Daily Research Updates
Morning Briefings
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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.
Maxim Gorky & The Fed’s Punch Bowl
(1) Maxim Gorky’s depressed crowd is delusional. (2) Singing a happy song. (3) Let’s give the economy and earnings a chance to recover. (4) Mounting evidence of stalling economic recovery. (5) Discounting multiple vaccines multiple times. (6) Fed keeping punch bowl full and spiked. (7) Growth stock investors are punch-drunk. (8) Profit-taking hits FANGMANT. (9) Three major investment styles all driven by the Magnificent Eight. (10) Delusional or realistic scenario? (11) China’s latest plague. (12) What if the radical left wins? (13) Movie review: “Miss Sloane” (+).
Biden’s Brave New World: Utopia or Dystopia?
(1) Another plague in China. (2) US-China Cold War heating up. (3) Dispatches from the trenches. (4) Setbacks on the health front. (5) Nice rebound in existing home sales, but gasoline usage stalling. (6) S&P 500 forward revenues and earnings bottoming. (7) Joe Biden: A man of the (left-leaning) people. (8) A crib sheet of the Biden-Sanders agenda prepared by AOC and other Illuminati. (9) Should we care if wind turbines kill birds, bats, and bugs?
A Billion Here, A Trillion There
(1) A global meltup. (2) Billions of dollars being spent on developing a vaccine at warp speed. (3) Trillions of dollars being spent and printed with abandon by fiscal and monetary policymakers. (4) EU agrees to issue “corona bonds.” (5) Japanese government writing a blank check for dealing with virus. (6) ECB, BOJ, and the Fed continue to pump massive amounts of liquidity to drown the impact of the virus. (7) Another CARES package on the way this week? (8) We are all MMTers now, including Bernanke, Yellen, and Powell. (9) MMT free-for-all: Why can’t we all stop paying taxes? (10) A trillion here, a trillion there add up to meltups in stocks, bonds, gold, commodities, and foreign currencies.
Meet the New, Improved Joe Biden
(1) “W” follows “V” in the alphabet. What about the economy? (2) Asymptomatic and unmasked virus spreaders. (3) As C-19 cases mount, Trump is falling behind Biden in the polls. (4) Trump now says masks are patriotic. (5) Big government income stimulus during April and May boosted retail sales during May and June. (6) Biden moving to the left along with the Democratic Party’s center. (7) One exception: Biden moves toward Trump’s position on China and Made in America. (8) Jail time for corporate polluters under Biden. (9) Higher taxes on higher incomes and on corporate profits under Biden. (10) Biden-Sanders task force is moving Biden further to the left. (11) Winners and losers under Biden. (12) A Biden Blue Portfolio.
US-China Cold War Heating Up
(1) December 11, 2001: Was it another Day of Infamy? (2) Unlike previous US presidents, Trump goes very public on US complaints against China. (3) A long-festering problem. (4) Meet Peter Navarro, again: America’s foremost critic of China. (5) More Cold War speeches from top US officials. (6) Phase 2 has been phased out. (7) Drawing a line in the South China Sea. (8) Banning Chinese companies and moving supply chains out of China. (9) Even the US Attorney General blasts China. (10) Chernobyl, COVID-19, and the Three Gorges Dam. (11) Update: Stay Home or Go Global? (12) Movie review: “Washington” (+ + +).
Banks Are Winning & Losing
(1) Americans are filling their tanks and hitting the road. (2) More upside surprises from the Citi Economic Surprise Index, and forward revenues and earnings too. (3) Banks reserving for lots of rainy days still ahead. (4) Capital markets and trading save the day for Q2 bank earnings. (5) Push for COVID-19 vaccines pushing possible candidates into late-stage trials. (6) Scientists also try harnessing plants to make vaccines fast and cheap. (7) Tesla’s price cuts may signal drops in its technology and production costs—not its sales.
Getting Technical
(1) Shockingly awesome Fed response to GVC. (2) Now all we need is a shockingly awesome vaccine. (3) Fed is fighting the virus. (4) No choice but to rebalance out of bonds into stocks. (5) Powell: Not even thinking about raising interest rates. (6) Powell: Not even thinking about high asset prices either. (7) YRI’s in-house COVID-19 experts are on the cases and vaccines. (8) Technology solved the food shortages Malthus predicted. Now if it could just stop the virus. (9) Operation Warp Speed is spending lots of money to stop the virus. (10) The stock market is showing both bad breadth and a golden cross. Go figure.
Counting Chinese Yuan & US COVID-19 Cases
(1) Still in Rod Serling’s The Twilight Zone. (2) The fifth dimension of the imagination. (3) A FANGMANT of our imagination. (4) From MAMU to MAMD, and back to MAMU again. (5) Joe Biden, soon to be the most progressive president since FDR? (6) A surreal future scenario: Fed pushes the federal funds rate below zero and buys stocks. (7) “Wizard of Oz” was Dorothy’s Twilight Zone nightmare. (8) The Chinese government is inflating credit and stock prices. (9) Updates on challenged and challenging COVID-19 stats.
Bad Earnings & Good Yearnings
(1) The seasons, they go round and round. (2) Magnificent Six leading the way. (3) Discounting better earnings. (4) Bank managements will have some good and bad news. (5) Banks will have to boost loan-loss reserves some more. (6) Business borrowers cash in lines of credit. (7) Credit-card debt declines as delinquencies rise. (8) Commercial real estate is in a world of trouble. (9) Investment bankers are fully employed. (10) Unlike most recessions, this one has some winners in addition to plenty of losers. (11) From FANG to FANGMANT. (12) Opting to benchmark to S&P 500 equal-weighted index rather than market-weighted one. (13) Movie review: “Greyhound” (+ +).
TGI Thursday: Accentuating Some Positives
(1) Good to see Americans on the road again. (2) Surprising surge in Citi’s Economic Surprise Index. (3) S&P 500 forward earnings starting to rebound. (4) Improvement in worldwide semi sales expands to US and Japan. (5) Nvidia and AMD power S&P 500 Semiconductors index higher. (6) Some positive news on the semiconductor earnings front. (7) Another chip manufacturer considers expanding its US manufacturing. (8) TuSimple continues developing its autonomous trucks, while others have tougher road.
Modern Monetary Theory: In Theory & In Practice
(1) Meet Stephanie Kelton. (2) A manifesto for the people’s economy. (3) A champion of big government. (4) Resource allocation debate: government vs markets. (5) The magic of printing money. (6) Fiscal policy should take the lead in creating full employment. (7) Economic deficits matter more than budget deficits. (8) MMT is the New Deal on steroids. (9) Fighting inflation by raising taxes. (10) Public service jobs for all. (11) The Wiz is a Utopian. (12) Big-government politicians on both sides of the aisle embrace MMT. (13) Trump administration unites fiscal and monetary policy in MMT alliance to fight the GVC.
More on MAMU & MAMD
(1) No rest for the wary as meltup refuses to rest. (2) Forward earnings just starting to recover. (3) Comparing MAMU now and MAMU in 1999. (4) Greenspan’s 1996 question about irrational exuberance. (5) Fed forcing everyone out of bonds and into stocks. (6) If MAMU is followed by MAMD, will Fed buy stocks and push yields below zero? (7) Chinese officials are stock-market cheerleaders. (8) Services economy rebounding in China and US. (9) Buffett is back at the M&A buffet. (10) No contest between bond yield and dividend yield. (11) Real rates turn negative, which is good for gold and maybe for other commodities too. (12) Fed officials want to make sure we know they will accommodate us.
The Fed & the FAANGMs That Ate the Market
(1) Crossing red lines. (2) Powell chooses to leap first, look later. (3) Fed starts buying bonds of corporations that don’t need help. (4) No Asset Left Behind: How the Fed’s bond buying boosts stock prices and P/Es. (5) Saving fallen angels before they turn into zombies. (6) Dalio’s complaint. (7) Central bankers’ firehoses still pouring lots of liquidity even though the fire sales are over. (8) Fair-value P/E: 15 or 30? (9) Yield Curve Targets. (10) The Magnificent Six viral stocks: expensive for a reason. (11) FAANGMs are dominating all the major investment-style categories. (12) Movie review: “Chernobyl” (+ + +).
Mostly Good News
(1) Watching improved gasoline usage to gauge the road to recovery. (2) Good news from employment and manufacturing data, too. (3) Boeing 737 MAX flies closer to approval. (4) United adds planes as air travel slowly takes off. (5) Analysts stop slashing forward earnings forecasts for Industrials, and most other sectors too. (6) Surveying the status of COVID-19 treatments and vaccines in the wake of Pfizer’s good vaccine news.