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The silence of the turkeys

Even Hannibal Lecter would be “cutting back” at Thanksgiving this year, with the American Farm Bureau Federation calculating that the average components…

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Even Hannibal Lecter would be “cutting back” at Thanksgiving this year, with the American Farm Bureau Federation calculating that the average components of Thanksgiving dinner are 15% higher this year than 2020. As Americans head of to a price inflated helping of turkey, cranberry sauce and something called a green bean casserole, inflation was very much in the minds of markets from last night’s pre-holiday US data dump.

FOMC hint at faster tapering

Although Durable Goods disappointed, when automobiles and Boeing aeroplanes are stripped out, the number looked pretty good. Elsewhere, the inflationary signals were more Hannibal and less Clarice. Personal Income and Personal Spending both rose by more than forecast and the PCE Price Index, a Fed favourite, also exceeded expectations, rising to multi-decade highs on a YoY basis. The FOMC minutes suggested the doves are in retreat as well. The committee noted that inflationary expectations in the near term could exceed forecasts and that a faster tapering is not out of the question.

It is probably the last item that weighed on markets the most. Once again, currency markets were the pressure relief valve, with the US dollar spiking once again, helped along by a soggy German IFO, fears of virus lockdowns and ECB officials pouring cold water on rate hikes. Front end yields squeezed higher in response as the FOMC maintained a 2.0% inflation target for the end of 2022. Stock markets ignored the data as investors dipped their toes back into the S&P 500 and Nasdaq waters ahead of the US holiday, unable to resist a cranberry sauce-covered buy-the-dip moment.

Another Turkey that benefited from a Silence of the Turkey was Turkey. President Erdogan managed to talk the Turkish lira 12% lower on Monday, but some silence yesterday saw the lira close 7.0% higher versus the greenback. I rather suspect the stay is temporary though, and that financial markets intend to keep eating the lira with some fava beans and a nice chianti once the Thanksgiving leftovers are consumed.

Another emerging market, perhaps more pertinent to Asia, Mexico, also saw plenty of action. The Fed taper-trade has not been kind to the Mexican peso this week. The peso finished 1.0% lower at 21.4200 after the Mexican President appointed the Deputy Finance Minister, who has zero experience in central banks or monetary policy, as the next central bank Governor. Nothing beats learning on the job, I guess. As a developing market and a major oil producer with a high beta to the US economy, Mexico could well be a template for many parts of ASEAN and the Mexican peso is now 3.0% lower for the week. China, once again, set a weaker yuan fixing today, and with that shield eroding, a taper-trade could be coming to a country near you if you are sitting in Asia.

Two countries that will probably buck that trend in regional Asia are Singapore and South Korea. Singapore is rapidly reopening its economy internationally and recovering domestic demand should outperform the export sector in Q1 2022. The Singapore/Malaysia partial reopening of the land border on 29 November being but one example. Notably, both the Monetary Authority of Singapore and the Bank of Korea have started tightening monetary policy. The MAS tightened via the NEER recently (look this one up readers, like communicating with Mrs Halley, it’s complicated), and the BOK hiked by another 0.25% to 1.0% this morning. The BOK Governor was hawkish in his outlook, and you can be sure the MAS will be at its next biannual policy decision in Q2 2022. For the rest of Asia though, policy settings look set to remain dovish, and if the Fed taper is accelerated at the December meeting, Asian FX could be in for a torrid finish to the year.

Elsewhere, New Zealand’s Balance of Trade and Australia’s Capex has passed without incident. Rising exports flattered the New Zealand Balance of Trade, while Australian Capex was a Q3 print and thus, was eroded by the New South Wales and Victoria lockdowns. Better times will come as Australia reopens. Both the Australian and New Zealand dollars continue to look vulnerable though, in no small part due to their hawkishly dovish fence-sitting central banks. Mostly though, their roles as global risk sentiment barometers leave them at the coal-face of the reality of the Fed taper.

Turning to China, the China Securities Journal is running a story that more fiscal stimulus could be on the way. With the PBOC adding liquidity via the repo today and setting a weaker yuan fix, China markets should have plenty of reasons to be happy. Instead, investors seemed more focused on three other developments. Firstly, indebted property developer Kaisa Group is offering to swap USD 400 million of Singapore Exchange-listed notes for longer maturities. The wording of the offer feels more like playing Russian roulette with 5 bullets in the 6 chambers. Take the offer or we won’t be able to pay the note when it expires on 7 December.

