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DECEMBER 3, 2019
STOCKS: AAPL, TSLA, NFLX, MU, QCOM
MACRO: TRADE, SPY
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL, NFLX, AND TSLA
Reading The Market Premium Content on SA Marketplace
- Morning Commentary 12.3.19
- Why SalesForce May Drop Following Results
- Stocks Are Down On Whatever Headline You Want
- Escalating Trade Tension Not Likely To Derail Bull Market – Been There, Done That
I can’t; I can’t write another post saying that stocks fell on trade headlines. Does today’s decline even count? The S&P 500 was only down 66 basis points, that is like a typical trading day, right? Can’t we say stock fell because they have been over bought and they needed to fall?
This trade….stuff… is ridiculous, and the headlines and the news is just nauseating. The Market has moved past it, it has. Had this happen in the Spring of 2019, or late last year, the Market would have fallen by 2 to 3%, there is no doubt in my mind. Now, all it warrants is a 60 basis points drop on the S&P and a 30 basis point drop in the Russell? My, how times have changed. Again, it goes back to what we talked about a week or two ago, for the most part, I think the Market mostly doesn’t care, or no longer belives all the doom and gloom that comes with the trade talk hype.
It was exactly one year ago that fears of recession galore were rampant through the Market place. Now a year later, we are no closer to recession today then we were then. The US economy grew at a respectful 2.1% in the third quarter. Meanwhile, most of the data we have gotten to this point in the fourth quarter is pointing to around 2.0% growth in the fourth quarter.
Consumer prices, remember the significant impact it was supposed to have on the consumer? Well, we are still waiting. Consumer prices have declined.
Maybe it because all the companies are absorbing the cost, and it is showing up in producer prices. Nope, not there either. Producer price ex-food and energy were up only 1.5% in October and have been falling.
So no price inflation, no recession, and tons of anxiety.
We have a nominal GDP of $21 trillion.
But yet, we are going to sink from a trade war with China, on what is now less than $500 billion of imports per year. Because the imports from China have been plunging in recent months, look at the chart below, I downloaded the data from St. Louis Fed and ran it in excel on a trailing twelve-month basis. Based on October’s data, imports fell to $486 billion from a peak of $540 billion in October of 2018.
So put the tariffs at 50%, and we are talking about $240 billion in taxes, on a $21 trillion US economy, and it represents 1.1% of the entire US economy. Put it at 25%, and we down to 50 basis points, on a trade number that appears to be shrinking.
I didn’t believe the economy would tank from a trade war with China last year, and I most certainly do not believe one will sink the economy now. So lets all just get over it
Moving on…
S&P 500 (SPY)
The S&P 500 fell to exactly where it was supposed to fall today, as I noted last night, before the “trade fears” took the market by storm, to 3,080. That region held firm and bounced. Now there is a gap to fill up to 3,110 tomorrow.
Netflix (NFLX)
Last time I check, Netflix was still not allowed in China, and now the stock is breaking a little mini-downtrend. $315 is a reasonable place for a rebound.
Apple (AAPL)
Apple fell today, but support was firmly at $255. That means that $260 is now resistance, with downside risk to the next support level at $249.
Qualcomm (QCOM)
Qualcomm fell below $82, and that level becomes resistance for the stock and opens the door for a decline to $76.50.
Micron (MU)
Micron fell through support at $45.50 today, and now that becomes resistance. It at least creates the possibility for it to drop to $42.
Tesla (TSLA)
Tesla continues to perform well and is likely on its way back to $347.
Have a great one
-Mike
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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