“Short the VIX.” – Jason, on what he learned in 2019
Hey there carnivores, Markets rose on Tuesday and were closed yesterday to celebrate New Year’s Day (read: nurse hangover). And today we’re looking back at 2019. Keep raging, Jeff & Jason
Back on my bullsh*t During the year of our lord 2019, stock indices across the globe had some of their best performances of the decade. Major indices in the US, Brazil, and Germany all increased by more than 20% in the year of the pig. Markets letting their freak flag fly came as a bit of a surprise to investors. If you recall this time last year, the global economy was slowing, stocks (never forget 12/24/18), bonds, and commodities were plummeting, the trade war had investors weak in the knees and worries about WTF Jerry Interest Rates and the Fed would do in the new year had markets’ panties in a bunch. Yet, like a stage-five clinger who just went off their meds, markets persisted. The S&P, Nasdaq, and Dow rose 29%, 35%, and 22%, respectively on the year. Ready to crash? “What could possibly go wrong?” – investors, probably Despite the surge in 2019, investors are expecting markets to continue growing next year. Central bank policies have eased, the US economy proved to be more resilient than expected, and the official signing of a “phase one” trade deal between the US and China is coming at the beginning of January. Still, potential headwinds remain. There is always a chance that the trade deal could blow up (spoiler: this will almost certainly happen), Brexit remains a royal pain in our asses, and the US election could throw markets for a loop. The bottom line… The ’00s called and they want their stocks back. The two stocks that contributed the most to 2019’s total stock return were the same two stocks that contributed the most to the full decade’s total stock return. Meet Apple and Microsoft. Apple and Microsoft contributed 8.19% and 6.59% to the S&P 500’s total return in 2019 and 5.77% and 2.68% over the decade.
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☑️ On the dotted line. Donny Politics plans to sign the US-China phase one trade deal on January 15th at the White House. He’ll be joined by “high level” Chinese officials but not by President Xi. You might remember that the two superpowers recently agreed that China would buy more agricultural goods from the US in return for the US’ pledge to not move forward with new tariffs on $156B worth of Chinese goods and slash tariffs in half on $120B worth of goods. There is no word on what phase two of the trade deal will look like or when those talks will begin. El Pres did indicate, however, that he plans to travel to Beijing to discuss trade sometime in the future. Which sounds a lot like when you tell a former colleague that you “definitely want to catch up for coffee.” ☑️ Stunt on ’em. The United States uses blacklist. It’s super in-effective! Despite heavy criticism from POTUS and US sanctions, Huawei, the largest telecom manufacturer in the world, announced that it will record $122B in annual revenue. This after indicating earlier this year that “survival” was the company’s biggest priority. Survive and advance, indeed. It’s worth noting that the Chinese company did miss full year expectations of $125B. ☑️ Ten-spot. While the rest of the world is just trying to figure out if it’s ok for Drake to be texting Billie Eilish, Tencent is busy snatching up a 10% stake in Universal Music Group from Vivendi for $3.36B. The deal, which will give Tencent an option to buy an additional 10% of Universal, values the company at more than $30B. Tencent which recently held an IPO for its music biz in the US is looking to cash in on a growing music catalog during a time when streaming makes ownership of music incredibly lucrative. Just ask Scooter Braun. ☑️ Vape God. It’s a big day for that guy who never left your hometown and sells weed down at the local vape emporium. The FDA will ban all e-cig pod flavors except for tobacco and menthol. The ban will exclude tank vaping systems that guys named Kyle refer to as “rigs.” These open systems are the types found most often in vape shops (and meth labs) which allow hobbyists to mix their own nicotine liquid, which has been attributed to some of the 2.5k vape-related incidents. The preferred e-cigs of teens tend to be prefilled cartridges such as those made by Juul etc. Seeing the writing on the wall, Juul had already self-imposed a ban on flavored pods in November.
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