Daily Research Updates
Morning Briefings
Expert market analysis delivered every morning. Stay informed with comprehensive research and data-driven insights.
Outlook vs Outcome, Preempting vs Reacting
(1) Did you get the Fed’s latest memo? (2) Here’s the message again: We are in no rush to raise rates. (3) Reacting to outcomes rather than preempting outlooks. (4) Pandemic changed Fed’s reaction function. (5) Forward-looking vs backward-looking guidance. (6) Powell’s latest super-dovish interview. (7) Redefining a recovery. (8) Powell’s latest spin on asset bubbles and the Archegos incident. (9) Is Powell channeling Greenspan’s 2008 shocking admission? (10) Another Great Inflator? (11) Clarida explains it all. (12) QE4ever by the numbers. (13) Q1 earnings season by the numbers.
Rocket Fuel
(1) Bowie beats out Prince for this year’s market theme song. (2) Margin debt is like rocket fuel. (3) Why hasn’t the Fed changed the margin requirement since 1974? (4) Margin debt soaring with stock prices. (5) Pandemic relief checks add up to $800 billion, with 25% spent and 75% saved. (6) FRB-NY is monitoring what consumers are doing with their relief checks. (7) Soaring personal saving over the past year reflected in record increase in M2. (8) “Mind boggling” comes to mind. (9) Lofty valuations, with Buffett Ratio voting for Major Tom. (10) Rapidly rising PPI inflation belies Fed’s “base effect” cover story. (11) Steel and lumber prices in outer space. (12) Movie review: “Hemingway” (+ + +).
MAMU, JOLTS, and Wuhan
(1) Jamie Dimon ready for the Roaring 2020s. (2) Goldilocks’ moment. (3) Adding MAMU to Dimon’s short worry list. (4) JOLTS report shows February’s job openings as high as a year ago. (5) S&P 500/400/600 forward earnings all at record highs. (6) Double-digit earnings growth ahead for four quarters in a row. (7) That devilish 1.666% bond yield. (8) Valuation multiples for the Goldilocks moment. (9) How is China beating the virus?
No Sign of Wage-Price Spiral
(1) T-Fed’s flood of liquidity fueling broad-based inflation in asset prices. (2) A fiscal relief plan for MAMU. (3) While cost-push and demand-pull inflation heat up, consumer price inflation remains subdued. (4) Even Professor Gordon is less pessimistic on productivity. (5) Pandemic was a booster shot for capital spending on IT. (6) Wage inflation remains subdued despite signs of labor shortages. (7) An analysis of higher vs lower wages. (8) Progressives’ real-pay-stagnation claim is a statistical myth. (9) Real hourly wages up 1.2% per year since 1995.
Floating on a Sea of Liquidity
(1) The M-PMI is highly correlated with the y/y changes in the S&P 500 and in the Treasury bond yield. (2) M-PMI currently bullish for stocks and bearish for bonds. (3) M2 up $4.2 trillion y/y. (4) More helicopter money on the way. (5) M-PMI orders and production boom, and so does prices-paid index. (6) NM-PMI at record high. (7) Employment, usually a coincident indicator, has been a lagging one so far. (8) Our Earned Income Proxy jumped to a record high last month. (9) Fed will wait until economy reaches broad-based and inclusive maximum employment before tightening. (10) Plenty of signs of labor shortages despite high joblessness. (11) Wage inflation remains relatively subdued. (12) Movie review: “My Octopus Teacher” (+ + +).
Old Economy Rocking & Rolling
(1) Materials and Industrials rock on. (2) Biden’s infrastructure bill and economic recovery keep the party going. (3) Steel and copper prices near highs. (4) Analysts scramble to raise steel industry earnings for this year, but aren’t planning on high prices sticking around into 2022. (5) European surge in Covid cases may taper enthusiasm for the metals. (6) Behind bitcoin and CryptoKitties, there’s a blockchain doing the work. (7) Large companies and upstarts help enterprises deploy blockchain technology.
Impending Doom or Impending Boom?
(1) Who is that masked man? (2) Lady in distress. (3) Will March madness bring April’s fourth wave? (4) Will vaccines protect us from UK’s B.1.1.7 variant? (5) No doom, only boom in consensus earnings forecasts. (6) More boom than gloom in bond yields too. (7) Valuation multiples floating on a sea of liquidity. (8) Archegos is playing out like a Greek play. (9) S&P 500 forward earnings has fully recovered and points to profits boom this year. (10) How much will the taxman slice off of corporate profits in 2022? (11) That sinking feeling about fiscal excess.
Alfred Hitchcock & The Dot Plot
(1) The dot plot could be the next horror show for the financial markets. (2) Powell says to pay no attention to the forecasts of his colleagues. (3) Monetary policy is backwards looking on purpose. (4) Falling behind the yield curve. (5) Fed’s forward guidance pushes tightening into 2023 or later. So it is likely to come much sooner. (6) The regional surveys of business activity and pricing are hot. (7) Delivery times getting longer as unfilled orders pile up. (8) The government is on a spending spree. (9) Taxes are coming.
From the 4Ds to the 5Ds!
(1) Nostalgia time. (2) The bull’s long charge. (3) Da Vinci Code again. (4) Fed resists pegging bond yield, and outsources inflation fighting to Bond Vigilantes. (5) Powell’s happy spin. (6) The Fifth Dimension: Adding Desperadoes to the 4Ds. (7) The yield-curve spread is signaling economic expansion with rising bond yields. (8) The first future-shock business cycle on a fiscal and monetary cocktail of steroids and speed. (9) The bull market has been broadening since early September 2020. (10) Financials boosted by ascending yield curve and prospect of higher earnings, dividends, and buybacks. (11) Net charge-offs were remarkably moderate last year. (12) Rally in Emerging Markets MSCI could stall on rising US bond yields. (13) Movie review: “The Father” (+ +).
Transports on a Roll
(1) Traffic jam builds in the Suez Canal. (2) Global trade is tangling up supply chains. (3) Dow Transports shakes off Covid and hits new highs. (4) Airlines flying before broad recovery in traffic. (5) Recovery in trade volumes and M&A help railroad stocks. (6) Internet purchases boost the shippers. (7) A look at the industries with record-high forward earnings per share. (8) Facebook working on brain/computer interfaces. (9) Smart glasses take on a whole new meaning. (10) Make things happen with a twitch of a finger.
Talking Fed Head
(1) Will the base effect on inflation be basically transitory? (2) What about the M2 effect? (3) The base effect has started in the Richmond Fed’s district, and then some. (4) Delivery times on the rise. (5) Home price inflation not reflected in CPI, but could soon indirectly boost rent inflation. (6) Powell admits sun is coming out, but only seeing clouds. (7) Ignore the dot plot. (8) An odd op-ed. (9) Fed’s top priority: broad based and inclusive employment. (10) Powell declares Phillips curve is dead. (11) Any bad consequences of Fed policies will be temporary, or else you’ll get another relief check.
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” (+ + +).