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A horror stock story on Tuesday. Drowning in financial paperwork on Wednesday. Here are the solutions

Tuesday was horrible. Though I am reluctant to catch falling knives, I bought a little more Amazon, when then promptly fell some more. Brilliant, Harry.

Yesterday (Wednesday) was closed for George H.W. Bush. See below. And tomorrow (Thursday) is another day.

There are two schools: One that says everything is awful and the Trump Administration is clueless with China. Negotiating with China is not another session of Celebrity Apprentice.

Then there’s the other school that says “Don’t worry. We’re doing just fine.” Leading the charge for “just fine” is Joel Ross of The Ross Rant. Here are some neat excerpts from last night’s edition:

What to make of an 800 point drop. In my view, not much other than a bunch of young traders and analysts who panicked, and do not listen, plus a mainstream media too happy to claim failure for Trump with China. This then gets to become a runaway market as the algorithms, which control 70% of trading, see the decline and are programmed to try to go with the market. It is impossible to know what is really programmed into the black boxes of the algo trading, but there is no real human thought of the old floor specialists when markets run away as they did yesterday (Tuesday). If you listen to the talking heads on TV, they are paid to sound like they know something, and many have an agenda to say allegedly profound things, and then hope by chance they’re right so they get famous like Abbey Joseph Cohen in 2008, but then she faded from sight. The more I listen to many of these people, the more it is clear they have no clue, and are just spouting off for the camera, whatever comes to their mind. Some of it is purely stupid, and some just misinformed, but mostly it is speculation based on nothing, or on ignorance of what is really happening. I do not suggest you do anything based on my opinion, and I am not trying to be a hero. What you get here is purely my view after too many years in Wall St and the regular business world starting and running companies.

If anyone expected Trump to come back with firm written agreements, they have no idea how the world really works. Of course the White House is purposely unclear about exactly what is, or is not agreed. They are dealing with the Chinese who lie, misrepresent, cheat and steal. For Trump, this is what he did himself all his life, and now he is just dealing with an Oriental version of a NY real estate developer. To him, this is how business was done. Nothing is in writing and signed yet. That is why they have a 90 day window to work it out, and why we will not really know what the Chinese will do until a year after that, and we see if they abide by whatever is agreed. It would be a major change in Chinese behavior if they did abide by whatever is agreed. Trump does not want to commit that too many specifics happened, and then get blindsided by the Chinese. The changes to how China has done business for decades is monumental, and is not going to happen easily, and surely not over one dinner. Will it get done? Possibly. We will have to see. Will they really open markets and drop the rule that you must let Chinese own 51% so they can steal all your technology? Frankly I am not sure it matters. China will just insert intelligence operatives into companies and have them steal it anyway. Will they buy more ag products- yes. Is Xi really willing to change his whole business strategy that has worked so well for 30 years? Maybe. China is a very different economy today than it was just ten years ago, so maybe Xi sees the need to change. Or, maybe he is now, for the first time, confronted with a president who will really take action to stop the bad actions of China. I believe he knows Trump is not Obama, and Trump will really do bigger tariffs and other steps, and the Chinese economy cannot withstand that right now. Nobody has ever really taken on China before, and Trump is not letting two more years go by with no real punitive action. Xi can’t wait out Trump as some have suggested. He can’t be sure Trump does not get reelected. Lots of talking heads say tariffs were bad, and we should have had a coalition of western countries. What the hell do you think has been happening for 20-30 years. Everyone knew China cheated on everything, and was stealing IP, but what was clear was all the nice diplomatic talk just proved to China that the west was very weak, and they could do whatever they wished and get away with it. Unless the US is the strong leader, nobody had the balls to do anything . Then Trump arrived. First China had to test if he is real, and if he will ignore the political naysayers, and now they know he is willing to do what he says, and he will really inflict damage on them. All the speculation on where this ends up, and Chinese behavior, is just speculation. By now, if anyone does not understand how Trump negotiates, which it appears most do not, then they need to stop jumping to false conclusions. His “tariff man” comment is purposeful to let Xi know he really will impose them if the Chinese do not do what they supposedly promised in Buenos Aires, in 90 days. It is classic NY real estate negotiating style. The young stock traders simply do not get it. Does anyone have a better idea how to get China to bend and change. Nobody did for the past 30 years. All anyone did was wring their hands and complain, but nobody did anything that mattered to China. All the nonsense about we need to talk and be diplomatic, and form a coalition, was tried and failed, and the Chinese knew the west was a feather to be blown away and ignored. For months they have treated Trump just like the rest, so he had to prove he really will act decisively. Xi had to understand this is a completely different game now, before he would even acknowledge that they steal IP. Trump has to prove they cannot wait him out. He and the rest of the delegation have made it clear this is really a 90 day window, and not the usual Chinese shuffle and delay. Mnuchin said Xi made a 45 minute presentation in which he committed to make dramatic changes. Maybe he realizes China is better to do these things than to have a trade, and potentially a real war. The US has rarely been in a stronger economic position to fight this battle. My assumption is there really will be a series of agreements on a variety of major issues from IP to fentanyl, to ag products. Whether the Chinese abide by these is a question only time will answer.

