The Enhanced Investor Weekly Macro
February 5, 2017
ENHANCED INVESTOR WEEKLY WRAP & UPDATE Market Wrap and Update No rate hike! What’s that mean going forward for this week and the incoming months? We first have to await Chinese data which is to be released this week. China, known to forge financial data, has pegged its monetary policy to that of the Federal Reserve, so let’s get started. First and foremost, in the week ahead, global financial markets will be busy with central bank meetings in the week ahead, with policy decisions due in the U.S., U.K. and Japan. Investors will also keep an eye out on key economic data, with the monthly U.S. employment report and euro zone inflation Global financial markets will focus on Chinese trade figures due on Friday in a relatively quiet week for economic data. Investors will also keep an eye out on a few U.S. economic reports, with Friday's consumer sentiment data in the spotlight, for further clues on the timing of the next Federal Reserve rate hike. Meanwhile, in the euro zone, market participants will pay close attention to a report on German factory orders to gauge the health of the region's largest economy. Traders will also be focusing on a number of central bank decisions this week, including rate reviews in Australia and New Zealand. 1.
China January Trade Data
China is to release January trade figures at around 03:00GMT on Friday (10:00PM ET Thursday). The report is expected to show that the country’s trade surplus widened to $48.9 billion last month from $40.8 billion in December. Exports are forecast to have climbed 3.0% in January from a year earlier, following a decline of 6.1% a month ago, while imports are expected to rise 9.6%, after gaining 3.1% in December. China is the #1 exporter and #2 importer in the world, so these numbers will move the market!
The Enhanced Investor Weekly Macro
Geopolitical events, environmental crises, and terrorism are going to shape the markets if they haven’t already.
1
The Enhanced Investor Weekly Macro
February 5, 2017
Additionally, the Asian nation will publish the Caixin services purchasing managers index on Monday, followed by foreign reserves data on Tuesday. China's economy grew 6.8% in the fourth quarter, boosted by higher government spending and record bank lending. But the economy still faces headwinds from a cooling housing market and possible protectionist measures from the U.S. China is attempting to switch from an export-oriented industry to a domestic, consumption based economy. We will monitor this going forward. 2. U.S. Michigan Consumer Sentiment for February The preliminary University of Michigan February consumer sentiment index scheduled for release at 10:00AM ET (15:00GMT) on Friday is expected to inch down to 97.8 from 98.5 in January. Besides the consumer sentiment report, this week's calendar also features U.S. data on international trade, job openings, weekly jobless claims as well as import prices. Headlines from Washington will most likely continue to dictate market sentiment in the week ahead, as traders focus on President Donald Trump for further details on his promises of tax reform, infrastructure spending and deregulation as well as trade policies. Earnings from the likes of Disney (NYSE:DIS), General Motors (NYSE:GM), Time Warner (NYSE:TWX), Coca-Cola (NYSEKO) and Twitter (NYSE:TWTR) are also on the radar this week. 3. German December Factory Orders Germany will publish data on December factory at 07:00GMT (2:00AM ET) Monday. The data is expected to show a gain of 0.5%, following a sharp drop of 2.5% in November. There will also be German, French, Spanish, and Italian industrial production data. All are expected to show growth, adding to evidence that the euro zone's economy is gaining momentum.
China prepping to switch their business model‌ to consumptionbased. Boom may continue, or bubble mat pop - stay tuned.
Immigration ban *stayed* by the In addition, the European Commission is State Department - H1B Visas scheduled to publish updated economic forecasts reinstated = no hinderance in for the region on Wednesday. innovation and production.
4. Reserve Bank of Australia Policy Meeting The RBA's latest interest rate decision is due on Tuesday at 03:30GMT (10:30PM ET Monday). Most economists expect the central bank to keep rates unchanged at the current record-low of 1.50% as it attempts to balance a heated housing market with weak wage growth and below target inflation.
