Finance Trends Letter

Nike ( NKE ) and Under Armour ( UAA ) are two big-name stocks caught up in this month's retail stock slide. We'll examine the ir charts in detail, but first an overview of the recent price d ecline s in this sec tor . As noted on Twitter earlier today, we are seeing major price deterioration in a number of retail stocks this week and in the month of December.  Seeing a real deterioration in retail stocks this week. $RL , $BBBY , $BIG , $M among those sliding lower. pic.twitter.com/BPVUCeh7SO — Finance Trends (@FinanceTrends) December 22, 2016 No doubt, a part of that weakness may be tied to fears of taxes on imports from China and Mexico, given President- e lect Donald Trump's decision to name economist Peter Navarro as head of a new White House National Trade Council . More on this from Reuters:  " ...U.S. President-elect Donald Trump named Peter Navarro, an economist who has urged a hard line on trade with China, to head a newly formed White Hous...

Greetings, friends and readers from across the globe! The New Year is well underway and with it, a pronounced sell-off in global share markets.  So what can we do to protect our mental capital and our financial capital in fast declining markets like these? Let's take a quick look around the world's markets and then I'll share some thoughts on the importance of playing defense in this environment. We began 2016 with one of the worst starts on record for the US stock market. The S&P 500's market valuation plunged by over $1 trillion , erasing the combined equivalent value of tech giants Google ( GOOGL ), Facebook ( FB ), Intel ( INTC ), Netflix ( NFLX ), and Yahoo ( YHOO ). Meanwhile, the Financial Times reported that $2.3 trillion in value had been "sliced from companies across the globe" in the first trading week of the year. The damage was widespread: "...An analysis of more than 6,000 global stocks by the Financial Times showed more ...

Amazon (AMZN) continues to shine as retail stocks plunge. Whether they are traditional mall retailers in the US or e-tailers based in China, many names in the retail industry are under selling pressure. One of the strongest US large cap stocks, AMZN pulled out of the recent market correction and shot up to new highs above $650. Here's an updated weekly chart of this dominant online retailer, which recently came full circle with the opening of its first physical book store. Meanwhile, traditional brick and mortar retailers like Macy's (M), Fossil (FOSL), and Wal-Mart (WMT) are sinking fast. Even Nordstrom (JWN), a high-end department store with a well-integrated online presence is fading fast in this market. The weakness may spread to other high end retail names like Tiffany and Co. (TIF) and Sotheby's (BID), a trend we highlighted last month in our " Retail and Leisure Stocks Slide " post.   $FOSL Sharp break lower. Down 11 months out of past 12, mos...

Global stock market returns for 2015 (yearly gains) via Trading Economics .  China's Shanghai Composite index leads (+48%) the major indices on a yearly basis, despite the sharp plunge from June's highs above 5,000. Brazil's Bovespa (-6%) lags, the worst performer of the major indices. You can find the full global list, covering Asia, Africa, Europe, and the Americas, at Trading Economics (link above). Here's a quick rundown of the best performing global markets for 2015. 1. China's Shanghai Composite up 48% for the year. The SSEC and new A-Share market ETF, ASHR had a huge run from late 2014 into mid-2015.  2. Russia Stock Market MICEX is up 26% on a 1-year basis. This ruble-denominated index is moving in on its all-time highs, while the dollar-denominated RTS index sits near 5-year lows. 3. Iceland's SE ICEX is up 51% over the past year. The Icelandic market has been steadily gaining ground the last 5 years after falling off a cliff in the...

FT.com interviews Swiss investor, Felix Zulauf , who sees storm clouds ahead for world markets.  Always worthwhile to hear Zulauf's views on the economy and investment markets. He feels we are entering a rough period ahead for emerging markets as they work to tighten inflation. He also anticipates a double dip in Europe, as well as a "tremendous slowing" in China.  Felix also makes some interesting forecasts on the US dollar, bonds, commodities, and the shape of quantitative easing (QE) to come, which he believes will be global in nature. Great response from Zulauf when asked about recent boom conditions in Germany: "I like to look forward not backwards" . An excellent reminder that markets are forward looking in nature and "always run ahead of the fundamentals".

