US Economic News

(31-03-2019, 02:50 PM)weijian Wrote:

(31-03-2019, 12:21 PM)karlmarx Wrote: Does VBs see the inverted yield curve as a signal to get out (soon)?

And why is WB so ever optimistic about U.S.?

Inverted yield curve! Sometime ago, i realized i m not as intelligent as the general crowd and gave up forecasting these stuff. It allowed me more sanity in my asset allocation. I wonder whether our Blue friend (haven't been active here for some time) has anything to say?

There is probably no place better for capitalists in this world, than the United States. And W.B is the American Capitalist

Been busy fishing and prawning. Nothing much to add really. Still reading whatevers been posted.

Nibbled a bit when STI had a dip previously to 3100+ levels. 

I reckon its just gonna be a slow decline so long as trade war goes on. China PMI numbers now 2 consecutive negative months, trend forming. on top of that 25% tariff has started in May so expect even more slowdown as the effect from that filters down.

US side things also slowdown and fed now talking about rate cuts. Slowdown also showing on quarterly reports of local small cap manufacturers i follow.

So really just waiting as usual, maybe a correction soon maybe not. US side seems like its still party hats on and FED QE again maybe...

At least locally, seems COE prices are coming down and maybank was talking about recession, so maybe got chance for STI correction.

(We have not really seen the full impact of June tariffs yet)

US underlying inflation firming; labor market tightening
https://www.channelnewsasia.com/news/bus...g-11712648

recession-indicator-flashing-red
https://www.barrons.com/articles/recessi...yptr=yahoo

2019.07.28【文茜世界財經週報】任內三度舉辦美國製造展　川普再提高認定標準
https://www.youtube.com/watch?v=Kp0V02WY...xu&index=3

Bridgewater founder Ray Dalio says there’s a 40% chance of a US recession before the 2020 election

Yen Nee Lee
PUBLISHED THU, AUG 15 2019  10:00 PM EDT

* The U.S. economy is taking a turn for the worse, says Ray Dalio, founder of Bridgewater Associates.
* Fears of a looming recession in the U.S. were heightened after a closely watched indicator flashed a warning signal: The yield on the 10-year Treasury note briefly broke below the 2-year rate early Wednesday.
* Cutting interest rates may not be effective in stimulating economic activity, so economies may resort to weakening their currencies to boost growth, Dalio says.

The U.S. economy is taking a turn for the worse and there’s a 40% chance America could experience a recession before the 2020 presidential election, according to Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates.

“Recessions are always inevitable, the only question is: ‘When?’” Dalio told CNBC’s Christine Tan on Thursday.

“I think that in the next two years, let’s say prior to the next election, there’s probably a 40% chance of a recession,” he said on  “Managing Asia.”

Fears of a looming recession in the U.S. were heightened after a closely watched indicator flashed a warning signal: The yield on the 10-year Treasury note briefly broke below the 2-year rate early Wednesday. That bond market phenomenon has been a reliable early indicator for economic recessions in the past.

That’s coming at a time when an ongoing fight between the U.S. and China threatens global trading activity and pushes back investment decisions among businesses.

Some economies are already on the verge of a recession. Gross domestic product in Germany — Europe’s largest economy — shrank by 0.1% in the April-to-June period compared to the previous quarter. In Asia, Singapore — a major financial center — also reported economic contraction in the second-quarter of this year.

‘Currency wars’

An economic slowdown globally will prompt central banks, including the U.S. Federal Reserve, to ease monetary policies even further, said Dalio. But cutting interest rates this late into the economic cycle may not be effective in stimulating the economy, he added.

More details in https://www.cnbc.com/2019/08/16/bridgewa...-gold.html

The ‘bloodbath’ in America’s trucking industry has officially spilled over to the rest of the economy
https://www.businessinsider.sg/trucking-...?r=US&IR=T

High-Dividend Stocks on Historic Discount as Yields Plunge, says Goldman
Updated Aug 20, 2019

The S&P 500’s highest yielding dividend stocks are selling at their biggest discount in nearly 40 years as bond yields across the globe are plunging. Despite mounting fears concerning global trade, weak economic data coming from economic powerhouses like China and Germany, and the brief inversion of the U.S. Treasury yield curve last week, Goldman Sachs recommends a basket of dividend stocks with high growth potential and which are trading at bargain prices.

