Tuesday, December 28, 2021

Morning Note: Huh? Record Chip Shipments??

After posting our not-short Year-End Letter Part 4 yesterday (with a part or two left to come), I'll keep this morning's note short and sweet.

First, one more for those who believe the severe shortage of certain essential stuffs (such as chips for all manner of technology, including cars) over the past year has been all about COVID.

Well, per the below from BCA Research, the semiconductor industry, by mid-year, actually managed to ship record amounts of those essential chips!

"The industry managed to increase production to address high demand, shipping more semiconductors every month than ever before by the middle of 2021. However, chip shortages ensued, because supply, despite its best efforts, could not keep pace with the demand."


In Part 4 of our year-end letter we expressed our optimism over the prospects for Japanese equities over the long run from here. 

At first blush I like the sound of the following:

"...Japanese industrial production this morning printed the largest month-on-month gain ever seen in data going back more than 43 years. Absolutely smashing expectations at 7.2% vs 4.8% forecast, which gives some idea of how much economists and markets might be underestimating the evolving story in Japan."

At second blush, when we consider that the Japanese government plans to apply generous fiscal stimulus to its economy, and, as their central bank remains the definition of dovish, at long last inflation may be a real risk for Japan. 

And with a sovereign debt pile that more than exceeds the size of the economy (sound familiar?) inflation-induced rising interest rates can pose a problem. 

But, then again, the Bank of Japan is the world leader in intervention into financial markets... so we're looking at virtually the same setup we see for the US potentially going forward. That is, allowing inflation to run, while suppressing (capping) interest rates at (they pray) a level markets can stomach. In which case, they in effect over time inflate (as a percent of GDP) down their debt burden (à la 1940s US)...

Of the 14 (of the 16) Asian markets we track that were open overnight, 13 closed higher.

Europe's green nearly across the board so far this morning as well, with 17 of the 19 bourses we follow trading up, as I type.

US major averages are up across the board (Nasdaq barely) to start the session: Dow up 169 points (0.47%), SP500 up 0.20%, SP500 Equal Weight up 0.31%, Nasdaq 100 up 0.05%, Nasdaq Comp up 0.04%, Russell 2000 up 0.20%.

The VIX sits at 17.74, up 0.34%.

Oil futures are up 0.98%, gold's down 0.02%, silver's up 0.12%, copper futures are down 0.57% and the ag complex is down 0.50%.

The 10-year treasury is up (yield down) and the dollar is up 0.18%.

Led by Disney, carbon credits, AT&T, Viacom, industrial stocks and Mexican equities -- but dragged by uranium miners, MP (rare earth miner), solar stocks, base metals miners and wind stocks -- our core portfolio is flat (+0.01%) to start the day.

You know the story about Joseph Kennedy rushing straight to his office after the shoeshine boy started giving him stock tips on a fateful day back in 1929. He shorted the stock market and thus became a multi-millionaire.

Here's WSJ markets reporter Gunjan Banerji yesterday:

"In Miami and just finished a ride with second Uber driver of the trip who’s trading stocks/options to supplement income."

And macro researcher Peter Atwater this morning:

"I suspect that the belief that anything can become hugely profitable if scaled to enormity will be proven woefully incorrect before everything is said and done."

Have a great day!

No comments:

Post a Comment