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Hong Kong Stocks Rally After Trump Holds Fire on Retaliation

Protests Hammer U.S. Cities Still Recovering From Lockdown This article by Amanda Albright, Eric Martin, Elizabeth Campbell and Christopher Palmeri for Bloomberg may be of interest to subscribers. Here is a section:

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Comments of the Day

02 June 2020

Video commentary for June 1st 2020

Eoin Treacy's view

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

Some of the topics discussed include: wide gap between main street and wall street may be primed to close, Europe and Japan recovering, dollar weak, oil, gold, silver, platinum, copper, nickel steady, emerging markets steadying on a weaker Dollar

 

Protests Hammer U.S. Cities Still Recovering From Lockdown

This article by Amanda Albright, Eric Martin, Elizabeth Campbell and Christopher Palmeri for Bloomberg may be of interest to subscribers. Here is a section:

Violence erupted in dozens of cities following the death of George Floyd, a black Minneapolis man who died after a white police officer pressed a knee into his neck for more than eight minutes. Some demonstrators broke off to rampage through shopping districts, including Rodeo Drive in Beverly Hills and Michigan Avenue in Chicago, and set fire to police cars and municipal buildings.

The chaos, amid otherwise peaceful protests, struck as the economy struggles to emerge from its coronavirus-enforced hibernation. After the Covid-19 deaths of more than 104,000 Americans, unprecedented government intervention and massive disruptions to business and everyday life, the scenes of unrest were a bleak contrast to the recent optimism of the markets. A 36% rally in the S&P 500 since March has pushed valuations to the highest in 20 years.

“I think people are coming to the realization that their jobs may not be coming back or coming back quickly. This is all conflating with the racial tensions and completely boiling over,” said Mark Zandi, chief economist at Moody’s Analytics. “This highlights the depth of despair in America,” he added, citing 20% unemployment and 50 million workers who’ve lost their jobs or had pay cuts.

Eoin Treacy's view

"Ranges are explosions waiting to happen" has been an adage at The Chart Seminar for decades. It is equally true of periods of political and social calm where an undercurrent of tension is already palpable. The divergence between the haves and the have nots has seldom been so wide.

For highly educated well-positioned people, working from home is an option and they have even seen savings rise. For the unemployable, illegal immigrants and nearly 40 million new unemployed conditions are dire and anger at the lack of progress is clearly evident.

 

Email of the day - on silver tracking funds

Thank you for your great service and your prescient commentaries.

I am interested in a non-leveraged silver fund structured along the lines of the PMGOLD ETF.

I would very much appreciate your views/suggestions.

Many thanks. R

Eoin Treacy's view

Thank you for this email, your kind words and I am delighted you are enjoying the service. PM GOLD is an Australia listed covered call-backed exchange traded note. The closest thing I could find to it is the ETFS Physical Silver ETN (ETPMAG AU) which is denominated in Australian Dollars.

 

Hong Kong Stocks Rally After Trump Holds Fire on Retaliation

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

While the U.S. President Donald Trump’s speech Friday was heated in rhetoric, it lacked specifics around measures that would directly impact the city. He announced the U.S. would begin the process of stripping some of Hong Kong’s privileged trade status without detailing how quickly any changes would take effect and how many exemptions would apply.

“Trump’s comments gave no immediate measures on Hong Kong and leave room for negotiations with Beijing,” said Castor Pang, head of research at Core Pacific-Yamaichi International. “Trump’s comments have eased investors’ concern about the impact of potential sanctions on the Hong Kong economy.”

Eoin Treacy's view

With significant domestic challenges the Trump administration has probably concluded that now is not the best time to further escalate tensions with China to the point where they are irredeemable. That has helped to support the Chinese markets.

 

Japan Inc.'s Cash Stash Grew to 89% of GDP Before Emergency

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

Corporate retained earnings rose to ¥484 trillion, roughly 89% of the nation’s gross domestic product (GDP) in the three months to the end of March, according to finance ministry data published today.

The extent to which firms tap into this cash hoard will likely be in the spotlight again as the current crisis unfolds, especially for companies that lay off workers.

Policymakers have been doubling down on their support for the economy. Since Abe called a national emergency in early April, his government has put together record stimulus packages worth ¥234 trillion or about 43% of GDP. The Bank of Japan’s special measures total ¥75 trillion.

With Covid-19 threatening jobs and businesses, economy minister Yasutoshi Nishimura in March urged companies to spend their cash savings to cope with the pandemic.

Japanese firms have taken a more cautious stance on spending their income since the global financial crisis with many of them looking to shore up their finances in case of future economic shocks. This conservative stance has drawn criticism from policymakers, namely finance minister Taro Aso, as not being aggressive enough to boost growth through higher wages and investment.

Eoin Treacy's view

This record of retained earnings stands in sharp contrast to the kind of activity that has been prevalent on Wall Street over the last decade where companies have returned almost all of their net cashflow in the form of dividends and share buybacks. That has left them particularly exposed to the lockdown-induced recession. Generally speaking, Japanese companies are much more conservatively run. That means they don’t take the kinds of big risks technology pioneers do but they do tend to have solid margins.

 

Eoin's personal portfolio - Last updated March 27th

Eoin Treacy's view

One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I'll change the title to the date of publication of new details so you will know when the information was provided.

 

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