Sunday, February 26, 2017

QUICK OVERVIEW



  • Lots of talk (“so-called forecasts”), that the Dow/S&P is about to double in the first 4 years of the Trump admin. That would be a return of some 18% per year – undeniably “tremendous”!!

  • Now the biggest single factor in the long-term direction of stocks is earnings “growth”. Currently the S&P 500 (you can trade it using SPY) is earning, per Barron’s Market Lab, $89.09, and $998 for the DJI. So, for the S&P to double, earnings would probably have to be somewhere close to $178 for the S&P and $2000 for the DJI in four years.
  • Optimists see Trumps tax cuts adding about $13, and deregulation $7, for a total of $109 for the S&P. The difference would therefore have to come from somewhere else, perhaps accelerated GDP growth of well over 4%, which would probably result in higher interest rates (the Fed is planning to raise rates already) - creating competition. You can peruse the implications here.
  • However, as you can see in the table, if rates should stay the same and earnings be $2000, the Dow could / should be trading at $84000 – now that would be a Trump rally, “tremendous indeed”!! And  that without considering the dividends -WOW!!

  • Meanwhile, Trump’s administration will project gross domestic product growth of 3 to 3.5 % per year when hyping the economic impacts of proposed legislation. This could be a tad difficult to achieve according independent and nonpartisan agencies as well as private-sector economic forecasters -- some are calling it “Argentine-style data manipulation” ...
  • In his annual letter to Berkshire Hathaway shareholders, the Oracle of Omaha said: “When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients.
    “Both large and small investors should stick with low-cost index funds.”
  • U.S. Agriculture Department data show that Turkey has become the biggest supplier of organic corn and soybeans to the U.S. last year. In 2016 it shipped 400,000 metric tons of organic corn, nearly quadrupling its prior-year total, while its soybean shipments climbed 8x, Other key suppliers to U.S. organic-food companies are now Ukraine, Argentina, Romania and India. This is prompted by U.S. consumers' demanding organic products - produced without synthetic pesticides or genetically engineered seeds.


  • Mexico says it has no intention of accepting new “unilateral” immigration rules revealed this week by the Trump administration that include plans to deport non-Mexicans to Mexico.

  • (Reuters) Amid trade tensions with the United States, Mexico plans to send a delegation next month to visit Brazilian corn, beef, chicken and soy producers as an alternative to U.S. suppliers, its representative in Brazil said on Friday.
  • Mexican chargĂ© d'affaires Eleazar Velasco said Brazil is uniquely positioned to expand agricultural commodity sales to Mexico if trade with the United States is disrupted because it is closer than other potential suppliers like Australia.
  • "The United States unilaterally wants to change the established rules of the game," Velasco told Reuters. "This will evidently lead us to rebalance our trade relations."

  • Germany’s environment minister, announced that the government would be instituting a ban on meat at official functions held by the Ministry of Environment, citing the environmental burden of meat production as the reason for the ban.



Saturday, February 18, 2017

QUICK OVERVIEW

  • Whatever might be going on in the White House, investors are keeping their faith in Trump -- so far. 

  •  Mexican newspapers report Mexican Parliament anticipates to shift corn/soy imports to South America and were ready to source soybeans/corn from Brazil/Argentina.

  •  German Consumer Price Index rose 1.9% 
  • YoY German GDP came in at a seasonally adjusted plus 0.4% in Q4. 
  • YoY the growth rate for 2016 was 1.9%, which was the strongest rate for half a decade. 

  • (Reuters) U.S. President Donald Trump's vow to roll back government regulations at least 75 percent is causing anxiety for some pharmaceutical executives that a less robust Food and Drug Administration would make it harder to secure insurance coverage for pricey new medicines… "People often argue that the FDA is too restrictive," said Roger Perlmutter, head of research and development at Merck & Co Inc (MRK.N). "We have the sense that the balance is pretty right ... you have to have a well-characterized risk/benefit profile." 

  • Solar now provides twice as many jobs as the coal industry: The solar industry is adding jobs much faster than the overall economy, but still makes up just over 1% of the country's total power supply. Clearly, there's room for growth.


  • Republicans terminate the EPA https://www.congress.gov/bill/115th-congress/house-bill/861/text

  •  (Fortune) In a new interview with Quartz, Microsoft founder Bill Gates makes a rather stunning argument—that robots who replace human workers should incur taxes equivalent to that worker’s income taxes. “Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed . . . If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.”

  • Catherine Rampell: National Endowment for the Arts budget, which Trump wants to eliminate: $148m Estimated annual cost (to NYC) to protect Trump Tower: $183m 


  • The 10 biggest defense budgets in 2016 added to over $1.1 trillion. The U.S lead the way with $605 billion, followed by China with $145 billion.

  •  U.S. annual inflation rate rose to 2.5% in January, from 2.1% in December.