Summer Breaking…

June 25, 2018

I’ve been on break studying history, culture and food with the family this weekend. But quickly, here are a few interesting things that I noticed this week in the markets:

    • While most stocks were lower, the international trade-related stocks (Industrials, Semis and Materials) were down much more. Also, Emerging Markets and Developed International equities underperformed even with the U.S. dollar lower. Tells me that risk was for sale as the trade wars increase.
    • Energy stocks bounced as OPEC production increases were less than expected (600k bbl/day versus 1m bbl/day expected). Now will anyone cheat (or do they have the capacity to do so)? And so the price of Crude Oil bounces back above the 200-day moving average.
    • Utilities, Retail and REITs outperform. So again, risk off and investors want more U.S. consumer exposure rather than multi-national trade exposure.
    • Small Caps again outperform Large Caps even with the U.S. dollar lower, so investors are working extra hard to avoid trade war exposure and get more U.S. consumer exposure.
    • The Financial Sector ETF (XLF) has now fallen 10 days in a row. This is a new record. Yield curve going flat is weighing big time.
    • Philly Fed Index for June came in short at 19.9 versus 29.0 estimated (and 34.4 in May). And new orders looked even worse falling from 40.6 to 17.9.

  • Daimler sends out a profit warning as they expect U.S. tariffs on U.S. manufacturing to affect future sales overseas (especially in China where their SUVs dominate). So Mercedes and BMW have gone into full freak out mode.
  • Airbus also warned that Brexit could affect its 15,000 employees in the U.K. Yea, Brexit…the gift that keeps on stinging.
  • The Dow Jones Industrial average dumped GE for Walgreens/Boots.
  • CNBC has a funeral for Bitcoin. So, they are no longer going to talk about it anymore? Bitcoin gets crushed to new lows below $6000.

Mercedes and BMW own the China SUV market with many of the vehicles made here in the U.S….
@markets: Mercedes and BMW SUVs are getting caught up in China-U.S. trade spat


What is the next career for a Rolls Royce engineer?

@FinancialTimes: Aerospace giant Airbus warned that the ‘severe negative consequences’ of Brexit could force it to leave Britain entirely — which would put 15,000 UK jobs at risk.


A good one…


Ut-oh Bitcoin…


Trade tariffs are about to cause U.S. bourbon prices to collapse. Still think this was an accident?

@business: Part of a whiskey storage warehouse collapsed in the heart of Kentucky’s bourbon country


Speaking of why Trade Wars don’t work for the United States…

@WISCTV_News3: MILWAUKEE (AP) — Facing rising costs from tariffs, Harley-Davison will shift production for EU bound motorcycles overseas.

A chart on the damage that the Trade Wars are doing to U.S. manufacturing stocks…

@carlquintanilla: See if you can spot when the stock market decided the tariff fight was more than just talk.

An update on the 361 World Cup Challenge…

Argentina made some big moves last week…in the market at least…

The MEXBOL (-1.02%) is outperforming the DAX (-6.38%)…ironic?

Lukaku’s brace didn’t seem to faze the Tunisia (TUSISE) market as it sits in first place for market return…

You can check the country market rankings here or follow us on Twitter for timely updates.

Finally, Goldman Sachs has England moving up!

As the tournament heats up, the winning margins are becoming wafer thin, especially for England. This is reflected in the winning probabilities, which capture a sense of how easy the path to the final will be for each country. On this score, France still commands the greatest chance of winning, given that we expect more decisive results in the knockout stages. Germany’s probability has recovered somewhat, given their strong chance of making it past the group stages. But this doesn’t alter our earlier observation that the four most probable winners are (in descending order) France, Brazil, Belgium and England.

(Goldman Sachs)


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