Moody’s lowered the sovereign credit rating of the US, joining S&P and Fitch in stripping America’s AAA status. While this is historic and will attract media attention, it reveals what has long been the Federal government’s poor governance and management. Spending more than it collects in taxes and lacking the courage to make difficult decisions and think long term. The current administration is admirably trying to right the financial ship. However, its on-again, off-again tariffs will never collect the intended revenue. Additionally, its proposed tax reductions come without corresponding serious spending cuts or addressing entitlement payments. While the Federal government…

I learned more about governance failure from my neighborhood HOA than from most boardrooms I’ve analyzed. I live in a small annex of houses along the edge of a more extensive residential complex. We are formally members of the homeowner’s association. The drawback here is that there is no clubhouse, pool, landscaping, or snow removal. There isn’t a single service offered. Still, we pay annual dues like everyone else — but a little less, as if the lack of value justifies a mild reduction. It seemed at first like a local annoyance. I then turned to examine closer. Not only…

The ten-year U. S. government note this week made it above 4.50% and, as economist Mohammed El-Arian notes, took the yield higher than its been for three months. This has helped to move the dollar index higher, although not all that much. The effect on interest rate sensitive stocks has been negative. (The 30-year U. S. government bond almost climbed back to the 5%, a level last seen in January.) The interest rate sensitive Real Estate Select Sector SPDR Fund has spent the month of May declining from its March and April peaks. The Dow Jones Utility Average is the…

Week in Review Asian equities were mostly higher for the week after the US and China announced a 90-day tariff pause for negotiations over the coming weeks. Internet earnings season kicked off in earnest this week. JD.com, Tencent, KE Holdings, and NetEase squarely exceeded expectations, while Alibaba missed estimates on its top and bottom line. New loans and aggregate financing for April, reported on Wednesday, came in below expectations, explaining the People’s Bank of China’s (PBOC) decision to cut rates last week. Mainland-listed shares of battery giant Contemporary Amperex Technology (CATL) were up over +6% this week in anticipation of…

A few up days does not mean volatility won’t return. In fact, I think most investors expect more market turbulence in the future, not less. And, the best way to defend your portfolio against a volatile market is to do your diligence. Diligence brings you opportunities while less rigorous investors are left to panic. My firm’s research delivers unrivaled diligence and enables you to block out the noise and focus on the true earnings and valuation of companies. For example, this week’s Long Idea is an opportunity to bolster your portfolio with a safe, high-quality stock. I previously made General…

In the past decade, Japan has risen in the ranks of independent watchmakers. Japanese artisans are now producing timepieces that can rival elite manufacturers from Switzerland. However, unlike the Swiss juggernauts such as Rolex, these independents operate in small workshops, often crafting only a handful of watches each year. What has brought them worldwide acclaim is an obsessive dedication to detail, design rooted in tradition, and innovation that defies their scale. Three names in particular keep popping up in watch forums and industry journals: Naoya Hida, Hajime Asaoka, and Masahiro Kikuno. These watchmakers have elevated Japanese watchmaking to another level,…

Boeing appears to be making a longer-term low. The company has been hounded by bad news, falling since 2019 and giving back 78.6% of its ten-year 2009-2019 bull market. Relative strength bottomed in mid-November. A six-month relative strength base, the minimum that we would expect before a sustained rise, is now in place. There are higher momentum lows both weekly and monthly. In terms of monthly price, a downtrend line from the 2009 high has been snapped, suggesting a sustained rally that will carry through to $230 short-term and $270 longer-term. Chart 1: Boeing Daily, Weekly, Monthly Chart 2: Boeing…

Tariffs, inflation, and wary consumers have deflated the U.S. home furnishings business, but IKEA sees an opportunity to outflank the competition. Everyone knows what business IKEA is in, right? Furniture—sofas, chairs, and beds. So it must compete with Ashley Furniture and Wayfair, the online furniture retailer. But IKEA also sells bedding, rugs, and kitchenware. So TJX (HomeGoods and Marshalls), Target, and Williams Sonoma? What about the Swedish company’s popular kitchen cabinets and appliances? Home Depot and Lowe’s? Trying to pigeonhole IKEA in a defined retail category in order to compare it to competitors is a slippery business. That should make…

Key News Asian equities were mixed but mostly lower overnight after substantial gains from the 90-day US-China tariff deal, as India and Pakistan outperformed, while Thailand and Hong Kong underperformed. The South China Morning Post reported that US-bound shipping orders increased nearly 300% after the 90-day pause was announced, reflecting still-strong demand from US businesses and consumers for China-made goods despite tensions. Airplane makers in Mainland China were sold off on the potential for a resurgence of purchases of US-made Boeing airplanes as a condition of a deal between China and the US. CNY has been highly resilient amid “Art…

The UK trade deal was apparently the tasty egg roll before the main course of lower Chinese tariffs. A delightful order for this dividend grower, ready to feast on the “Peking duck” of trade agreements. China is one of the biggest buyers of US crops, importing tens of billions of dollars of American agriculture every year. Soybeans and corn meander from Midwest farms all the way across the Pacific to feed China’s large (and growing) livestock industry. Higher US-China tariffs have weighed on US farmers’ profitability—and in turn, on business for key ag suppliers like Corteva Agriscience (CTVA). So the…