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The Real Winners From Trump's Tariffs Are China's Neighbors

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Comments of the Day

31 May 2019

 

 

Video commentary for May 30th 2019

 

 

Eoin Treacy's view

A link to today's video commentary is posted in the Subscriber's Area. 

Some of the topics covered include: Crude oil pulls back to break its uptrend, grains and beans steady, iron ore at a new high, Wall Street steady, Treasuries firm, review of recession lead indicators and long-term moving averages. 

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Crude oil pulls back to break its uptrend, grains and beans steady, iron ore at a new high, Wall Street steady, Treasuries firm, review of recession lead indicators and long-term moving averages.

 

Crude oil pulls back to break its uptrend, grains and beans steady, iron ore at a new high, Wall Street steady, Treasuries firm, review of recession lead indicators and long-term moving averages.

 

Crude oil pulls back to break its uptrend, grains and beans steady, iron ore at a new high, Wall Street steady, Treasuries firm, review of recession lead indicators and long-term moving averages.

 

 

Could Stock Picking Matter More Than Sector Positioning This Year?

Thanks to a subscriber for this report from UBS which may be of interest. Here is a section:

 

 

Eoin Treacy's view

A lonk to the full report is posted in the Subscriber's Area.

The Federal Reserve aggressively tightened policy last year by both raising rates and reducing the size of its balance sheet simultaneously. That has had more of an effect on international growth than domestic growth but the underperformance of the banking and industrial sectors is a testament to slowing activity. We are at the point in the cycle where we can expect easier policy. The big question is whether the Fed will act soon enough to avoid negative economic figures.

 

 

Bond Bears Dust Off Debt Insurance on Wave of Corporate Pain

This article by Katie Linsell for Bloomberg may be of interest to subscribers. Here is a section:

“There are many people now focusing on single-name distressed situations rather than doing plain-vanilla index trades,” said Jochen Felsenheimer, the Munich-based managing director of XAIA Investment GmbH. “There are lots of idiosyncratic situations rather than systematic triggers.”

Distressed situations are increasing as companies struggle to manage the debt piles they built up during years of largesse. The cost of insuring such companies is surging, with swaps on some of Europe’s riskiest names costing thousands of basis points compared to about 300 basis points for the region’s high-yield benchmark.

Investors are paying up for protection amid speculation they’ll cash out when companies collapse. Moody’s Investors Service forecasts the speculative-grade default rate in Europe will nearly double to about 2% next year from 0.9% in April.

“Defaults are still quite low, but swaps are definitely more relevant today than they were a few years ago,” said Justin Jewell, senior portfolio manager at BlueBay Asset Management in London. “For funds that have the flexibility, these tools are becoming effective again.”

 

Eoin Treacy's view

The manner in which intangibles have been squeezed out of the valuation of major companies like Kraft Heinz, General Electric and Tesla represent significant changes in the way the prospects for companies is being assessed by the debt markets. That change is a factor of tightening liquidity conditions particularly last year but the strength of the Dollar remains an inhibiting factor to global liquidity this year.

 

 

The Real Winners From Trump's Tariffs Are China's Neighbors

This article by Nathaniel Taplin for the Wall Street Journal may be of interest to subscribers. Here is a section:

There is some evidence of that happening, even with the previous, smaller tariffs. Since the third round of U.S. tariffs on China went into effect in late September, U.S. imports from China have faltered. An 8% growth rate in October turned to an 18% decline on the year in March. Yet import growth from Taiwan has risen from 12% to 21% over the same period. Imports from Vietnam grew 34% in March, up from a 15% rate in October. And imports from South Korea also surged in the first quarter: They were up 18% on the year, against just 9% in the fourth quarter of 2018.

Some of those shifts might represent manufacturers in China rerouting goods through neighboring countries. Chinese export growth to Southeast Asia and Taiwan accelerated in the first quarter of 2019, even as its overall export growth slowed. Regardless, the result is probably more expensive goods in the U.S. and lower employment in China, as Chinese companies shift elements of supply chains across borders or lose market share to pricier but tariff-free Asian competitors.

Many U.S. policy makers would argue that some pain for U.S. households is worthwhile if it achieves broader strategic goals. In the meantime, however, the big winners from the Sino-U.S. trade conflict are still across the Pacific.

 

Eoin Treacy's view

In the cryptocurrency world, “trust” is the buzzword. It occurs to me it is also the primary asset which has been lost in the pursuit of the trade war. The USA and other countries were willing to tolerate China’s misdeeds for years until the populist revolution highlighted just how much damage had already been sustained by the middle classes. Now the unfair trade practices and theft China has engaged in are no longer being tolerated and normal trade practices are being demanded. China is not in a position to accept those terms and that is setting up the conditions for a protracted disagreement which is likely to ebb and flow for years.

 

 

2019: The 50th year of The Chart Seminar

 

 

Eoin Treacy's view

There will be a memorial concert for David at the Royal Festival Hall on October 5th. It looks like we will have a room at the Royal Festival Hall for an hour before the concert for a memorial. Wine and canapes will be served. Afterward we will retire to the Benefactor's Lounge where Tim Walker, Chairman of the LPO will dedicate the concert in David's memory. The concert will be from 7:30 to 10pm. If anyone would like to attend the concert in addition to the memorial there will be a box to tick on the booking form which I will provide as soon as I have it.   

Since this is the 50th year of The Chart Seminar we will be conducting the event on October 3rd and 4th to coincide with the memorial on the Saturday.

In the meantime, if you have any questions, would like to attend, or have a suggestion for another venue please feel to reach out to Sarah at [email protected].  

The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non-EU residents are not liable for VAT). Annual subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.

 

 

Eoin's personal portfolio - cryptocurrency long opened

 

 

Eoin Treacy's view

Details of this trade are posted in the Subscriber's Area. 

 

 

 

 

 

 

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