Author Archives: Ket Garden

The US unemployment go straight up while the pending home sales go straight down

China`s growth plummeted -6,8 YoY in Q1. The growth in the U.S is still on the right side, coming in at 0,3 percent YoY in Q1. But if you look at the quarter, the growth in China is down -9,8 percent, while the U.S growth is down -4,8 percent.

The annulized 4,8 percent drop in Q1 of 2020 markes the end of the longest period of expansion in America`s history. The drop is the steepest pace of contraction in GDP since the last quarter of 2008 (financial crisis).

The Covid-19 pandemic forced several states to impose lockdown measures in mid-March and that pushed millions of people out of work. The unemployment rate go straight up while the pending home sales go straight down.

Contracts to buy previously owned homes in the US dropped 16,3 percent YoY earlier in March this year, and that is the biggest annual decline since April 2011, amid the Covid-19 crisis. On a monthly basis, pending home sales went down 20,8 percent, which is the largest drop since May 2010.

Unfortunately, it seems like this is just the beginning.

The next quarter can be very ugly, while the unemployment rate can go straight up to Great Depression levels. The growth in the US can plunge more than 30 percent. If that is happening, what do you thing will happen to the pending home sales?

The numbers are expected to get even worse in April as the government surveyed businesses and housholds for the report in mid-March, before majority of people was under some form of a lockdown.

Trump`s economic adviser Kevin Hassett said unemployment in the US can soar to 17 percent. In March the unemployment rate was 4,4 percent in the US.

During the financial crisis, the US lost about 9 million jobs, but now the US is losing that many jobs about every 10 days, Hassett told ABC on Sunday.

This is sad, because all the jobs created since the Great Recession (2008) have been wiped out. So far, we are talking about 26 million and it can be worse. Hassett told ABC the unemployment will surge to levels not seen since the Grat Depression (1929).

During the Great Depression, about 15 million jobs were lost.

So, we know what`s coming. People without job and money will not buy a house.

Pending home contracts generally are seen as a forward-looking indicator of the health of the housing market because they become sales one to two months later. This summer holiday will be very special.

To contact the author of this story: Ket Garden at post@shinybull.com

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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The Chinese economy shrank 6,8 percent YoY in the first quarter of 2020 which is the first GDP contraction since records began in 1992

We are all in it toghether and the times we are living in right now is historic. Just take a look at China and the Chinese economy that shrank 6,8 percent YoY in the first quarter of 2020. What a drop! This is the first GDP contraction since records began in 1992. Wow.

The reason for the drop is well known; COVID-19. No doubt. Xi and the CCP took action after the virus outbreak and enforced a two-month-long shutdown of all non-essential business activity. Nor did they celebrate a new year, and a shutdown like this is of course very expensive.

Car production in China recorded the sharpest decline which dropped -44 percent. That is a big shock. Last year, approximately 21,36 million passenger cars and 4,36 million commercial vehicles had been produced in China.

The growth for passenger cars has jumped from 7 million in 2008 (financial crisis) to 25 million in 2017. In 2018, every fourth passenger vehicle in the world had been produced in China, and China is ranked first among countries with the largest production of passenger cars in 2018.

As you can see, the growth of the production and sale of vehicles in China have increased rapidly. Its interesting to see that almost all of the leading bestselling cars in China are the product of joint ventres with foreign manufacturers.

Shanghai Automotive Industry Corporation (SAIC) has an ongoing cooperation with General Motors (GM). SAIC-GM manufactures and sells Chevrolet, Buick and Cadillac brand automobiles in Mainland China. When the sales drop in China, so it does in the U.S.

Export from China also dropped 6,6 percent YoY to $185 billion in March 2020, compared with marked estimates of a 14 percent fall and after a 17 percent plunge in January-February combined amid the COVID-19 pandemic.

Among the the biggest trade partners, exports fell to the U.S by -20,8 percent. Considering the first quarter of 2020, exports declined 13,3 percent from a year earlier.

However, China`s long term growth potential will not be affected by the short term fallout of the coronavirus pandemic, as the country`s economic fundamentals remain unchanged, the authorities said.

To contact the author of this story: Ket Garden at post@shinybull.com

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Is this the end of the bull market?

The bull market is 11 years old on Monday, and it is the longest stretch of non stop gains ever. The sell off over the past 12 trading days means that the US stocks are on the edge of a bear market. Therefore; Tuesday will be a test.

If the market goes below 20%, the bull market will officially be over, and we are entering a bear market. After the Great Recession, the bull market started in March 2009. The S&P 500 has gone straight up since then.

The S&P 500 is up 339% and it has been a slow recovery. It`s similar to the recovery from the Great Depression in June 1932 were the S&P 500 skyrocketed 325%. At that time, it was the deepest recession in modern American history.

President Franklin Roosevelt supported the bull market with massive government spending. Later on, Roosevelt pulled back from the program and the Fed tightened its reserve ratios for banks. The economy didn`t recover as much as it should, and tighter monetary and fiscal policy led to a double-dip recession.

This is why the Fed is important now. So are the Trump administration. The Fed cut the rates 50 points only days ago and they will probably come up with more news about the market even this week.

The Fed offers Repo Market $50 Billion more to ease rate pressure. New York Fed Repo Totals $112,93 Billion and Fed`s move to tap liquidity operations will buy time on more rate cuts.

What they do now is great leadership on the world stage. They can`t stop the virus but they can make liquidity.

To contact the author of this story: Ket Garden at post@shinybull.com

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OPEC leaders agree to cut oil production

The Oilprice has declined along with the stock market but Opec leaders agreed to cut production of 1,5 bpd with Russia support as Coronavirus hits demand. At the same time we have 2 and 10 year treasury yield below 1 percent. Investors are not shure how to react to the Coronavirus. A virus that usually has mild or no symptoms at all, according to experts.

Opec members will cut 1,0 mil bpd and its non-Opec allies (led by Russia) will cut by 0,5 mil bpd instead. This is interesting as we look towards OPEC talks on Friday. OPEC will hold a press conference on Friday after the OPEC meeting.

To contact the author of this story: Ket Garden at post@shinybull.com

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Target Inc has been one of the better performers in the retail sector and jumped nearly 6% on Monday

Last trading week was crazy, but the start of this week was even more crazy. Everybody said don`t buy the dip, and now you can clearly see that everybody is doing the opposite. They are buying the dip. But take a look at one of the top stocks I am looking at in times like this.

Target Inc jumped nearly 6% on Monday, while WalMart jumped nearly 8%. Target Inc warned investors that its holiday season was weaker than the company was expecting. Wall Street expects Target Inc to earn $1,66 per share on revenue of $23,47 billion. Last year earnings came to $1,53 per share on revenue of $22, 98 billion.

The consumer is strong and remain the driving force of the U.S economy. Just as important, big-box retail is not dead, as evidence by the strong earnings results and forecasts just delivered from Walmart.

Can Target Inc keep up the pace? Target Inc has been one of the better performers in the retail sector, with its shares up 42% over the past year, thanks to the company`s e-commerce initiatives. But with concers about the coronavirus, Target Inc will need strong top-and bottom-line results, solid growth and upside guidance to keep Wall Street excited about its direction.

Watch out for Target Inc before the open on Tuesday March 3.

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