The basket is comprised of stocks from a range of sectors, offering impressive expected dividend yields (DY) for the year and attractive forward-looking price-to-earnings ratios (P/E ratios), including, AT&T Inc. (T) with a 5.9% DY and 9x P/E ratio; Kohl’s Corp. (KSS), 6.1% and 9x; Archer-Daniels-Midland Co. (ADM), 4.8% and 11x; Citizens Financial Group Inc. (CFG), 4.3% and 8x; AbbVie Inc. (ABBV), 6.8% and 7x; and Seagate Technology PLC (STX), 5.7% and 10x.

What It Means for Investors

The median stock in Goldman’s Dividend Growth Basket beats the median stock in the S&P 500 on a number of key metrics: a 3.8% estimated DY for 2019 vs. 2.1% for the S&P 500; a dividend compound annual growth rate (CAGR) between 2018 and 2020 of 9% vs. the S&P’s 6%; and an estimated PE ratio for the next twelve months of 11x vs. 16x for the broad market index.

Compared to what markets are pricing in, Goldman’s estimates for dividend growth are definitely optimistic. Swap market prices suggest dividends are expected to grow at an annual rate of 0.7% over the next decade, while the investment bank’s analysts are calling for 3.5% annual growth over the same period. That difference in expectations combined with the historically low valuation discount for dividend stocks makes it easier to understand why Goldman’s analysts think there is a great bargain to be had.

Slightly less optimistic, asset management firm Janus Henderson recently reported that the pace of year-on-year dividend growth had slowed to 1.1%. But that’s for stocks across the entire globe, not just in the U.S., and even that tiny bit of growth helped push dividends to their highest level on record. Janus Henderson forecasts global dividend payouts to post a 4.2% rise by the end of the year, according to the Guardian.

Those big dividends are looking especially attractive in a world where U.S. 10-year Treasuries are yielding a little over 1.6% and bond yields around the world are plunging, many into negative territory. While investors have been accustomed to negative yields on sovereign bonds for several years now, they’re now starting to acquire a taste for negative-yielding corporate debt as well. The total amount of negative-yielding bonds across the world was up to nearly $17 trillion last week, according to Bloomberg...........


https://www.investopedia.com/dividend-st...an-4768082

If you look at Trump's Team. Most of them are hawks of varying degrees against China.
And if you look at Peter Navarro, Director of Trade and Manufacturing Policy.
He will implement 43% tariffs on China if he gets his way and he is unlikely to agree to ANY trade deal.

So will the trade deal get done? Yes and No.
Yes it may have a superficial agreement sometime soon before Trump's term ends to pacify the markets.
No because a trade deal with china is not the agenda for many members of trump's team.
How many times has the trump team said a deal is almost done when nothing is concluded in the end?
China is sensing this and may just wait it out, China is very much prepared for the pain ahead.

My take is a ceasefire or a superficial deal at best. It's not going to end anytime soon.

When the Americans allowed the Chinese to sell them a large number of goods, they probably expected the Chinese to remain subservient to their interests. Just as the Americans assisted the economic rise of numerous Asian nations -- Japan, Taiwan, etc -- by purchasing their goods.

Yet, the Chinese have not repaid the favour, at least not in ways that the Americans expect.

The Americans are probably quite upset about this. And may now anoint some other (Asian?) countries, as they shift their purchasing away from China. The largesse will probably be spread over numerous countries. It makes no sense for the Americans to further stoke the rise of a super power that is unfriendly towards them.

The Chinese does not yet yield as much economic clout, though it makes up for that with physical hostility and diplomatic aggression. China will suffer from having less factory orders. But may react by speeding up its economic transformation.

As expected

1. Chinese imposes tariffs in response.

2. Peter Navarro cited sticking points before a deal can be reached. (Issues that could never be solved. Can be interpreted as they have no intention of a trade deal in the first place) He wanted 43% on all chinese goods for the longest time. Chances are increasing he will get his way if trump agrees to his plan.

3. Trump now calls president Xi "enemy" and wants companies to shift out of China.

4. How many times have Trump & his team assured that a deal is almost complete and talks are "going well"
My updated take is that it is not going well and it wont go well as far as the eye can see... Even a superficial one wont take place so soon.

5. It would just take just another negative to take down the dow to single day >1000pts loss, ie Fed holding rates instead of cutting. Right now things are still humming along in the US. Reflected in the indices that are not very far from all time highs.