The Week Ahead
Japan is struggling.
The Nikkei dropped 2.1%. It was no doubt rattled by the weak US market, but I think it was more rattled by the combination of a weakening dollar and a GDP revised to a negative 0.3% for the quarter. A weakening economy with a strengthening currency is not a good thing.
In fact, the Nikkei is down 14% in the past 6 months.
The reality is that Japan depends on dollar denominated exports and currency fluctuations affect earnings. The yen has risen ~5% in 1 month, and that reduces the value of repatriated earnings.
Asian stocks all suffered: South Korea (down 3.7%), Singapore (down 2.6%), Australia (down 2.1%)
That is really why the pullback is happening.
But the US markets may respond to the weakness without much thought.
Look, we are heading to a recession. The first wave is already hitting lenders and homebuilding related sectors. The next wave will hit retailers and consumer products. But the waves will break up after that.
So there are several ways to play this
1. Option straddles to bank on the volatility
2. Exit
3. Contrarian investing: invest in companies that do well in downturns
4. Invest in 'recession proof' stocks (healthcare, food, oil, etc)
5. Stay multinational - growth in emerging countries will continue
I favor #3, #4, and #5. Most of our stocks are taking advantage of global oil demand, ongoing healthcare demand, global infrastructure demand. Only 2 stocks buck this trend: TRID and NUAN. Of these, TRID is th eonly one exposed to a sudden and significant slowdown in consumer spending.
TRID is an investment in two things: massively undervalued growth and global TV demand.
I think most people have flown and some weak hands may move yet. But I am buoyed by the low volume selling on Friday. Big money already got out, and it will return as we get close to earnings season. The Fed will add some turmoil, but fundamentals will show that certain sectors remain strong.
Also, be aware that this week is a Jewish holiday (Thursday is the Jewish New Year). There are a lot of Jews on Wall Street and many will be out of work. A slow day Thursday preceded by some moves Wednesday (buying or selling).
The Nikkei dropped 2.1%. It was no doubt rattled by the weak US market, but I think it was more rattled by the combination of a weakening dollar and a GDP revised to a negative 0.3% for the quarter. A weakening economy with a strengthening currency is not a good thing.
In fact, the Nikkei is down 14% in the past 6 months.
The reality is that Japan depends on dollar denominated exports and currency fluctuations affect earnings. The yen has risen ~5% in 1 month, and that reduces the value of repatriated earnings.
Asian stocks all suffered: South Korea (down 3.7%), Singapore (down 2.6%), Australia (down 2.1%)
That is really why the pullback is happening.
But the US markets may respond to the weakness without much thought.
Look, we are heading to a recession. The first wave is already hitting lenders and homebuilding related sectors. The next wave will hit retailers and consumer products. But the waves will break up after that.
So there are several ways to play this
1. Option straddles to bank on the volatility
2. Exit
3. Contrarian investing: invest in companies that do well in downturns
4. Invest in 'recession proof' stocks (healthcare, food, oil, etc)
5. Stay multinational - growth in emerging countries will continue
I favor #3, #4, and #5. Most of our stocks are taking advantage of global oil demand, ongoing healthcare demand, global infrastructure demand. Only 2 stocks buck this trend: TRID and NUAN. Of these, TRID is th eonly one exposed to a sudden and significant slowdown in consumer spending.
TRID is an investment in two things: massively undervalued growth and global TV demand.
I think most people have flown and some weak hands may move yet. But I am buoyed by the low volume selling on Friday. Big money already got out, and it will return as we get close to earnings season. The Fed will add some turmoil, but fundamentals will show that certain sectors remain strong.
Also, be aware that this week is a Jewish holiday (Thursday is the Jewish New Year). There are a lot of Jews on Wall Street and many will be out of work. A slow day Thursday preceded by some moves Wednesday (buying or selling).
posted by Andrew at
9:10 PM
2 Comments:
MICC got hit HARD today. I am weary of MICC and TRID -- are we gonna ride through this phase or do you plan to liquidate and re-enter at a lower price?
Andrew, you suppose to be stopped out of TRID today: intraday it touched 13.86 and your stop was at 14. The fact that your largest position is in your biggest looser amazes me. Admit that you were wrong about TRID, close the position and move on.
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