Tuesday was sort of a lackluster session on the surface. However, it was powerful beneath the surface, as buyers shifted from high flyers (sending weighted indices lower) and moved into other niches of the stock market. There were a combined 516 new 52-week highs against only 35 new lows on the NYSE & the NASDAQ Composite. There were more winners than losers in the NYSE and the NASDAQ. And the volume was overwhelmingly positive:

• NYSE: Up volume: 1.69 billion vs Down volume: 1.21 billion
• NASDAQ: Up volume: 1.30 billion vs Down volume: 890 million

The Biggest Hurdle

Don’t look now, but more than 80% of names on the S&P 500 are trading above their 200-day moving average. It’s not as uncommon as it might seem, but it’s the first time it happened since September 2014, which means this better be a great earnings season. 

Small Business Optimism

The National Federation of Independent Business (NFIB) Optimism report is an important read for all investors. Yesterday’s release was in line with the consensus estimate and it’s still among the highest levels ever.

Wanted: A Good Man or Woman

The big problem for small businesses remains in finding qualified workers. Government regulations have come down a ton from where they were a couple of years ago. I’m concerned more about business owners who point to taxes as the single most important problem from a year ago. However, few business owners are worried about poor sales or finance rates. 

Phase One

Could today’s trade news rekindle a cross-border foreign direct investment (FDI) between the United States and China?  There is no doubt China’s investments in the United States were climbing. And there is also no doubt China read the 2016 election tea leaves better than the American media and spiked its investment efforts that year and the next year, ahead of the official launch of the trade battle.

Overall, from 1990 through April 2019, the United States invested $276.38 billion in China, and China invested $148.33 billion in the United States. I’m sure U.S. businesses are eager to test new rules prohibiting forced transfers and even make more acquisitions.

China to U.S. FDI: $148.33 billion

Entry	Investor	Type	Stake
Greenfields $11.32	Private $113.42	Strategic $114.76	Controlling $126.12
Acquisition $137.01	State Owner $35.91	Financial $33.57	Minority $22.21

 

U.S. to China FDI: $276.38 billion

Entry	Investor	Type	Stake
Greenfields $195.69	Private $276.38	Strategic $241.98	Controlling $181.98
Acquisition $80.70	State Owner $.005	Financial $34.40	Minority $94.40

Portfolio Approach

Still fully vested in the model portfolio.

Tuesday was sort of a lackluster session on the surface. However, it was powerful beneath the surface, as buyers shifted from high flyers (sending weighted indices lower) and moved into other niches of the stock market. There were a combined 516 new 52-week highs against only 35 new lows on the NYSE & the NASDAQ Composite. There were more winners than losers in the NYSE and the NASDAQ. And the volume was overwhelmingly positive:

• NYSE: Up volume: 1.69 billion vs Down volume: 1.21 billion
• NASDAQ: Up volume: 1.30 billion vs Down volume: 890 million

The Biggest Hurdle

Don’t look now, but more than 80% of names on the S&P 500 are trading above their 200-day moving average. It’s not as uncommon as it might seem, but it’s the first time it happened since September 2014, which means this better be a great earnings season. 

Small Business Optimism

The National Federation of Independent Business (NFIB) Optimism report is an important read for all investors. Yesterday’s release was in line with the consensus estimate and it’s still among the highest levels ever.

Wanted: A Good Man or Woman

The big problem for small businesses remains in finding qualified workers. Government regulations have come down a ton from where they were a couple of years ago. I’m concerned more about business owners who point to taxes as the single most important problem from a year ago. However, few business owners are worried about poor sales or finance rates. 

Phase One

Could today’s trade news rekindle a cross-border foreign direct investment (FDI) between the United States and China?  There is no doubt China’s investments in the United States were climbing. And there is also no doubt China read the 2016 election tea leaves better than the American media and spiked its investment efforts that year and the next year, ahead of the official launch of the trade battle.

Overall, from 1990 through April 2019, the United States invested $276.38 billion in China, and China invested $148.33 billion in the United States. I’m sure U.S. businesses are eager to test new rules prohibiting forced transfers and even make more acquisitions.

China to U.S. FDI: $148.33 billion

Entry	Investor	Type	Stake
Greenfields $11.32	Private $113.42	Strategic $114.76	Controlling $126.12
Acquisition $137.01	State Owner $35.91	Financial $33.57	Minority $22.21

 

U.S. to China FDI: $276.38 billion

Entry	Investor	Type	Stake
Greenfields $195.69	Private $276.38	Strategic $241.98	Controlling $181.98
Acquisition $80.70	State Owner $.005	Financial $34.40	Minority $94.40

Portfolio Approach

Still fully vested in the model portfolio.

Today’s Session

Confusion over Goldman’s numbers have been the biggest mover of the broad market before the open.  There was an initial swoon, then a rebound, and now its drifting lower.

Goldman Sachs (GS) Mixed

https://www.goldmansachs.com/media-relations/press-releases/current/pdfs/2019-q4-results.pdf

• Net revenues were $36.55 billion, which included fourth quarter net revenues of $9.96 billion, the second highest fourth
• Quarter net revenues and the highest since 2007.
• The firm ranked #1 in worldwide, announced and completed mergers and acquisitions for the year 2. The firm also ranked #1 in worldwide equity and equity-related offerings and common stock offerings for the year 2.
• Investment Banking generated net revenues of $7.60 billion, its second highest annual net revenues.
• FICC financing net revenues increased for the fifth consecutive year to a record $1.38 billion.
• Firm wide assets under supervision increased $317 billion 5 during the year to a record $1.86 trillion, including net inflows of $108 billion in long-term assets under supervision.
• Consumer & Wealth Management generated record net revenues of $5.20 billion, including record Management and other fees in Wealth management and significant growth in Consumer banking net revenues.
• During 2019, the firm returned $6.88 billion of capital to common shareholders, including $5.34 billion of share repurchases and $1.54 billion of common stock dividends.

Target (TGT) Miss

Target Reports Holiday Sales and Maintains EPS Guidance

https://investors.target.com/news-releases/news-release-details/target-reports-holiday-sales-and-maintains-eps-guidance

November/December comp sales performance by category:
Apparel	Up approx. 5%
Essentials & Beauty • Beauty	Up approx. 6% Up approx. 7%
Food & Beverage	Up approx. 3%
Home	Down approx. 1%
Hardline • Toys • Electronics	Down more than 3% Approx. flat Down more than 6%

This morning we got some economic data.

Economy: Manufacturing

Empire State

• Actual 4.8
• Estimate 3.6

Highlights

• General Business +1.5
• New Orders +4.9

Comments

A purely personal opinion from my life and travels across America the past year seems to point to a fairly severe shortage of workers in high skill jobs and in service related positions. I think small business in particular are going to be forced to raise wages and benefits. I believe that will over time provide a more sustainable consumer driven economy. Reducing the wealth and benefits disparity between upper management and workers in the corporate world may impact profits/earnings in the short term, but will produce a healthier climate across all business sectors and the economy at large in the long term. We must improve the effectiveness and efficiency of our educational system in America. Clearly the current maze of bureaucracy and lack of clear definable goals across local-state-federal public and private educational is a problem! garro on 1/15/2020 9:44:09 AM

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