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A Bird's Eye View Blog

Fireside Charts: Boris, Brexit, and Bad News for Tech Stocks

By:BCM Investment Team | Date:Jul24, 2019 | Category: Equity, Economics, Market Highlights, Fireside Charts

It's a busy week for the markets as we all eagerly await the results of Robert Mueller's testimony, the ECB's release of PMI data, and earnings reports from Facebook, Amazon, Alphabet, and others. Here are a few things we're focusing on in the meantime:

 

While the S&P 500® Index continues its bullish trend, we're feeling echoes of the 1999 tech bubble as we observe that nearly 20% of the Index's total return can be attributed to only four stocks—Microsoft, Apple, Amazon, and Facebook. This news is particularly concerning in light of yesterday's announcement from the DOJ of an antitrust investigation into "online platforms," which resulted in a cumulative ~$25 Billion loss in value for three out of those four top performers. Can the U.S. continue to escape the global slowdown with these flagship stocks under threat? Over in Europe,  Manufacturing PMI prints have continued their downward trend in Germany (where today it hit its lowest point in 7 years), France, and the Eurozone as a whole. How strongly can we expect Europe to withstand the "triple threat" of Brexit, U.S. tariffs, and the slowdown in China? 

 

 

1. This reminds me of 1999!

 

 Source: WSJ Daily Shot, as of 7/23/19

 

 

2. A $100,000 question:

 

Source: Haver Analytics, as of 7/24/19

 

 

3. Even our chicken farmers are having a rough go...

 

 Source: USDA, Bloomberg, as of 7/23/19

 

 

4. While rig counts are down, remember that the new, modern rigs can drill in two or more directions at the same time!

 

Source: WSJ Daily Shot, as of 7/23/19

 

 

5. Was the Philly Fed's print an anomaly? This is another bad miss...

 

Source: WSJ Daily Shot, as of 7/24/19

 

 

6. German manufacturing had yet another bad print...

 

Source: WSJ Daily Shot, as of 7/24/19

 

 

7. Even France, the only major EU economy whose manufacturing has stayed positive so far, has fallen to neutral (PMI of 50).

 

Source: WSJ Daily Shot, as of 7/24/19

 

 

8. With German and French manufacturing in retreat, Europe as a whole followed suit...

 

 Source: WSJ Daily Shot, as of 7/24/19

 

 

9. What seems to be holding the European economy back?

 

Source: Bloomberg Economics, as of 7/23/19

 

 

10. How important is trade to these emerging markets?

 

Source: Scotiabank Economics, as of 7/23/19

 

 

 

Boris Johnson takes over as Prime Minster today, which many economists believe elevates the risk of a "no-deal" Brexit. Now under new leadership and still deeply politically divided, the U.K. could be headed any number of economically destabilizing events—battles between the PM and Parliament, an election, or a referendum just to name a few. With the pound decreasing in value and approaching its two-year low, we may already be seeing the effects. Do you have an industry colleague who has been closely watching the U.K. and Europe? Click below to share a link to this blog, where they can sign up to receive our insights on the markets. 

 

 

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Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are a recommendation to take any action. Individual securities mentioned may be held in client accounts.