The Tariff Man

A few weeks back I wrote it would take a real idiot in charge to screw up the American expansion.

Today I will talk about tariffs and the possible idiot.

Have a look at this chart:

This trend change in tariffs is staggering. Even if reversed tomorrow, and it won’t, large corporations won’t trust the White House on policy. Yesterday, ‘Le Grande Orange’ started tweeting about Indian tariffs.

The tariffs are good for the consultancy industry, but large corporations are not going to have an easy time with this. Most will do nothing short term as consultants will take months to run scenarios.

Most likely, the tariffs are a trigger for a slow down in the US expansion. While the tariffs may not lead to a recession, they have already triggered some massive trend changes and new trends that will begin to show up in many new groups of stocks.

For example, most ‘experts’ think it will accelerate growth in many emerging markets.

So far, all is well with the S&P hitting more all time highs yesterday, and even the FANG stocks as an equal weighted group are back near all-time highs. The old trend (which I keep riding) is still our friend, but I have an extra toe out the door.

Whatever happens, Fat Nixon has already framed the ‘end of expansion/recession’ story as all about the FED and certainly not about the man he hired that is in charge of the FED or his tariff policy.

Logistics, Logistics, Logistics –

The economy used to be all about plastics and ball bearings

Today it is all software AND logistics.

Andy Kessler has a great piece about how logistics have helped lengthen the expansions and change the business cycles. Have a read.

This morning the FED is talking about easing interest rates so stocks are ignited once again. The question now is are they too late? The tariffs though should further ignite the consulting sector (which Andy talks about in his logistics piece above) which is likely a bad thing for the economy as companies slow down to figure out how to play the new landscape.

If everyone is now worried about a recession, will it happen?

The Markets – What Happened In The First Half of 2019…and Investing For a New Cold War

The first half of 2019 was a blur.

I continued to ride the ‘software is eating the world’ trend to some pretty good results, but outside my world of software startups and technology stocks, the world did turn and even in my world there were some massive surprises.

Let’s begin:

The S&P was up approximately 20 percent…

Within the S&P Xerox (wtf!) and a host of other names you have never heard of led the way:

Remember Snapchat…snubbed by everyone but my son Max, the stock is up 176 percent so far in 2019, double that of S&P 500 leading Xerox.

Note to self and all you – the markets work in wonderful and mysterious ways!

On a monthly basis, technology stocks are pennies from all time highs…NOT bearish:

They told me the internet was dead back in 2012, but here she is in 2019 at all-time highs on a monthly basis…that’s NOT bearish:

75% of stocks in the S&P 500 are now above their 200-day moving average, the most since February 2018:

Despite all the strength in the economy and the records in stocks – the market is still pricing in a 100% probability of a Fed Rate Cut on July 31st:

A gold bug and a Bitcoin bull might YELL right about here that ‘NO WONDER GOLD IS AT 6 YEAR HIGHS AND BITCOIN WAS UP HUNDREDS OF PERCENT IN THE FIRST HALF OF 2019‘ and I would say ‘damn straight’!

I would also raise my hands to the sky and like a old grumpy man and point to the fact that $10,000 invested for 30 years in Swiss government bonds will grow to $9,856 at maturity 2049 (note: assumes interest rates reinvested at @ current 30-yr rate of -0.05%):

Confused yet?

Let’s continue…

While the gold bugs and Bitcoin HODL’rs rejoice… the most interesting crypto chart of 2019 so far is how the altcoins (shitcoins) have been relatively obliterated:

With all that in mind, what are some guesses for the rest of the year?

The easiest extrapolation is to keep riding what’s working and I plan on that.

I also have a gut feeling that select biotech stocks will continue to perform well in this risk on environment.

If the dips stop getting bought, Fat Nixon will blame the Fed andf the immigrants and I will blame Fat Nixon.

I could go on and on but I will stick with the simple stuff that has been working.