China’s property sector woes haven’t gone away, which leads me to the next point. A group of US Federal Reserve researchers have found substantial downside risks to China’s growth outlook. That won’t bother Beijing, but the banning of 12 more China companies by the US overnight might well do. Finally, spare a thought for JP Morgan overlord, Jamie Dimon, who may be feeling like more Jamie Ma than Jamie Dimon this morning, after joking that a 100-year old JP Morgan would outlast the 100-year old Chinese Communist Party. There’s nothing like being a Dimon in the rough.











Author: Jeffrey Halley

Economics

FTC Demands Wal-Mart, Amazon & Others Participate In Supply-Chain Probe

FTC Demands Wal-Mart, Amazon & Others Participate In Supply-Chain Probe

Shortly after President Biden sat down with top executives from…

FTC Demands Wal-Mart, Amazon & Others Participate In Supply-Chain Probe

Shortly after President Biden sat down with top executives from Wal-Mart, a handful of regional grocers and others to hold a “round table” to discuss “supply chain” issues, the FTC announced Monday afternoon that it would launch an investigation into the factors contributing to these types of disruptions, which have been blamed for contributing to inflation by helping to drive up prices.

Just as reports claimed the supply chain crunch appears to finally be waning, President Biden sicced the FTC on the issue. Once again, it’s bureaucracy to the rescue; and anybody who doesn’t go along with the Biden Administration’s preferred narrative (ie that this is part of a global phenomenon, and that the US isn’t unique) better hope the administration doesn’t accidentally make things worse.

At any rate, it’s bureaucracy to the rescue.

And we don’t say that because we think America’s ports need assistance (they clearly do). The problem is that the supply chain crunch goes far beyond the ships and the ports and the truckers. It’s what an economist might call a “complex”” issue.

While President Biden met with a senior Wal-Mart executive in person, and in front of the cameras, as part of Monday’s “supply chain round table” at the White House, Bloomberg says it is ordering large retailers, wholesalers and consumer good suppliers including Amazon and Walmart to provide the White House with “detailed information” that might aid in a newly launched inquiry into the ongoing supply chain disruptions that are contributing to President Biden’s inflation (or should we say, reflation?) fears.

In addition to Wal-Mart and Amazon, the investigation will target Kroger, Associated Wholesale Grocers, McLane, Procter & Gamble, Tyson Foods, Kraft Heinz and others who are expected to receive their orders from the FTC on Monday. Firms have 45 days to respond.

It’s believed the administration intended this is a message to companies everywhere: don’t raise your prices unless you absolutely need to, because the White House will be checking the receipts, waiting to bust anybody who can even be remotely construed engaging in price gouging.

According to BBG, information being sought by FTC includes primary factors disrupting their ability to obtain, transport and distribute products, impact of those disruptions on delayed or canceled orders, increased costs and prices, what firms are doing to curb disruptions.

The study will focus on determining whether supply chain problems have led to bottlenecks, anti-competitive practices or higher prices, the agency said in a statement.

FTC Chair Lina Khan said in a statement she was hopeful that the study would “shed light on market conditions and business practices that may have worsened these disruptions or led to asymmetric effects.”

The FTC is also asking firms to return the information it’s requesting as soon as possible. Firms will have 45 days from the date they receive the order to respond.

“Supply chain disruptions are upending the provision and delivery of a wide array of goods, ranging from computer chips and medicines to meat and lumber,” FTC Chair Lina Khan said in a statement announcing the investigation.

President Biden and his team clearly intended Monday’s “round table” with “supply chain” executives like the leaders of Wal-Mart, Food Lion and others as a distraction. Readers can watch the “round table”, held at the White House Monday afternoon, at their convenience.

But allow us to save you some time, because, at the end of the day, Biden doesn’t need their help.

But he may need them to pay higher taxes, on top of rising costs and expenses for their businesses, to help offset the costs of his social spending package which is expected to further stoke inflation.

