Bullseye Brief presents three thematic, actionable investment ideas every other week. My goal is to help identify only those opportunities most worthy of your time… by analyzing data, distilling complexity and sharing insights from a deep network of experts. I love what I do and invite you to join me.
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Adam Johnson

Adam Johnson anchored several business programs at Bloomberg Television over five years, interviewing CEOs, heads of state, and Nobel laureates. His daily video investment blog, Insight and Action was sponsored by a major U.S. lender. Previously he managed global risk assets for ING Furman Selz and Louis Dreyfus, trading oil futures, listed equities and equity options. Adam began his career at Merrill Lynch with a degree in economics at Princeton.


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Then and Now

Wall Street’s Perennial #1

  • U.S. Consumer Credit of $3.9T has risen 45% since 2008 on low rates and evolving lending platforms
  • Federal banking regulators have proposed repealing the Volcker Rule meant to curb trading by banks
  • Innovative financial institutions with strong balance sheets and ability to scale are best positioned

The U.S. Federal Reserve did something extraordinary in 2008: It bought assets no one wanted, and kept buying until the world started buying too. Working closely with Treasury and shell-shocked legislators, Federal officials literally invented liquidity programs ad hoc, and in the process staved off another Great Depression. Fed Chair Bernanke was quite muted as the nation got back to normal, but Capitol Hill was not. It wanted an eye for an eye after bailing out Wall Street’s fat cats. New agencies sprung up, tasked with imposing billions in fines and writing scores of new laws. Their zeal is understandable, except that hefty compliance costs ended up squeezing Main Street’s lenders too. So now Congress is rolling back regulation, and what’s particularly interesting is what’s happening in the background. Wall Street’s biggest player is already miles ahead of Washington, as it was during the clampdown. I’ve watched the regulatory pendulum swing one way, and now back the other. Time to buy Wall Street’s perennial number one.


June 16, 2018

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Big Red One

China’s Best Stock?

  • China’s population of 1.3B exceeds the U.S. by a factor of four and accounts for 18% of all people globally
  • Half of China’s citizens are connected on a single platform providing e-commerce, banking and logistics
  • The Shanghai Composite Index trades at a forward multiple of 12 times earnings vs. 17.5 for the S&P 500

America’s 1st Infantry Division marched tenaciously across Europe through two world wars. Nicknamed The Big Red One as the Army’s oldest continuously serving division, its troops were immediately identifiable by their distinctive shoulder patch featuring a red numeral one emblazoned on a field of green. Hollywood’s 1980 film of the same name told their story, and I remember watching it as a boy thinking war was anything but glamorous. This was not a swaggering John Wayne portrayal, but a gritty examination of what it takes to win. The movie made such an impression, it was the first thing that came to my mind when I reflect on China’s quest for economic power today. Having travelled extensively throughout the country with a film crew for Bloomberg Television several years ago, and I can confirm their tenacity. Everyone works on Saturdays, multiple jobs are commonplace, and trucks with 36 wheels haul coal at 90 mph on 12-lane highways. China is indeed The Big Red One, and our job as investors is to deploy capital with their strongest homegrown companies leading this charge.


June 16, 2018

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Summer Vacation

My Consumer Bet

  • May’s strong retail sales growth of 5.9% argues for higher than expected expenditures on summer travel
  • Global online travel bookings are already expected to rise 11% in 2018 to $1.5T according to Phocuswright
  • Three online travel agents (OTA) dominate online bookings with a combined 48% global market share

For months you’ve heard my mantra… The Two E’s of Earnings and Employment are a powerful tonic for stock prices… and thankfully, our shared patience is being rewarded. May’s exceptionally strong retail sales growth of 5.9% is convincing even skeptical strategists on Wall Street that U.S. GDP could surprise everyone and make a run towards 4%, double the current rate. Two-thirds of the U.S. economy is consumer driven, and tax cuts have increased U.S. disposable income by 5% on average. I think May was just the beginning, and we are going to witness a sustained uptick in spending. This will drive earnings higher, and provided trade angst and political uncertainty don’t cast too long a shadow, stocks should rally. Newfound willingness by consumers to open their pocketbooks coincides with another important trend, where people are generally opting for experiences rather than things. As we move into June and families begin to make vacation plans, these two macro themes will likely converge in the form of stronger than expected travel expenditures. Online travel agents stand to benefit, and I’m buying one of the world’s largest by employing a straightforward option trade which helps me manage risk/reward in a volatile market.


June 16, 2018

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33

As in global equity trading volume tends to contract by 33% during World Cup games according to a new study from two economists at the ECB.
#Goooooooal

99.1

As in 99.1% of the global container shipping fleet is currently being utilized, reflecting exceptionally strong demand for goods worldwide.
#SynchronizedGlobalGrowth

545

As in China counters U.S. tariffs of $50B on 1,102 products with tariffs of $34B on 545 products… less than what the U.S. imposed and delayed until July 6.
#NegotiationOliveBranch?

img-1

“The economy is doing very well. Most people who want to find jobs are finding them, and unemployment and inflation are low.”
–Fed Chair Jerome Powell during Wednesday’s FOMC meeting which resulted in a 25 basis point increase in the U.S. benchmark lending rate to 2.00%.

#BullishForBanks

“Now that the regulatory environment has shifted we’re taking a look at our policies and procedures for individual retirement accounts.”
–BofA Merrill Lynch spokesman Jerry Dubrowski as Congress debates rolling back portions of Dodd-Frank legislation.
#AnotherReasonImLongBanks

“I had a very good convo with @jack this weekend at Kanye’s bday and I think he really heard me on the edit button” 
–Kim Kardashian tweeting about telling Twitter founder Jack Dorsey to include an edit function instead of making users delete and retype entire tweets just to fix typos. 

#TotallyAgree