Finally, it would be irresponsible not to talk about the US and China trade war, so I will end with this good read titled ‘Investing For A New Cold War‘. For you lazies…the conclusion:

Assuming that the US-China standoff is not merely a trade war but the start of a new cold war then the shift in the US-China relationship will cast a long shadow over financial markets. As reviewed above, the new cold war could end up being:

Bearish for US technology stocks
Bearish for the US dollar
Bullish for Russia
Bearish for Chinese growth
Bullish for renminbi bonds

In short, for a world that may be going through a dramatic shift, one wants to be long the assets that no-one today owns, like Chinese and Russian bonds, and underweight those that everyone and their dogs are overweight like the US dollar and US technology stocks.

Momentum Monday – Don’t Look Down

I hope everyone had a great 4th of July weekend.

Right now the markets are continuing to look great. Price action continues to indicate higher prices. Dips are being bought. The risk continues to be ‘headlines’ and trade/tariff rhetoric.

The S&P is up 20 percent and a lot of hedge fund summer vacations may be cancelled as managers play catch up to the indexes.

As always, Ivanhoff and I tour the markets and share what we see around the world of momentum. It is hard to miss it right now, but like always, the markets can be frustrating. Do not chase.

In big caps, Facebook, Disney and $PAGS are three stocks that I own that look poised to continue higher from good setups.

CLICK HERE for this week’s Momentum Monday.

Have a great week.

As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

Some Sunday Shoutouts – Who I Read, Follow, Pay For…

I get asked all the time who I read and so I wanted to re-share some posts on the subject that I have fully updated.

I have updated my recent What I Read, What I Pay For, Who I Follow and How to Get Started Investing. Have a read and try out some of the names on the lists.

Here is my updated – Who Do I Follow and How to get Started on Stocktwits

Finally, originally published in 2013, I have updated the post and enclosed it below with all my current daily and weekly reads…

The linkfests, blogs and newsletters I read daily and weekly:

Fred Wilson

Brad Feld

Seth Godin

TechMeme

The Profile – Free from Polina Marinova who curates an excellent weekly reading list on business leaders and up and coming companies.

Abnormal Returns – Tadas curates a daily financial markets reading list.

Semil Shah – Haystack Newsletter – Free newsletter discussing life as a Venture Capitalist and his takes on investing.

Bill Bishop – Get Smarter About China – not free, but excellent insights into chinese tech and media and politics from Bill who lived in Beijing for 20 years with his family and is now back in DC.

Benedict Evans – analyst at A16Z.

Pomp – Off The Chain – All things Bitcoin newsletter

Multicoin Capital – Crypto hedge fund blog (I am an LP)

MG Siegler – From Tech Crunch editor to VC at Google a really good free email

Strictly VC – Connie has a great – free – daily email on all things venture capital and now works for Techcrunch.

Alex Taussig – a consumer venture capitalist at Lightspeed with a very good weekly email

Jason Hirschhorn

Have a great Sunday and go to work.

Earthquake

Toronto had its first earthquake as Kawhi left town for the Clippers.

Max texted me yesterday that he felt his first earthquake in San Diego. It knocked over a fan in his bedroom and he had no idea what was happening so it scared him.

I was with Ellen in Vegas at Caesar’s Palace when we were woken by an earthquake one night.

The first earthquake I have ever felt was in Los Angeles over 30 years ago and I remember how the apartment I was staying in shook for minutes after the earthquake ended.

I have a terrible memory for people and places, but our minds have a way of embedding certain events that are easy to recall with the right triggers.

Have a great Saturday.

The Best Ten Years Ever?

Last week I wrote about this great market in ‘The Trend Is Your Friend‘.

It turns out that the last 10 years are ‘The Best Ten Years Ever‘, according to research from Michael Batnick.

There is a lot of cheerleading going on at The White House right now about the economy and the stock market. I am long and superstitious enough to cringe at all the ‘tempting of fate’ each time I see a tweet about stocks.

I like Michael’s take on the last 10 years and what lies ahead:

It’s hard to appreciate the good times when you’re in the middle of them, which is why it’s helpful to turn to the data. Narratives hide the present, numbers reveal them.

Looking at the numbers, one can easily make the argument that we just lived through the best ten-year period ever for U.S. stocks. Which means what, exactly?

