Back to Blog
Watch GBPUSD12/20/2020 Images: Serena Repice Lentini on Unsplash
With plague vaccines rolling out, no-deal Brexit in a few weeks, and UK lockdowns becoming even more restrictive, GBP still managed to strengthen against USD since April. January through June will be wild fundamentally. If you want action, seek out this pair supported by fighting best friends with a common language and dispute for what is proper football. It's the one that requires everyone's feet on the pitch to touch the ball. GBPUSD will open at 1.352 today.
Back to Blog
Tesla Says Hello12/20/2020 Image: Vlad Tchompalov on Unsplash
Tesla ($TSLA) was named to the S&P 500 and will make its debut tomorrow. Getting listed on the index with the other large market capital companies is important because many institutions gauge S&P's performance and align it with the market outlook. Tesla is probably also excited about its debt rating on its way to BBB-, the first level of investment grade bond ratings. Elon has had a huge year and so have many of his tech colleagues. The internet services and social media industry is up 41.88% YTD and the computer processing and cloud services people are up 38.37% YTD. Did you notice it was difficult to get a decent microphone for a few months when the plague started? Don't forget about bitcoin. $TSLA will open tomorrow at 695.00 USD.
Back to Blog
Not Cool12/13/2020 Image: Jay Wennington on Unsplash
We've been following the New York City restaurants story. Last autumn we wrote about a heat lamp shortage as restaurants scrambled to adjust to outdoor eating requirements. With Governor Cuomo's order banning indoor dining tomorrow, residents flocked to restaurants to get it in one last time. On this week's episode, we discussed the crushing burden of regulations and how the small business takes it on the chin every time. Some believe it's a good thing Olive Garden's bread rolls will still be around as larger companies have the capital to absorb the blow.
Back to Blog
Container Space12/13/2020 Image: Dylan McLeod on Unsplash
The no deal Brexit is causing other problems. Traders may lose faith quickly and send the sterling on an unfavorable ride until things settle when January comes around and everyone realizes it's not ever really that cold in England this time of year. Incomplete containers are leaving London in an effort to keep time slots. They've endured delays all year because of the plague and now companies are stockpiling. Customs delays will increase and tariffs between UK and EU are expected to return. The natural reaction is to increase container rates. Shanghai to Felixtowe (Suffolk, England) is now at 3,000 USD per container. The route started 2020 at 2,200 USD. GBPCNY opens at 8.66 today.
Back to Blog
Needles and Crude12/6/2020 Image: Christopher Burns on Unsplash
The recent vaccine news and encouraging public sentiment occurred in the period as the OPEC negotiations. 500,000 barrels per day of the sweet stuff will start in January. Optimism for a recovering economy and people driving to jobs to use loud machines has spurred oil price activity. WTI Crude was 37.14 USD on November 6 and will open tomorrow at 46.09 USD. Rising oil prices means rising demand means more independence. Let's get this thing going again.
Back to Blog
Hammer Drops12/6/2020 Images: Denise Jans on Unsplash
WarnerMedia, owned by AT&T ($T), announced last week their straight-to-stream model with HBO Max. AMC Theaters said it was nice knowing everyone, bought a lime green VW Beetle, and set off to find the meaning of... anything. For longtime Netflix ($NFLX) subscribers, this is cause for concern. Straight-to-stream "blockbusters" have mostly been a waste of everyone's time excluding the film set catering companies. Marco Polo (200mm USD), The Ridiculous 6 (Adam Sandler still?), and Bright were all disasters. Anything that's good is because of the writing and not the production value though Peaky Blinders was great until the crash of '29. Does this mean we should get ready for green screen butchering? Studios have to make up for the instant cash flow represented by their former partners in giant movie complexes and controlling fire is expensive. Subscription models make it difficult to justify massive budgets like Game of Thrones and Rome on HBO. Many just look like Threat Level Midnight, though. Perhaps the best product to come from the plague regarding entertainment will be refocusing efforts on screenplay writing. They remade Ghostbusters for crying out loud. $T will open at 29.54 USD and $NFLX at 498.31 USD tomorrow.
Back to Blog
Europeans Still Spending12/6/2020 Image: Nick Karvounis on Unsplash
Euro area retail spending is up 4.2% from October 2019 to October 2020. From September 2020 to October 2020, Denmark (+8.3%) and Croatia (+6.5%) are well ahead of Netherlands (-0.7%) and Luxembourg (-0.3). With Christmas season upon us and people desperate to do something, anything, that doesn't involve the television, a busier economy is sorely needed. EURGBP opens at 0.901 today.
Back to Blog
Factory Orders Up12/6/2020 Image: Daniel Wiadro on Unsplash
US factory orders were up 1% in October, continuing a growth streak (recovery, rather) since May 2020. With new machine orders down 0.3%, sticking with maintaining old machinery and getting everything out of already owned assets while the economy is still uncertain seems to be the smart play. For some, holding onto the spouse and pumping in preventative maintenance costs is less expensive than getting a new one.
