Morning Briefings
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Happy 2022!
Check out the accompanying pdf and chart collection. (1) Santa outpunched the two Grinches. (2) Omicron spreading like wildfire, and could burn out quickly. (3) Biden hands the pandemic back to state governors. (4) The Fed should be done tapering by March. (5) Whose afraid of 75bps? (6) Yield curve says don’t fight the bond market. (7) Santa’s earnings-led meltup. (8) Fewer kinks in supply chain. (9) Lots of booming economic indicators. (10) Plenty of liquidity, which is more liquid than it was before the pandemic. (11) The case against Volcker 2.0. (12) Durable goods prices soaring after deflating for many years. (13) Rent inflation will remain troublesome. (14) Inflation may be peaking according to regional business surveys. (15) Movie review: “Being the Ricardos” (+ +).
Santa vs the Two Grinches, Again
Check out the accompanying pdf and chart collection. (1) Santa runs into turbulence. (2) The attack of the two variants. (3) Omicron is fast spreading, but less dangerous, especially to the vaccinated. (4) Will herd immunity be the outcome? (5) New cases soaring in Europe, but not hospitalizations, so far. (6) China faces the Omicron challenge. (7) The hawkish variant of the FOMC. (8) Levitating dot plot. (9) Waller says March is a “live meeting.” (10) Pivots and rotations. (11) A slimmed-down variant of Biden’s BBB likely to pass in early 2022. (12) People are disappearing in China, and so is retail sales growth. (13) Will China’s property bubble burst or just deflate? (14) Movie review: “Spencer” (+).
Will 2022 Be Better Than 2021?
Check out the accompanying pdf and chart collection. (1) Outdoor gas heaters collecting dust. (2) Taking on the bears. (3) Higher buybacks mean more stock grants. (4) Coming tax hikes may be spurring insider stock sales. (5) Households own lots of stock, but are they crazy like a fox? (6) Stocks have rallied at the start of Fed tightening cycles. (7) What could go right in year ahead? (8) Covid could go from pandemic to endemic. (9) Opportunities in travel-related areas. (10) Boeing could finally fly. (11) Everyone’s getting married. (12) Energy recovery should continue. (13) The year of the autonomous truck.
Behind the Inflation Curve
Check out the accompanying pdf and chart collection. (1) Fed head provided a heads-up. (2) Powell has mutated from dovish to hawkish variant of Fed chair. (3) FOMC’s latest projections likely to show more rate hikes in 2022. (4) Fed scrambling to catch up with inflation curve. (5) Real interest rates are unreal. (6) Is the bond yield alarming or not? (7) Durable goods inflation should moderate next year. (8) Inflation is currently disconcerting. (9) Supply chains are still kinky. (10) Monitoring the supply chains. (11) Amazon shows the way.
Does Covid = Y2K For Earnings?
Check out the accompanying pdf and chart collection. (1) Technicians don’t like what they see in Nasdaq. (2) A replay of Y2K boom and bust for tech as a result of Covid? (3) Scramble to boost productivity should offset less pandemic-related tech demand. (4) Nasdaq 100 beating Nasdaq composite (2,500+ stocks). (5) S&P 500/400/600 Information Technology having a good year. (6) Mag-8 are in both S&P 500 and Nasdaq 100. (7) Mag-8 accounts for more than a quarter of S&P 500 market cap and is trading at a forward P/E of 34.8 on a free-float basis. (8) S&P 500 profit margins probably peaked during Q2 but should stay high, especially ex-Financials. (9) Lots of solid revenues and earnings growth rates among S&P 500 sectors.
Santa’s Sleigh & Biden’s Helicopters
Check out the accompanying pdf and chart collection. (1) Stocking stuffer idea. (2) Two Grinches: the Omicron variant and the hawkish Powell variant. (3) Believing in Santa. (4) S&P 500 makes another record high … Ho-Ho-Ho! (5) Good tidings for Tech. (6) A happy holiday yield-curve story. (7) Bidenflation: Dropping cash from helicopters works all too well. (8) Larry Summers was right. (9) Inflation likely to persist, but moderate later next year. (10) How real are S&P 500 earnings? (11) Real earnings yield says sell. We say don’t sell. (12) Movie review: “West Side Story” (+ +).
China, Wall Street, and the CIA
Check out the accompanying pdf and chart collection. (1) Evergrande’s restructuring looks likely. (2) It’s not alone. (3) Chinese economic growth slows, so its central bank boosts liquidity. (4) Hongkongers moving out. (5) Biden ires China by giving Taiwan a seat at the table and skipping the Olympics. (6) China building military outposts. (7) The little guys standing up to Xi might start a trend. (8) US financial giants see an opening in China and take it. (9) But are they hurting the US by developing China’s markets? (10) Taking a look at the venture capital firm that invests the CIA’s money. (11) Warning the US to up government research funding or risk losing our edge to China.
The World vs the Virus
Check out the accompanying pdf and chart collection. (1) Peter and the Variant. (2) Is Panic Attack #71 over already? (3) The Virology and Epidemiology Department at YRI. (4) Variants happen. (5) Stay Home continues to outperform Go Global. (6) US MSCI forward earnings on steeper uptrend than in rest of world (ROW). (7) US forward revenues outperforming ROW. (8) Profit margins higher in US than ROW. (9) Omicron spreads faster. So why doesn’t the stock market care? (10) A variant similar to the common cold? (11) Shots and pills should work against Omicron. (12) “President Fauci.”
Taper Tantrum 4.0
Check out the accompanying pdf and chart collection. (1) Taper tantrums now and then. (2) Easier for the Fed to back off during past three tantrums than now. (3) A work in progress. (4) November’s CPI won’t help. (5) What is the yield curve telling us? (6) Sentiment indexes are bearish on balance, which is bullish. (7) Betting on earnings growth and liquidity. (8) The stock market equation. (9) Peak earnings growth will be followed by less earnings growth. (10) Growth-vs-Value rollercoaster driven by pandemic waves. (11) The death of Growth, Tech, and high-P/E stocks has been exaggerated.
The Economy Is Booming
Check out the accompanying pdf and chart collection. (1) New theme song for the stock market by The Clash. (2) Strong economy is good for earnings. (3) Not so good for valuation if FOMC votes to taper faster. (4) GDPNow tracking near 10% for Q4! (5) Raising our Q4 forecast. (6) Only boom in Boom-Bust Barometer. (7) M-PMI remains high, while NM-PMI is at new record high. (8) Are supply disruptions as disruptive as they say? (9) Full-time employment leading jobs recovery. (10) Wages and prices rising. (11) S&P 500/400/600 forward revenues, earnings, and margins confirming strong business activity. (12) Movie review: “House of Gucci” (+ +).
Consumers & Fusion
Check out the accompanying pdf and chart collection. (1) Holiday gatherings should help propel retail sales. (2) Hoping Omicron doesn’t play the Grinch. (3) Improving job market and rising incomes otherwise bode well for retailers. (4) Consumers’ debt is up, but debt service relative to disposable income remains low. (5) S&P Consumer Discretionary sector beating the S&P 500. (6) Amazon weighs on the Retail Composite. (7) Analysts upbeat on retailers’ earnings next year. (8) Nuclear fusion becomes a hot topic. (9) Fusion attracts big bucks from Gates, Bezos, and others. (10) Playing with the most powerful magnets on Earth. (11) Double-checking the math.
Follow the Money
Check out the accompanying pdf and chart collection. (1) The two Grinches: Omicron and Jay Powell. (2) Powell wants to speed up tapering trot. (3) Don’t sell Santa Claus short. (4) The Fed averted a great credit crunch last year. (5) Animal spirits gone wild in capital markets. (6) The wealthy diversifying their wealth by funding more ventures and startups. (7) Record refinancing in nonfinancial corporate bond market. (8) C&I loans falling. (9) Leveraged loans at record high. (10) Lots of stock issuance. (11) Booming IPO issuance. (12) Lots of VCs. (13) Record M&A deal-making.
Is America Shovel Ready?
Check out the accompanying pdf and chart collection. (1) Obama’s insight: Shovel-ready projects don’t exist. (2) Biden needs construction workers for his BBB infrastructure projects. (3) The difference between “shovel ready” and “shovel worthy.” (4) Meet Mitch Landrieu, the new infrastructure czar. Wish him luck. (5) A dismal history of big infrastructure spending. (6) Construction costs are high. (7) Construction workers have plenty of work now. (8) Durable goods orders are booming, and shipments aren’t lagging far behind notwithstanding supply-chain issues. (9) Forward earnings of S&P 500 Industrials soaring along with orders. (10) IT equipment output is also booming.
The Omicron Panic
Check out the accompanying pdf and chart collection. (1) Austria’s lockdown and Germany’s record infections unnerved investors recently. (2) Then Omicron news hit the tape on Friday. (3) A new potentially dangerous variant. (4) Travel lockdowns. (5) S&P 500 drops a bit, while oil nears a bear market. (6) Drug makers are prepared to play Whac-A-Mole with variants of Covid. (7) Two or three rate hikes next year? (8) Plenty of excess M2. (9) More Fed officials talking about tapering at faster pace. (10) Movie review: “The Eyes of Tammy Faye” (+ + +).
Transportation & Green Ships
Check out the accompanying pdf and chart collection. (1) Retailers are ready for the holiday rush. (2) Shipping prices ease, and Transports underperform the S&P 500. (3) West Coast import volumes plateauing at record high. (4) Keeping an eye on the drop in intermodal rail traffic. (5) The surge in trucking volumes has stalled. (6) Analysts still optimistic about railroad and trucking industries’ 2022 earnings. (7) Ports open overnight, but truckers stay home. (8) Containers overstay their welcome. (9) Shippers test green energy. (10) Electric, methanol, wind, and nuclear get a chance.
The Genie Is Out of the Bottle
Check out the accompanying pdf and chart collection. (1) Inflation is turning out to be both pesky and persistent. (2) Powell’s latest pivot. (3) Blaming supply-chain disruptions for inflation rather than excessively stimulative fiscal and monetary policies. (4) FOMC consensus expects inflation to drop close to 2% next year. (5) We expect FOMC will raise inflation target from 2% to 3% next year. (6) Inflation blast from the past: COLAs are back already. (7) Regional price indexes remain inflated. (8) Are inflationary expectations really “well anchored” at 2%? (9) Average inflation targeting is a bad idea. (10) Movie review: “Dopesick” (+ + +).
China, Materials & Green Isn’t Clean
Check out the accompanying pdf and chart collection. (1) China’s Xi gets a promotion. (2) Troubled Chinese real estate developers scramble to raise money. (3) China’s new home sales and prices fall again in October. (4) Covid-19 cases still pop up despite China’s zero-tolerance policy. (5) Beijing requires a negative Covid test before entering the city. (6) Chinese economy growing, but slower. (7) A look at top-performing sectors over past two decades. (8) Demand for materials used in Chinese construction could sag. (9) Demand for materials used in EVs and windmills should keep booming. (10) Examining the dirty side of clean energy.
Updates on Profit Margins & Europe
Check out the accompanying pdf and chart collection. (1) Record-high stock prices driven by record-high earnings. (2) S&P 500 revenues and earnings beating Q3 expectations. (3) Negative forward guidance on labor and parts shortages not weighing on earnings expectations. (4) Annual revenue and earnings estimates for 2021-23 at record highs. (5) Profit margin expectations plateauing at record level. (6) No sign that cost pressures are squeezing margins. (7) Europe relying on Russian gas to keep warm. (8) Breakthrough cases, a new pandemic woe in Europe. (9) Europe’s recovery slowing despite lots of fiscal and monetary stimulus.
Is the Meltup a Bubble?
