$GE Derails its Choo Choo Division

General Electric wants to divest its locomotive division. Hmm Warren Buffett makes big bets on trains. Locomotives equal productivity in trains so lets get rid of it.  Definitely gives you a tell as to what GE is not thinking about as it looks for ways to return to the glory years when everything it touched turned to gold.

Siemens maybe?

George Gutowski writes from a caveat emptor perspective.

Asian Dynamics, Korean Nitroglycerin and Black Swans $VIX, $QQQ, $SPY, $GLD, $DJX, $USD

Lots of big Asian Meetings coming up. Trump going to the big ones.  He’s sent three aircraft carriers to hold his place until he gets there. No visit to DMZ. Wise to eliminates a provocation opportunity for the North Koreans.

But the underlying vibe has changed some.

Trump just wants to whack North Korea and Kim Jong-un and carve out place in history.  Mad man does good thing sort of thing.

Japanese Leader Abe coming off a very democratic two thirds super majority.  He has a mandate to increase Japan’s military posture.  Korea will only be a starting point. Then there is the South China Sea, Shipping Lanes, Muslin insurgencies in Phillipines, Indonesia etc.  Abe is probably China’s biggest concern.

Chinese leader Xi Jinping who has just been crowned by the Chinese Communist Party as the most powerful leader since Mao and has his own aspirations.  Xi should be Abe’s biggest concern.

Problem is Trump and western world see this as a Korea problem. Japan and China see this as an age old conflict for Asian Dominance with an American irritation. Trump and the Pentagon will most likely prevail in the shooting phase, compliments of the American Taxpayor.

What about round two.  Just as Bush went into Iraq with a short term game plan so too do I fear Trumps short term game plan. He has no long game.

That is how you get Black Swans. This is how you grind up the South Korean Economy which China  would like to replace.

George Gutowski writes from a caveat emptor perspective

North Korea’s Olympic Spirit $USD, $VIX, $GLD

In case you’re not a sport fan but are concerned about Black Swans chew on this.  The 2018 Winter Olympics are scheduled in South Korea some 50 miles south of the famous border separating North and South. Dates are Feb 9 to Feb 25. This is just 3 months away.

Plenty of time to pulverize North Korea and then hold the games.  Mind boggles over the opportunities as viewed by North Korea. Will the US team go disguised as the US Marine Corp or will the US Marine Corp go disguised as the Olympic team.

Black Swans are usually not on the balance sheet.

BTW next games in 2022 Beijing.

George Gutowski writes from a caveat emptor perspective.

Japanese Inflation to go Ballistic $JPY, $USD

Japan will militarize and spend significant amounts of capital on armaments. Militaries even the efficient ones need huge amounts of manpower.  Japan’s unemployment rate is around 2.8%.  Japan needs to staff a military industrial complex and then compete with the other more established arms merchants.

They’re about to let the genie out of the bottle and ignite the inflation fuse.

George Gutowski writes from a caveat emptor perspective.

Puerto Rico A Banana Republic Wrapped in an American Flag $USD, #TRUMP, 

Puerto Rico was devastated by hurricane. So was Texas, Florida parts of Louisiana and Alabama. Why is Puerto Rico still on its ass?  Trump tossing rolls of paper towel bad optics as it was is not the problem. Puerto Rico managed themselves as a Banana Republic. A population under 5 million ran up debts in the tens of billions. But has no infrastructure that can deal with a hurricane. There was inadequate thinking in advance. Now that the island has been destroyed they have the same chance that Japan and Germany had after WW2. Rebuild properly and become a jewel in the Carribean. Small population makes this easy.  Biz opportunity for a few select companies

Or culture wars continue.

George Gutowski writes from a caveat emptor perspective

Lullabye for Wall Street $VIX, $QQQ, $SPY, $GLD, $DJX

Sleep softly Wall Street.  Child like naïveté abounds. There is only one direction.  That is up. NASA will be the first to tell you that rockets need fuel. When you exhaust fuel gravity takes over. But in the meantime sleep and slumber. Many investors will die in their sleep.  PE ratios at all times high. Can earnings really keep increasing. Oh and don’t forget margin debt which is at or near record highs. Margin debt is a gift from the devil.

Have a nice day.

George Gutowski writes from a caveat emptor perspective. 

Amazon HQ2 Political Fallout $AMZN $WMT

Amazon ($AMZN) is considering a second headquarters which needs to be in North America.  Right there you have to wonder if they get globalization and the roles of Asia and Europe.

But here is the real problem.  The place will have 50k jobs. Donald (Make America Great Again) Trump will not tolerate a non US decision.  If not USA than the decision must be Canadian  The NAFTA negotiations are not going well. Trump will attempt to blow it up. Amazon will get caught up in the crossfire and become very distracted.  Given an absurdly high PE ratio this may just be the reality check Amazon investors have long feared.

George Gutowski writes from a caveat emptor perspective.

 

Amazon May Pick Montreal for HQ2 $AMZN, $SOCL, $CAD, 

Amazon ($AMZN) received hundreds of proposals for the backup /headquarters project. Who will win?  Take a look at Montreal Canada. It has the east coast time zone advantage. Close to populated parts of the USA. The secret sauce is very very cheap hydro electric power rates.  Cheap electricity has been attracting FANG and other companies. Amazon sucks a lot of juice. Real Estate is relatively cheap. Wage rates are relatively cheap.  Easy access between Seattle and Montreal.  More flights can be easily added. Francophone separatist tendencies seem to have died out. Montreal will definitely be short listed. Toronto and Kathleen Wynne take note. 

George Gutowski writes from a caveat emptor perspective. 

Barrick Gold Flash and Fury $ABX, $GLD, $GG, $NEM, $AUY 

Barrick is announcing but not promoting a resort facility on an old mine property two hours away from Vancouver British Columbia. That’s in Western Canada not far from the Pacific Ocean for the geographically challenged. Sounds interesting, ski resort, 12 month operations, gondolas in the parking lot, locally grown vegetables.  What the hell does this have to do with being a Gold miner.  If I want food lots of food companies around.  

Bulls make money. Bears make money. Pigs get slaughtered.  Sell this asset and maintain focus before you become someone’s dinner.

George Gutowski writes from a caveat emptor perspective.

After Tax Reform Does Trump Have Value. $QQQ, $VIX, $GLD, $SPY, $DJX

Assume America’s Political process lurches to some form of tax reform.  What else do we want/need from Trump.  Distasteful as he is; he will he be a spent force.  He has appointed a conservative to Supreme Court. He will appoint a new Fed Reserve Chairman very soon. Maybe even this week. War with North Korea. Maybe but once the dogs of war are unleashed the Pentagon will run the show.  Healthcare well lets just say the politicians can’t help themselves for now.  Trump wants it to crash and burn.

Other than more arguing what can he deliver even in a negative sense.

Economically if tax reform doesn’t kick start the economy Trump Brand will crash and burn just like that witch in the Wizard of Oz.

So if you’re looking for Black Swans this might be one of them.

George Gutowski writes from a caveat emptor perspective