China Threatens Vulnerable Hong Kong, Taiwan, And The Global Economy

Posted: May 22, 2020 1:27 PM
China Threatens Vulnerable Hong Kong, Taiwan, And The Global Economy

Source: AP Photo/Lee Jin-man

The Running Man (aka The Hungry Caterpillar), originally an African dance, is a street and fad dance that originated between late 1986–early 1987 and was performed notably by Janet Jackson in the video of her hit "Rhythm Nation" and subsequently on the Rhythm Nation World Tour and various live performances.

Additionally, it was performed by MC Hammer, Bobby Brown, and Vanilla Ice during their live concert shows and music videos but achieved renewed popularity in the 2000s. It is also used in some forms of the Melbourne Shuffle dance style. It consists of a hopping or sliding step done in such a way at speed to simulate a runner.

The Running Man achieved celebrity focus in 2007 with Britney Spears doing a homage to it during her M+M's: Concerts From The HOB Tour 2007 and Scarlett Johansson stating of her dancing in an interview with Seventeen that, "I do a great Running Man."


It Was the Running Man Session

The market was busy with lots of gyrating and movement, but it did not go anywhere, as early gains faded into a haze of headlines with geopolitical implications. The notion that communist China is ready to drop the charade and simply implement security laws directly, bypassing Hong Kong authorities, seems to have been in the offing for some time, but the spread of the coronavirus (COVID-19) makes it an even more convenient time to strike.

China has its back against the wall, as the world has joined to demand answers on the origins of the virus and steps taken and not taken, to alert all of humanity. 

There is also a greater pushback against practices, including so-called debt diplomacy.

President Trump tweeted about the Hong Kong threat and declared the United States is prepared to help Hong Kong fight what would be a clear violation of the promise of “one country, two systems.”

Then there’s Taiwan, which is feeling more emboldened to flex its independence. It’s a serious quagmire and a serious threat, although most believe we are a long way from a physical confrontation. The Cold War is here.

An Even Session

It was an even session with slightly more losers on the NASDAQ, and slightly more winners on the New York Stock Exchange. The up vs down volume was just about evenly split.

Market Breadth









52 Week High



52 Week Low



Up Volume



Down Volume



Only two S&P sectors were higher on the session:

  • Consumer Discretionary (XLY): +0.36%

L Brands (LB) saw same-store sales of scented candles soar 41%. I’m not sure why the stock rocketed more than 18% for the session, which led the entire market. The top ten movers were all Consumer Discretionary, except for Cincinnati Financial (CINF).

L Brands Inc.



Gap Inc.



Norwegian Cruise Line Holdings Ltd.






Kohl's Corporation






Arconic Corp






Cincinnati Financial Corp.



The TJX Companies, Inc.



  • Industrials (XLI): +0.24%

The sector was led by Boeing (BA), which got an upgrade and a new target of $164. Airlines had better news this week, along with defense contractors. 

Currently, our model portfolio is overweight in Consumer Discretionary and Industrials. If you are curious about ideas and or investment propositions, contact

After the Close

Big numbers and big moves: 

  • Palo Alto Networks (PANW): The big winner
  • Splunk (SPLK) initially moved lower, then turned much higher
  • Agilent Technology (A)
  • LiveRamp (RAMP) Technologies

On the Downside

  • Nvidia (NVDA) posted a monster number, sending shares higher, and then it began to turn lower

Today’s Session

The stock of the day is Deere (DE), which had stronger earnings and revenue than expected, despite falling from the previous year.  Net income declined to $666 million from $1.14 billion, or $3.52 a share, in the prior year.

  • EPS $2.11 vs $1.62 consensus
  • Revenues $8.22 billion vs $7.68 billion
  • Worldwide net sales -18% y/y
    • Equipment -20%
    • Agriculture & Turf -18% to $5.97 billion
    • Construction and Forestry -25% to $2.26 billion

The company warned full-year sales are likely to fall sharply due to the pandemic, which will affect demand for agricultural and industrial equipment. Despite this, the stock is moving higher in the pre-market, indicating up 3.6%