Morning Briefings
Expert market analysis delivered every morning. Stay informed with comprehensive research and data-driven insights.
What’s the Matter with Profits, Again?
(1) Oddities in profits data. (2) The bears love NIPA profits because they are in a coma (ambiguity intended: Read either way). (3) Stock prices diverging from NIPA profits. (4) S&P 500 earnings diverging from NIPA profits. (5) Tale of two profit margins: S&P 500 at record high, while NIPA on downward trend. (6) Market discounting that earnings growth will rebound next year from this year’s growth recession. (7) Another earnings season, another earnings hook. (8) NIPA profits measure is a fruit cocktail. (9) S corporations distorting NIPA profits and National Income shares.
Some More Thanks Giving
(1) Wearing a cardigan sweater at TD dinner. (2) Raining on the parade. (3) Ready for Santa. (4) Wild ride for S&P 500 P/E since early 2018. (5) The case for a meltup. (6) More panic attacks or the big bear? (7) Trump and Xi need a face-saving phase-one deal. (8) Does Pelosi really want to impeach Trump, or just embarrass him? (9) Another government shutdown? Probably not. (10) Scientists making progress on CO2 scrubbers.
Thanksgiving
(1) Thanksgiving and Mr. Rogers. (2) Counting blessings. (3) A great year for stocks and bonds. (4) Lots of full-time jobs. (5) Real wages at record high. (6) Mixed capital spending. (7) No boom, no bust. (8) Clunkers: Exports, imports, railcar loadings, and leading indicators. (9) The Fed’s latest financial stability report. (10) Nothing to fear but lots of corporate debt. (11) Movie review: “A Beautiful Day in the Neighborhood” (+ +).
Consumers Are Consuming
(1) Europe finding a bottom? (2) European car registrations pop, and non-auto retail sales head to new highs. (3) Chinese debt hitting higher highs. (4) Chinese bond defaults strike companies, banks, and municipal entities. (5) In US, all retailers are not having the same year. (6) Target hits multiple bullseyes; Kohl’s strikes out.
Global Capital Flows & the Dollar
(1) The jury is out on Go Global vs Stay Home. (2) US came out of Great Financial Crisis better than most. (3) US financial system is strong. (4) US consumers are in very good shape. (5) High-tech capital spending booming. (6) Inverse correlation between the trade-weighted dollar (TWD) and commodity prices, which remain weak. (7) Our capital flows proxy is also inversely correlated with TWD. (8) Emerging markets tend to do best when Fed is easing. (9) Dollar remains key reserve currency. (10) Deflating Asian PPIs.
P/E Primer
(1) Question of our times: Is the market overvalued? (2) Inflation-adjusted valuation models aren’t alarming. (3) Meet MAPE: Misery-Adjusted P/E. (4) Les Misérables are much less miserable. (5) Inverse relationship between P/E and misery. (6) A primer on forward P/Es. (7) 505 P/Es. (8) S&P 500 Energy, Financials, Health Care, and Industrials are the fairest of them all. (9) Market-cap shares vs earnings shares for the sectors. (10) Global sectors: valuation vs market-cap shares.
Revisiting Earnings & Valuation
(1) The life of Brian. (2) Despite Brexit, London is booming. (3) Hillary and me. (4) No trade deal yet with China. (5) What if Chinese troops repress Hong Kong? (6) Mixed signals from stock market indicators. (7) Only 400 points to go from 3100 to 3500. (8) Doing the math again. (9) Forecasting forward earnings. (10) Growth recession in business sales. (11) Melt-up risk. (12) Valuation models factoring inflation show market isn’t overvalued, though not cheap. (13) Movie review: “Ford v Ferrari” (+).
A Couple of Consumer Discretionary Industries
(1) Two S&P Consumer Discretionary sector industries may be headed out of favor with buyers of their products and their stocks: Homebuilding and Internet Retail. (2) Consumers know value when they see it and wait for it when they don’t. (3) Consumer discretion: the better part of value? (4) Rising mortgage rates and home prices aren’t good for homebuilders. (5) Elevated valuations aren’t good for their stocks’ future performance. (6) Internet retailers’ share prices have lagged the broader market, but perhaps justifiably so given diverse woes. (7) 3-D printing makes itself at home—and work.
