Daily Research Updates
Morning Briefings
Expert market analysis delivered every morning. Stay informed with comprehensive research and data-driven insights.
Yielding to the Central Banks
Check out the accompanying pdf and chart collection. (1) Lots of central banks filling up the punch bowl. (2) PBOC cuts reserve requirement to boost bank lending. (3) Lots of punch for global stock and bond markets. (4) The Fed is TIPSy. (5) Bond yields are unreal, as even junk yields fall below inflation rate. (6) S&P 500 dividend yield falls below 2.00% on the way to 1.00%. (7) Millions more S corporations than S&P 500 corporations. (8) S corporations boosting corporate profits but not corporate taxes. (9) A new study on profits.
Variants & Other Strangers
Check out the accompanying pdf and chart collection. (1) Nasty little, free-riding, living-dead mutants. (2) Variants of concern. (3) Following the Greek alphabet: Alpha through Delta so far. (4) Israel’s latest data. (5) No spectators in Tokyo’s Olympic stadiums. (6) China’s vaccine challenged by Delta. (7) Keeping score. (8) Distorted signal from Fed-rigged bond market. (9) Supply-side challenges include shortages of labor, chips, and homes for sale. (10) Capital spending is booming. (11) Investment styles mutating on a daily basis. (12) Movie review: “Nobody” (+ +).
From China with Love No More
Check out the accompanying pdf and chart collection. (1) Semi shortages hurting autos, helping semi companies. (2) Ford caught flat footed, suffers the most. (3) Toyota’s bet on auto sales rebound pays off. (4) Countries consider semiconductor companies a national treasure. (5) May worldwide chip sales surpass 2018 peak. (6) The list of aggressive moves by the Chinese government grows longer. (7) China’s latest crackdown on its tech companies hits US IPO investors’ pocket books. (8) WHO investigation into origin of Covid-19 stymied. (9) Was the Wuhan Military World Games a super-spreader event? (10) Xi speech minces no words. (11) Take a trip to The Metaverse.
Inflationary Expectations
Check out the accompanying pdf and chart collection. (1) Powell says inflationary expectations still well anchored. (2) Powell is relieved that Fed doesn’t have the same problem with sliding inflation as ECB and BOJ do. (3) Powell should set up dashboard for key inflation indicators. (4) One-year and three-year inflationary expectations currently at 4.0% and 3.6% according to FRBNY survey. (5) Americans most hurt by inflation see more of it than others do. Are they more alert to it? (6) Other surveys also show elevated short-term inflationary expectations. (7) Wage pressures rose during Q2. (8) Earned Income Proxy at record high.
Earnings-Led Slo-Mo MAMU
Check out the accompanying pdf and chart collection. (1) Comparing current MAMU to 1999 meltup. (2) S&P 500 stunt plane flying through the vapor trails of the Blue Angels. (3) Why has the forward P/E held up so well around 22? (4) Revenues and profit margin fuel V-shaped recovery in earnings. (5) Peak in M-PMI consistent with peak growth rates in revenues and earnings. (6) Decelerating gains for S&P 500 ahead. (7) S&P 500 at 4800 sooner or later? (8) A good week for FAAMGs. (9) Updating the four investment styles. (10) Stay Home still beating Go Global. (11) Bonds disconnected from reality by Fed and foreign bond purchases. (12) Tapering should resolve the bond market conundrum. (13) Fed is now money market mutual fund of last resort. (14) Movie review: “No Sudden Move” (+).
Jobs, Drought & Commodities
Check out the accompanying pdf and chart collection. (1) Lots of help-wanted signs may mean 4% unemployment is around the corner. (2) Few say jobs are hard to get. (3) Our bet: Tapering starts after September Fed meeting. (4) Heat wave exacerbates drought in the West. (5) Farmers opt not to farm. (6) Watching fruit and veggie prices. (7) Wells running dry, towns sinking, and price of water skyrocketing. (8) San Fran Fed watching impact of climate on economy. (9) Lumber and copper prices drop, while steel holds at the highs.
