#$argt

[blainerollins]

361 Capital Weekly Research Briefing: It’s Tango Time...

May 8, 2017

As the VIX flirts with single digits, the S&P 500 has been flopping around like a live fish on deck. But for U.S. investors in foreign equities, the music continues to play as cheaper valuations overseas and a weaker U.S. dollar pushed fund flows into other geographies. As you might have guessed, Argentina has led the way with a 40% gain for U.S. investors year to date. But looking more broadly around the world shows nearly half of the major equity markets posting returns that are greater than 13% versus the S&P 500 at 7.8%.

For the week, the returns continued to be concentrated in the overseas markets as France looked certain to pick a Macron victory. Also gaining was the Nasdaq which seems to be in a perfect Goldilocks economic growth environment for its companies (not too hot and not too cold). If the economy was flying, investors would want to own cyclicals. If the economy was sinking, investors would want to own bonds. Instead, with the 2% growth outlook that we seem to be heading toward in the U.S., then Apple, Google and Netflix continue to be the names at the top of everyone’s buy list.

Speaking of International stocks, from the Brexit low, EAFE has now gained +27%…

Looking at all of the major Equity markets shows plenty of places to invest outside of the U.S. in 2017…

Europe has seen a large reversal in fund flows in 2017 which helps to explain the 10-30% gains you see above…

(JP Morgan)

On the flipside, Gold is quickly losing its luster again after an early 2017 recovery…

Big trend-following asset styles will not be a fan of last week’s breakdown. And with North Korea losing all of its friendly nations, major geopolitical risk seems to be taking a backseat in the markets right now.

Apple Inc. leads all equity sectors for the week and the year to date…

It is tough to ignore Apple given that it is now a larger weight than most equity sectors. Credit their good earnings for pulling the Tech sector and Nasdaq to new all-time highs last week.

Stocks follow earnings? Or earnings follow stocks?

Technology and Consumer Cyclicals post the best earnings beat rate for the Q1 reporting season. Is it a coincidence that their stocks have been outperforming year to date? Or did the outperforming stocks tip you as to which groups would have the better earnings?

(Earnings via @bespokeinvest)

If you run money, you can’t ignore Apple…

It has outperformed the market by three-fold YTD.

To read the full 361 Capital Weekly Research Briefing, please click here

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[valuentumbrian]

Things Are So Bad They’re Actually Good?

Image Source: Simon Cunningham

Major economies are in recession and others are far from healthy. That has some investors in the US excited.

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Brazil’s economy, nearly 60% of South America’s gross continental output, entered into technical recession following the second consecutive quarter of GDP declines, the latest reading a fall of nearly 2%. Economic data assessing the health of Brazil’s largest South American trade partner, Argentina, remains “flawed”, according to the International Monetary Fund, which believes the country will only grow marginally in 2015 and remain stagnant in 2016. Including contributions from Venezuela, which is dealing with near-hyperinflation, the combined gross national product of the three struggling countries accounts for approximately three-fourths of South America’s entire economy.

Though less than half the size of Brazil’s, Canada’s economy has also fallen into recession during the first half of the year, with economic activity in the country dropping 0.5% during the second quarter following a more aggressive slide in the prior three months. The Financial Times reported that earlier last month, “oil from Canada’s tar sands has skidded towards $20 a barrel, a level not seen for international crude prices in 12 years.” Runaway production, transportation limitations, and a refinery disruption in the US has largely been responsible for the massive drop in Canadian crude oil prices, but structural reasons (including OPEC and US shale oversupply) aren’t helping. Canadian Natural Resources is on our list of dividend yields to avoid. Even Target gave up on its initiative to expand into the country, perhaps revealing a degree of oversupply in consumer markets despite the retailer’s well-publicized and internally-admitted missteps.

The African continent is not immune to global pressures. Growth in Nigeria, the largest economy in Africa, has decelerated significantly to a pace of ~2.3% expansion during the second quarter (more than 4 percentage points slower than that achieved in the year-ago period), and many observers are pointing to the high probability that the economy will succumb to recession by the end of the year. Nigeria remains heavily oil-dependent, with reportedly as much as 70% of revenues generated from the black liquid, and as energy resource markets remain under pressure, Nigeria’s pain will only grow. The gross domestic product of the most developed economy on the continent, South Africa, shrank 1.3% in the second quarter versus consensus expectations of 0.6% growth. The South African rand is trading at an all-time low relative to the US dollar.

The equity market of one of the largest economies in the world, China, has collapsed in the past several months, and economic purists are crying foul as the Communist government directly intervenes to prop up share prices. Property prices are reportedly under pressure in Hong Kong and Shanghai, and auto sales haven’t been great. General Motors, Ford and Nissan showed that sales of their models in China dropped in August, even though Toyota and Honda fared better. Perhaps most disappointing is that Best Ideas Newsletter portfolio holding Alibaba offered some very cautious comments on consumer spending and gross merchandise volume. We knew such negative comments were coming, but shedding Alibaba in the $70s only to pick it up once the dust settles is a trade fraught with too much risk, in our view. Shares trade at ~18 times March 2017 year-end earnings.

Yet, US markets are rallying, with the S&P 500 now only trading ~8% below all-time highs set in late May. Hopes that central bankers around the world will yet again flood the global markets with excess liquidity, driving prices ever higher, and views that conditions are so bad around the globe that the Fed won’t engage in contractionary monetary policy beginning in September has traders jumping on board. Bad news is good news again, so therefore terrible news must be fantastic news. What a ridiculous thing to say. You know it and we know it, but it’s true.

Sign up for daily Valuentum access here. Also, please don’t forget to follow me on Twitter at @valuentumbrian. Thank you for reading! 

[etfalpha]

Argentina’s Tangled Web - Who Killed Alberto Nisman? And Why? - OpEd

Argentina’s Tangled Web – Who Killed Alberto Nisman? And Why? – OpEd

The evidence already available about Argentine Prosecutor Alberto Nisman’s death from a gunshot to the head creates a strong presumption that he was murdered.

By Gareth Porter

Alberto Nisman was about to present publicly his accusation that President Cristina Fernández de Kirchner and her foreign minister, Héctor Timerman conspired to absolve Iran of the 1994 AMIA bombing and lift the Interpol…

View On WordPress

[dragonflycap]

"Don't Cry For Me" - Argentina 

Bet you thought that was gonna be Madonna.  So, Argentina defaulted on their debt yesterday.  So what!  They have defaulted 7 times before! Seven! Unless you own their debt this should not be a big deal.  Maybe even if you own it.  Financial crisis and default is in their blood.  Hell the big crisis from the Peron era led to a musical that has been around for 40 years now.  Default is their middle name.  But the Argentinians are not crying about it.  They just missed winning the World Cup and their stock market is soaring.

The chart above shows the trend higher in the FTSE Argentina 20 ETF, $ARGT, since the pullback in February.  The bearish Butterfly harmonic completed and it retraced, but is heading back higher again.  The MACD is about to cross up, a bullish indication.  And the RSI has turned higher.  This has also created what is known as a Positive RSI Reversal, where a lower low in the RSI is accompanied by a higher low in the ETF Price.   It gives a target higher to 26.  And the two legs higher at the 138.2% Fibonacci ratio, suggest a possible 3 Drives pattern that targets 26.25 as well.  

I know a lot of technical jargon.  But the bottom line is that the Argentina stock market is looking higher.  So listen to what it is saying and don't cry for it.

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