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I am not seeing a recession, but it’s getting ugly out there for risk holders.
My guess is this is a garden-variety valuation correction.
The markets bet big on a lot of wind – about the sails being full of tax cut air – with growth in hand and beyond the horizon. And it’s not happening.
The problem we have is this U.S. administration thinks solely thru the lens of a “zero sum” game: the winner takes from the losers.
What are trade, investment, and business concepts generally? These are actually a set of positive sum games, when played right. There can only be winners on each side of the table, or no deal, or alliance, or stream of transactions can and will continue, over a long-term horizon.
Until that gets addressed in a meaningful way, I am afraid we stock investors must be resigned to “zero sum” policy computations to global economic growth.
With U.S. growth up and non-US growth down, that equals no overall expansion progress. That is, assuredly, a simple and straightforward solution to a very sideways growth outlook for the globe overall.
And the most cogent recipe I know of – for zero YTD 2018 stock index returns.
What of 2019 returns? We shall see. A broad stock valuation re-set (nearing a year in length now) can be a good setup for another broad leg-up and a share price recovery.
Have a Nice Xmas. A New Year is on the way.
Warm Regards,
John Blank
Zacks Sector/Industry/Company Telescope
If you want to understand the negative effects of the U.S. China trade war on earnings and revenue growth, look no further than the December Zacks sector stories.
The negatives pile up. Tariffs raise prices, so Consumer Staples and Discretionary are hurting. Higher rates and high home prices depress Home-related industries.
Then, there is the oil price collapse, sucking the wind out of Energy and Materials sectors.
Industrials are also struggling again, other than the ‘sugar high’ of Aerospace & Defense, and a solid performance by the Railroads.
All in all, this sector ranking should be cause for concern.
(1) Health Care is still Very Attractive. The leader is, again, Medical Care, and Drugs look good too.
The Ensign Group, Inc.'s independent operating subsidiaries provide a broad spectrum of skilled nursing and assisted living services, physical, occupational and speech therapies, home health and hospice services and other rehabilitative and healthcare services at healthcare facilities, hospice agencies, home health agencies and home care businesses in California, Arizona, Texas, Washington, Utah, Idaho, Colorado, Nevada, Iowa, Nebraska, Oregon, Wisconsin, Kansas and South Carolina.
(2) Financials rise to Attractive. The leader is Insurance, followed by Finance.
Employers Holdings, Inc. is a specialty provider of workers compensation insurance focused on select small businesses engaged in low to medium hazard industries. It markets its products through independent local, regional, and national agents and brokers, as well as through its strategic partnerships and alliances and relationships with national, regional, and local trade groups and associations. Employers Holdings, Inc. is headquartered in Reno, Nevada.
(3) Info Tech is back to a Market Weight. The Telco Equipment industry looks best. Semis are looking OK too.
Ericsson is a world-leading supplier in the fast-growing and dynamic telecommunications and data communications industry, offering advanced communications solutions for mobile and fixed networks, as well as consumer products. The company is a total solutions supplier for all customer segments: network operators and service providers, enterprises and consumers. The company has the world's largest customer base in the telecommunications field.
(4) Utilities are back to a Market Weight. The best is Electric Power, as the winter heating season is here.
(5) Energy is back to a Market Weight. The Energy-Alternates, Coal and Pipelines look good. But the core Oil & Gas plays are hurting, with oil prices collapsing.
(6) Industrials fall to Unattractive. The leaders are Aerospace & Defense and Railroads & Trucking.
(7) Materials are down to an Unattractive sector. The best is Metals - Non-Ferrous. Building Products/Construction Materials looks the worst.
(8) Communication Services is Very Unattractive, but Telco Equipment is the opposite. It looks great, due to the 5G-rollout investment.
(9) Consumer Discretionary is also now a Very Unattractive sector. The worst is Electronics, Publishing and Home Furnishing-Appliances. That’s a tell on the spreading weakness in spending.
(10) Consumer Staples is a Very Unattractive sector. The sole strong spot is Agri-business. The remaining industries look poor, likely due to the U.S. China trade war tariffs.
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It's Time for Win-Win Trade Policy: Zacks December Strategy
The following is an excerpt from Zacks Chief Strategist John Blank’s full Dec Market Strategy report To access the full PDF, click here.
Introduction
I am not seeing a recession, but it’s getting ugly out there for risk holders.
