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Strategies & Market Trends : The Financial Collapse of 2001 Unwinding -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (905)	7/23/2018 6:09:27 AM
From: elmatador	Respond to of 13801

Biggest Earnings Headwind Is Strong Dollar, Not Trade Kenneth RapozaContributori Jul 22, 2018, 06:00pm 504 views #MarketMoves Remember a few years ago when people said the dollar was dead? It would weaken beyond belief. No one would want it. The Chinese yuan would take over in emerging markets. They’d be buying soybeans priced in Brazilian reals. Only, like the peak oil theory in 2001-2002, the dead-dollar theory should also be dead. Until there is a major financial crisis and institutional investors and billionaires decide to put larger portions of their wealth into bBtcoin, the dollar is here to stay. The euro couldn’t knock it out. The renminbi hasn’t come close to knocking it out. And this week, the biggest headwind to earnings wasn’t a slow economy and trade wars, it’s a strong dollar, says Dan Russo, chief market technician for Chaikin Analytics, a stock research firm. “Trade tensions were not a major directional driver for the market last week ,” Russo says. “Investors seemed to shrug off Trump’s comments about wanting to impose tariffs on over $500 billion of Chinese imports.” The U.S. government is considering imposing tariffs on $200 billion worth of Made in China goods by summer’s end. China already faces around $50 billion in tariffs, enacted by the Trump Administration this month. The S&P 500 settled relatively flat on the week despite the ongoing trade war and Trump hysterics. Wall Street investors are wearing some sort of hearing protection because the political noise has hit 130 decibels, ear-drum damaging. U.S. investors, meanwhile, are doing fine. Year-to-date it is the best performer out of all developed markets. The Nasdaq closed higher last week. The Russell 2000, mostly mid- and small-cap companies, beat all the indices last week to close just below its all-time high. Financials and U.S. industrials had strong gains. Tech stocks outperformed again, and the dollar index weakened a bit on Trump comments that the Fed’s interest rate policies meant more inflows into dollar bonds, meaning a stronger dollar in the simplest of outcomes. “It’s not unprecedented, what Trump said about the Fed,” says Libby Cantrill, PIMCO’s head of public policy. Cantrill was speaking on Bloomberg TV July 20 about Trump’s critique of Fed monetary policy undercutting a strong economy. According to FactSet, the earnings growth per share for U.S. companies in the second quarter now stands at around 20%, up from 18.9% at the end of the first quarter. Of the 17% of the companies that have reported earnings so far, including Honeywell (HON) and medical equipment manufacturer Danaher (DHR), 87% of them have beat their earnings estimates. It’s still early in the earnings season, but if this keeps up it will set the pace for the rest of the year. And it seals the narrative that the Trump Administration has been a strong positive for the economy. Moreover, those that argue that the economy has been spurred along by Obama will be hard pressed to explain why two of the biggest growth factors have been tax cuts and Obama-era regulation rollbacks. There is also the labor market situation, with blue-collar workers gainfully employed in one job, not two or three jobs. It is hard to say if this is a direct result of lower blue-collar immigration. No official reports have been sent out on this issue, though anecdotal evidence suggests that jobs often taken by undocumented workers—such as construction and delivery services—are being taken up by working-class Americans. Russo said that of all the conference calls he participated in, companies “largely downplayed any meaningful impact from trade tensions.” In fact, “the largest headwinds mentioned by management on their conference calls have been higher energy and input costs and the rising dollar,” he says. Increased input costs could also include aluminum. The U.S. government imposed tariffs on steel and aluminum imports from Brazil, Russia and other suppliers. This week, some 174 S&P 500 companies will report second-quarter earnings. That will give investors more insights into the strong dollar and trade policy in general. Energy infrastructure company Haliburton (HAL) and metals importer Illinois Tool Works (ITW) could have some insights into energy prices and tariffs when they report this week. China’s Baidu (BIDU) should be interesting, as China policymakers were tightening money supply in the second quarter but are expected to get loose in the third. Baidu’s call should be interesting on China’s direction in the months ahead. Most investors believe the third quarter is when trade war impacts will be more widely felt, depending on the industry. Russo thinks the dollar will move higher. “If the dollar moves higher, small-cap stocks could resume their outperformance compared to large-cap stocks,” Russo says, as large-cap names can be more glued to global export markets.

To: Elroy Jetson who wrote (905)	7/24/2018 1:49:13 AM
From: elmatador	Respond to of 13801

China dials down Xi's personality cult as criticism mounts Posters are taken down ahead of annual meeting with elders OKI NAGAI, Nikkei staff writer July 24, 2018 04:08 JST BEIJING -- Chinese authorities have started to take down posters of President Xi Jinping in certain parts of the capital, in what is seen to be an attempt to tone down the cult of personality, as party elders raise alarm over his authoritarian flair amid escalating tensions with the U.S. The move comes ahead of the annual Beidaihe meeting held at the seaside resort town in Hebei Province, where past and present leaders of the Chinese Communist Party meet to discuss the direction of national policies. Former President Jiang Zemin and other party elders are rumored to have sent a lengthy letter to Xi, urging him to reconsider his diplomatic and economic policies. There is growing sentiment within the party that Xi should pay more respect to past leaders who reformed China and propelled it to the world's second-largest economy. Signs and posters praising Xi had popped up across China following the twice-a-decade Communist Party congress last fall, which helped him consolidate power even further. But they were taken down from several bulletin boards at a Communist Party facility in Beijing in mid-July in a seeming response to criticisms against Xi. "It was an order from the party committee in charge of the building," a source familiar with the matter said. An alleged image of the official notice was posted online. A government-affiliated think tank in Shaanxi Province also recently canceled an event to discuss Xi's political ideology. The political mood in China shifted on July 4, when a young woman live-streamed herself splashing ink on a Xi poster to protest the "tyranny" and "brain control" imposed by his government. The video quickly went viral. She went missing after tweeting a photo of uniformed men outside her door, and is believed to have been detained. The incident opened the floodgates for further condemnation of Xi. The state-run Xinhua News Agency reported on July 11 that former party chairman Hua Guofeng once apologized for encouraging a personality cult around himself. The article, which has since been deleted, is widely seen as an indirect attack on Xi's campaign for power. The Communist Party had given Xi added clout in hopes of tackling China's slowing growth and other challenges more efficiently. But the brass remains extremely wary of giving one leader too much power, given the disastrous consequences of the Cultural Revolution under Mao Zedong. Concerns have only grown amid the escalating trade war with the U.S., which has undermined one of China's most important diplomatic relationships. Still, the Xi administration appears to be on solid ground. He left for a 10-day trip to Africa on Thursday, and it is unusual for a Chinese leader to leave the country in times of instability. Some observers believe that if anything, the return to a more collective approach to leadership is only intended to spread out the blame should trade tensions with the U.S. escalate beyond control.