Margins, Productivity & Housing
Check out the accompanying pdf and chart collection. (1) They are all tech companies now. (2) How to construct a Productivity Portfolio. (3) Searching for and finding some uptrends in profit margins. (4) The Phillips Curve model isn’t dead, but it isn’t real either. (5) Regional prices-paid and prices-received indexes peaking. (6) Harvard housing study is a Biden policy document. (7) Are institutional investors to blame for the housing shortage?
Rapidly Rotating Styles
Check out the accompanying pdf and chart collection. (1) Churning underneath the calm surface. (2) Blaming it on TINA. (3) In the broad-bull-market camp. (4) In the sooner-rather-than-later camp on Fed tapering. (5) More churning ahead as earnings growth slows and Fed tightens. (6) Hard to see a correction with M2 up $5.0 trillion since January 2020. (7) Cash has been the painful alternative to stocks. (8) Mag-5 and the four investment styles. (9) Lower-wage workers account for 81% of private payrolls and 68% of wages and salaries.
The Facts of Life & Death
Check out the accompanying pdf and chart collection. (1) Country music played backwards. (2) On the road with Ivanka. (3) Hot chicken in the Athens of Tennessee. (4) Mutating virus. (5) Pandemic exacerbated demographic trends. (6) Fewer babies, more seniors. (7) Retiring Boomers. (8) Labor shortages likely to stimulate productivity growth. (9) Getting older in America. (10) Too many white collars, not enough blue collars. (11) Lower wages rising twice as fast as higher wages. (12) Is inflation just passing through? (13) Tapering timeline. (14) Movie review: “The Gentlemen” (+).
Plastics, Earnings & AI
Check out the accompanying pdf and chart collection. (1) Mother Nature has been inflating plastics prices via weather and Covid. (2) Help wanted at plastic plants. (3) Watching recent jump in oil and gas prices. (4) Commodity Chemical industry earnings soar this year but peter out in 2022. (5) Checking out 2022 S&P 500 earnings. (6) Industrials and Consumer Discretionary sectors maintain their leadership next year. (7) Materials and Financials not so much. (8) The US military embraces data and AI. (9) A disturbing view of machine-based warfare.
Peak Earnings Growth
Check out the accompanying pdf and chart collection. (1) Q2 marked the peak in GDP and earnings growth. (2) Decelerating gains. (3) S&P 500 has had a V88.8 rebound. (4) Our updated S&P 500 targets for this year and next year: 4300-4700 and 4400-4800. (5) Lower wages up twice as fast as higher wages over the past 24 months. (6) Existing home prices up 24.4% y/y, frustrating would-be buyers. (7) No shortage of price increases. (8) Powell is ready to talk about tapering at next FOMC meeting. (9) ECB on autopilot while awaiting fiscal stimulus. (10) ECB hits 2% inflation target. (11) Inflation remains MIA in Japan.
Looking Under the Hood
Check out the accompanying pdf and chart collection. (1) Will services boom follow goods boom? (2) Fixing up our house. (3) National parks crammed with too many humans seeking communion with nature. (4) Hint of rotation from goods to services in retail sales. (5) US manufacturing has been flatlining since China entered WTO. (6) Lean inventories should continue to boost domestic production and imports too. (7) Light, medium, and heavy trucks are all in high demand. (8) No sign of tech slowdown. (9) Construction industry hitting an affordability wall? (10) Climate-change activists capping oil wells? (11) Defense & space still flying high.
Stocks, Inflation & The Productivity Portfolio
Check out the accompanying pdf and chart collection. (1) Tapering tantrum time? (2) We weren’t surprised by hawkish drift in dots. (3) Stocks beat bonds as inflation hedges. (4) Rising costs can squeeze profit margins unless they are offset by raising selling prices or boosting productivity. (5) Revenues and earnings tend to rise faster than prices. (6) Real earnings yield, which is currently bearish, is highly correlated with other leadings economic indicators, which are currently bullish. (7) Real dividend yield isn’t a useful market timing tool. (8) Valuation and the Misery Index. (9) Movie review: “Oslo” (+ + +).
Powell, Earnings, FAANGs & Robots
Check out the accompanying pdf and chart collection. (1) Fed’s dots paint a new picture. (2) Powell’s talking about talking about tapering. (3) Might tapering begin in September? (4) Expecting blockbuster Q2 earnings and record GDP. (5) Post-Covid ad-spending surge helps Facebook and Google. (6) Netflix hurt by competition from Disney and the outdoors. (7) Tech regulatory threats grow. (8) Tech shares no longer leading the market. (9) Welcome to the Fourth Industrial Revolution. (10) Faster and cheaper computers and sensors creating better robots. (11) Robots improve companies’ efficiency and productivity.
Credit & Wealth
Check out the accompanying pdf and chart collection. (1) Jamie Dimon’s warning and positive spin. (2) Credit card debt and business loans are down. (3) Loan losses are MIA. (4) Corporations have lots of bond debt and lots of cash. (5) Lots of homeowners with lots of homeowners’ equity. (6) Household net worth rose to a record high along with stock market and home prices during the pandemic. (7) The 1% have been getting wealthier faster thanks to their equity portfolios. (8) Residential real estate and pension entitlements are more equitably distributed. (9) The Millennials will inherit lots of wealth. (10) Billionaires aren’t like the rest of us.
Move Along, Nothing To See
Check out the accompanying pdf and chart collection. (1) Old saying in the pits. (2) Commodity prices providing clearer signal than bond yields. (3) Broken lumber. (4) Dust bowl of 2021? Drought out West getting worse. (5) Chinese fattening up their pigs with US grains. (6) US oil production remains depressed. (7) China tapping on the brakes? (8) Rising commodity prices boosting S&P 500 revenues, earnings, and margins. (9) Strong profits + labor shortages = capital spending boom. (10) Technology production at record high led by computer & peripheral equipment.
The Greatest Punchbowl on Earth
Check out the accompanying pdf and chart collection. (1) Conundrum in the bond market. (2) Powell’s mantra. (3) The future of ZIRP. (4) Japanese yields vs the copper/gold ratio. (5) A second month of base affected CPI gains. (6) Tsunami of liquidity. (7) Banks drowning in deposits, while loan demand is weak. (8) Overnight repos at the Fed. (9) Buddy, can you spare a muni? (10) Tipsy. (11) Taxing jobless benefits. (12) Tug-of-war between the Fed and inflation. (13) Are the Bond Vigilantes dead again already or just taking a siesta? (14) Movie review: “Halston” (+ + +).
From China with Love
Check out the accompanying pdf and chart collection. (1) China’s Xi aims for a kinder, gentler image. (2) Vigil for Tiananmen Square massacre prohibited in Hong Kong, but brave residents come out anyway. (3) Companies and individuals looking to leave the changed city. (4) Chinese technology companies face tighter rules at home. (5) Yet China’s rulers count on tech companies to help the country win on the world stage. (6) Chinese vessels still intimidating in the South China Sea. (7) Chinese planes menace Taiwan. (8) China’s economy faces tougher comps and rising producer prices. (9) Turning coal ash into rare earth metals is a win-win-win.
Anatomy of the Bull Market
Check out the accompanying pdf and chart collection. (1) Corrections, bears, and bulls. (2) The market knows best, usually. (3) Outlook for the four investment styles. (4) Staying with the outperforming sectors since September 1, 2020. (5) Breadth measures showing broad bull market. (6) Broad bull market should continue to benefit SMidCaps, with outperforming forward earnings. (7) How much downside for Growth-to-Value ratio? (8) The valuation case for staying home in Value. (9) Why have the Bond Vigilantes taken a siesta? (10) Europe is lagging the US on pandemic front and still in recovery rather than expansion mode. (11) EU’s pandemic relief is actually a green new deal. (12) When will the ECB start tapering?
