9.5.22: We wrap up Labor Day Weekend refreshed. We are ready to continue serving you well.
Key U.S. and China brief market notes by Larry's Analyst Staff Team for our Public Email List
Note to Public Readers: We have seized a tremendous opportunity to reposition equity exposure over the last 45 days based on our bearish sentiment. The easy opinion to significantly reduce U.S. equity positions that we were calling for has been made, and we expect “chop” (up & down, up & down with no clear direction) in the very near-term before a larger directional move.
As for China, several major cities (Chengdu, as an example) are once again in lockdown due to the Zero-Covid policy. Strategist Larry has seen this pattern many times throughout 2022, and will provide guidance on WHEN to add to the Chinese Internet Sector. In the near-term, Zero-Covid will restrict business confidence and slow down consumption (again). But just as COVID cases can spike, they will also fade. The key has always been with the timing, and we will once again intend to get it right based on our research. Right or wrong, we are squarely focused on thoughtful risk-management to ensure survival first, capital gains second.
Strategist Larry is on an intense mission to help as many folks as he can to mitigate the pain of an earnings recession (inevitable) while taking maximum advantage of the subsequent recovery that will ensue (also inevitable).
He is exceptionally proud and honored to be able to help so many good people (U.S., Canada, Europe, Hong Kong, Singapore, Australia), and he intends to continue sharing past premium reports to the general public to serve as complete samples so that they fully understand his research and strategy. Here, we share our August Strategy (1st Half and 2nd Half) to the general public.
As markets re-enter the trading week, we want to be your guiding Signal in a world filled with incredibly distracting noise. If you have questions, as a member inside our Community, you are always welcome to ask Strategist Larry questions directly through 1:1 chat. He enjoys taking questions from members - he says it keeps him as sharp as possible.
You have questions? Good, because we have answers (as long as it is inside our scope of expertise).
This email is brought to you by Interactive Brokers, one of our preferred brokerages to buy HK-Listed Shares in our China Internet Equity Coverage Universe.
In our emails, we will provide the following coverage points:
Brief Snapshot of U.S. & China markets and valuation
Our Analyst Team’s Chart in Focus
U.S. & China Upcoming Economic Calendar Snapshot
Notable Chart from Media Outlets
Fear & Greed Index Recap
We hope you find this newsletter to be insightful and enjoyable! - Larry and Team
U.S and China Markets Brief Snapshot 🇺🇸 🇨🇳
(Powered by our Channel Financial Data Provider YCharts)
S&P 500 Index: 3924.28
KWEB (Chinese Internet) ETF: $28.72
Analyst Team Note:
Per the WSJ, “Though the odds the stock market will finish this year in the black seem remote, there still are decent odds the market will rise at least to some extent. Among all four-month periods since 1928, the S&P 500 rose in 64% of them. That’s a good estimate of the probability the S&P 500 will be higher than today at the end of 2022.”
Macro Chart In Focus
Analyst Team Note:
QT (quantitative tightening) might the biggest, yet the most undermentioned threat to the markets.
From March to April 2020, the Fed purchased a total of $580 billion in MBS and then averaged around $114 billion per month in MBS purchases until March 2022.
Here’s the most important line: The Fed hasn’t even begun QT and mortgage rates are already at the 5.66%.
There is a possibility mortgage rates could go much much higher from here.
Upcoming Economic Calendar
(Powered by our Channel Financial Data Provider YCharts)
U.S Economic Calendar (Upcoming Data Points)
China Economic Calendar (Upcoming Data Points)
Analyst Team Note:
OPEC and its allies including Russia recently announced a plan to trim production by 100,000 barrels a day next month.
Oil’s rally today comes alongside news of a worsening energy crisis in Europe and decaying confidence that the US and Iran will agree to any semblance of a nuclear deal.
Years of underinvestment and lack of “onshoring” has finally caught up to the West.
Chart That Caught Our Eye
Analyst Team Note:
Despite the average 30-year fixed mortgage rate almost doubling this year, the median sales price for new homes has stayed resilient.
This is likely because inventories remain tight due to shortages of construction labor and materials. Per BofA, despite the slide in existing home sales, the number of days supply on the market stands at only 14, which is down three days from the same time last year.
Sentiment Check
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.
Interactive brokers allows investors to buy HK-listed shares of Alibaba, JD, Tencent, and other brand name Chinese Internet companies on the HK market. This will effectively reduce any confusion or work you will have to do in case there is the event of delisting US ADRs
Just a VERY Important Reminder: Impersonators and Scammers have taken their schemes to the next level by creating multiple accounts on Instagram, Twitter, Telegram, and Whatsapp to pretend to be me. Do NOT fall victim to scams. Their conversation flow is now more sophisticated than ever. You must be on guard. Seriously, be safe. They’ve even blocked my regular account so that I cannot view their activities.
