Daily Research Updates
Morning Briefings
Expert market analysis delivered every morning. Stay informed with comprehensive research and data-driven insights.
Awakenings
(1) Hearing more good things about Gilead’s anti-viral drug. (2) Will the US economy awaken from its government mandated catatonia? (3) Revising our real GDP forecast: Much worse in Q2, but recovery starts during Q3. (4) Small business survey full of bad news with one exception. (5) Consumers showing some tentative signs of leaving their cabins. (6) Gasoline demand is picking up. (7) Reopening for business, though not business as usual. (8) Inflation outlook: the 4Ds versus the 3Ts. (9) Fed would welcome and accommodate a temporary awakening of inflation. (10) Setting the stage for another Cold War. (11) Joe Biden?
Bumpy Road for Transports
(1) Powell to politicos: Be ready to step up. (2) Transports sending bearish signals. (3) Trucking one of few industries in positive ytd territory. (4) May railroad data show deterioration continues. (5) Investors help trucking and railroads stocks bounce, but still avoiding airlines. (6) April numbers out of China show economy starting to percolate. (7) Marriott says Chinese consumers starting to travel again. (8) Under Armour Chinese stores open, but sales still down y/y. (9) Will US follow China’s economic trajectory?
Looking for Bottoms
(1) The race for the cure. (2) Is remdesivir COVID-19’s Tamiflu? (3) Even Howard Stern is a virologist now. (4) Mixed message from commodity pits. (5) Professor Copper signaling a bottom in global manufacturing? (6) More gasoline will be pumped as lockdowns wind down. (7) M-PMIs: China is up, while the rest of the world is down. (8) Comparing S&P 500 fundamentals in 2020 to 2009. (9) As each day passes, 2020 becomes less important and 2021 becomes more important for stock market outlook. (10) S&P 500 forward revenues, earnings, and profit margin could bottom by mid-year.
VWW-II
(1) WW-I was followed by VWW-I. (2) Far fewer casualties so far during VWW-II than VWW-I, but the economic toll from lockdowns is mounting rapidly now. (3) If the stock market is the scorekeeper, then there will be peace in our time from the virus. (4) 2900 or so might be a good place for the S&P 500 to consolidate for a while. (5) Opening season could be full of hits and misses. (6) Brief update on COVID-19 tests, cures, and vaccines. (7) Q2 real GDP tracking down 34%. (8) Head count: 46 million distressed workers during April. (9) Government unemployment benefits are generous while they last, beating many workers’ usual pay.
The Best Things In Life Are Free
(1) Crosby, Sinatra, Vandross & Jackson sing about life’s freebies. (2) Stock investors singing about free money. (3) Jerome, Christine, Haruhiko & Spanky. (4) B-52: the bombers and the band. (5) The Fed is covering the Treasury’s deficit. (6) Fed’s policies great for distressed assets, not so great for liquid assets. (7) Band of central monetary planners. (8) Forward P/Es of FAANGM and distressed S&P 500 industries boosted by free money. (9) Most of the unemployed expect to be going back to work soon. (10) Movie review: “Driveways” (+ +).
FAANGMs & Drugs
(1) Passing time with Puccini. (2) Economic data dropping like a rock. (3) COVID-19 keeps us investing at home. (4) FAANGMs prove asymptomatic. (5) FAANGM products keep us sane while isolating, as their uptrending earnings attest. (6) Struggles to obtain PPE reignite US push to onshore critical manufacturing, including drugs and medical equipment. (7) US & China swap blame-game barbs. (8) The first country to develop COVID-19 vaccine may win more than bragging rights.
Earnings Fizzles & Fiscal Fireworks
(1) The big losers are boosting the P/E! (2) Industry analysts chopping earnings estimates. (3) An optimistic outlook for 2021 and 2022 could drive S&P 500 to new highs next year. (4) The CBO sees a depression during Q2 followed by a recovery during H2-2020. (5) YRI vs CBO. (6) CARES Act shows Washington really cares with big bucks. (7) Treasury expecting to get its money back from Fed’s lending programs. (8) Round and round we go with more rounds of free money. (9) MMT’s magical mystery tour. (10) No constituency left behind.
American Magic
(1) Entrepreneurial vs crony capitalists. (2) Big Business and Big Government are natural born allies. (3) The lobbying industry is their love child. (4) Coolidge, Reagan, Emanuel, and Machiavelli. (5) Airlines weighed down by bailouts and on flight plan to be nationalized. (6) Buffett isn’t taking any more flyers on airlines. (7) Buffett’s search for value halted by Fed’s QE4ever. (8) The Sage of Fort Knox. (9) Globalization under attack by viruses, tariffs, and border controls. (10) Stay Home vs Go Global update.