My guess is this is a garden-variety valuation correction.
The markets bet big on a lot of wind – about the sails being full of tax cut air – with growth in hand and beyond the horizon. And it’s not happening.
The problem we have is this U.S. administration thinks solely thru the lens of a “zero sum” game: the winner takes from the losers.
What are trade, investment, and business concepts generally? These are actually a set of positive sum games, when played right. There can only be winners on each side of the table, or no deal, or alliance, or stream of transactions can and will continue, over a long-term horizon.
Until that gets addressed in a meaningful way, I am afraid we stock investors must be resigned to “zero sum” policy computations to global economic growth.
With U.S. growth up and non-US growth down, that equals no overall expansion progress. That is, assuredly, a simple and straightforward solution to a very sideways growth outlook for the globe overall.
And the most cogent recipe I know of – for zero YTD 2018 stock index returns.
What of 2019 returns? We shall see. A broad stock valuation re-set (nearing a year in length now) can be a good setup for another broad leg-up and a share price recovery.
Have a Nice Xmas. A New Year is on the way.
Warm Regards,
John Blank
Zacks Sector/Industry/Company Telescope
If you want to understand the negative effects of the U.S. China trade war on earnings and revenue growth, look no further than the December Zacks sector stories.
The negatives pile up. Tariffs raise prices, so Consumer Staples and Discretionary are hurting. Higher rates and high home prices depress Home-related industries.
Then, there is the oil price collapse, sucking the wind out of Energy and Materials sectors.
Industrials are also struggling again, other than the ‘sugar high’ of Aerospace & Defense, and a solid performance by the Railroads.
All in all, this sector ranking should be cause for concern.
(1) Health Care is still Very Attractive. The leader is, again, Medical Care, and Drugs look good too.
Zacks #2 Rank (BUY): The Ensign Group (ENSG - Free Report)
The Ensign Group, Inc.'s independent operating subsidiaries provide a broad spectrum of skilled nursing and assisted living services, physical, occupational and speech therapies, home health and hospice services and other rehabilitative and healthcare services at healthcare facilities, hospice agencies, home health agencies and home care businesses in California, Arizona, Texas, Washington, Utah, Idaho, Colorado, Nevada, Iowa, Nebraska, Oregon, Wisconsin, Kansas and South Carolina.
(2) Financials rise to Attractive. The leader is Insurance, followed by Finance.
Zacks #2 Rank (BUY): Employer’s Holdings Inc. (EIG - Free Report)
Employers Holdings, Inc. is a specialty provider of workers compensation insurance focused on select small businesses engaged in low to medium hazard industries. It markets its products through independent local, regional, and national agents and brokers, as well as through its strategic partnerships and alliances and relationships with national, regional, and local trade groups and associations. Employers Holdings, Inc. is headquartered in Reno, Nevada.
(3) Info Tech is back to a Market Weight. The Telco Equipment industry looks best. Semis are looking OK too.
Zacks #1 Rank (STRONG BUY): Ericsson (ERIC - Free Report) )
Ericsson is a world-leading supplier in the fast-growing and dynamic telecommunications and data communications industry, offering advanced communications solutions for mobile and fixed networks, as well as consumer products. The company is a total solutions supplier for all customer segments: network operators and service providers, enterprises and consumers. The company has the world's largest customer base in the telecommunications field.
(4) Utilities are back to a Market Weight. The best is Electric Power, as the winter heating season is here.
(5) Energy is back to a Market Weight. The Energy-Alternates, Coal and Pipelines look good. But the core Oil & Gas plays are hurting, with oil prices collapsing.
(6) Industrials fall to Unattractive. The leaders are Aerospace & Defense and Railroads & Trucking.
(7) Materials are down to an Unattractive sector. The best is Metals - Non-Ferrous. Building Products/Construction Materials looks the worst.
(8) Communication Services is Very Unattractive, but Telco Equipment is the opposite. It looks great, due to the 5G-rollout investment.
(9) Consumer Discretionary is also now a Very Unattractive sector. The worst is Electronics, Publishing and Home Furnishing-Appliances. That’s a tell on the spreading weakness in spending.
(10) Consumer Staples is a Very Unattractive sector. The sole strong spot is Agri-business. The remaining industries look poor, likely due to the U.S. China trade war tariffs.