Morning Briefings
Expert market analysis delivered every morning. Stay informed with comprehensive research and data-driven insights.
Panic Attack #67?
(1) S&P 500’s next record high likely in 2021. (2) Vivaldi, Templeton, and Birinyi. (3) From pessimism to skepticism, optimism, and euphoria. (4) Oct. 2017: Back to the future. (5) Less exuberance would be bullish long term (6) Time to party like its 2020, not 1999. (7) Tech’s fundamentals are much more solid coming out of latest recession than previous two. (8) SoftBank unlikely to be this year’s LTCM. (9) Nasdaq includes the FAANGMs, while S&P 500 Tech sector includes only Apple and Microsoft. (10) Fiscal and monetary authorities talking about doing something about income inequality.
What If …?
(1) The tale of the whale. (2) Hard times for SoftBank, today’s LTCM? (3) The meltup of the 1990s followed LTCM’s meltdown. (4) What if everything goes right? (5) A happier and healthier tale. (6) Monster rebound in real GDP during Q3 unfolding. (7) De-urbanization is great for home and auto sales. (8) Productivity making a comeback. (9) Now for a brief consideration of what if everything goes wrong. (10) W and K economic scenarios. (11) The Fed is on the side of the bulls, which could be too much of a good thing. (12) Movie review: “The Morning Show” (+ + +)
Happy & Unhappy Earnings Hooks
(1) Tracking the recovery’s progress. (2) Global Growth Barometer bounces. (3) S&P 500 revenue and earnings estimates hooks still improving. (4) Tech and Health Care sectors earnings revisiting pre-COVID-19 levels. (5) The S&P 500 travel industry’s earnings chart is U-G-L-Y. (6) China’s domestic travelers give us hope. (7) Everyone wants to be the next Tesla. (8) EV startups do reverse mergers with SPACs to go public.
The Fed Is in Control
(1) Before and after the pandemic. (2) Is the Fed pegging the bond yield? (3) Inflationary expectations showing up in bond’s yield spread with TIPS, not in the bond yield itself. (4) Bond yield hasn’t budged despite strength in economic surprise index and M-PMI. (5) Inflationary expectations rising with copper price. (6) Is the Phillips Curve flat or dead? Yes, to both! (7) Employment gets more weight in dual mandate. (8) The unemployment rate isn’t the only labor market variable that matters. (9) De facto yield curve control is here. (10) No rush to raise rates anytime soon.
Lots of Liquidity Left
(1) A mad dash through recent events. (2) March’s mad dash for cash left plenty still available, even now. (3) Bond yields near record lows, while liquid assets remain near record highs. (4) Central banks continue pumping liquidity. (5) Government social benefits boosted personal saving, which is still boosting consumer spending. (6) Comparative MAMUs. (7) July’s consumer-spending report shows pandemic’s winners and losers. (8) Housing-related industries are clear winners. (9) Used car sales getting a lift from new suburbanites. (10) Fed likely to continue to undershoot inflation target for the foreseeable future.
Anatomy of a Meltup
(1) A theme song for the meltup. (2) Was that a bear market or a correction? (3) The final stage of bull markets. (4) Bull continues to stampede, trampling even the bulls. (5) November 3 election could trip up the bull. (6) MAMU’s forward P/Es approaching 1999 tech bubble levels. (7) The valuation question when interest rates are zero. (8) Fed will keep rates near zero longer while waiting for inflation to overshoot. (9) Yield-Curve Control will be Fed’s response if bond yield keeps rising. (10) All meltups are valuation led. (11) Are 200-dmas signaling impending corrections in high-flyers? (12) Movie review: “Radioactive” (+).
Homes & Drones
(1) Low rates and fleeing urbanites send new home orders surging. (2) Millennials forming families create long-term housing demand. (3) Wedding dreams dashed by COVID-19 free up funds for home down payments. (4) Homebuilders have pricing power, but face increasing lumber costs. (5) Keeping an eye on increasing mortgage delinquencies and falling rents. (6) Chipotle drives S&P 500 Restaurants index’s return to positivity. (7) Green technology: Tree-planting drones help revive barren lands.
The Pandemic & American Demography
(1) Counting cases. (2) More births than deaths. (3) But births are falling, while deaths are rising. (4) COVID-19 baby bust? (5) Past health and economic crises led to fewer births. (6) More challenging than ever to find childcare. (7) Calculating excess deaths from the virus. (8) Pre-existing strains combined with financial ones likely to boost divorces. (9) Postponing getting hitched. (10) Home, sweet home. (11) Pandemic has been a boon for booming housing industry. (12) Housing-related retail sales getting a big boost too. (13) Moving to greener pastures.
Forward Looking
(1) GDPNow model tracking at 25.6% for Q2. (2) Citi’s economic surprise index remains surprisingly strong. (3) US flash PMIs flashier than the ones for the Eurozone. (4) NY and Philly business surveys were solid in August. (5) Leading indicators leading higher. (6) Transportation indicators in low gear. (7) S&P 500 revenues and earnings data were down sharply during Q2. (8) Weekly forward revenues and earnings show both recovering from their recent bottoms. (9) Unlike in the movie, gold and bond prices are good friends.
The Future Is Coming
(1) Lots of time to compare 2020s to 1920s. (2) Three recessions in the 1920s, and one Great Crash. (3) Beware of the 2030s. (4) Extrapolating 6% annual appreciation trend puts DJIA at 45,000 by 2030. (5) Latest round of technological innovation is just getting started. (6) Industrial Revolution was about brawn, while High-Tech Revolution is about brain. (7) More on the S&P 5-8 versus all the rest. (8) Not all FANGMAN stocks are in tech sector. (9) Movie review: “Fear City: New York vs The Mafia” (+ +).
Broadening Earnings Optimism
(1) Analysts boost earnings growth estimates for wide array of industries. (2) Cyclicals get the nod, as do any industries relating to the home. (3) Upward revisions not as strong for industries selling the staples we hoarded earlier this year. (4) Money falls from the sky in Europe. (5) ECB ups bond buying to €1.35 billion. (6) Furloughs keep European workers off the unemployment rolls. (7) EU countries show unified front with plans to sell €750 billion of bonds. (8) Eurozone July economic data have green shoots. (9) For the grass to grow, COVID-19 needs to stay at bay.
Morning Briefing 2020-08-19
(1) The Fed fights the virus. (2) Trying to get inflation right on average. (3) The whites of inflation’s eyes. (4) Kaplan and Evans weigh in. (5) Making up for misses with overshoots. (6) Yellen briefed Biden and champions average inflation targeting too. (7) Fed’s Don Quixote mission: to reach the unreachable stars. (8) Central bankers getting high on CBDC. (9) The equity mandate: Can monetary policy level the playing field? Should it?
More Comparisons of GVC and GFC
(1) Natural and man-made disasters. (2) GVC recession is shorter but deeper than GFC downturn. (3) An unprecedented lockdown recession. (4) GVC recovery should take less time than GFC did. (5) Big Q3 recovery ahead for real GDP. (6) US business sales of goods almost back to normal. (7) Big boost from inventories ahead. (8) Amazingly fast roundtrip for US auto assemblies. (9) No recession in tech output. (10) China’s NM-PMI was different this time. (11) Too many old people in China? (12) Eurozone showing partial recovery in production, but complete recovery in retail sales. (13) More oomph in Germany. (14) Submerging economies emerging again. (15) FAANGM update.
Comparing the Great Virus Crisis & the Great Financial Crisis
(1) A tale of two calamities: Lehman and the pandemic. (2) Global measures of production and exports show similar recessions during GFC and GVC. (3) U-shaped recovery back then. (4) V-shaped recoveries for PMIs and leading indicators now. (5) US forward revenues and earnings bottoming. Mixed picture overseas. (6) Much more and much faster monetary and fiscal stimulus this time. (7) Comparative credit crunches. (8) Inflation remains subdued around the world, giving policymakers room to stimulate, for now. (9) Movie review: “Summerland” (+ +).
Material Information
(1) S&P 500 Materials sector’s big bounce signaling better days ahead. (2) Gold loses some luster as bond yields edge higher. (3) Dr. Copper confirms the patient is on the mend. (4) Companies that cut costs in downturn should see profitability pop as volumes improve. (5) Electric vehicle demand should boost lithium demand. (6) Eastman Chemical says demand “likely” bottomed in May. (7) Developers looking for the Holy Grail: a battery that lasts forever and doesn’t use cobalt.
Sputnik V
(1) Discounting lots of good news through the end of next year. (2) Raising S&P 500 year-end targets: 3500 this year and 3800 next year. (3) Hard to predict upside in meltups. (4) March 23 was Don’t Fight the Fed Day. (5) MMT + TINA = MAMU. (6) S&P 500 forward revenues and forward earnings on recovery road. (7) Putin’s Sputnik V moment. (8) Russian vaccine news depresses FANGMANT stocks, gold, and bond prices but boosts bank stocks. (9) Credit markets also benefitting from Fed’s QE4Ever. (10) Liquidity vs solvency. (11) More delinquencies, defaults, and bankruptcies are ahead. (12) Energy and retailing industries remain especially troubled.
Another Roaring Twenties May Still Be Ahead
(1) A precedent for our times. (2) Still lots of years left for the 2020s to roar like the 1920s. (3) Malthusians never see technological innovation coming. (4) Technology solves the problem of scarce resources. It also boosts productivity and prosperity. (5) Lots of amazing innovations during the 1920s, and since then. More ahead in the 2020s. (6) Vaccines, treatments, and cures for those pesky viruses. (7) High-tech spending on IT equipment software, and R&D now accounts for a record 50% of capital spending. (8) Silent Cal vs Loud Don. (9) Government has gotten bigger since 1920s, and will get even bigger in the 2020s. (10) Crony capitalism isn’t capitalism, but it doesn’t have to be bearish for stocks either. (11) S&P 500 has been tracking 2% Dividend Yield Model since 2010.
