Layaways, Tweets & the Dollar

By Jeff Kelly on December 13, 2019

I saw a nice story, there’s a link below, about Chicago Bears Linebacker Khalil Mack paying off all the layaways at his home town Walmart in Florida. About $80,000.00 worth! This has become a thing many people are doing as way to help those less fortunate with holiday expenses. Reading the article had me thinking about my own family growing up. We used layaway. Layaway is a plan offered by a retailer. You pick the items you want to buy, put down a payment and have a certain amount of time to pay off the balance. The store holds the goods until they are paid off. Our family didn’t have a lot of money. My Mom would buy many of the gifts, usually in late October. That would give her a good amount of time to go into the store and payoff the balance. She also had a “Christmas Club” through her employer. They would take a small amount out of each paycheck during the year. These funds were then paid out in early to mid-December to use for gifts. This was often the money my Mom used to pay off the layaways.

I have terrific memories of those holidays when I was young. The gifts we got weren’t nearly as important as being together and enjoying everyone’s company. There were few holidays where all my family could be together. Usually one or more of my brothers was serving overseas.  Still there were poker games, basketball games and some football as well. Terrific memories. I hope your holiday preparation is allowing you to enjoy the season without too much stress.

NFL star Khalil Mack pays off hometown Walmart’s holiday layaways

The markets had another nice week. Hopefully we can stop talking about the trade deal with China at least for a bit. The deal as we know it is much ado about nothing. Anything that keeps us talking and trading is a positive but there’s not much in the deal we have seen so far, that wasn’t available months or even a year ago. The market continues to trade very well. The macro data continues to be poor. The U.S. Dollar broke down this week. This can be a positive for many U.S. multinationals. It can also be a positive for Emerging markets and commodities. We think oil and other commodities may have a good first quarter.

Charts From The Week Past

Leader of the free world has a lot of time to tweet.

Source: Trump Tweet Archive

Yesterday showed the most new highs vs new lows in the past 5 years. 

Sources: @StockCharts.com, SentimentTrader

The Dollar Index breaking support and the trend-line dating back almost 2 years.

Source: Bloomberg

Another look at the dollar breakdown.

Source: finviz.com

The dollar declines and emerging markets have their best day in 6 months.

Source: Bespoke

Copper rallies nicely with the weaker dollar.

Copper rising in value isn’t something usually seen if an economic catastrophe is imminent.

Sources: Allstar Charts, Optuma

Metals and Mining ETF, XME, also likes the weaker dollar.

Sources: Allstar Charts, Optuma

The Russell 2000 (small caps) are in a seasonally good period.

Expect them to outperform into mid-January.

Sources: Hirsch Holdings, Stock Traders Almanac

Deutsche Bank expects buybacks of 625 billion in 2020.

While less than 2019, it still represents 2.4% of U.S. market cap. The supply of equities continues to decline.

Sources: Compustat, Bloomberg, DB Asset Allocation, Dealogic

With results in from all but one of the 650 parliamentary seats, the Conservatives had won 364, their biggest election win since Margaret Thatcher’s 1987 triumph – Labour, led since 2015 by the veteran socialist Corbyn, had won just 203 seats, the party’s worst result since 1935.

Sources: Financial Times, Jones Trading

A full Brexit is now likely, and the British Pound seems okay with that. 

Sources: Refinitiv, Financial Times

Continuing Jobless Claims with the biggest jump in a long time.

Maybe an outlier but a concern.

Sources: Hedgeye, BLS

The most widely held stocks by generations.

Millennial’s love Bitcoin. I also find it interesting they are the only group with Disney as a top holding.

Source: Charles Schwab

Companies are offering benefits to pay off student loans. 

Source: Society for Human Resource Management

Optimism about the country’s economy has risen for CFO’s in the U.S., Latin America, Africa and Japan.

Big declines in Canada and China.

Source: Duke’s Fuqua School of Business/CFO Magazine Global Business Outlook

The flows out of stock funds in a very good year is something.

Source: TrimTabs

We need reasonable immigration to grow our economy.

For the Reagan fans out there, look at the huge uptick in immigration during the Reagan years.

Source: William H. Frey analysis of U.S. Census Bureau Population Surveys

Small business compensation plans reach a new high.

This can be inflationary.

Sources: NFIB, TheDailyShot

Weekend Homework

Hidden Forces – The Failure of American Hegemony: Why Nationalism Trumps Liberalism Every Time | John Mearsheimer is an interesting podcast about Nationalism in foreign policy. Excellent points are made. You may not agree but it will make you think.

In this week’s episode of Hidden Forces, Demetri Kofinas speaks with John Mearsheimer, professor of political science and international relations at the University of Chicago. Dr. Mearsheimer’s intellectual contributions have had a profound influence on the thinking of an entire generation of students in international relations. He’s been a vocal critic of neoliberal hegemony, nation-building, as well as the so-called “forever wars” that America has been engaged in ever since the Bush administration’s invasion of Afghanistan in 2001. He is most closely associated with the realist school, which views the international system as fundamentally anarchic, where the most dominant concern among the great powers is defined by their desire and competition for security that sometimes leads to war.

If you want to further understand how we got where we are today, I highly recommend this book. The Forgotten Man is also great.

Today, a battle rages in our country. Many Americans are attracted to socialism and economic redistribution while opponents of those ideas argue for purer capitalism. In the 1960s, Americans sought the same goals many seek now: an end to poverty, higher standards of living for the middle class, a better environment and more access to health care and education. Then, too, we debated socialism and capitalism, public sector reform versus private sector advancement. Time and again, whether under John F. Kennedy, Lyndon Johnson, or Richard Nixon, the country chose the public sector. Yet the targets of our idealism proved elusive. What’s more, Johnson’s and Nixon’s programs shackled millions of families in permanent government dependence. Ironically, Shlaes argues, the costs of entitlement commitments made a half century ago preclude the very reforms that Americans will need in coming decades.

In Great Society, Shlaes offers a powerful companion to her legendary history of the 1930s, The Forgotten Man, and shows that in fact there was scant difference between two presidents we consider opposites: Johnson and Nixon. Just as technocratic military planning by “the Best and the Brightest” made failure in Vietnam inevitable, so planning by a team of the domestic best and brightest guaranteed fiasco at home. At once history and biography, Great Society sketches moving portraits of the characters in this transformative period, from U.S. Presidents to the visionary UAW leader Walter Reuther, the founders of Intel, and Federal Reserve chairmen William McChesney Martin and Arthur Burns. Great Society casts new light on other figures too, from Ronald Reagan, then governor of California, to the socialist Michael Harrington and the protest movement leader Tom Hayden. Drawing on her classic economic expertise and deep historical knowledge, Shlaes upends the traditional narrative of the era, providing a damning indictment of the consequences of thoughtless idealism with striking relevance for today. Great Society captures a dramatic contest with lessons both dark and bright for our own time.

I hope you have a terrific weekend.