Note to Readers from Larry: We wish all of our good friends a Merry Christmas. At some point, we do believe better days will come for long-term Investors and bulls of the market. I’m actively looking for these signs in 2023. In the near-term, we may get a brief break from negativity starting next week (the last few trading days of 2022) if a Santa Clause rally emerges.
Given the intensive turmoil tech is going through, I wrote a piece on this yesterday evening on key areas of interest such as Semis, Tesla, and China. Good times, bad times, anything in between - I’ll keep our Community updated with thoughtful insight and research.
Despite the Nasdaq 100 about to finish off the worst December performance since 2002, short interest for the QQQ (which tracks the Nasdaq 100) is at a decade high. A deeper selloff could ramp up pressure on investors positioned long to throw in the towel.
Macro Chart In Focus
Analyst Team Note:
The world is using less cardboard boxes, which is a troubling sign that global trade is slowing down.
Per KeyBanc, “Severe weakness in global box demand is an indication of how weak many parts of the global economy are. The recent history shows a significant amount of economic stimulus would be necessary to provide meaningful box demand, and we do not see that coming”.
Global demand for packaging paper is showing weakness for the first time since 2020. US prices fell in November for the first time in two years and the US, the world’s biggest exporter, reported 21% lower volumes sent overseas in October versus the previous year.
In November, home sales in the United States declined by 35.1% on a seasonally-adjusted basis, the largest drop recorded by Redfin since 2012.
Additionally, the median price of homes in the country only increased by 2.6% from the previous year, the smallest increase since the beginning of the COVID-19 pandemic in May 2020.
New listings for homes also fell by 28.4%, the largest decrease aside from April 2020.
Despite the decrease in new listings, the overall supply of homes increased by 4.6% from the previous year, indicating that homes are taking longer to sell.
Chart That Caught Our Eye
Analyst Team Note:
While higher-rated corporate bonds (BB, B+, etc) have traded down noticeably this year, junk bonds (CCC) have collapsed. With more loan prices reaching extremes, companies that run into any sort of difficulty could see their loans plunge quickly, which translates to surging borrowing costs, boosting the chance of corporate defaults.
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.
