Morning Briefings
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Free Money Boosting Earnings
(1) Strength in average of NY and Philly business indexes augurs well for March M-PMI. (2) Also predicts strong growth in S&P 500 revenues. (3) Raising 2021 and 2022 earnings-per-share projections to $180 and $200. (4) Economic Impact Payments boosting economic and earnings growth. (5) Rebounding profit margin. (6) Analysts predicting double-digit earnings growth during Q1-Q4 and 25% increase for the year. (7) Forward earnings and revenues have fully recovered. (8) Still targeting S&P 500 at 4300 this year and 4800 next year. (9) The valuation question: Will all the free money offset rising bond yields? (10) How much of pandemic fiscal and monetary stimulus has leaked abroad?
No Relief for Bond Vigilantes
(1) Dr. Ed’s latest podcast. (2) New book about the Fed and the GVC. (3) Do over 250 million Americans need “relief” checks? (4) Thousands adding up to billions. (5) Big boost for housing-related retail sales including TVs and microwave ovens. (6) M2 up $4 trillion y/y. (7) March is on fire, according to Philly Fed survey. (8) Prices-paid indexes soaring in Philly and NY districts. (9) Copper/gold ratio and Philly prices-paid correlations with bond yield remain bearish. (10) The pre-pandemic old normal for bond yields was 2.00%-3.00%. (11) Movie review: “Land” (+).
Dividends & Hydrogen
(1) Rising confidence reflected in rising dividends. (2) Many companies reversing 2020 dividend suspensions. (3) Some retailers and REITs reinstate dividends, but travel-related companies not there yet. (4) Will banks boost dividends too? (5) S&P 500 dividend yield and 10-year Treasury yield coming into balance. (6) Large truck manufacturers and upstarts alike exploring hydrogen fuel. (7) Hyundai leads with a hydrogen-fueled truck being tested on the road today.
What’s in this Sausage?
(1) “V” is for “V-covery.” (2) $1,400 checks times 287 million Americans is serious money. (3) Business sales of goods at record high during January. (4) S&P 500 revenues outlook is bright. (5) Forward earnings of S&P 500/400/600 all at record highs. (6) Plenty of beef and pork in American Rescue Plan Act. (7) Lots of shots and checks. (8) Free money: $402 billion in checks, $362 billion for state and local governments, $206 billion for unemployed, $196 billion for schools. (9) Setting the stage for UBI? (10) Uncle Joe has lots of presents for the kids.
Inflation: Asking for Trouble?
(1) In 2016, Yellen wondered what determines inflation. (2) Now Yellen says any inflation pickup will be fleeting. (3) The Phillips curve: Fuhgettaboutit! (4) The 1970s were so yesterday. (5) Lots of job openings. (6) Skills mismatch or generous unemployment benefits, or both? (7) Small business owners need help but can’t find workers. (8) Mixed readings on wage inflation. (9) Commodity and PPI costs soaring. (10) The base effect. (11) A sign of trouble for consumer price inflation. (12) SEC issues warnings about SPACs.
Clash of the Titans
(1) Zeus vs Thetis. (2) T-Fed vs Bond Vigilantes. (3) Pushing back by pushing up bond yields. (4) What will beneficiaries of $1,400 checks do with the money? (5) Fed and commercial banks still loading up on Treasuries and MBS. (6) Still plenty of fiscal and monetary stimulus piled up as stash of M2 cash. (7) More stimulus coming soon. (8) No Operation Twist or yield-curve target? (9) ECB is stepping up bond purchases. (10) Is there any evidence showing Treasury relief checks have been used to buy stocks? (11) Foreign investors have been big buyers of US stocks. (12) Movie review: “Minari” (+).
Tech World
(1) Tech sector enjoyed eye-popping two-year outperformance. (2) Tech earnings rose, and P/Es rose faster. (3) Recent tech selloff barely moved the needle. (4) China aims for moderate economic growth and world domination of advanced technologies. (5) As Beijing tightens its control over Hong Kong, residents and businesses pack their bags. (6) Fintech players growing up. (7) Walmart jumps into fintech, while Square and SoFi enter traditional banking.
A Most Remarkable Recovery
(1) A spring shower of cash could fuel stock market meltup. (2) Is Panic Attack #69 over already? (3) More helicopter money on the way. (4) Personal savings bloated by government checks, boosting M2 and stock prices. (5) Go away in May if stocks melt up in April? (6) What might cause Panic Attack #70? (7) Q4-2020 data show complete V-shaped recoveries in S&P 500 revenues, earnings, and profit margin. (8) S&P 500 forward earnings back in record-high territory. (9) Huge write-offs last year.
In Praise of Monetary & Fiscal Folly
(1) Rent inflation is currently a headwind for overall inflation. (2) Here is how it could turn into a tailwind for inflation. (3) Demand for houses outpacing supply. (4) Shortage of homes for sale and declining affordability are depressing would-be homebuyers. (5) Rent has a big weight in consumer price measures. (6) The Phillips curve could rise from the dead. (7) Rent inflation correlated with wage inflation, which remains high. (8) Watching them make sausage in Washington. (9) Counting blue and red heads in the Senate. (10) Reconciliation Part II: Build Back Better. (11) Compromising with Manchin.
