Note to Readers from Larry: Our mid-month November Investment Strategy is released where we provide intermediate-term research opinions on our covered themes. We like the longer-term outlook on Semis but we discussed that a near-term pullback was in order. We stay constructive on China, but add/re-entering at the right levels also need to be done with care after the large recent advance. All this and more is discussed in our report. A premium preview was provided on Substack yesterday evening. Feel free to take a look. The majority of my Investment Community members are currently on Patreon. But some new public friends have chosen to join me on Substack because they prefer to simply receive the research in email-format. The research content is precisely the same.
My strategy is best designed for investors with an intermediate-term or long-term orientation towards investing.
Since 1950, there have been 18 midterm election cycles, and in the twelve months following each of those cycles, the stock market has had positive returns. Over the subsequent 12 months, stocks delivered an 18.56% average annualized gain compared to just 10.6% over all other years.
Macro Chart In Focus
Analyst Team Note:
“The relationship between corporate revenue growth and tightening credit conditions (Exhibit 1) suggests that the outlook for corporate profits will continue to deteriorate at an accelerating pace, as already evident in Q3 corporate earnings reports and the declining ratio of analysts’ upward-to-downward estimates for future profits.” - Merrill Lynch
The October retail sales report was constructive, with the headline and the core control group coming in above estimates.
As expected, spending rose sharply at gas stations (due to higher gas prices), restaurants (as the reopening tailwind continues) and nonstore retailers (because of the additional round of Prime Day and related promotions). The only major pocket of weakness was general merchandise stores. Besides Prime Day, October retail sales were probably boosted by the distribution of stimulus checks in California.
Chart That Caught Our Eye
Analyst Team Note:
While homebuyer/homebuilder confidence have slumped to record lows, the current housing market is nowhere as leveraged as it used to be. Expect the cooling momentum to continue from here on out until we see a more balanced housing market.
We want to take a moment to thank Interactive Brokers for being one of our Channel’s trusted Partners and to inform my audience of the special features they have given that our online friends here closely follow Chinese Internet stocks (BABA/Tencent).
Much of Larry’s audience is concerned about the US ADR issue of Chinese Stocks being delisted.
