Phase One of Trade Deal to Be Signed January 15… President Trump announced he and the Chinese Vice Premier would sign the first phase in the reduction of the trade war on January 15 at the White House.
What it means – Waiting for Phase 1 of the new trade deal with China has been agonizing. Both sides noted progress in the deal, then backtracked, then finally announced an agreement in principle just before more tariffs on December 15, only to wait weeks before announcing the signing date. And yet, we still have few details. U.S. tariffs will remain on $250 billion of Chinese goods, and there’s no word on what greater protections U.S. companies have for intellectual property and enforcement mechanisms. Phase 1 sounds like progress, but we must know what’s in it before we get too excited.
The New Decade Starts with a Bang… The equity markets were quick out of the gate in 2020 as some of the fears for yearend, including disruptions in the repo market, failed to materialize
What it means – At yearend, financial firms of many stripes clean up their balance sheets so they hold the highest quality securities available to them as well as cash. This window dressing, as it’s called, puts them in line for lower regulatory requirements in the weeks and months ahead.
Investors feared that a clamor for cash and U.S. Treasury bonds in the last days of December would put the repo markets out of whack, but it didn’t happen. Investment firms and banks still wanted the cash and securities, but the Fed made sure there was plenty available. The central bank had $150 billion earmarked for repos but only ended up using $25 billion or so. This followed three months in which the Fed had put more than $350 billion into the markets.
October S&P CoreLogic Case-Shiller 20-City Home Price Index Up 2.2% Over Last Year… The index gained 0.1% over September.
What it means – The improvement to 2.2% over last year makes two months in a row that the Home Price Index has gained ground on an annual basis. It’s too soon to say that last summer was a bottom for the slowdown in real estate, but that could be the case. A combination of low interest rates and rising wages appear to be giving buyers more confidence, now it’s just a matter of getting enough inventory to satisfy demand. On the pricing front, the average home across the nation sold for 3.3% more this year than last year. Prices in Phoenix rose the fastest, followed by Tampa, while prices in San Francisco fell for the third consecutive month.
People’s Bank of China (PBoC) Reduces Reserve Requirement, Making $115 Billion Available for Lending… The PBoC announced it will cut the amount of reserves banks are required to hold by 0.5% beginning January 6.
What it means – The Chinese government and central bank are worried about growth, so the PBoC is making more money available for lending. But there’s no guarantee that the move will do the trick. Chinese banks are reluctant to lend to truly private companies, preferring instead to lend to state-owned enterprises (SOEs) because such firms carry the implicit backing of the government. If banks shun new or bigger loans to private companies, bank lending won’t be a source of growth.
Phase 1 of the trade deal isn’t likely to change the situation because American importers have adjusted their manufacturing, sending some of their business to other countries such as Vietnam. That business is unlikely to return to China anytime soon.
Ford Closes Order Book for Mustang Mach E… Ford began taking orders for the all-electric Mustang Mach E on November 17, but now says the order book is full.
What it means – Potential buyers had to put down a fully-refundable $500 deposit to reserve their vehicle, which should begin rolling off the assembly line in late 2020. But make no mistake, the Mustang Mach E is not a pony car, it’s a four-door small SUV crossover with a front end reminiscent of the latest mustang. The vehicle will cost between $37,000 and $55,000, with a range between 200 and 300 miles. While heightened interest in the car is good for Ford, it signifies something else that is much more important – lots of competition for Tesla. The days of Musk mystique appear numbered as mainstream competitors crowd the electric vehicle field.
Want to Lose Weight, Increase Memory and Brain Function? Try Intermittent Fasting… Professor Mark Mattson of the Johns Hopkins School of Medicine just published a study showing the many benefits of intermittent fasting. The diet technique, which calls for either daily eating in just a six or eight hour window, or choosing two days a week to have just one moderately-sized meal, can cause metabolic switching, where the body resorts to burning stored fat and metabolizing sugary carbohydrates more slowly. The switching can increase brain function, help control high blood pressure and the effects of diabetes, as well as lead to weight loss and increased energy. But there is a downside. It’s hard for people to stick with the regimen because it requires adherents to starve their body a bit to make the switching happen.
Data supplied by Dent Research/Delray Beach Publishing
“When the facts change, I change my mind.
What do you do, sir?” ~ John Maynard Keynes
Our plan is “the plan will change.”
What is your plan?
Relative strength measures the price performance of a stock against a market average, a selected universe of stocks or a single alternative holding. Relative strength improves if it rises faster in an uptrend, or falls less in a downtrend. It is easily applied to individual positions in your portfolio and to sectors and asset classes.
WARNING: All e-mail sent to or from this address will be received or otherwise recorded by the Investor Resources, Inc. corporate e-mail system and is subject to archival, monitoring and/or review, by and/or disclosure to, someone other than the recipient.
This message is intended only for the use of the person(s) (“intended recipient”) to whom it is addressed. It may contain information that is privileged and confidential. If you are not the intended recipient, please contact the sender as soon as possible and delete the message without reading it or making a copy. Any dissemination, distribution, copying, or other use of this message or any of its content by any person other than the intended recipient is strictly prohibited. Investor Resources, Inc. has taken precautions to screen this message for viruses, but we cannot guarantee that it is virus free nor are we responsible for any damage that may be caused by this message.
Investor Resources, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion.