Who's handling China well and who doesn't have a handle on it at all?
Today we are getting a slew of reports about how we don't have to worry about the sale of U.S. apparel in China given that we are hearing that Nike (NKE) , Tapestry (TPR) and Lululemon (LULU) revenues have experienced no slowdown.
But Starbucks (SBUX) ?
Goldman is expressing some concern that it could be more in the Apple (AAPL) camp, some weakness, although I don't know how you can possibly know right now how Starbucks is doing in China unless you had hard data about delivery. The company has put in place a number of initiatives since the recent slowing of sales in the country and I think it is too early to know if they are already doing badly.
The former should be hurting: we are reading about how all of these billions of dollars in government payments and subsidies to farmers are being held up by the government shutdown and that farmers here are experiencing terrible pains from all sorts of vicissitudes related to the China trade war.
At the same time, though, the stock acts incredibly well and has been a terrific forecaster of events. I wonder if what you are seeing is the beginnings of the next round of Chinese ag sales, something that could be propelled by the fact that as much as there is some rigor to the President's stance on intellectual property theft, he often seems far more focused on the farmer portion of his base than just about any other and you can see that if he can't get this government to subsidize the farmers because of the shutdown than he will need the Chinese government to do so. Heaven forbid that the farmers ever go without their subsidies.
I am not changing my stance that if you want to see real movement out of China you need to focus on aerospace, American Express (AXP) and Apple. The three A's.
American Express has been trying to get a business operating license in China and has even teamed up with LianLian, which is the fourth largest non-bank payment provider, to get the business going. It's bad enough that the government has insisted that Amex has a partner, without that license nothing is going to happen. It's the easiest way to show the financial sector that it is welcome in China.
Apple? We know that Apple is a conspicuous U.S. product that is easily avoided, especially if competitor Huawei has much larger subsidies at the register. If we were to see any embrace at all by the government of Tim Cook then we know there's real movement.
Finally, though, the most important badge of faith would be to see a gigantic order to Boeing from China airlines, an order which could reverberate throughout the entire aerospace complex that includes Honeywell (HON) , United Technologies (UTX) and GE, which is starting to act like an aerospace and manufacturing company again. All of the industrials started acting better again this week even though there is no sign that anything good is happening on this front.
Then again, the stocks were dead right as predictors when they went down. Who is to say they won't do it right on the upside?