The Enhanced Investor Weekly Macro
2
The Enhanced Investor Weekly Macro
February 5, 2017
On Thursday, RBA Governor Phillip Lowe will speak at the A50 Australian Economic Forum Dinner, in Sydney. Besides the RBA, retail sales figures due on Monday will also be in focus. 5. Reserve Bank of New Zealand Rate Review The Reserve Bank of New Zealand’s monetary policy update is due at 20:00GMT (3:00PM ET) on Wednesday. Most market analysts expect the central bank to hold its benchmark interest rate at the current all-time low of 1.75%, while signaling the next move in rates could be higher due to a recent uptick in inflation. RBNZ Governor Wheeler will also hold a press conference following the decision.
Long-Term Stock Ideas International: MOMO - $23 area now, with a $38 target. 100% growth of late with 25 PE run rate. Video is gaining steam. BABA - Growth returning, near $100 now and basing a bit. A breakout comes at $106. NTES - I mentioned this when it was $85 a share, now $260 area. At any rate PE Ratio at 20 with recent growth at 40%, 2-week tight base. Growth stocks: IDCC - Modems for all devices, 8 week base pattern. On list multiple times. CAVM - 8 week base breakout, system on a chip designs, 100% recent growth. DISH - PE Ratio 30, video on demand and streaming is a secular growth area. AGX - 9 week base, involved in Engineering and Construction, PE 20, Growth rate 60.
The Enhanced Investor Weekly Macro
3
The Enhanced Investor Weekly Macro
February 5, 2017
Education Trump has issued more executive orders than he’s spent days in office so far, and week two of his Presidency started off with a divisive refugee ban. From there, things have been even more tumultuous for the markets, with justice department firings and rocky discussions with global leaders. Many Republican leaders, from John McCain to the Koch brothers, have spoken out against the travel ban. This fracturing highlights new potential uncertainty that any of Trump’s campaign goals, including stimulus plans, will easily be enacted. The US business world is on high alert following the ban, Fast Company Reports, as its vagueness and potential to shake up immigration law in the future could impact employees. Gold has been on a small rally this week following Trump’s executive action to halt incoming travel of citizens from seven specific Middle-Eastern nations. The travel ban caused major moves off of risky assets and into safer financial investments like precious metals. Some investors are monitoring the potential fracturing of the Republican Party, which would likely increase market uncertainty into 2017. Trump also issued an immigration ban that put his administration at odds with many foreign leaders like Australian Prime Minister, Malcolm Turnbull. The disagreement was reportedly over a previous agreement made with President Obama, according to the Washington Post. Regardless of the reaction to the tense conversation, if more discussions with global leaders become volatile, markets could react the same way.
Additional Info For any newcomers who don’t know me, I’ve been contributing via the Enhanced Investor Weekly Macro Reports under #WatchList for almost a year. As I noted last week, given the recent market action and my in-depth knowledge of bubbles relative to political shifts and global economics, I’ve decided that it was simply not enough for beginners, or even intermediate traders because in order to have the ability to synthesize what’s truly happening - you need to be operating at the MBA/PhD level. Unfortunately, some PhD’s forget the basics. Anyway, as I said a few weeks ago, it’s not fair for me to assume that all of you have what those at investment banks call “financial sophistication”, but that’s why we’re working together here at Enhanced Investor. Combatting Wall Street and gaining the upper edge is why we do this. Anyway, I am more than happy to help, so if for some reason I don’t receive a tag in the #mainstockchat, or you don’t direct message me on Discord, please feel free to email here adamwood@fas.harvard.edu or you can tag me on StockTwits @ EILeadMacroAnalyst.
The Enhanced Investor Weekly Macro
4
The Enhanced Investor Weekly Macro
February 5, 2017
Don’t fear the bubble. We do not fear bubbles here at Enhanced Investor. Why? Because we’re armed with the strategic, tactical, and historical knowledge of every major bubble that has ever occurred. From the Tulip Mania of 1637 to the Housing Crisis of 2008 and the current market conditions - we’re prepared.
The Enhanced Investor Weekly Macro
5