Another Jolt of Inflation Ahead
Check out the accompanying pdf and chart collection. (1) Base effect: Nothing to see here; keep walking, please. (2) Shortages should be transitory too, so say Fed officials. (3) Inflation targets vs trajectories. (4) A baseless case for 2.0%. (5) Inflation is a tax. (6) Fighting Mother Nature’s deflationary forces. (7) Demand and supply shocks. (8) A three-month perspective on inflation. (9) Drilling down into the CPI. (10) A few things to worry about: costs of gasoline, food, used cars, and rent. (11) Wage inflation is picking up.
Can Washington Lift Wages?
Check out the accompanying pdf and chart collection. (1) The meaning of full employment. (2) Lots of turnover in labor market. (3) Frictional unemployment reflects geographic and skills mismatches. (4) Plenty of job openings. (5) 25 states say no to federal jobless benefits. (6) Checking off Powell’s check list. (7) Timing tapering. (8) Confusing employment data. (9) Another record high for wages and salaries. (10) Biden wants to raise wages, which he erroneously claims are lowest in 70 years! (11) The myth of income stagnation, again. (12) Bullish outlook for real pay in Roaring 2020s scenario. (13) Broad-based rebound in corporate earnings fuels broad-based bull market. (14) Movie review: “Mare of Easttown” (+ +).
Biden, Oil, and Solar
Check out the accompanying pdf and chart collection. (1) Biden’s $6 trillion budget proposed. (2) Administration banks on low growth, low inflation, and low interest rates. (3) Higher taxes don’t prevent deeper deficits. (4) Debating the definition of infrastructure. (5) Shell gets shellacked by court ruling. (6) Climate change court cases on the rise. (7) Will CO2 emissions fall or just shift to new players? (8) Massachusetts may be next to require new homes have solar. (9) Finding new surfaces for solar panels.
Booms & Busts
Check out the accompanying pdf and chart collection. (1) The next recession. (2) Big blow to Big Oil. (3) US oil field output remains depressed, as does the rig count. (4) US oil demand almost fully recovered. (5) Iran is a wild card. (6) Demand and supply shocks. (7) A business cycle on fast forward. (8) Inflationary pressures galore. (9) Great for profits and capital spending, for now. (10) Booms are followed by bananas. (11) Lots of reasons for labor shortages.
More Inflation Ahead
Check out the accompanying pdf and chart collection. (1) Serling vs Hitchcock. (2) Lots of head-spinning developments. (3) The 1920s vs the 1970s. (4) The Roaring 2020s vs The Great Inflation 2.0. (5) Subjective probabilities of 65/35, down from 70/30. (6) T-Fed vs the 5Ds. (7) Jamie Dimon’s warning. (8) A week of big wins for climate-change activists and OPEC+. (9) Rising risk of higher oil prices and weaker dollar. (10) California’s drought worsens. (11) So much cash and so many shortages. (12) Who is liquid and why? (13) Q1 was an amazingly good quarter for earnings. (14) Movie review: “Vertigo” (+ +).
Tapering, Crypto & The Drought
Check out the accompanying pdf and chart collection. (1) Clarida’s just the latest Fed head to talk about talking about tapering. (2) Treasury market takes tapering talk in stride. (3) What’s in Fed’s inflation tool kit? (4) Western drought forcing tough decisions on the farm. (5) Keeping an eye on fruit and veggie prices. (6) With strong FQ-2, Deere says farmers doing great and buying equipment. (7) Fed studies digital dollar, while crypto financial ecosystem flourishes. (8) China’s regulators cracking down on crypto trading and mining. (9) Lots of crypto banking services outside of the banking system. (10) DeFi even trickier for regulators to control. (11) Mark Cuban sees a future filled with smart contracts on the blockchain.