Back to Blog
Space Kind Of Dark11/22/2020 Image: Clyde He on Unsplash
After boredom with Pluto became unbearable, New Horizons spacecraft moved on to mess with us again. After rendering out light sources from known galaxies and even those from theorized stars, astronomer Rod Lauer of Arizona’s National Optical Astronomy Observatory and his people still found light 4 billion miles away from Earth. Astrophysicist Michael Zemkov gave a palms to the sky emoji as he told NPR, "They're saying that there's as much light outside of galaxies as there is inside of galaxies, which is a pretty tough pill to swallow, frankly." It just doesn't end. Ever. And that's cool.
Back to Blog
From Barrels to Beans11/22/2020 Image: Healthycliff Syndor on Unsplash
Canadians are also offering the world's second favorite black liquid gold to the world. Tim Hortons (absorbed by $QSR 58.98) is chasing its footprint in China to compete with Starbucks ($SBUX 97.01) and Luckin ($LKNCY delisted from NASDAQ after fraud accusations). McDonald's ($MCD 214.09) is also making its land grab. Dunkin' hasn't done much there since their failed launch the first decade around their other sugar product the Chinese simply didn't like. Boston has something to say about that. McDonald's is set to spend 380MM USD to open 3,000 McCafé stores in China, bringing its total of little stores to 4,000, quickly approaching Starbuck's 4,700 stores. Starbucks currently charges 4.60 USD per cup of coffee. Meh, just put up the initial layout for a Nespresso machine, happily spend the 1.10 USD for far superior coffee in recyclable pods, and be done with it. Like mescaline, it's the only way to fly.
Back to Blog
USDCAD & Oil11/22/2020 Images: dailyfx.com
CAD has gotten stronger against the greenback particularly since the election. Biden in office means more quantitative easing and USD printing. On November 2nd, it had a high of 1.337 and has continued its fall since the plague to open at 1.309 today. In the same period, oil (WTI) reached 35.72 USD the Monday before the US election and will open today at 42.465 USD, a smooth move in the opposite direction. This shows a propensity for the complete inverse correlation of -1.00. It's currently at -0.72.
Back to Blog
Yeah, Hoarding11/22/2020 Image: Xavier crook on Unsplash
Did MLB even play this summer? America's new pastime is hoarding. It's fun, costs the same as a baseball game after one beer and one hot dog, and Americans make it a competition like everything else we do. Supply chains have adjusted and shouldn't be significantly disrupted this time. With plague cases up and cold weather settling, people are expected to hunker down and complain about their families again. The big concern, however, is whether the toilet paper hoarders are the same people from March and if they are, don't they still have a stockpile from last spring? Tacos didn't seem to suffer much this year.
Back to Blog
Zoom Opens Thanksgiving11/17/2020 The video conference company that provided for predictable fake scenarios of people getting caught in underwear will remove its 40 minute call cap from 0000h EST 11/26 to 0600h 11/27.
The green screen with Jerry Seinfeld's apartment 5A was the best result of the quickly accepted technology all summer. This is a good move for the company that was in a prime position to capitalize on the plague's effect on the economy and the way we communicate. $ZM's market cap was 36.54 billion USD in March 16, 2020. Today, it's worth 113.60 billion USD. It's cool they spotted everyone a solid 30 hour window. One side effect was a shortage of after market web cameras and proper microphones. Free weights are still in short supply and bench bars are completely unavailable. Is there a correlation to be found with the shortages? Probably. Another side effect we (humans) discovered is the annoying ticks of our colleagues. On that list is this weird phenomenon of people looking down and watching themselves talk on their screens instead of looking into the camera. We now know the intricate details of so many foreheads. When friends are challenged, they'll claim they're watching the other people on the call. This is easily disproved, however, because we can see their eyes move when others are talking.
Back to Blog
Hoarding not Expected11/15/2020 Image: Peter Bond on Unsplash
Lockdowns and toilet paper again? Perhaps not, but food producers have changed their product lines and hired co-packers to help fill their supply chains. One move was to reroute deliveries to grocery stores as restaurants sadly just don't have the demand. Expenses have increased, however, as sanitation and labor requirements have wreaked havoc on P&Ls and forced companies to adjust. Some economists don't expect hoarding to happen as people are simply out of money and lengthening its value.
Back to Blog
Door Dash IPO11/15/2020 Image: Brett Jordan on Unsplash
California passed Proposition 22, allowing driver services like Uber, Lyft, and DoorDash to continue to classify its workers as independent contractors and not employees eligible for benefits under state law. DoorDash formally asked SEC for permission to go public. Even with the plague, the food delivery service still lost 149 million USD CY 2020 through September. It has plans for other business partnerships including a recent deal delivering medicine from Sam's Club. As we reported last summer, these delivery companies are not profitable. Unprofitable tech companies are more appealing to Robinhood traders than those who write newsletters about economics and forex.