Stock Valuation in a Zero-Bond-Yield World
(1) Hamlet, TINA, Joe, and me. (2) Valuation isn’t a life or death issue, though paying too much for stocks can be a killer. (3) TINA is back, stronger than ever. (4) Reversion to the mean. (5) But what if the mean is a moving target, buffeted by inflation and Interest rates? (6) Blast from the past: Fed’s Stock Valuation Model. (7) FANGMAN again. (8) Buffett Ratio is off the charts. (9) Is the V-shaped recovery starting to stall? (10) Rents are disinflating. (11) Movie review: “The Last Narc” (+ + +).
Health Is the Key To Happiness
(1) COVID-19 creates winners and losers—even in S&P 500 Health Care sector. (2) S&P 500 Health Care sector expected to post positive earnings growth at the right price. (3) Political clouds quickly approaching. (4) Investors won’t like Biden’s plans to expand Medicare and limit drug prices. (5) A rundown of the latest COVID-19 breakthroughs includes bets on cloned antibodies and on lung protection. (6) Scientists playing guinea pigs.
Survival of the Fittest?
(1) Less civil civilization. (2) It’s all relative. (3) More like Darwin’s natural selection than survival of the fittest. (4) The virus picks winners and losers. (5) With interest rates near zero and a scarcity of Growth stocks, valuation multiples soar. (6) The US has the FAANGMs, and the rest of the world does not. (7) Service-providing companies remain among the biggest losers from the pandemic. (8) A brief update on the plunges and weak recoveries so far in various service industries. (9) Millennials finally have a good reason to buy homes. (10) Baby Boomers may stay put. (11) Not enough homes for sale. (12) Many tenants and their landlords are in a world of pain.
Bond Vigilantes: Rest in Peace
(1) William Shakespeare, Marc Antony, Julius Caesar, and me. (2) The noble Bond Vigilantes were killed by the noble Fed. (3) They all meant well. (4) A galloping ride down Memory Lane when the Bond Vigilantes were high and mighty. (5) Their heyday: When the Wild Bunch was feared by the Clinton Gang. (6) Subdued inflation subdues the Bond Vigilantes. (7) Fed’s post-GFC bond purchases corrals the hard riders. (8) GVC and QE4Ever buries them. (9) If inflation makes a comeback, can Bond Vigilantes come back from the dead? (10) The Fed is more than willing to tolerate higher inflation. (11) Beware of the Dollar Vigilantes.
Money, Money, Money In the Rich Man’s World
(1) Lots of fun and high-octane punch at the Fed’s MMT Ball. (2) Markets dancing to Prince and Abba songs. (3) The two wealthiest men in the world have all the money in the world, and can print more of it. (4) The Treasury has a big account at the Fed. (5) The Fed has a big pile of the Treasury’s securities. (6) Commercial banks have a pile of deposits, lots of loans, and rapidly mounting loan losses. (7) Not keen on Financials that lend money. (8) We are all monetarists now, or at least we are all watching the monetary aggregates again. (9) Powell as Daddy Warbucks. (10) Party poopers: Gold and Dollar Vigilantes.
De-Urbanization in US, Plagues Made in China
(1) Urbanites in search of home offices and backyards send home sales surging. (2) Dropping mortgage rates help too. (3) We’re betting new homeowners will need to buy a car—or two. (4) Low auto inventories should help manufacturers too. (5) The Chinese Communist Party is cursed and is a curse. (6) Watching for cracks in the Three Gorges Dam. (7) The latest accusations of Chinese stealing US intellectual property.
V-Shaped Indicators
(1) A two-month recession? (2) Millions remain unemployed. (3) Flash estimates and regional business surveys point to strong July PMIs. (4) Orders indicators rebounded in May, June, and July. (5) Economic surprise index remains elevated. (6) Dow Theory is bullish. (7) ATA Truck Tonnage Index shows more truckers on the road again. (8) Gasoline stalls in latest week. (9) Railcar loads bottoming, maybe. (10) Forward earnings bottoming for sure. (11) Debating unemployment insurance schemes. (12) Test marketing a Universal Basic Income?
Welcome to Oz
(1) So real or surreal? (2) Washington is more like Oz than Kansas. (3) The Wizard of MMT. (4) Kelton’s dreamland is a nightmare for conservatives. (5) One of the enlightened authors of the Biden-Sanders progressive manifesto. (6) Oz was about a bad dream. (7) Pay no attention to the seven reasons to worry lurking behind the curtain. (8) Precious metals join stocks as preferred alternatives to bonds. (9) Falling TIPS yield is bullish for gold and other assets. (10) The case for and against the dollar.