David Ross

What I think I learned last week #49

TGOO: Thank God October’s Over! I think everyone is saying that, especially hedge funds as October was the worst month for hedge funds in 7 years.

TFED: Thanks For Election Day. Investors historically love the mid-term elections, and this year was no exception.  Wednesday, with a jump of 2%, was the best day-after-midterm performance for the S&P 500 since 1982.

The S&P 500 index is on track to report average earnings growth of 26.3% for the third quarter of 2018, its best pace since 2010.

For the first time since 2012, Warren Buffett’s Berkshire Hathaway bought back stock, nearly a billion dollars’ worth, during the third quarter. Berkshire still has over $103 billion of cash on its balance sheet.

That cash is worth a lot more these days, as the dollar moved to its highest level in a year-and-a-half.

The Bank of Japan hinted that its next move is to begin a policy of monetary tightening.

China has unveiled artificially intelligent robot news anchors that can mimic human facial expressions and mannerisms while reading out reports.

I wonder if those AI robot news anchors will be reporting on China’s 50 million empty apartments, as soon-to-be-published research will show 22% of China’s urban housing stock is unoccupied, creating worries of too much real estate speculation in the country.

The Wall Street Journal published an excellent story on how China is wedging itself into the heart of that Asian peninsula often called “Europe.”  No, Europe is not a real continent. It is only a peninsula of the Asian continent.

Retail sales volumes in the Asian Peninsula, I mean Europe, were flat in September and growth over the year fell to 0.8%. This is the lowest annual change since last October.

The annual report produced by Germany’s Council of Economic Experts predicts that the country’s economic growth is going to slow dramatically as the auto industry continues to face headwinds.

BMW is feeling those headwinds now as earnings plunged 24% from a year ago.

Venezuela’s annual inflation rate accelerated to 833,000% in October, up from September’s 488,000% rate.  The country is on track to hit the International Monetary Fund’s estimate of an inflation rate 1,000,000% by year-end. For next year, the International Monetary Fund forecasts a ten million percent inflation rate.

Not helping Venezuela’s economy: the price of oil, which entered a bear market this week as Brent crude oil has dropped by more than 20% since last month. Not only have oil prices dropped by a lot, but it has been a consistent drop as oil prices notched their longest losing streak on record with eleven straight days of losses, and counting.

In its annual World Energy Outlook report, the IEA predicted that the US would account for 75% of global oil growth, driven by shale fracking. The US also was predicted to provide for 40% of global gas growth.

US producer prices rose more than expected in October and at their fastest pace in six years. Combined with the statement following last week’s Federal Reserve meeting, the market started pricing in the possibility of additional interest rate hikes.

Dyslexics beware. Robyn Denholm, CFO of Australian telecom group Telstra, has been named Board Chair for Tesla.

ThyssenKrupp shares, by dropping 10% on Friday due to issuing its second profit warning this year, suffered their biggest one-day plunge since June 2016.

Paradise Lost. Deadly wildfires in California destroyed an entire town called Paradise.

Oops, give me a brake. That’s what the driver of a BHP iron ore train must have said when he got out of the train to inspect a railcar, but forgot to secure the train. The train consisting of four locomotives and 268 railcars then rolled away and traveled 92 kilometers at speeds of more than 150km/hr (about 93 miles per hour) before the company remotely derailed it through controlling rail switches.

And that’s what I think I learned last week.