Month: November 2017

Tis the season to be bullish

We are just a week away from Thanksgiving and then the holiday season really kicks into high gear. While many headlines warn of overvaluation and Grinch predictions of market pullbacks, Runnymede remains bullish. Since last summer, we have been beating the drum on strong global earnings driving stock markets higher and higher. Nothing has stopped the above trend profit growth and now we are in the strong seasonal part of the year.

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China’s Single’s Day shatters records as the biggest sales day anywhere on the planet

Black Friday and Cyber Monday are famous in the US for the big discounts and therefore big spending. In China, they created their own version called Single's Day — on November 11 or 11/11, which began as a protest of sorts against Valentine's Day, propelled by college students in the 1990s. To show the incredible buying power of the Chinese consumer, in just the first two minutes of shopping, over $1 billion was spent at Alibaba alone and by the end of the 24 hours, Alibaba's sales hit a record of $25.3 billion, more than 40 percent higher than Singles Day 2016. Yes 40 percent growth! JD.com, the #2 retailer in China, sold $19.1 billion!

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European junk bonds pose systemic risk in next downturn

This week, Fitch Ratings warned that record junk bond prices combined with risky corporate bond issuance is creating “increasing uncertainty” and is raising the chances of a sharp turnaround in the European high-yield, aka junk bond, credit market. Thanks to massive quantitative easing by the European Central Bank, yields on Euro junk bonds have been dropping steadily since early 2016 when the ECB began buying huge amounts of corporate debt. The most popular benchmark for European junk bonds fell below two percent for the first time ever last week. This is flat out crazy as investors are taking significant risk for just a two percent yield, less than a 5-year US Treasury Note which is considered the safest bond in the world. Fitch warned that recent market calm and the distorting impact of monetary policy “obscure the true risk-return dynamics faced by investors.”

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