The Market Before Christmas

Fri, 2017/12/22 - 11:09am | Your editor
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We went to the theater last night, but not to the London opening of Hamilton which was outside my price bracket. We just hopped across the Thames to Greenwich to see the pantomime Cinderella. Its performers were equally multi-racial, as is now common in London. It was surprisingly localized, with “Ella” and her two wicked stepsisters (both played by males) the daughters of Halley, the man who discovered the comet. The only problem I had with the play was that Prince Charming was a bit of a wimp lacking princeliness or sex appeal. Alas, the play had been written before Prince Harry got engaged to Meagan.

A few scandals besides the one we reported on in Mexico yesterday.

As we now all know, Apple throttled older iPhones allegedly to stop batteries from dying, and just by chance also encouraging its i7 and earlier model customers to buy newer phones. As an owner of two i6+ models I am a member of the class suing AAPL.

Despite the Republican attempt to defund Obamacare by removing the obligation to buy health insurance if you want to risk paying out of pocket, in fact Americans are signing up. Drug and hospital shares should gain from news that in week 7 of the open enrollment for Obamacare in the Federally Facilitated Marketplace, covering 39 states, the level has already hit 11.8 mn people.

This is ahead of the S&P target for the whole of 2018. Enrollment can rise further because plans have extended signup times because call centers crashed because of the heavy sales volume and because areas which had natural disasters like Texas, Florida, Georgia, and South Carolina also have extended sign-up periods.

Catalans voted for separatists but barely, which hurt the Spanish bolsa as it means that an early resolution is unlikely. The euro fell 0.5% to $1.1817 overnight.

Bitcoin fell below $12,504 yesterday and opened up only a bit at $13,659.85 Friday, in what I hope was an unrelated move. I did not check with the Turkish-Cypriot newsagent this morning because his son had begun his school holiday and was manning the cash register.

Bloomberg headlined how the former Long Island Iced Tea Wednesday changed its name to Long Blockchain which boosted its share price 183% in yesterday's trading when 15 mn shares changed hands. It has no non-tea assets or blockchain deals yet. It also cancelled a stock sale planned earlier. It is 13% controlled by Briton Eric J. Watson of Cullen Invesrtments who owns businesses, he says, in various English-speaking counties, and which sold its Cullen Agricultural Holdings to the former tea company in 2015.

There will be no blog Mon., a public holiday in most of the world, although the Orthodox and Uniate churches celebrate Christmas in Jan. Instead I will work on the fixed-income part of my outlook for 2018, the equity bit of which came out yesterday. The main problem is that something like 85% of asset managers think bonds are overvalued, a level that has prevailed since Oct., well before the latest Fed interest rate hike. (Data from BofA-Merrill Lynch Global Fund Manager survey.)

One of the few bright bond markets, which had attracted some 43% of asset managers in Nov., was China. Its risks are now scaring them and as of Dec. 15, only 34% of them were buying Chinese debt. About 15% of respondents now expect a Chinese debt crisis to hit in 2018.

Chinese debt valuation would be hit if growth slows, particularly in the hot real estate market, and if inputs and raw materials go up in price because of anti-pollution measures. You have to decide if the Xi Jinping government controls Chinese economic levers or not, which is unpredictable. My challenge for the holiday weekend.

 

The last trading day before Christmas-to-New Year week, when markets tend to be quiet, is mainly about closing deals before 2018 and Catalonia. Not today.

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