Free Trade & Investment

The stock markets are up big over the past couple days on optimism around trade talks between China and President Trump.

Trump is really trying to goose the stock market, talking past the sale

Monday is Columbus day, so when trade discussions conclude with tariffs delayed but no actual deal that will likely be ugly for investors over the extended holiday weekend. I expected the hopium to burn out by 3 to 3:30 PM absent a large announcement, though the Federal Reserve follow on today virtually guarantees a Trump-friendly close. Shorts are getting absolutely murdered today.

About the only thing down big today is the Russian search engine Yandex. YNDX is off nearly 20% today – trading around $29 a share, not too far off the end-of-world styled lows from last . The Kremlin is promoting a draft law which would limit foreign ownership of local tech companies to 20% of the float.

Yandex, which has expanded from Russia’s largest search engine to embrace services including taxis and food-delivery, has a free-float of 85% of its shares in the U.S. The draft law would hurt investments and restrict international development for Russian companies if passed in its current form, Yandex General Director Elena Bunina said at the hearings.

There was similar scuttlebutt from the US about potentially delisting Chinese securities from US exchanges if they do not follow securities laws and/or limiting government pension investments into Chinese companies.

Further goosing the markets today in the spirit of FOMO (& directly against the concept of free markets), the Federal Reserve announced they were extending their “temporary” overnight funding operations through January & they will be expanding the size of their balance sheet. They are doing QE4 (buying $60 billion in Treasury bills per month starting next week at least into Q2 next year) but are calling it something else

My view on Bitcoin is it is a binary bet on financial chaos. When the regular capital markets increase in prices & investors have confidence in the stock market going up Bitcoin often slides on big moves up in the stock market. I sold out of my remaining Bitcoin yesterday for a small gain & it is off a couple percent today. There was also a new guideline published a couple days ago that would make regular use of Bitcoin for smaller transactions an accounting nightmare, rendering it largely good exclusively for speculation. Even hard forks can be treated as income the moment new chains are created, which would further discourage those.

I also traded in and out of a bit of Kroger & Zillow yesterday while also selling off an ExxonMobil position I had. Coming into today the only stock I was holding (other than a bit of Apple & Disney that I have had for a long time) was some Zillow in my IRA that I bought on yesterday’s dip & sold it today for a couple percent gain.

The Federal Reserve guaranteeing they’ll expand their balance sheet into Q2 of next year virtually guarantees a Trump reelection. Some sectors may still sell off on a Warren headline risk, but if Trump does a trade deal with China ahead of the election & the Fed’s goosing of the economy runs through the first half of next year it is hard to see how he loses re-election.

I’ve made solid gains going in and out of ABBV over the past couple years & have ate some solid losses on what was perhaps too large of a WBA position, though if the healthcare sector starts selling off at all on Warren headline risk with the Federal Reserve expanding their balance sheet I might back up the truck buying a bit of each.

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