Slope of Hope Blog Posts

This is the heart and soul of the web site. Here we have literally tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. You can also click on any category icon to see posts tagged with that particular category.

Trump’s Trade Triumph Trashed

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I must say, I was impressed – – disappointed, but impressed – – when the news stuck that Trump’s bullying of Europe had paid off. I mean, sheesh, is it REALLY that easy to bludgeon an entire continent to bend to your will? If so, then maybe he IS a great negotiator and the master of the art of the deal. It was a shocking rolling-over on the part of Juncker and company.

As of this writing, though, I just want to mention that the “Trump Triumph” explosion to lifetime equity highs seems to have disappeared in an awfully big hurry. I obviously have no idea what things will look like in the morning, but as of this moment…………it’s already gone.

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U.S. Market Risk Surges as World-Wide Trade Wars Escalate

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From the daily percentage comparison chart below of the four U.S. Major Indices, you can see that the Nasdaq 100 and Russell 2000 Indices have begun to surge above their recent all-time highs and have accelerated faster than their Dow 30 and S&P 500 counterparts.

The spread between the first two and the latter two indices is ever-widening and higher risk investing is on the rise…signalling that, either this latest surge is the beginning of a new bull market that would, ultimately, pull in the Dow and S&P and send them to record highs, as well, or is in the process of forming a climatic thrust before the end of a very long bull run that began when stocks plummeted to their lows on March 6, 2009, following the 2008/09 financial crisis.

With today’s drop in these markets (as of 12:40 pm ET), presumably in response to further tariffs imposed on China by President Trump, we’ll see how escalating world-wide trade wars, inflation, and Central Bank interest rate actions affect/infect U.S. (and world) markets in the coming weeks. (more…)

Three Days of Madness

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I just wanted to point out that there is a span of three days this month – – a little more than a week from now – – that promises to be absolute pandemonium. Just look at all the major market-moving mayhem at hand:

I also want to point out there’s this little bitty thing not mentioned which is the North Korea Summit. So – – strap in.

ONE OTHER THING – Any of you who use PIVOT POINTS for trading, drop me an email. I want to show you some prototypes to make sure we got it right.

Semiconductor Canaries: Chirp, Warble… Soon a Croak and Silence?

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In light of earnings reactions in the Semiconductor Equipment sector, it’s time for an update of a theme we have had in play since November, 2017

The canary is no longer chirping in a healthy manner and the economy’s coal mine has a toxic gas leak. While the recent Lam Research (LRCX) earnings report was pretty good and there were positive aspects to that of Applied Materials (AMAT), these highly cyclical companies that have been at the front end of the entire economic cycle that had its beginnings in 2013 are showing signs of wear.

Business is still good but when you are talking about cyclical leaders, it is growth rate that matters. I have read article after article touting strong current business and future drivers that will change the typical Semiconductor cycle as next generation Fabs are needed for ever more dynamic specialty chips for higher-end devices.

Applied Materials Slides After Softer Q3 Forecasts on Weaker Smartphone Demand

“Smartphone sales have been below expectations, particularly for high-end models, and in response, both semiconductor and display suppliers have made adjustments to their capacity planning,” CEO Gary Dickerson told investors on a conference call. “With inventory rebalance that we’re seeing from smartphones, we’re going to see a sequential dip in the Q3. But from our guidance into Q4, you can see that it recovers nicely into Q4.”

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One Possible Future (by Piano Man)

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I wanted to share something that perhaps few people would see. My background was in semiconductor test. I spent almost 30 years in mixed-signal semiconductors working for a vendor of test equipment and then with a semiconductor company. Semiconductor testing is a massive market, every electronic item you buy is tested at the device/computer chip level, then as a circuit board filled with those components to verify functionality, and then as an end product.

Billions of dollars are spent on test equipment as an economy is expanding to meet the needs of manufacturing consumer products. For the testing, the tester is mated to another piece of equipment, called a handler, that together allows both pieces of equipment to test hundreds of devices an hour (perhaps thousands of devices an hour if it is quick to test). Entire manufacturing floors overseas are filled with this pairing of equipment that runs night and day, if needed, to crank out tested computer chips to be sold around the world. And yes everything gets tested. (more…)

Trump: China’s Mandate from Heaven (by Binkius Hippo)

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Too Long, Didn’t Read Summary:

• China is economically screwed up beyond belief.
• Xi realizes this (being the leader of financial reform in China).
• China’s economy is going to implode.
• Xi has to make sure he survives.
• Xi can’t reform the economy, so he’s prepared by purging the party of all opposition.
• Xi has anointed himself emperor so a future leader cannot scapegoat and execute him.
• Xi has to make sure the communist party survives.
• To maintain the imperial mandate of heaven, he has to unite the Chinese people around the Chinese Communist Party instead of having the people blame the CCP.
• Trump is perfect.
• Foreign aggressor.
• Plays on racial memories of the Boxer Rebellion and subjugation by the west.
• Incoherent trade war spun in the Chinese press as unfairly attacking China.
• Trump’s proposals won’t bring jobs back to the USA (as the factories will just move from China to other SE Asian manufacturing countries).
• China’s best way out of the financial implosion is rapid and drastic RMB devaluation. A trade war gives political justification for this.
• 40% minimum devaluation needed to save the Chinese financial system. SPX goes to 500.
• Trump gone at SPX’500. China can then negotiate with new American president. (more…)

Where’s Money Parked Globally This Year?

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The following year-to-date graphs simply show, at a glance, which global indicesUS sectors, commoditiescurrenciesbonds, as well as the FAANGs, have gained/lost the most, so far.

My only comment is keep an eye on China, the Canadian and Aussie Dollars, as well as Canada and Australia, in particular..further weakness could hint of a recession in the not-too-distant future.

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“Trade War”

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It has in the past been “the financial crisis”, “the Euro crisis”, “Greek debt”, “Italian banks”, “the fiscal cliff”, “Brexit” and so on. Every one of those events an extension of Keynesianism and its debt-leveraged monetary magic tricks. But now the buzz phrase is “trade war”, a different kind of animal.

The brewing trade war with China is different. With every damn one of the events noted above we here in the anti-hype environs of nftrh.com (and before it, biiwii.com) have tried to maintain perspective about why it was occurring (Thing 1, which we had anticipated in essence if not in the exact way it played out) or why they would not prove long-term bearish or bring on the end of the world (Things 2-6).  [Editor’s Note: at first glance, I thought this was a Biblical citation, until I realized there was not a book of Things, at least not in the King James Version to which I am accustomed. – Tim]

Indeed, we often note that inflammatory market events prove most often to be sentiment resets and buying opportunities as the herd pukes up its asset holdings. Keynesianism after all, has an elasticity to it despite its obvious and one day terminal faults. The elastic keeps stretching to this day. (more…)

Semi Bearish?

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Over the last several years, beginning in 2013 I’ve made post titles like ‘Semi Bullish‘ in response to the bullish leading edge economic cycle indicator, the Semiconductor Equipment sector and its implications for broad stocks and the economy. Those implications of economic acceleration were along these lines… Semi Equipment Book-to-Bill (b2b) → Broad Semi → Manufacturing → Employment → Firm Economy. Shortly after the b2b was noted as bullish the SOX index and the S&P 500 broke out to new highs, not to even hint at looking back until the rocky 2015-2016 period.

The 2013 period launched everything we know as bullish today. (more…)