Zombies in the Fed’s Soup
(1) How to watch the Fed. (2) Suffering from group-think. (3) Doubling down on faulty models. (4) An embarrassing case in point: Undershooting the inflation target for 8 years. (5) A glut of demand-side macroeconomists. (6) Debt-financed demand for goods and services can be weighed down by too much debt. (7) Borrowing by zombie companies creates deflationary excess capacity. (8) Borrowing binges, now and then. (9) The Fed is feeding the zombies, postponing the IMF’s zombie apocalypse. (10) More on comparative global valuation by sectors.
Going Global
(1) Across the pond. (2) Brexit, China, Trump, etc., etc. (3) Cabin fever revisited. (4) Everyone is going global. (5) From contrary to consensus in a few weeks. (6) Third time’s the charm for the Fed. (7) A bull market in a bull market. (8) The Fed is on pause over the next 12 months. (9) Trump’s favorite poll. (10) Bad news for bonds is good news for stocks. (11) Germany’s L-shaped bottom. (12) US vs them: comparing valuation multiples by the sectors.
Productivity Is Rebounding
(1) Setback or blip? (2) Rule #1 for Forecasters. (3) Back to the future: Big upward revision in productivity growth during second half of 1990s. It can happen again. (4) From paradox to miracle. (5) Productivity rebound is underway. (6) Confirmation coming from real hourly compensation and record-high profit margins. (7) Government’s bean-counters can take a decade to catch up with technological change. (8) The cloud and free apps may be boosting GDP and productivity, adding more beans than the bean-counters are counting. (9) YRI is virtual. (10) Movie review: “Midway” (+ +).
Energy Getting Re-Energized?
(1) S&P 500 Energy: Been down so long that it may be time to look up. (2) A trade deal would energize crude prices. So would another war in the Middle East. (3) It’s all about supply and demand. (4) An alarming article by a credible source on the potential for a war between Israel and Iran. (5) A new molecule may reduce your heating bill. (6) US government is watching Chinese companies watching us. (7) TikTok recognizes you.
What’s Up?
(1) Compelling valuations abroad. Fundamentals, not so much. (2) Latest rounds of easing by the ECB and Fed should be good for EMEs. (3) Cyclical policy stimulus vs structural lead weights. (4) Europe is full of bad economic sentiment, negative economic surprises, and weak M-PMIs—though still a great place to visit. (5) M-PMIs above 50.0 in EMEs, below that in developed economies. (6) Best bargains in S&P 500 are in Financials and Health Care. (7) Hoping the bull market broadens. (8) Targeting 3500 for end of 2020. Discounting 2021. (9) Joe slices and dices Growth vs Value some more.
It’s an Old World After All
(1) Is global slowdown all Trump’s fault? (2) Significant slowing in world production growth since early 2018. (3) Global PPIs and commodity prices confirming widespread slowdown. (4) Too much stuff: peak demand for gadgets, autos, and oil? (5) The global economy is aging and experiencing EDR disorder. (6) Lots of structural trends weighing on global auto sales. (7) US household employment shows boom in full-time jobs. (8) No stagnation here: Real wages up 1.0% per year on average since early 1990s! (9) More and more of capital spending is on high tech.
‘In a Good Place’
(1) Warm, fuzzy, cozy, safe & sound? (2) Looking for trouble, but not finding much. (3) Doing well despite all the commotion in the nation’s Capitol building. (4) Is Trump impeachable? (5) Will Trump strike out in 2020? (6) Is the Fed postponing the zombie apocalypse? (7) Consumers carrying the ball. (8) Capital spending isn’t weak across-the-board. (9) Powell ties rate hikes to inflation. (10) Inflation remains mostly MIA. (11) Gains in real wages augur well for productivity. (12) Movie review: “Parasite” (-).
As Goes Tech, So Goes the Market
(1) Tech is leading the way higher for stocks. (2) Outsized market-cap and earnings shares. (3) A third of S&P 500 market cap in IT and Communication Services. (4) Hard to keep a good FAANGM down. (5) The march of the giants. (6) A close-up of Google and Netflix. (7) Ultracapacitors vs batteries. (8) Musk is on it.
Style Guide
(1) What’s in style? (2) Fewer headwinds for Go Global. (3) Forward earnings and forward profit margins better in US than abroad. (4) Go Global is very cheap relative to Stay Home. (5) SMidCaps have better forward earnings, but worse margins than LargeCaps. (6) Growth’s earnings not growing much faster than Value’s. (7) Growth’s valuation premium to Value is historically high currently. (8) IMF sounds the alarm on potential financial instability. (9) Postponing zombie apocalypse.
Bottom Fishing
(1) Yield-curve spread swings from negative to positive. (2) Recession fears abating. (3) Why rising bond yields are bullish for stocks. (4) Simple yield-curve rules for managing monetary policy. (5) A bearish list for bonds. (6) Signs of better economic growth. (7) Even the German bond yield may be bottoming along with German economy. (8) Waiting for a bottom in industrial commodity prices. (9) S&P 500 earnings growth close to zero this year. Closer to 5% next year. (10) A few brief thoughts on Value versus Growth and SmallCaps versus LargeCaps
Good News & Bad News
(1) Californians rushing to Texas. (2) Signs of life in Fed district business surveys. (3) Regional orders and employment indexes rose during October. (4) Upticks in flash PMIs for US. (5) GM strike and Boeing 737 MAX woes contributed to weakening durable goods orders and shipments. (6) Phase One trade agreement between US and China should provide some relief for economies of both countries. (7) Ugly outlook for federal deficit. (8) No recession in federal tax receipts. (9) Federal outlays on redistributing income at record high. (10) Movie review: “The Current War” (+ + +).
Some Well-Performing Cyclicals
(1) Outstanding year for S&P 500 so far. (2) Defensive sectors have outperformed over past three months. (3) But some cyclical sectors have performed well too. (4) Lower mortgage rates boost housing-related industries. (5) Semis on a roller-coaster. (6) A bottom in worldwide semi sales? (7) Trucking along. (8) Doing well despite trade, Boeing, and GM woes. (9) Gene editing for fun and profit. (10) Prime editing DNA.
A World of Lowflation
(1) Unconventional monetary policies are now conventional. (2) Mixed results, so far. (3) Worldwide reach for yield continues. (4) Powell’s warning in 2013 more relevant than ever. (5) Greek bonds are good credits again. (6) Deflation has been persistent problem in Japan, while low inflation prevails in the Eurozone and the US. (7) Deflation in durable goods is widespread. (8) CPI services inflation rate higher in US than in Eurozone and Japan. (9) Rent inflation is higher and has a greater weight in US CPI than in Eurozone and Japan. (10) A brief global guide for CPI wonks.
Shiller’s Bullish Trump Scenario
(1) The biggest risk to longest economic expansion may be political rather than financial. (2) Shiller’s odd theory: Consumers want to take after Trump. (3) Trump has given consumers more after-tax income with more uncertainty. (4) Big increase in personal saving since Trump was elected president. (5) No boom, no bust. (6) LEI stalls; may be running out of room to improve. (7) No surprise: Economic Surprise Index improves during second half of most years. (8) More upside surprises in US than in Eurozone. (9) Forward earnings better here than over there. (10) More bargains over there than over here. (11) Waiting for commodity prices to bottom. (12) China continues to slow.
Global Soft Patch
(1) Soft patches now and then. (2) Revenues with and without Energy. (3) Business sales growth has slowed significantly this year. (4) Forward revenues makes another new record high. (5) Industry analysts tend to be too optimistic about earnings, but realistic about revenues. (6) Not much cheer in IMF’s world economic outlook, except 2020 should be better than 2019. (7) A list for optimists. (8) Time for Go Global to outperform? (9) Online shopping releases dopamine. (10) Consumers likely to keep consuming. (11) The repo story.
Happy Bankers. Brawling Brokers.
(1) No recession in bank earnings reports. (2) Banks find profits in a flat yield curve world. (3) Firing on all cylinders. (4) Provisioning for rainy days. (5) Credit quality remains solid. (6) Asset management: Passive passes active. (7) Discount brokers go for broke with no fees for trading. (8) Competing for fee-based AUM. (9) Flying in a graphene tube with fast charging, high-powered AA batteries.
Lead Weights
(1) Strike and strike-out. (2) Troubles at GM & Boeing adding to US manufacturers’ trade woes. (3) Manufacturing output in a growth recession. (4) Civilian aircraft shipments down 30% from March-August. (5) M-PMI showed manufacturing worsening in September. (6) Some reasons for optimism. (7) Chinese PPI is deflating again, which is bad news for profits. (8) Swine flu drives China’s CPI food index up 47% y/y. (9) Not much clarity in latest Fed minutes. (10) Rate cut not a slam dunk at next FOMC meeting.