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Royals Rumblings - News for July 9, 2018

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Boston Red Sox v Kansas City Royals Photo by Brian Davidson/Getty Images

ICYMI: the Royals made a slew of moves prior to the start of Sunday’s game vs the Red Sox. Jason Hammel was moved to the bullpen, Jake Junis was moved to the DL, and Heath Fillmyer was moved to the starting rotation.

It took awhile for this news to really become clear (it was originally only reported on Yahoo! Japan) but the Royals signed the youngest Japanese player in history

Reflecting a fresh approach to extend their scouting operations into the Pacific Rim, the Royals have signed Kaito Yuki, a 16-year-old pitcher from Japan who is believed to be the youngest player from his country to sign with a major-league club.

Yuki is a 6-foot-2, 170-pound right-hander from Tondabayashi City in Osaka Prefecture who recently graduated from junior high school. He popped onto the Royals’ radar in recents months, following the additions of Pacific Rim coordinator Phil Dale and Japan scout Hiro Oya to the club’s staff.

Elsewhile at The Star, Maria Torres looks at how the Royals are taking their prior approach of the last rebuild to kick off this new one.

“To have a group go through (the minor leagues) together is different. It’s similar to the 2007 and 2008 classes,” assistant general manager J.J. Picollo said. “We’re trying to follow that script because it worked.”

Overall good guy Sam Mellinger looks back at the short tenure of George Brett being the Royals hitting coach

“No, I’m going to wait for Pete.”

”Gordon, come on over.”

”No, I’m going to wait for Pete.”

”OK, wait for (expletive) Pete. I’m out of here.”

Ben Lindbergh of The Ringer looked at how Lorenzo Cain is better this year than ever before. Rany Jazayerli even chimed in with his thoughts:

Facebook shares were up 2%+ on Friday, making CEO Mark Zuckerberg the 3rd richest person (at least on paper), overtaking Warren Buffett.

Going into Thursday night/Friday morning as the tariff deadline neared, investors were bracing for a red day but the market unexpectedly rallied based on the back of tech.

No company has more “sell” ratings from analysts than Tesla. While the company has seen it’s stock take off since its IPO, it’s floundered the past year as investors are going on eight years of negative earnings. Recently, the company passed it’s self-created milestone of 5,000 Model 3’s in a week. Despite that, the stock has fallen as analysts and investors were skeptical with how that number came about, with Tesla having to pour every ounce of energy to reach that and set up a makeshift third assembly area in the form of a large tent. Tesla has the largest short interest among public companies, and CEO Elon Musk was reading to pop champagne as the 5K week approached, even sending out an antagonistic tweet thinking the stock would skyrocket and force shorts to cover. Instead, the stock dropped day-after-day, creating likely millions in gains for shorts.

Even though the economy is chugging along as expected with good but not fantastic growth, the Federal Reserve is considering hiking rates at a bit faster rate than they thought. “The Fed” raises and lowers rates (known as monetary policy) to slow down or speed up the economy. You may be asking “why would you want to slow down the economy?” Inflation getting out of control can lead to problems with further sustainable growth and leading to recession as things get out of hand (like a spaceship entering an atmosphere at too steep a rate). Rising interest rates means companies are less likely to borrow money (issuing debt) and consumer spending slows down (higher rates on credit cards, mortgages, loans, etc...). The stock market has been loving near-zero rates for the past decade coming out of The Great Recession but as the global economy begins syncing up and growing, The Fed and other central banks are making sure things don’t speed up too quick.

With “Trump Tax Cut” fueling companies to pursue buybacks instead of capital expenditures with the money saved, but that isn’t leading to stock prices increasing as you would expect. When a company announces a buyback, it’s stock price typically sees a nice 5-10% boost depending on how much is being repurchased. That’s typically a one-time pop, but buybacks signal the company feels they are in strong financial health and it also means increased earnings per share for investors (since there will be fewer shares outstanding). 350 companies in the S&P 500 are trailing their index’s modest 3.2% gain on the year, a worrisome sign that the buybacks may have not been want investors necessarily wanted to see. Some analysts wish that money was spent on capital improvements in new factories or research and development.

Quick Hits

31 undervalued stocks, per Morningstar

Vanguard isn’t taking in as much money as they used to, but neither is anyone else

Oil could jump 10% this summer

How US/China tariffs are rippling through industries

The recent China selloff looks worse than the 2015 selloff