Well, it’s hard to say. Can this bull market continue? Yes, of course. It’s already gone on longer than many people thought it would, myself included. But is it likely to be as strong as it was over the last ten years? No, almost certainly not.

In a system as unpredictable as the stock market it’s difficult to make predictions, but if there are any iron laws we can learn from studying the past, it’s that the good times don’t last forever. I’m not saying we’re about to enter a lost decade, but I’m very confident that the next ten years won’t be as smooth as the last one.

Happy 4th Everyone! …And Some Thoughts on Community

I loved this quote form poet Maya Angelou:

Success is liking yourself, liking what you do, and liking how you do it.

I got it from ‘The Chart Report‘ a new fave daily email I get from my friends Patrick Dunwila and Steve Strazza who are doing a great job curating the social web for the most interesting charts of the day. They are building therr own community within the larger community of people that love talking about stocks and markets.

I dish out my share of critiques about companies, people and products on the social web. I know it’s not fair, but hey life is not fair.

I also get my fair share of critiques and attacks because I am easy to find.

While I am not an expert in much, I feel like the closest thing I am to being an expert in is community. I live and breathe the idea of sharing and how t0 build community. I did it with Wallstrip and now over 12 years at Stocktwits and early adopter of Twitter and 14 years on my blog.

It is not hard to find me and scream. It’s just as easy as finding me to say something nice.

The truth is for every nasty comment or critique I get 99 thank you’s or hey ‘have you thought of this’ which I consider a helpful compliment.

I have written about this before but building a community is about having rules. The less the better of course which what makes community building hard. You just can’t be all things to all people.

It’s why I love centralized communities. It’s why centralized communities have been around for thousands of years. Obviously centralized is not perfect and thats why everyone in tech and crypto thinks the solution is ‘decentralize’.

As crypto and the blockchain take further hold, I expect decentralized communities will take shape.

I just don’t think people as a whole will be any happier with them.

I hope everyone has a fun and safe 4th of July. Ellen, Rachel and I will be walking the streets of Manhattan and enjoying the city.

Is It Safe?

Every day I get one or two invitations to speak at a conference from ‘people’ on Linked In. Yesterday I got one of the strangest:

I was too scared to click through, but just might because I am confident there is no ‘pee tape’.

I posted the same on Twitter and the comments were really funny…have a read

Speaking of safe…

Congress thinks Facebook’s crypto project LIbra is NOT safe and wrote a letter to Facebook asking them to STOP. My friend Pomp summed it up perfectly. Have a read of the letter as well. We are doomed.

Finally…this podcast with Marc Andreesen, Ben Horowitz and Stewart Butterfield is very safe for listening and I highly recommend it – ‘Entrepreneurs Then and Now‘.

Living life as an Optimist …Learning The Art of Disappointment

Fred Wilson is bummed about the Knicks and turned it into a blog post about early stage investing and disappointment.

I think a lot about disappointment because I am an optimist. Until I began investing in other people’s startups I had only myself to blame and if I was hard on myself I was mostly just hurting myself.

Now that I am a career optimist I have to learn how to live with a lot of disappointment that is out of my control.

I have found what works best is educating our LP’s on exactly how our business works. The math is the math and no matter how good you are at spotting and investing in founders – most startups just fail. Per Fred:

Fortunately, I have learned a lot about disappointment in three decades of backing early-stage startups. Our business is one where a third of things we do don’t work out at all and another third deliver a lot less than we had hoped when we pulled the trigger. Only a third of our investments deliver on what we expected when we made them.

Fortunately about ten percent of the investments we make so vastly outperform our expectations, that they make up for everything else we do.

So we live with a lot of disappointment. And one of the questions I struggle with is how much of that disappointment do we share with the founders and teams we work with.

Certainly feedback helps founders. But if the feedback is too negative and too downbeat, it is not helpful and can also lead to tune-out.

So I have found that many times I need to bite my tongue and take the disappointment in stride and chalk it up to the cost of doing business in early-stage investing. You have to be an optimist to make early-stage investments and you can’t let the disappointments take that optimism out of you.

Howard here again…good advice Fred.