Liquidity & Distress
(1) Many fire sales extinguished by central bankers’ fire hoses. (2) As stores closed, personal saving rate soared. It will likely remain high after a short dip when lockdowns end. (3) GVC aftershocks reduce likelihood of V-shaped recovery. (4) Did you get out on February 19 and back in on March 23? Should you go away in May? (5) Shock absorbers: Distressed asset funds are like kids in a candy store again. (6) Jump in S&P 500 P/E led by most distressed industries. (7) Game changers on health front of the war against the virus. (8) Chinese government’s bullying approach raising resistance. (9) Meet China’s bat woman. (10) Planet of the Viruses: Imperiled animals are taking their revenge on pushy humans.
Morning Briefing 2020-04-30
(1) Obsessing over the P/E. (2) Pricing stocks for normal earnings and abnormally low interest rates. (3) Don’t fight the Fed, especially when it teams up with the Treasury. (4) A trillion here, a trillion there adding up to serious money. (5) Twilight Zone: Falling S&P 500 forward earnings boosting P/E. (6) Three US companies talk about China’s recovery. (7) PPG reporting paint sales improving in China. (8) Starbucks brewing more coffee again in China, and soon in US. (9) CAT is open for business in China. (10) Fortnite hosting crossover events.
Not Much Confidence Among Consumers & Analysts
(1) Rebound in S&P 500 to 2900 well ahead of schedule. (2) Forward P/E of 19.7 is a bit rich under the circumstances. (3) A hard road back to “normalized” earnings. (4) Lots of uncertainty on health front, and more bad news on economic and earnings fronts. (5) Due for some consolidation with less volatility. (6) Consumer Optimism Index falls off a cliff, and so do regional business indexes. (7) Industry analysts are adrift with no compass. (8) IMF working on assessing the damage from GVC. (9) Add another trillion to the rescue pot.
P/Es in The Twilight Zone
(1) Epidemiologists are like economists, but not in a good way. (2) Models versus common sense and empirical observation. (3) My pandemic prescriptions: required mask-wearing, temperature-taking, and COVID-specific field hospitals. (4) Public health: the seven steps forward followed by Taiwan. (5) Opening up is hard to do, but needs to be done without a second wave. (6) Back to The Twilight Zone: As earnings estimates dive, P/Es soar. (7) Misery Index Model isn’t working, so far. (8) Buybacks falsely accused again.
The Twilight Zone: Where Is Everybody?
(1) “[B]etween the pit of man’s fears and the summit of his knowledge.” (2) A world of fear. (3) Mad-cash-cow disease. (4) From reach for yield to dash for cash, to rebalancing into stocks, to snapping up distressed assets. (5) A pandemic of cabin fever. (6) MMT and QE on steroids. (7) Death-defying deficits. (8) From Weimar to Tokyo. (9) The Cold War between the US and China. (10) Investing in an era of crony capitalism. (11) Hooray: The shortage of distressed assets is over! (12) The lower depths from Maxim Gorky to Jules Verne.
Down & Up
(1) Tech saves the S&P 500, while Energy hardly hurts it. (2) Cooking fatigue helps restaurants’ takeout biz. (3) Investors overlook Energy sector’s miserable Q1 results, seeing only the production cuts that will eventually heal the market. (4) Necessity proves it is the mother of invention in the race for COVID-19 cures and vaccines.
A View to a Kill
(1) James Bond and Jerome Powell. (2) The Fed created and exacerbated the zombie problem. (3) The IMF wrote the script for the current version of “Zombie Apocalypse.” (4) Fed recognized that half of investment-grade bonds were BBB. (5) Fed is now scrambling to save them from Zombieland. (6) Powell saw the problem coming and made it worse. (7) T-Fed’s spiffy new SPVs. (8) Fed sets up two homeless shelters for corporate bonds, including the “fallen angels.” (9) Saudi prince gets a new French palace. (10) Pelosi: “Let them eat ice cream.” (11) Industry analysts scrambling to cut their earnings forecasts. (12) Can FAANGMs lead the way higher?
Small Companies Are Beautiful & Distressed
(1) Oil demand and prices plummet along with global economy. (2) When was the last time you were at a gas pump? (3) Running out of oil storage capacity. (4) Industrial commodity prices ex-oil are down but not plunging like oil so far. (5) The Fed is bailing out BBB fallen angels, not the other zombies in the junk pile. (6) LargeCaps, Growth, and Stay Home stocks have been outperforming, and may continue doing so. (7) ADP numbers show small-sized companies account for about a quarter of employment and paychecks. (8) Unintended consequences: Government’s Paychecks Protection Program runs into some snags. (9) Not enough lifeboats.
S&P 500 Flying, Economy Diving
(1) 1987, 2008, & 2020. (2) Shortest bear market in history? (3) Rebalancing made the bottom. (4) The Fed: bombs away! (5) S&P 500 revenues and earnings growth before and after Lehman. (6) Revenues and earnings before and after COVID-19. (7) Assessing the health, economic, and financial fronts of the war against the virus. (8) The last are first since March 23, but over the long run companies in digital and biological technologies should outperform. (9) Recovery pattern: V at first, followed by a U. (10) US economy losing altitude at lightning speed. (11) China as a role model for other economies? (12) Movie review: “Resistance” (+ +).
