Blaine Rollins: "Feel the lift?"

Blaine Rollins: "Feel the lift?"




A 30% move is worth much more than just selling an extra 250-500k cars and trucks. Portfolio Managers want to buy GM because they think the company will be selling a lot more autos at higher prices in busier factories. GM just might be the markets single best thermometer right now.

GM Stock Chart

A chart of the German DAX shows you that the economic uplift is not limited to helping U.S. stocks…

German DAX Chart

(@allstarcharts)

In fact, the German economy is beginning to thump the U.S. economy by some measures…

German industry rebounded from a summer lull with its best month in six years, keeping Europe’s largest economy on a solid footing in the second half of the year.

Output, adjusted for seasonal swings and inflation, increased 2.6 percent from July when it fell a revised 0.1 percent, the Economy Ministry in Berlin said on Monday. That’s the biggest increase since July 2011 and it pushed the year-on-year gain to 4.7 percent.

(Bloomberg)

German Industrial Production Chart

Economic growth can now be see in every major global economy as each PMI is printing > 50.0…

Global Purchasing Managers’ Index Chart

(JPMorgan)

And economists are upgrading their forecasts…

From Wall Street to Washington, economists have been upgrading their forecasts for the global economy this year, with the consensus now pointing to an expansion of more than 3 percent — up noticeably from 2.6 percent in 2016.

Economists from the I.M.F. are likely to follow suit when the fund releases its biannual report on the global economy on Tuesday.

The rosy numbers are noteworthy. But what’s more startling is that virtually every major developed and emerging economy is growing simultaneously, the first time this has happened in 10 years.

“In terms of positive cycles, it is difficult to find very many precedents here,” said Brian Coulton, the chief economist at Fitch, the debt ratings agency. “It is the strongest growth we have seen since 2010.”

(NYTimes)

If you think equities get hurt as rates rise, here is a chart refresher…

We are at 2.3% currently on the 10-year U.S. Treasury yield. Equity markets usually have difficulty when the yield rises above 5%. So hopefully this time is no different.

Correlation between stocks and interest rates chart

(JPMorgan)

Pay attention to what Bill Joy is saying…

Sun Microsystems co-founder Bill Joy recently joined Water Street Capital and has pushed the secretive hedge fund firm to build a large stake in Micron Technology Inc., arguing the market for its main product is set for a sustained boom without the wild ups and crushing downs of the past.

The rise of cloud computing, artificial intelligence, and augmented and virtual reality applications on Apple Inc. iPhones and other high-end smartphones will spur stronger demand for DRAM chips, Joy wrote in a recent memo to Water Street founder Gilchrist Berg and other executives at the firm.

DRAM supply is likely to fall well short of this demand as it becomes increasingly difficult and expensive to churn out more capable chips, and a smaller number of manufacturers behave more rationally to maintain profit, Joy added.

These arguments are well-known in the business, driving the spot price of these chips up more than 70 percent in the past year. What’s unusual is Joy’s conclusion that the market for dynamic random-access memory chips — DRAM — will no longer be whipsawed by oversupply and fluctuating demand.

“With the DRAM industry untethered from its highly cyclical past, we believe chip prices and company earnings are going to be and remain higher for longer than investors currently expect,” Joy wrote in the memo, which was obtained by Bloomberg.

(Bloomberg)

Very difficult to argue with this chart of semiconductor performance…

SOXX Chart

Great food for thought from Bill Nygren…

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