Bloomberg Markets profiles Fidelity fund manager, Anthony Bolton, the British investing star who recently backed away from retirement and has now "staked his reputation on China". More in Bloomberg's article, "Fidelity's Bolton defies China bears with 27% return" : " ...In Britain, Bolton’s reputation as a stock-picking genius was analogous to that of Peter Lynch, the manager of Boston- based Fidelity Investments’ Fidelity Magellan Fund from 1977 to 1990. Fidelity Investment Managers, formerly known as Fidelity International, is an affiliate of Fidelity Investments. Now, at age 60, Bolton is in China partly to explain to clients why he has made a comeback to bet he can pick winners for the 625 million-pound Fidelity China Special Situations Fund that made its debut in April. Bolton says he’ll be able to find winning stocks that other fund managers have ignored. So far, that self-confidence has been justified. Anyone who bought into the closed-end fu...

Jim Rogers said that the US government's inflation data was "a sham" and that interest rates would be heading "much, much higher" in the next few years while speaking at the Reuters 2011 Outlook Summit. You'll find video of his chat w/ Chrystia Freeland at Investment Postcards or you can check the related video links in this Reuters article to see the full panel discussion. As usual, Jim pulls no punches while discussing Ben Bernanke's foibles as Fed Chairman and the difficulties facing the US and European economies as inflation and runaway deficits take their toll. He also points out some potential bright spots that could come about if the US government were to reduce its out of control spending and simplify (or do away with) the tax burdens on its citizens. Long term strength of the developing economies, commodities, and the rise of Asia are also highlighted.

Through the magic of Skype and the internet, Howard Lindzon interviews Jim Rogers on StockTwits TV and pitches him a barrage of questions sent in by StockTwits members. Everything is up for discussion here, from Rogers' opinion on stocks and commodities, to his early days working on Wall Street and running a hedge fund, as well as his more recent adventures. Also, plenty of focus on family life and raising his kids (who speak Mandarin and English) in Singapore. Enjoy the discussion, and Happy Thanksgiving!

While searching for a classic trading text on Scribd, I came across this 109-year-old tome on the success of 19th and early 20th century entrepreneurs called, How They Succeeded , in the related books sidebar. Looking through the table of contents, one finds an interesting array of business, artist, and educator profiles and plucky little subchapter titles emphasizing the virtues of hard work, thrift, and foresight. Admirable traits to be sure, though the Horatio Alger-type bootsrapping tales of personal success and luck are usually mocked in the politically correct schoolrooms of today. How They Succeeded For those of us schooled in the cynical view of free enterprise and the dastardly deeds of the robber barons (and most of us who attended American schools in the last 40 years were purposely imprinted with that bias), it may seem a bit comical to look at a chapter on John D. Rockerfeller and find subheading titles such as "His Early Dream and Purpose",...

China has surpassed Japan to become the world's second largest economy , in terms of nominal GDP. Yeah, I'd say that's a noteworthy trend on the world economic scene. Bloomberg has the details: " China surpassed Japan as the world’s second-largest economy last quarter, capping the nation’s three- decade rise from Communist isolation to emerging superpower. Japan’s nominal gross domestic product for the second quarter totaled $1.288 trillion, less than China’s $1.337 trillion, the Japanese Cabinet Office said today. Japan remained bigger in the first half of 2010, the government agency said. Japan’s annual GDP is $5.07 trillion, while China’s is more than $4.9 trillion. China led the world out of last year’s global recession with an economy that’s more than 90-times bigger than when leader Deng Xiaoping ditched hard-line Communist policies in favor of free-market reforms in 1978. The country of 1.3 billion people will overtake the U.S., where ...

As I don't pretend to be an expert on matters of currency movements, here are comments from a few more knowledgeable sources on the recent policy shift in the Chinese renminbi (yuan) currency peg. 1. China to put renminbi in a currency basket - Daily Reckoning. "The renminbi is now 'flexible!'" These cats reckon that moves higher in the RMB vs. the dollar are not a foregone conclusion (as many/most suspect). 2. Chinese yuan under 5 by 2020 - Maoxian. Chairman Maoxian sees a long-term controlled appreciation of the Chinese currency that is likely to suit the country's own interests (and timetable). 3. Yuan revaluation impact to be limited - PragCap. Bondsquawk contributes this post on the revaluation, noting that deterioration in the euro is having an effect on "China's plan of allowing considerable appreciation for the yuan". 4. Chinese currency: why Americans should care about yuan revaluation - CSMonitor. Notes on how the exchange rate fle...