Powell Deputizes Bond Vigilantes
(1) T-Fed outsources maintaining law and order to Bond Vigilantes. (2) Powell not worrying about disorderly markets or inflation. (3) The Fed is patient and dovish. The Vigilantes are not. (4) No twisting at the Fed’s party for now. (5) T-Fed’s party line: Rising yields reflecting strong recovery, not inflation. (6) Rallying commodity prices bearish for bonds. (7) Wage inflation is high. Aberration or a problem for consumer prices? (8) Is Panic Attack #69 over yet? (9) Bull market continues to broaden and rotate from Growth to Value. (10) Movie review: “The Mauritanian” (+ +).
Spring Is Coming
(1) Improving Covid-19 stats seed economic optimism. (2) “Uplyfting” data on ridesharing volumes. (3) Easy comparisons are around the corner. (4) More doors opening for business, and a few states lifting capacity restrictions. (5) Rallying stock and commodity markets telling us to fear not? (6) Most S&P 500 Industrials industry indexes have had a far better year than sector’s performance suggests. (7) Farmers and Deere reaping profits. (8) Airlines’ and Boeing’s woes weighing on business for many an industrial conglomerate. (9) Hoping Biden will keep defense spending steady. (10) Deere explains how high-tech machines benefit farmers’ bottom lines. (11) Eco-friendly street pavers.
The Starship Enterprise
(1) Helicopter Ben’s solution has been implemented. (2) Yield-curve targeting or Operation Twist? (3) Four Fed presidents’ happy spin on the backup in bond yields. (4) Lots of fiscal spending in the pipeline. (5) Einstein’s theory of relativity and the speed of light. (6) Going boldly where no man or woman has gone before. (7) M-PMI is bullish for S&P 500 revenues. (8) New orders at record high. (9) Construction spending at a record high. (10) Inflationary cost pressures heating up. (11) ESG disclosure could soon be mandatory.
Operation Warp Speed II
(1) From OSW-I to OSW-II. (2) Overheating a hot post-pandemic economy. (3) Checks without balances. (4) From plague to pest. (5) J&J has a shot for that too. (6) Real GDP is on monetary and fiscal performance-enhancing drugs. (7) Two record increases in personal income since April; another this spring. (8) T-Fed sending helicopter money by check. (9) Bonfire of the insanities. (10) Great for profits. (11) Bad for bonds.
Bond Vigilantes: They’re Back!
(1) Inflation tantrum in bond market. (2) Protesting fiscal and monetary excesses. (3) Five recent taper tantrums in the stock market. The latest one is Panic Attack #69. (4) The Carville memo. (5) Powell’s conundrum. (6) What to do about rising bond yields? Fed has three choices. (7) Is Powell cooling off to more fiscal stimulus? (8) The case for a transient pickup in inflation. (9) The Age Wave is still disinflationary. (10) Prices-paid indexes are soaring. (11) Hard to see the whites of inflation’s eyes in consumer prices, so far. (12) Movie review: “The United States vs. Billie Holiday” (+ + +).
Consumers, Earnings, And Proteins
(1) Falling Covid-19 cases inspire dreams of hitting the mall. (2) Uncle Sam boosts personal income. (3) Consumers deleveraged a little, saved a little, and spent a lot. (4) Deferred rent, mortgage, and student loan payments help too. (5) Home retailers face tough comps this year. (6) Clothing retailers will have easier comparisons if we have occasions to dress up in 2021. (7) Burning our sweatpants. (8) Are positive forward earnings revisions slowing? (9) Scientists hoping proteins are the key to curing cancer, Parkinson’s, and Alzheimer’s.
Morning Briefing 2021-02-24
(1) Fink’s “Dear CEO” letter. (2) Building a Green New Capitalism (GNC). (3) An existential crisis. (4) FOE’s and WEF’s agendas are on the same page. (5) Stakeholders matter more than shareholders. (6) Davos men and women working together for the common good. (7) The goal of the Great Reset is carbon-free and inclusive capitalism. (8) Lots of global movers and shakers are on board. (9) Fink’s warning: “Companies, ignore stakeholders at their peril.” (10) What’s your ESG score? (11) From FASB to SASB. (12) Bloomberg is on the case. (13) Central banks going green.
On the Road to Reflation
(1) Unprecedented policy stimulus boosting cost pressures. (2) Bond Vigilantes getting set to ambush policymakers on the road to inflation. (3) Yellen and Powell say they have “tools” to fight inflation. (4) Powell sees “transient” inflation coming this spring. (5) Williams say stock market valuations are fine and dandy. (6) Three regional price surveys showing more inflation in the pipeline. (7) Copper leading commodity price rally. (8) Copper tracks inflationary expectations proxy. (9) Extraordinary growth in monetary aggregates. (10) S&P 500 winners and losers if inflation makes a comeback.
