We’ve bought all the stuff we need

An extract from the recent Wells Fargo quarterly call transcript said……

“For Wells Fargo consumer customers, nearly $50 billion of federal stimulus payments from rounds two and three have been deposited into our customers’ accounts, and we estimate roughly 25% remained in their accounts as of July 2.”

Consumers have bought at the stuff they need. The stimulus money has been spent. They don’t need anymore TV’s, computers and refrigerators.

See Ed’s valuable research contribution below.

https://www.linkedin.com/posts/edward-yardeni_economy-economics-macroeconomics-activity-6841093040304721921-i3w_

Bitcoin is still not a currency

At its lowest point, Bitcoin fell 18% in today’s trading. Other crypto currencies mimicked the action.

Top tip: cryptos are correlated.

So, a Salvadoran who accepted Bitcoin as legal tender yesterday just saw the value of that ‘currency’ decline between 10-18% in a single day.

That’s quite a kick in the gut for an impoverished nation, Bitcoin isn’t exactly an example of stability.

If someone wants to make a case, that a new owner of Bitcoin tomorrow may then stand a chance to make ‘that 18% back’…….that’s hardly something I’d call a currency.

I’ll keep referring to cryptos as a speculative instrument and not a currency.

September 8, 2021
by Rob Zdravevski
rob@karriasset.com.au

No shortage of buy ideas

It may seem perverse but my global equities buying list is much larger than those stocks which need to be sold.

Interim rotation, value over growth

Whoot ! U.S. 10 year government yields have broken above a trend line I’ve been watching.

Expect to see value stocks and financials perform better than the high flying growth stocks.

There is always something to do.

September 7, 2021
by Rob Zdravevski
rob@karriasset.com.au

You’d think they’d know better

Please realise the idiocy of this headline and whoever authored or approved it at the Australian Financial Review.

Talk about ‘clickbait’.

This falls under the continuing edition of how the media frames the story they want you to hear.

While I have my intermediate bearish views on the price of Iron Ore, today, trading in shares of Fortescue Metals adjusted for its $2.11 dividend. It is well expected that the stock falls by that amount.

This half-yearly dividend amounts to an astonishing 10% of the company’s market capitalisation.

By the end of the day, the stock was $2.28 lower from the previous day’s close…..yet the headline below reads “plunge”.

It’s not a plunge, it’s a dividend adjustment!

That’s not very sharp acumen or literacy from a specialist financial newspaper.

September 6, 2021

by Rob Zdravevski

rob@karriasset.com.au

#notallofusarestupid

Macro Extremes (week ending September 3rd, 2021)

The following assets (on a weekly timeframe) registered an Overbought reading or traded more than 2.5 standard deviations above its rolling mean.

Extremes “above” the Mean (at least 2.5 standard deviations)

Cocoa

Overbought (RSI > 70)

Hot Rolled Coil Steel (for the 49th consecutive week)

Cattle

Natural Gas

Switzerland’s SMI equity index (for the 13th week)

the Nasdaq 100 & S&P 500 index

Amsterdam’s AEX, Copenhagen’s 25 and Helsinki equity indices

and India’s NIFTY 50 equity index

The Overbought Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)

Aluminium

Assets (securities) within my immediate universe which touched the other side of the extreme, being Oversold (where the RSI is < 30) or were at least 2.5 standard deviations below its mean are;

Extremes “below” the Mean (at least 2.5 standard deviations)

None

Oversold (RSI < 30)

None

The Oversold Quinella – Both Oversold and Traded at < 2.5 standard deviations above the weekly mean)

None

Notes & Ideas:

This past week was a story of muted action in many asset classes. Commodities and the commodity related currencies were the providers of volatility.

The other notable news is the list above is the smallest over the past 5 months.

The larger advancers over the past week comprised of Lumber soaring 23.5%, Natural Gas climbing 7.3%, Nickel was 4% higher, Aluminium, Silver and Cocoa rose 3%, Heating Oil and Gasoil advanced 2.5% and Tin was up 2.2%. Amongst the equities, the Nikkei +5.4%, Korea’s KOSPI + 2%, Russia’s MOEX + 3%, the Hang Seng +2% and the HSCEI +3.7%, adding to last week’s 2.5% rise…..remember how the sky was falling for Chinese related stocks?

The decliners counted Iron Ore (9%), Orange Juice and Corn (6%), Cattle (3.4%), Sugar and Soybean (2.5%), Brazil’s Bovespa (3%), the U.S. KBW Banking Index (3.8%) and somewhat surprising Gold (priced in AUD) fell 1.3%.

September 5, 2021

by Rob Zdravevski

rob@karriasset.com.au

Exit by billions in dividends

The recent opportunity in the dividend stripping trade on being long Fortescue (FMG:ASX) was one of the more obvious in the Aussie market in quite a while.

As I wrote (cryptically) a couple weeks ago, that the stock has long-term downside risk and

More downside risk in FMG

once it trades ex-dividend the stock will likely see more weakness.

Records profits are terrific as are record dividend payments, but from the page of ‘knowing how the world operates’, I believe that for reasons of confidence, Dr Forrest can never be seen selling any of his FMG shares and so I think his strategy is to either pledge or gift them to other entities and drag as much of his net worth out via dividend distributions.

Over the past 3 years, ~ $7.5 billion has moved his general way courtesy of dividend payments. That may account for a third of his net worth.

If I could get another $7 billion out in the next 3 years, I’d be quite happy with that parachute move.

Don’t get me wrong, it’s brilliant.

August 30, 2021

by Rob Zdravevski

rob@karriasset.com.au