Some Friday reading (and viewing) for ya. 1. Obama challenges financial industry to join regulatory overhaul - Bloomberg. 2. Marc Faber says China exhibits 'Danger Signals' , symptoms of bubble building (w/ video) - Bloomberg. 3. Jeremy Grantham on bubbles - FT.com. 4. Renegonomics: are deadbeat borrowers fueling consumption ? - Laurence Hunt's Blog. 5. Rail traffic recovery continues - PragCap. 6. John Paulson turns bullish on housing, economy - MarketWatch. 7. View From the Top: Mohamed El-Erian talks to FT about economic recovery, the US dollar, and the state of financial markets - FT.com Thanks for checking in at Finance Trends ; you can keep up with our posts and musings via RSS and Twitter . Have a great weekend, and be excellent to each other.

Twitter pal Dasan takes a look at Anthony Gallea's 1998 book, Contrarian Investing , in his recent post, "Contrarian Investing - a Classic Investing Book" . Here's an excerpt from the lead-in: " I believe serious investors are always trying to improve themselves. One of the ways to do this is through constant reading... ...I recently came across a book written in 1998 that a few smart hedge fund managers that I respect said had a great influence on them. I summarize its key points below, but don't let that stop you from reading the book yourself . "Contrarian Investing" By Anthony Gallea. Written 1998. In 1998, Anthony Gallea, a Portfolio Manager at Smith Barney, with help from William Patalon, a professional writer, wrote the classic “Contrarian Investing.” Jim Rogers wrote the forward to the book. Many successful investors have cited this book as a book that greatly influenced them. This volume, like Ben Graham’s “The Intelligent Investor...

Charlie Rose interviews investor Jim Chanos , the noted short-seller and hedge fund manager (Kynikos) who now insists there is a property bubble of epic proportions in China. We shared this interview link on Twitter earlier in the week, but I wanted to post this here for everyone to see. If you've seen some of Chanos' past presentations on China , you'll be familiar with some of his arguments on the real estate bubble, but this interview provides an excellent update to, and clarification of, his thoughts. Enjoy the discussion, and see our related links for more on this theme. Related articles and posts: 1. Jim Chanos: "Overheating in China" - Finance Trends. 2. Pivot Capital report: China's investment boom - Finance Trends.

Marc Faber was recently interviewed by the Financial Times for their video series, "View From the Markets". Here's a quick overview of some of the topics and themes covered in this 4 part discussion: Marc warns of a partial US debt default, in which the government denies payment to foreign bond holders due to the overwhelming burden of future interest payments on the debt. Usually, governments faced with this situation will "monetize" the debt and print money to inflate away the real debt burden. Irrational monetary policies and artificially low interest rates have fueled recent asset bubbles and laid the foundation of the global financial crisis. We continue to see these artificially low rates globally, which leads to misallocation of capital, as in the case of China currently. Faber does not agree with targeted "excess profit" taxes on industries such as banks or oil companies. Instead, he points out that simply having high real interest rates would...

Guys, if you're taking a long view of the markets and studying up on economic trends this weekend, you might want to take a look at Chris Puplava's latest market wrap for FSO. Chris has put together an update on the credit markets, with some thoughts on US Treasuries and the direction of long-term interest rates . There's also quite a bit of data and commentary on China's holdings of US govt. debt and the "state of the states" - US state finances. Plus, you'll get a look at the economic recovery, bank lending practices, market sentiment indicators, and more. Lots to look at here. And if you've got time to check out Martin Goldberg's recent market wrap on the Emerging Markets (and ETF $EEM in particular), you'll find some worthwhile technical commentary there as well. Have a good weekend, and if you're surfing our part of the blogosphere, check back in for some new updates & video posts. See you then.

Here's what I'm currently watching: noted short-seller and hedge fund manager, Jim Chanos gives a talk on "Overheating & Overindulgence" in China at the London School of Economics Alternative Investments Conference (see also: Bloomberg video ). We've noted here before that Chanos is hugely bearish on the Chinese economy and looking to bet against its overheated real estate and construction businesses by shorting commodities and ancillary suppliers. In this presentation Chanos offers his thoughts on China's GDP growth, its credit excesses, and the interplay of its economic and political system. Very interesting stuff, even if Jim Rogers is skeptical over the recent findings of newly-minted China experts. Is he right? Given my limited knowledge of the situation, I'm inclined to agree with Marc Faber (a friend of both Chanos and Rogers) who notes that Jim Chanos is "hyper smart" and willing to back his thesis, though it's uncertain how...