Getting Hotter
(1) Some like it hot. (2) The risk is overheating a hot economy. (3) Acting big means bigger deficits and lots more debt. (4) Yellen once worried about deficits. (5) Yellen aims to get back to full employment by next year. (6) Powell and Yellen say jobless rate is more like 10% now. (7) FOMC would welcome an inflation warm-up. (8) January’s latest economic indicators are hot. (9) Housing-related industries are booming. (10) Running out of housing inventory. (11) Are Bond Vigilantes getting set to ambush policymakers on the road to inflation? (12) Movie review: “Judas and the Black Messiah” (+ + +).
Have Shot, Will Travel
(1) Disney wishes on a star, vaccines for all by April. (2) Carnival’s customers booking for 2H-2021. (3) S&P 500 Biotech underperforms, but smaller biotech names are on fire. (4) All biotech ETFs are not alike. (5) Outperformers boosted by acquisitions and hot IPO market. (6) Nuclear energy reimagined: smaller, cheaper, safer. (7) Bill Gates-backed TerraPower and X-energy win DOE contest to build SMRs (small modular reactors).
‘V’ for Victory?
(1) The third wave of the pandemic has crested. (2) From a plague to a pest. (3) Stock market isn’t disconnected from economy and earnings. (4) Earnings likely to be flat y/y during Q4. (5) Expecting a 25% increase in 2021 earnings over 2020. (6) Forward revenues and earnings almost back to pre-pandemic levels. (7) Impressive rebound in profit margin. (8) Hot commodity prices confirming V-shaped global recovery. (9) Solid recoveries in global PMIs and leading indicators. (10) Global bull market in stocks driven by upbeat fundamentals. (11) US Growth stocks are highly valued. (12) US Value stocks have about the same forward P/E as overseas stocks.
Good vs Bad Endings
(1) Zooming worries. (2) A trillion dollars here, a trillion there. (3) Mission accomplished, so far. (4) Nasdaq partying like it’s 1999 once again? (5) Home prices are also having a party. (6) Cost pressures mounting but not showing up in CPI, yet. (7) Pandemic has boosted some prices and depressed other prices. (8) Expect a post-pandemic reversal of pricing power. (9) Rent inflation continues to fall, and has lower to go. (10) The Fed keeps resuscitating Zombies, while trying to bury the Vigilantes. (11) Blue Angels for the government’s net interest. (12) Movie review: “Promising Young Woman” (+ + +).
Onshoring & Charging
(1) Optimism about S&P 500 Q1 earnings growth on the rise. (2) S&P 500 Energy & Real Estate sectors enjoy the biggest Q1 upward earnings estimate revisions. (3) Only Utilities’ and Industrials’ estimates get cut. (4) Shortages of masks and semis highlight importance of domestic supply chains. (5) Taiwan Semi building in Arizona, while Samsung scouts for a location. (6) “Green” technology companies building new manufacturing capacity too. (7) Many capital goods orders on the rise. (8) Norway, world’s EV leader, tries wirelessly charging taxi batteries. (9) Nio swapping batteries in China. (10) UK ponders how to charge cars parked on the street.
Help Wanted
(1) Summers trashes Biden’s winter plan. (2) Providing disincentive to work. (3) Not enough workers with the right skills? (4) Private-sector wages and salaries at record high. (5) Our Earned Income Proxy was strong in January. (6) Wages rising at faster pace. (7) Payroll tax receipts at record high. (8) Small businesses are hiring, but can’t find qualified workers. (9) Job postings back to pre-pandemic level. (10) Ratio of unemployment to job openings drops. (11) Quits jump reflecting labor force dropouts rather than job switchers. (12) Biden’s plan is too stimulating. (13) An update on the major central bankers.
The Government Is Here To Help
(1) Yellen is more powerful than ever. (2) Can Yellen fend off the Bond Vigilantes? (3) A wildly ambitious agenda to solve four crises. (4) A meeting of regulators to discuss stock market volatility. (5) Yellen predicts full employment next year if Biden plan is passed. (6) A student of inflation and how to squelch it. (7) Professor Summers says it’s too much, and could bring back inflation. (8) Why work? (9) Expected inflation rising along with commodity prices. (10) Fed buying lots of notes and bonds.
Earnings Season’s Greetings
Check out the accompanying pdf and chart collection. (1) Positive revenues and earnings surprises. (2) Tweaking our earnings forecasts. (3) Still targeting 4800 for S&P 500 by year-end 2022. (4) More fiscal stimulus will boost earnings this year. (5) Corporate tax hike likely to pare earnings next year. (6) Profit margins have been remarkably resilient. (7) Another quarterly earnings hook. (8) The meltup risk again. (9) Bullish PMIs. (10) Personal income gets a boost despite weak employment. (11) T-Fed’s digital printing presses are on overdrive. (12) Inflationary pressures building below the calm surface of consumer prices. (13) Bond Vigilantes may be coming back from the dead. (14) Movie review: “The Little Things” (+ +).