Topley’s Top Ten – March 6, 2019

1.China stocks rally to a 9-month high after Beijing promises trade secret protection for foreign companies

  • -The Shanghai Composite Index is near a nine-month high on hopes of an end to the US-China trade war.
  • -China promised spending, tax cuts, and protection of foreign companies’ technology secrets.
  • -“A high degree of optimism [is] already baked into markets,” FXTM said.

China ETF held 200 day on weekly chart.

China ETF daily chart 50day about to go thru 200 day to upside.

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Topley’s Top Ten – March 5, 2019

1. Kyle Bass-China has Stolen $2-$3 Trillion of IP from the U.S in the last Decade….The “ultimate arbiter” for China will be its Foreign Exchange Reserves.

Kyle Bass says trade deal with China must address IP theft: ‘They’re stealing our game from us’

“The U.S.’ No. 1 asset, in my view, is our ingenuity, our intellectual property, our ability to innovate,” Bass tells CNBC’s Brian Sullivan.

Hayman Capital Management founder Kyle Bass thinks any trade deal with China must include enforcement mechanisms against intellectual property theft for the U.S. to truly benefit from it.

“Over the last decade, they’ve stolen $2-to-$3 trillion in IP from us. The U.S.’ No. 1 asset, in my view, is our ingenuity, our intellectual property, our ability to innovate,” Bass told CNBC’s Brian Sullivan in a pre-taped interview that aired on “Worldwide Exchange.” “That’s our game and they’re stealing our game from us. It’s really important for this new agreement to be measurable and punishable.”

Chinese Yuan—Rally but below highs.

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Topley’s Top Ten – March 4, 2019

1.CAGR S&P 20 Years…5.52%

It’s Been a Rough 20 Years for Stocks. The Next 20 Should Be a Lot Better

Vito J. Racanelli

A higher-than-expected December payrolls number helped push the market up 3.4% on Friday. Yet stocks had their worst first two days of the year since 2000. Where the market will be in a year has little to do with where it is now. Twelve months ago, stocks were coming off a 22% return in 2017 and feeling fine, thank you very much—until September. Then, the wheels fell off.

Ironically, there is more certainty in picturing the market’s next 10 or 20 years. That’s the time frame investors should use. They rarely examine the trailing returns of past decades, but they should. There’s one number that explains a lot of things: 5.52%. Over the 20 years ended 2018, that’s been the nominal compound annual growth rate (CAGR) of the S&P 500.

It might not feel like it after a decade-long bull market, “but we are coming off 20 of the worst years for compounded returns since the Great Depression,” says Nicholas Colas, co-founder of DataTrek Research. The average trailing 20-year market CAGR since 1928 is 10.7%. Blame the two negative-35%-plus bear markets since 2000.

This low return has given birth to, among other things, the rise of passive investing and the growth of exchange-traded funds. It has forced commissions down and encouraged the use of automation to further reduce broker expenses. Institutional investors, pension funds, and sovereign-wealth funds have taken on more risk—shoveling money to venture capital and private equity—to make their required rates of return, typically 7% to 10%, Colas says.

It is hard to imagine our most recent big winners, s (ticker: AMZN), Alphabet s (GOOGL), andApple s (AAPL) of the world doubling their market capitalizations in the next 10 years (a 7% CAGR). To start seeing better long-run returns, the market needs lots of new blood, he says, a fresh crop of disruptive tech companies, to come public. The good news is that some, like Uber Technologies and Lyft—and potentially Airbnb and others—are preparing to do so.

The best thing about sitting at the low end of a historical range is that mean reversion should start to kick in, Colas says, and the next 10 to 20 years from here will likely be pretty good. Happy now? As for 2019, tell me if there will be a recession, and I’ll tell you where the market is going

S&P 20 Year Chart…2 35% Drawdowns.

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Topley’s Top Ten – February 28, 2019

1.Earnings Recession Does Not Necessarily Mean Economic Recession

The idea is that an earnings recession would lead to a conventional economic downturn, with rising unemployment, falling consumption and even broader downward pressure on profits — but that’s not actually true, Belski said in an interview.

Indeed, an earnings recession has happened six times since 1987 — but a real recession has followed only twice, Belski said. That alone should mitigate any fears that an earnings slowdown would come back to bite the market, he said.

Furthermore, when earnings downturns happen and economic recessions don’t follow, the S&P has risen an average of 17.6% over the next year, he said, citing the five times this has happened since 1967

Opinion: What ever happened to that earnings recession?By Tim Mullaney

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