Bakes' Takes podcast - Episode 12 - 5/27/20

Bakes’ Takes Podcast Show Notes –Saturday May 23, 2020 Mike, I’m sorry. I was wrong, cost you money, the opposite of why I do this. Didn’t foresee Shops, still think ad revenue going down more than Shops upside, but the market has spoken. Working harder to make up for this. Watch time frames. Week not important. 321.86—295.48, -8%. Volume still light on up days. Seems tired. If big volume breakout close above 303, August ’19 resistance then suggests new bull market. 3:09I will explain support and resistance as if you can’t see the SPY charts I am referencing. Climbing stairs/escalator. Then down the elevator. 4 years months up, 1 month down. 5:30https://www.wsj.com/articles/tencent-levels-up-as-china-hunkers-down-11589379005 by Jacky WongRelates to potential EUM investment (short MSCI Emerging Markets). China, Taiwan, Korea. BABA, TCHEY, TSM9:05https://www.wsj.com/articles/u-s-sends-warships-to-support-malaysia-in-south-china-sea-amid-china-pressure-11589382717 by Niharika MandhanaChina claims nearly all of the South China see and objects to oil-and-gas operations that don’t involve Beijing. Lost tribunal claim—Vietnam, Malaysia, Brunei, Taiwan, Philippines. 3 U.S. naval ships.10:05https://www.economist.com/finance-and-economics/2020/05/14/america-files-a-new-financial-salvo-at-beijingTariffs, blame for Covid-19, now Trump Administration rid American exchange of Chinese stocks.10:50https://www.economist.com/asia/2020/05/21/china-punishes-australia-for-promoting-an-inquiry-into-covid-19China’s ambassador to Australia, Cheng Jingye, recently warned Australia it was treading a “dangerous” path by pressing for an independent inquiry into the origins of the coronavirus (one that might reveal China doing more to suppress information about early infections than to quash the outbreak itself). If relations between the two countries soured, Mr. Cheng threatened, Chinese tourists might have “second thoughts” about holidaying Down Under. Families might wonder whether Australia really was the “best place to send their kids” to study. Ordinary Chinese might no longer want to “drink Australian wine, eat Australian beef”.In the event, China this week agreed to an inquiry, in the face of international pressure at the World Health Organisation’s annual assembly (held online). But it did so after slapping tariffs of over 80% on Australian barley on May 18th, having already banned beef from Australia’s four biggest abattoirs on May 12th.11:35https://www.barrons.com/articles/chinas-hard-line-on-hong-kong-what-it-means-for-u-s-investors-51590166402?mod=past_editions by Reshma Kapadia12:07https://www.barrons.com/articles/just-as-rays-of-hope-were-appearing-china-tensions-flare-51589590940?mod=past_editions by Randall ForsythAt the same time, another big threat emerged, as U.S.-China tensions escalated. The Commerce Department on Friday curtailed Huawei Technologies’ access to semiconductors that use U.S. technology. That led Global Times editor Hu Xijin—widely seen as speaking for Beijing—to tweet that China could retaliate against U.S. companies, such as Qualcomm (ticker: QCOM), Cisco Systems (CSCO), Apple (AAPL), or Boeing (BA).In addition, the Trump administration ordered the federal employee retirement fund not to invest in an index that includes Chinese companies that, it warned, could be sanctioned for “culpable actions for the Chinese government with respect to the global spread” of the coronavirus.Indeed, China is viewed with antipathy by Republicans and Democrats alike in this election year, Greg Valliere, chief U.S. strategist for AGF Investments, writes in a client note. “So, during the campaign, there will be a competition to see who can be the most anti-China,” he predicts.An escalating trade war during what might be a depression? Haven’t we seen this movie before? And didn’t we hate its ending?The Smoot-Hawley Act increased tariffs on foreign imports to the U.S. by about 20%. At least 25 countries responded by increasing their own tariffs on American goods. Global trade plummeted, contributing to the ill effects of the Great Depression. Sep 5, 2019The Fed isn’t buying just Treasury and agency mortgage-backed securities, but also corporate debt through the bond market and exchange-traded funds, including those that deal in speculative-grade debt.This reflects the change in how credit works in the real world. Instead of Fed asset purchases putting more reserves into the banks so they can make loans, monetary policy now works largely via the financial markets.The central bank has gone light years beyond what’s in elementary economics textbooks to combat the economic slide, expanding its balance sheet by $2.6 trillion since early March to $6.9 trillion, including initial purchases of $305 million in corporate bond ETFs.12:27