Check out the accompanying pdf and chart collection. (1) Not everything is in a bubble. (2) Sentiment isn’t euphoric. (3) Bitcoin is impossible to value. (4) Home prices overvalued relative to incomes. (5) High stock market valuations supported by strong earnings. (6) SMidCaps may be starting to outperform. (7) S&P 500 P/E inflated by Growth, which is inflated by Mag-8. (8) Alarmingly high Buffett Ratio misleadingly ignores record profit margin. (9) No cause for alarm in Fed’s latest Financial Stability Report. (10) Biden explains “Bidenflation.”
Inflation: Blast from the Past
Check out the accompanying pdf and chart collection. (1) Similarities and differences between now and the 1970s. (2) Productivity should make all the difference. (3) Our upwardly revised inflation forecasts. (4) Commodity prices still rising. (5) Labor shortages empowering workers. (6) Short-term wage-price spiral unlikely to persist if productivity grows. (7) Biden puts OPEC+ in driver’s seat. (8) Hilarious US Energy Secretary laughs out loud. (9) Policy response to climate change is inflationary. (10) Record US imports despite supply disruptions. (11) Moderating and accelerating inflation components. (12) “China price” now a source of US inflation. (13) Movie review: “Silk Road” (+ +).
Health Care & Gates’ Green Investments
Check out the accompanying pdf and chart collection. (1) Patients’ return to health care facilities this year will mean tougher comparisons for the S&P 500 Health Care sector in 2022. (2) Lack of workers hurts behavioral health facilities. (3) The many cats and dogs adopted during the pandemic need Zoetis’ drugs. (4) Bill Gates’ Breakthrough Energy Ventures gets billionaires to open their wallets. (5) Breakthrough-funded companies are developing more efficient clean energy, pulling carbon from air, and making everything imaginable greener. (6) Coming soon: better batteries, electric planes, and farming that would shock Old MacDonald.
Are We There Yet?
Check out the accompanying pdf and chart collection. (1) Hurdles to global recovery are receding in rearview mirror—yet that’s where global central bankers’ sights remain glued. (2) Is extreme accommodation still appropriate? (3) Central bankers of the past might have acted by now to resist inflation. (4) ECB, BOJ, and Fed all talk the talk about transitory nature of accelerating inflation and supply/labor shortages. (5) When will they walk the walk? (6) Covid-19 pandemic isn’t over, but we are learning to live with it.
The Bond Conundrum, Again
Check out the accompanying pdf and chart collection. (1) No tapering tantrum in bond market. (2) Tapering isn’t tightening. (3) But tapering sets stage for tightening if inflation persists. (4) Are retail investors buying bond funds to rebalance out of stocks? (5) Major central banks in no rush to raise their official lending rates. (6) Bank of England surprises. (7) Chinese trade surplus at record high during October. (8) Large capital outflows from China. (9) Property developers hitting a great wall in China. (10) Investors starting to realize that SMidCaps are cheap.
Transitory or Persistent?
Check out the accompanying pdf and chart collection. (1) Distracting from the message. (2) Powell defines “transitory.” It’s not “persistent.” (3) Powell may be transitory. (4) End of federal jobless benefits seems to have boosted employment. (5) Our Earned Income Proxy at new high again. (6) More full-time jobs, less long-term unemployment. (7) Lower-wage workers beating inflation, while higher-wage workers are not. (8) Supply disruptions and labor shortages depressed productivity and boosted unit labor costs during Q3. (9) The case for the Roaring 2020s. (10) Labor shortages are chronic because they are in DNA of population. (11) Movie review: “Finch” (+).
Semis & Quantum Computers
Check out the accompanying pdf and chart collection. (1) Semiconductor shortage may last another year. (2) ON Semiconductors’ Q3 beat keeps its rally going. (3) NXP says semi content in autos keeps growing. (4) Tech giants dive into semiconductor design. (5) Analysts still see semiconductor earnings growing, albeit more slowly, next year. (6) China says its new quantum computer is better than ours. (7) Introducing semiconductor qubits. (8) Quantum computers being used for good and evil. (9) Toyota using quantum computers to develop solid-state batteries. (10) Bad actors harvesting data today to quantum-hack tomorrow. (11) Quantum startups merging with SPACs.