Tyler Durden
Mon, 11/29/2021 – 18:00

Author: Tyler Durden

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Economics

4 Cyber Monday Stocks to Buy: ROKU, PYPL, TWLO, V 

As the markets continue to chop around all-time highs — leaving both bulls and bears believing they are “in the lead” — I wanted to veer from our…

As the markets continue to chop around all-time highs — leaving both bulls and bears believing they are “in the lead” — I wanted to veer from our typical top stock trades routine and look at some potential bargain-bin Cyber Monday stocks to buy. These may not be the typical quick-trade candidates, but longer term swings so long as they do not break down too much further from current levels. Let’s get started.

Cyber Monday Stocks to Buy No. 1: Roku (ROKU)


Click to Enlarge
Source: Chart courtesy of TrendSpider

Roku (NASDAQ:ROKU) is the first on our list, with shares down around 50% from the highs — more than any other stock on this list. Nonetheless, you will notice in the disclosure that I am long a majority of these stocks, and I believe in their long-term futures.

I am a trader first and an investor second, but when I see high-quality stocks — “quality” being the key word — on a 40% to 50% discount, I like to begin accumulating them for long-term holds.

I discussed this strategy once in a lengthy YouTube video.

In any regard, we’re in that stage with many of these growth companies. Here is a weekly chart of Roku, which is trying to find its footing in the low-$230s.

Surprisingly, Roku finished higher last week, giving us the potential for a weekly-up rotation over $238.27.

In the short-term that could put the $250 level in play, followed by the gap-fill level and the 21-month moving average near $270. Above that, and the $290 to $300 zone is on the table.

A sustained move below the $223 low, and we could see $200 next. However, after such a beating, the risk/reward is shifting toward the bulls’ favor.

Cyber Monday Stocks to Buy No. 2: PayPal (PYPL)

Cyber Monday stocks to buy PYPL
Click to Enlarge
Source: Chart courtesy of TrendSpider

PayPal (NASDAQ:PYPL) is not down as much as Roku, but it’s still about 40% off the highs. Shares are trying to hammer out a bottom down here, but it’s not clear if that will be the case.

Now, check out Monday’s action. Shares undercut the prior week’s low near $184, then reversed higher. It did so with some bullish divergence on the charts, too.

From here, let’s see if PayPal can clear $293.90, putting $200-plus back in play.

What we don’t want to see is a break below this week’s low and sustained move lower. That could put $175 back on the table.

Cyber Monday Stocks to Buy No. 3: Twilio (TWLO)

Cyber Monday stocks to buy TWLO
Click to Enlarge
Source: Chart courtesy of TrendSpider

Twilio (NYSE:TWLO) has some life, putting in its third-straight daily gain. Shares are up more than 10% from last week’s low, and are going weekly-up over last week’s high.

That’s a great start, but we need more.

Back over $300 would do a lot of good for bulls this week. That puts Twilio back above the 10-day and 21-day moving averages, as well as the 21-month moving average.

If we get that, then Twilio could see an additional push to the 10-month and 50-day moving averages, followed later by the 200-day moving average.

On the downside, however, a break of $275 and the November low really deals this one a tough blow and will likely stop out a lot of longs.

Cyber Monday Stocks No. 4: Visa (V)

top stock trades for V
Click to Enlarge
Source: Chart courtesy of TrendSpider

Last but not least is a high-quality company, but one that’s been caught in a landslide lately: Visa (NYSE:V).

Shares are trying to hammer out a bottom in the $190 to $200 range, but so far, it’s struggling to gain upside traction.

If it can regain $200, I think we need to start talking about the $205 to $208 area, where Visa faces plenty of prior moving averages of various timeframes. The monthly VWAP measure is also there.

Above $208 puts $211.66 in play, the gap-fill from earlier this month. Those are the “immediate upside levels” if bulls gain some traction.

On the downside, though, a break and close below $192 could put $180 in play.

On the date of publication, Bret Kenwell held a long position in ROKU, TWLO, PYPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

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The post 4 Cyber Monday Stocks to Buy: ROKU, PYPL, TWLO, V  appeared first on InvestorPlace.


Author: Bret Kenwell

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Economics

NU Virus Raises Red Flag For Reflation Stocks 

What a difference a day makes. Black Friday turned into Red Friday after the pandemic took a new turn for the worse. Is it déjà vu all over again? Do…

What a difference a day makes. Black Friday turned into Red Friday after the pandemic took a new turn for the worse.