Back to Blog
USD Dips11/15/2020 Image: TradingView
Equities want to be bullish and its investors tend to be optimistic long term. Currency traders aren't bothered either way and it is showing opposite US stocks' performance. The resurgence of reported plague cases in the US has some governors moving toward economic crushing lockdowns. When money isn't being earned or exchanged, confidence in the value of that currency wanes. Manufacturers need to make stuff and workers need to survive. EURUSD (1.183), USDJPY (104.64), GBPUSD (1.320), CADUSD (0.762), SEKUSD (0.115), and USDCHF (0.913) all contribute to DXY's weaker position since the plague hit the US in March.
Back to Blog
Bye TV Ad Buys11/15/2020 Image: 偉宗 勞 on Unsplash
This cool graphic from Visual Capitalist illustrates global advertising spend channels since 1980. TV advertising spend reached its peak in 2014 at 230 billion USD. Newspapers (huh?) summited at 125 billion USD in 2007. Search and social media ad spends are quickly closing the gap. What's particularly amusing is that TV outside of large sports has been mostly forgettable. Well, try telling your wife she already got her bachelor and see how well that goes. What's the first thing we do when we even sense the commercial coming? Yup, we look down at our phones. And when an ad appears on that fingerprint smudged device, we look back at the TV as there's no way we're going to spend 5 to 15 seconds pushing the space for the Skip Ad button like we're in an elevator. Adults in China are averaging 206 minutes on their cellular telephones daily. That's 3.5 hours every day of being bored by the whole human experience and not even trying to hide it.
Back to Blog
Let's Book the Whole Theater11/10/2020 Image: Felix Mooneeram on Unsplash
We knew the plague would change everything including what we took for granted. Movie theater company AMC is desperate for business and after watching its stock price ($AMC) start the year at 7.46 USD and then dip to 2.08 in April and again to 2.15 last week, rolled out its movie theater rental program. Up to 19 other people with whom you can barely get along anyway can pitch in for the 99 to 349 USD cost depending on the movie. You can book it here. Leaving companies alone to figure it out because they have to or they disappear forever is a good policy. Many companies have figured out that work from home is actually viable and adults can indeed be trusted to work out of sight. Retail operations have adjusted by adding booking services for appointments and of course curb side delivery. We've seen newfound artists suddenly find the courage to post their work on IG. July saw 84.3% more new business applications in the US over last year and Louisiana rocked a 240% jump from July 2019. Maybe we can actually create and solve problems because we must. The only bummer here is that it took a plague to force many to self reflect and realize they really can do this. Making smartass remarks to a bad movie is a lot less fun 6 feet away.
Back to Blog
Against the Current11/9/2020 source: tradingeconomics.com
Current account quantifies a country's exchange of goods and services with the world. The formula is CA = (exports - imports) + net income abroad + net income transfers. Yes, I'm aware order of operations doesn't call for the parentheses but sometimes being redundant helps an explanation.
Net income abroad is investment payments and income transfers include remittances. Forex, anyone? It's typically cyclical and the plague certainly had at least something to do with trade. A positive current account means Japan is lending while a negative current account means the US is a net borrower. It's not permanent, however, as growing economies tend to borrow more (hopefully temporarily) to accelerate that growth. Is there a correlation to be made between corporate trade and personal spending habits? Maybe. There does not appear to be causation, though. Japan has a tradition of saving and then saving some more. This is appropriate behavior for a country whose banking system offers 100 year mortgages, puts three generations in one house, and effectively makes that property the first item in the will. Cool robots that solve problems we did not know we had and toilets that solve problems in ways we did not know we could embrace come from the mystical land in part to stimulate the economy organically by encouraging frugal households to spend some of that money. source: tradingeconomics.com
We don't need the X axis on the second chart to know what month and year that spike in US personal savings represents or even why it's there. The yen has gotten stronger over that three year period as Japan's current account has remained positive. USDJPY is currently trading at 104.919
Perhaps we're more connected than we care to acknowledge and there are seemingly infinite ways to quantify it.
Back to Blog
Will Gold Retest?11/8/2020 Image: Rene Böhmer on Unsplash
Gold has been bullish since mid July and the US election has certainly played with confidence in the established safe haven. The gambling on Tuesday saw the safer plays in XAUUSD as November 3rd had a low of 1887.19 and hit a high of 1952.77 on Thursday amid the turmoil politically. 2,000 is the level to watch for bulls because who doesn't like a nice, round number? XAUUSD will open at 1951.92 today. |