Did the yield curve invert. Barely, and at the short end. There was a big move of capital to Treasuries as a safe haven when stocks tanked, so I am not sure the inversion matters the way the market seems to think. With the Fed selling bonds now to unwind QE, and it being a different bond market, and with algorithms running 70% of portfolios, it is not at all clear that what is happening now is analogous to when inverted curves mattered. Are we going to have a recession in 2019-no. In 2020- maybe, but far from sure. All the hubbub around a slowing economy, etc., is just a lot of people in Wall St never having lived thru strong economic times, and so they revert to old maxims of long in the tooth recovery, charts, theories that make no sense, etc. The kiddies pore over data and divine that they have found the truth, and they can forecast when a recession will occur. A lot of BS. There are so many unknowns right now, there is no way for anyone to have any confidence in a projection for 2020. The whole China deal, whatever it turns out to be, will change whatever anyone had forecast, one way or the other. Then there is Brexit, EU politics, Iran, Ukraine, Italy, N Korea, and DC political madness starting in January, etc. We are going to bounce from one bad news issue to the next, but under it all, earnings will continue to grow at 8% or better. The final Q3 earnings were up 29%, so by comparison anything that used to be considered good growth, is considered bad now, even though it is good.

Take a deep breathe. None of us knows what was really agreed or even discussed at length with China, so guessing is a waste of time. The Chinese do not lay out what is happening on anything they do, so this is no different. So all the press blather about the Chinese have not confirmed this or that, so maybe what Trump and his people say is not true, is just ignorant nonsense. Trying to guess what the Chinese are, or are not saying, or meaning is futile. They have now said there are firm timetables and guidelines, so they are acknowledging what Mnuchin and Kudlow have been saying. Sit still with your investments, and wait to see what happens in the next few weeks. When there are, or are not, signed agreements, then we will know, and all the talking head speculating is a waste of time.

On tariffs, the reality supposedly is, the Chinese producers are reportedly eating 50% of the tariffs, importers are eating another piece, and the high dollar is eating another portion, so the tariffs are not crushing costs. Plus end buyer prices can be raised a couple of percent. They also do not yet apply to that many items that matter, or that cannot be procured elsewhere than China. Only a small portion of corporations say tariffs are a real issue. The steel tariffs do add costs, but the issue with cars is not steel costs, it is products nobody wants to buy at any price. Ford and GM are producing cars nobody wants, so they are shutting production which is what they should do.

You can (and should subscribe) to The Ross Rant here. 

It’s time to short GM.

Two eulogies to George H.W. Bush worth listening to

Yesterday I went looking for a paper document

It was horrible. Filing cabinets full of paper. Some of it in order. Some out of order.

But the worst — Under what name? The firm. The project? The partnership?

Can’t find anything. Yuch.

So, what’s the rule?

The IRS recommends that you “keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later. If you file a claim for a loss from worthless securities or bad debt deduction, keep your tax records for seven years.

It gets easier. You really don’t need to save much. Tax records yes. But the rest? Bank and brokerage statements are online. No need to save monthly statements or transaction reports.

The best news is that you can scan everything you need (like agreements) and store them on your cavernous laptop, or accessory flash drive. Use this Futjitsu ScanSnap IX500 scanner:

Make sure you give every document you scan a long name — so you can easily find it later. And spend some time organizing your laptop’s filing system.

Searching on a computer is far faster than rummaging through metal file cabinets.

Here’s a link telling you what little you need to save. Click here.

I love my new Series 3 Apple watch

+ It tells me who’s calling — so I can ignore them.

+ It tells me Susan is calling so I can answer her call immediately — on my watch, like Dick Tracy.

+ Speaking on the Series 3 is now the same quality as on a cell phone.

+ My watch gives me snippets of  text messages and emails. Useful.

But it has one drawback. It’s quirky. It changes its settings — all by itself.

It changes my preferred face. Worse, it turns on these two buttons:

They’re designed for the theater. You’ll know if they’ve turned on because your phone won’t turn on when you lift your arm.

Simple solution: Swipe down and turn them off.

Favorite cartoons

Will someone please tell these idiots that it’s not necessary to kill a cow to get milk.

HarryNewton
Harry Newton. What being a grandfather is all about. Sophie (left) is coming to New York this weekend to go to the Nutcracker at Lincoln Center.

Zoe is due in four years time. I hope I’m alive.

This is Sophie’s favorite food. It’s from DQ, the restaurant chain Warren Buffett (and hence I) own.

Great news: There is a DQ in Manhattan. And Sophie, we’re going. Adventure time.

 

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  • jerry kline

    What people like Joel Ross do not get is that people don’t want to invest because
    e the preside t is crazy and a liar. No one trusts him. Who knows if he even spoke to Chinese leaders? Trump is a stupid moron and the evangelicals and those in rural areas who continue to support him are complete morons. Folks like Ross they crunch PE ratios and book values and unemployment figures and GNP numbers – it means nothing. I don’t care. Most investors don’t care. All that matters is that the president is insane, Congress is horrible and who wants to invest in a country with leadership this bad> Not I.

  • Omer Acikel

    Hey Harry, I different interpretation of the Trader Joe sign: it is not just about killing for meat “to live”, it is also “free range” aspect of their quality of life that they lost to produce milk. I am not as intrusive about these ladies however as human beings, we think we are entitled to make others to suffer for own own benefit. I know for a fact that cows have been milked excessively.