Is it déjà vu all over again? Do we have control over COVID-19, or does the coronavirus have control over us? 

The narrative for the pandemic finally coming to an end just went south, and with it, short-term investor sentiment. The market doesn’t trade well against heightened levels of uncertainty, including all the protocols, mandates, restrictions and new forms of vaccines coming at a time when investors were increasing equity exposure into what was shaping up to be a very bullish close to 2021. 

Source: Bloomberg.com, Nov. 28, 2021

The only person who I suspect had a clue about this story breaking and the ugly market reaction was Microsoft (Nasdaq:MSFT) CEO Satya Nadella, who sold 839,000 shares of stock Nov. 22-23 for proceeds of roughly $285 million, representing nearly half his current holdings. His previous sales have typically been averaging 42,000 shares per quarter. Why the monster trade? I think inquiring minds would like to know. It deserves a response.

World governments are taking swift action against the newly discovered Omicron COVID-19 strain that is already popping up in other countries outside South Africa, where it first emerged. Dr. Fauci believes it inevitably will be in the United States, and may already be present, just not yet reported. Looking at Bloomberg headlines over the weekend:

WHO Warns of ‘No Information’ on Severity of Omicron

Airlines Scramble as Restrictions Return 

NYC May Be at Start of Winter Surge

Swiss Vote to Keep Covid Health Pass

Botswana Identifies More Cases

Fauci Stresses Need for Vaccination

Germany Has More Suspected Omicron Cases

Dutch Cluster Suggests Omicron Foothold in Europe

Moderna Vaccine for Omicron May be Ready in 2022

Merck Covid Pill Set for Authorization Despite Concerns, MS Says

Given the World Health Organization (WHO) taking its usual wait and see approach, claiming it doesn’t have enough information to come to any near-term conclusions or action plan, it suggests to me that the market will remain in flux until much more is known about the new variant. The only thing the WHO has made its mind up on is what name to call it — NU, for new virus. How about WU — for Wuhan?

So, now the market has to contend with inflationary pressures and what is likely to be an array of anti-COVID measures that could stifle growth heading into 2022. This being a growing likelihood scenario, it stands to reason that capital flows targeting income generation will increase into short-term corporate bonds and into equities of companies in stay-at-home, telecom, consumer staples, utilities, health care and real estate. 

Sources of funds, at least over the very short term, will be energy, financials, consumer discretionary, industrials, materials, metals and mining. Once the smoke clears from the initial wave of selling, technology stocks should recoup most of their losses, as that sector led the market to new highs every time there was a COVID-flareup-related sell-off, and there is little evidence to suggest this will be different going forward.

A couple observations should be noted that will continue to characterize the market landscape. The first is that the strong dollar will likely get stronger as investors seek safety in dollar-denominated assets. The greenback was hit by sellers on Friday as knee-jerk logic kicked in and the Fed’s plan to taper would now be put on hold. The dollar index (DXY) was clearly overbought, but will probably find strong support at the $94.00 level, roughly 2% below where it closed Friday.

A strong dollar is a negative force for multinational corporations that conduct more than 50% of sales outside the United States. Hence, fourth-quarter profits are likely to reflect the impact of foreign exchange (forex) headwinds and pinch S&P 500 earnings growth forecasts for Q4 2021 and Q1 2022. On the plus side, oil prices tumbled last week, with WTI crude ending Friday’s session down 13.06% to $68.15/bbl. Natural gas was unaffected, closing up 7.1% to $5.48/MBtu as shortages in Europe heading into winter are providing a strong bid.

Here, too, investors seeking inflation-hedged income should look at some of the natural gas producers and pipeline operators that are pure plays on natural gas, as this is where strong fundamentals exist for U.S. energy companies with domestic operations serving domestic markets that won’t have their profits impacted by a strong dollar. What was the growingly attractive global reflation trade is now rapidly reverting to the hunker down local and regional economy trade, at least until the U.S. Centers for Disease Control and Prevention (CDC) gives the “all clear” sign. That signal, sadly, is probably several weeks or a few months off.

The post NU Virus Raises Red Flag For Reflation Stocks  appeared first on Stock Investor.







Author: Bryan Perry

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