Here & There
(1) Economic data getting downright ugly. (2) Consumers buying food and toilet paper, not much else. (3) Banks boosting loan-loss reserves, anticipating defaults. (4) JPM warns Q2 could be worse than Q1. (5) BofA says loan deferral requests may have peaked a week or two ago. (6) For banks, lower interest rates offset the benefit of more commercial loans. (7) Bank stocks already reflect lots of bad news. (8) Diversified Banks’ P/Es climb as earnings fall. (9) A look at how China reopened its economy. Is it relevant to US?
Taking Stock
(1) The Age of Future Shocks. (2) From reaching for yield to dashing for cash to rebalancing into equities, all in two months. (3) Retesting the February 19 high rather than the March 23 low? (4) Some more numbers on the dash for cash. (5) Stock prices soar as P/Es jump more than earnings dive. (6) Record drop in S&P 500 forward earnings last week. (7) Chinese social financing at record-setting pace during March. (8) Fed’s balance sheet up $1.8 trillion in past four weeks to record $6.0 trillion. (9) A primer on some of the Fed’s lending facilities.
Investing in the Post-GVC World
(1) Three Marketeers: Mnuchin, Rubin, and Fink to the rescue. (2) A brief history of Fed Puts. (3) The Fed is playing whack-a-mole again with more moles and bigger hammers. (4) From the Fed to Feddie to T-FED. (5) BlackRock will manage the Fed’s corporate bond portfolio for a small fee. (6) GVC aftershocks will shock the post-GVC world. (7) Globalization is at risk. (8) Bringing supply chains home and working from home. (9) Cash was trash, then came the mad dash for cash. Now cash-rich corporations are like kids in a candy store. (10) M&A boom is on the way. (11) Online shopping, warehousing, logistics, and trucking are likely to continue to boom. (12) Stay away from GVC’s basket cases. (13) A couple of freefalling economic indicators.
Feddie’s Free Money: No Asset Left Behind
(1) Bernanke used bazookas; Powell is using B52s. (2) Carpet-bombing the economic and financial fronts of VW-I with free money. (3) Over $1 trillion raised in dash for cash during March. (4) Businesses tapping lines of credit like never before. (5) Future shock: from QE4 to QE4ever to NALB (no asset left behind). (6) Fed keeping zombies from getting buried. (7) Fed indirectly supporting stocks by enabling rebalancing from bonds to stocks. (8) Bull/Bear Ratio is very bearish, which is very bullish. (9) The Fed is on a buyback binge in the credit markets. (10) The Fed has become the Bank of the United States, with capital provided by the US Treasury. (11) In Powell and Mnuchin we trust. (12) You ain’t seen nothing yet!
Tech Is Going More Viral
(1) US death-count methodology could exaggerate COVID-19’s lethality, leading to policy overkill. (2) Lockdowns are taking a toll on economy. (3) We are all germophobes—and tech addicts—now. (4) Stocks benefitting from pandemic-altered reality include names in the outperforming S&P 500 Tech and Communication Services sectors. (5) Cloud-computing and gaming industry companies are among the winners. (6) Here come the robots—and contactless financial transactions.
The Great Rebalancing: No Asset Left Behind
(1) Working on Chapter 13 of the second edition of my Fed book. (2) A work in progress. (3) The Fed’s remarkable pivot on March 23 marks end of B-GVC, beginning of A-GVC. (4) Weekly data confirm dash for cash during March. (5) Credit spreads confirm March 23 was a major turning point on the financial front of war against the virus. (6) The Fed is the buyer of last resort for bonds, providing cash for rebalancing into stocks. (7) The Fed’s balance sheet is vaulting to new record highs. (8) ECB joins Fed and BOJ with no-asset-left-behind PEPP (Pandemic Emergency Purchase Programme). (9) BOJ doing much more of the same.
The Way Forward
(1) A happy Monday for a change. (2) A list of positives. (3) Getting worse at a slower pace. (4) CVS offering Abbott’s test in two cities. (5) Bill Ackman and Neil Diamond don’t have much in common. (6) Pandemic’s theme song offers the way forward. (7) Analysts just got the GVC recession memo. (8) Bear-market rally or looking past the doom and gloom to good times again? (9) B-52 money: Bazooka and helicopter analogies seem so yesterday and puny. (10) The Great Rebalancing.
Analyze This
(1) Neil Diamond’s song may be a good antidote. (2) Industry analysts tend to be too optimistic during good times. (3) They don’t see recession coming and turn too pessimistic as economy starts to recover. (4) Our Earnings Squiggles Framework shows it all. (5) Biggest downward earnings revisions occur during recessions. (6) Modeling earnings now using 2008-09 experience. (7) Lehman Moment: March 16 White House Guidelines set stage for shutting down the economy. (8) Focus on 2021. (9) Forward earnings just starting to take a dive. (10) Bad versus Ugly scenarios for S&P 500. Bad is the new Good. (11) B-52 money will pour into numerous industries. (12) A few industries are already booming as a result of GVC. (13) Joe’s daughter’s university has a vaccine for COVID-19.