Macroeconomics

Productivity

  • How far productivity has come in 10 years 2020 US Census edition …
  • “We were able to verify 65% of addresses using satellite imagery — a massive accomplishment for us,” said Census Bureau Geography Division Chief Deirdre Bishop during the briefing. “In 2010 we had to hire 150,000 people to verify 100% of the addresses in the field, this decade we will only have to hire about 40,000 employees around the nation to verify the remaining 35% of addresses.”
  • h/t Calculated Risk
Stocks

E-cigarettes

  • The FDA announced about 2 years ago that it “plans to begin a public dialogue about lowering nicotine levels in combustible cigarettes to non-addictive levels” . This is still ongoing through the comprehensive plan.
  • E-cigarettes (along with other alternatives) were meant to be a saviour of the industry.
  • Unfortunately there have been a series of deaths reported in the US linked to E-cigarettes, with 3 more over the weekend.
  • Center for Disease Control and Prevention (CDC) put out a statement advising the public to stop using these products while they investigate.
  • The ability of tobacco firms to keep their existing profit pools, built on years of price rises, is looking even less likely.
Macroeconomics

Oaktree Memos

  • Reading what other respected fund managers do is very important.
  • Howard Marks has made a name for himself as a distressed debt investor and founder of alternative asset house Oaktree.
  • His memos found here are always worth reading for their commentary on market cycles and economics.
  • Most importantly they are a great source of common sense in financial markets.
  • The latest memo (from July) is a perfect example of this – how to understand the Fed’s actions in the current environment.
Stocks

Altice Disrupting

  • Altice are being very aggressive in the US mobile market.
  • Their new plan prices at $20/month for life unlimited everything (incl roaming and calls to 35 countries) for their existing cable customers and $30 month otherwise (for those near their 21-state footprint).
  • This is roughly half the cost of rivals.
  • You bring your own phone or buy one with 36 month zero financing.
  • US Mobile is very high margin for the incumbents AT&T and Verizon …
Misc

Amazon Fires

  • Scepticism is a huge part of investing.
  • T.H. Huxley said – “I am too much of a sceptic to deny the possibility of anything” (h/t The Browser – more on this site later).
  • The Amazon Fires probably caught your attention recently. We don’t mean to stir controversy and the attention is well deserved but …
  • Did you stop and question some of the claims in the press you read?
  • These two sources did. Here and Here.
    • Yes there was a large increase in fires vs. last year but it is only 7% more fires than the average … always check the comparison!
    • Lungs of the planet? – the Amazon is a huge producer of oxygen but also a huge consumer. Overall it is closer to balanced!

Macroeconomics

China

  • Some of the most insightful writing on China is done by Michael Pettis (@michaelxpettis)
  • The financial press often gets key economic concepts, like imbalances, wrong (for example the idea that every deficit has to have a surplus).
  • Pettis writing illuminates these topics which are vital to understand the Chinese economy and what is going on in the world.
  • For example the latest piece on US-China Trade war is a must read.
Tools

Short Positions

  • The FCA requires that any short position >0.5% be disclosed.
  • You can find a spreadsheet on FCA website with all these positions – by stocks and by disclosing fund manager. Updated daily.
  • You can then easily make a pivot table to see top shorted stocks etc.
  • Kier, Thomas Cook and the AA are in the top.
short-positions-daily-updateDownload
Macroeconomics

US Manufacturing ISM

Source: Trading Economics
  • US Institute of Supply Management (ISM) dips below 50.
  • First time since 2016.
  • It suggests a manufacturing contraction. Not to be confused with a full recession (see 2016 dip).
  • New Export Orders, not surprisingly, was the biggest loser among the sub-indices.
  • Always interesting to give the full report a glance.

Tools

Pocket

  • Many in the financial profession, especially those on the buy-side, will know that keeping up with reading is both vital and overwhelming.
  • One app that is fantastic is Pocket.
  • No time to read the interesting articles (posted on Snippet)? No problem. Just click the pocket button at the top of your browser to save it for later.
  • You can then see all your articles in the app, and they all get downloaded to be read offline (like in the tube on the way home).
  • It is very easy to use – you can then archive read articles, it gives you an estimate of how long each one takes to read etc.
  • No more lost gems!
Stocks

Burry Long Gamestop

  • Dr. Micahel Burry of Big Short fame is long Gamestop.
  • Nearly 60% of the stock is out on loan to shorts. Often this is a great set up for going long a stock if you believe things won’t be that bad.
  • He has written a letter to the board advocating a buyback in the face of short sellers. You can find it on this Market Folly link. There is also an interesting interview in Barrons with the man himself on the thesis.
  • NB Market Folly is a great site that tracks what big names in the US Hedge Fund world are up to.
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