bank’s resolve to control the yuan’s descent
- Fed officials are starting the year largely unified in expectation of a gradual series of rate increases
- Facebook said that it would forge closer ties with news organizations and promote “news literacy”. How about they just do a better job of screening this stuff? Maybe have an innocuous flag indicating whether it is a reputable news agency or not?
- Whoa! Mars – the candy maker – is buying VCA – a veterinary and dog day-care company – for $7.7B in a bid to dominate the fast-growing pet-care business
- McDonald’s is selling an 80% stake in its China operations to a group that includes state-owned Citic and private equity firm Carlyle
- Amazon said it plans to create over 100,000 US jobs in the next 18 months
- Apple plans to build a new business in original TV shows and movies - a move that could help offset slowing iPhone and iPad sales
- So, as most of you know – I hope – there are three branches of government. Executive – the president who sets objectives; Legislative – senators and congressmen that create laws; and Judicial – judges and lawyers who uphold the law. The Kansas State Senate, for the first time since 1861, does not have a SINGLE lawyer amongst them. However will they create laws!?
- Israeli scientists suggested the moon was forged in a rain of cosmic debris, in a new theory of its origin. Surprising. The original theory was that another large planetary body collided with the earth. This did two things A) it slowed the rotation of the earth (we should actually have closer to a 16-hour day, not 24 hours) and B) debris from this collision coalesced itself into the moon
- An Illinois teenager exploring a shuttered prison in Joliet with a friend found herself behind bars. The girl had been exploring the abandoned Joliet Correctional Center, closed since 2002, when she accidentally locked herself in an empty cell
- You know what banks need? Slot Machines, Miniskirts, and Chocolate. As super-low interest rates reduce loan revenue, one Japanese lender is branching out into farming, pinball, broadcasting, rice cultivation and blueberry jam, among the things I listed above. The name of the bank is Ogaki Kyoritsu Bank
Commentary for the Week of 01/09/2017 – 01/13/2017
by David Abuaf, CFA
Investment Manager, RJFS
Chart from Barrons
Ah, investing; the often-dull game of sitting around doing nothing, temporarily punctuated with periods of quick activity. Last week was just that, the dull game.
According to Frank Cappelleri at Instinet, “It has taken longer than people had hoped for the market to find direction…it’s frustrating for both sides.”
While investors might be reluctant to place further bets on the Trump trade, they’ve been more than willing to dive into areas that had lagged, such as Consumer Discretionary and Tech. This suggests that investors haven’t given up hope for more market upside. According to Todd Lowenstein at HighMark Capital Management, “Everyone’s looking for value where it resides, that’s a healthy sign.”
We should expect this back and forth to continue for a while longer. Namely, as Trump assumes office and deals start being done – whether they be amongst Donkeys and Elephants, or international – the markets could become more volatile and less trend oriented. The good news is that as long as progress toward the ultimate goals is being made, the ‘Trump” trade should remain in place. If dormant, let the frustration of nothing happening reign supreme!
All opinions presented are those of David Abuaf, and not of Raymond James or Forman Investment Services.
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