Morning Briefings
Expert market analysis delivered every morning. Stay informed with comprehensive research and data-driven insights.
Running Out of Gas
(1) Setting the record straight on stock buybacks. (2) The Fed acknowledges that data on employee stock compensation plans are MIA. (3) Lots of traffic as car sales slow around the world. (4) Ridesharing is having an impact. (5) Why are German autos in a ditch? (6) Greener autos. (7) Chinese supply of autos accelerating, while Chinese demand is slowing. (8) Tougher emission standards. (9) Brexit again. (10) Carney has some thoughts on cryptocurrencies.
Abnormal Times
(1) Former Fed head Dudley joins the resistance. (2) Exploding heads. (3) Depressing global economic headlines. (4) Fiscal and monetary stimulus losing their effectiveness as trade policies increase uncertainty. (5) In US, tax-cut boost to growth is wearing off already. (6) What’s the matter with Germany? (7) Yet: S&P 500 forward revenues and earnings at record highs. (8) CBO predicting trillion-dollar budget deficits for the next 10 years, with Treasury debt rising to $21 trillion by 2029. (9) Lots of assumptions. (10) A hard Brexit may be too hard to swallow.
Fed’s New Obsession with ELB
(1) Is ELB the same as zero, or something south of that? (2) Slippery slope. (3) Should the Fed have done more? (4) Wondering what to do if ELB goes to zero? Ask the ECB and BOJ! (5) Recalling Powell’s recent ELB nightmare speech. (6) The Fed has become the world’s central bank of last resort. (7) Three reasons why the Fed eased at the end of July. (8) A few by-the-way comments on financial stability. (9) Fed’s pirouette puts focus back on ELB. (10) History lesson: QE2 was the alternative to negative rates.
Morning Briefing 2019-08-26
Morning Briefing is also available. (1) Trump is playing game of chicken with Powell and Xi. (2) Trump’s enemies list. (3) Turning more reckless. (4) Stay Home still beats Go Global. (5) More rate cuts ahead. (6) Recalling “Rebel Without a Cause.” (7) Is Trump trumping Powell, Xi, or Trump? (8) Powell’s “favorable place” is less so. (9) Trump’s risky game plan: Powell turns chicken first, then Xi follows.
Consumers Still Consuming
(1) The issue for consumer spending isn’t one of whether but where. (2) Wallets are cracking open in many a retail channel, just not department or electronics/appliances stores. (3) Broad spending indicators are flashing green, as consumers’ jobs outlook is rosy. (4) Saving rates are up too. (5) Target and the home improvement retailers are in the right place at the right time. (6) The greenback may get a run for its money as digital currencies spring up.
Bonds in Neverland
(1) Unconventional monetary policies become conventional. (2) From the Old Normal to the New Normal to the New Abnormal. (3) Fed aborts normalization. (4) ECB reverses course. (5) BOJ never even considered leaving Neverland. (6) PBOC continues to inflate greatest credit bubble in history. (7) Negative mortgage rates in Denmark. (8) The tether gets tighter in global bond market. (9) TIPS on the verge of going negative? (10) Negative real rates may have more to do with geriatric demographic outlook than with productivity.
Searching for Growth
(1) Weekly S&P 500 forward revenues remain impressive, still making new highs. (2) No recession in quarterly S&P 500 revenues, which also rose to new high during Q2. (3) Corporate managers managing to find solid revenues growth in slow-growing global economy. (4) Small spread between growth rates in aggregate and per-share revenues. (5) Lots of cyclically weak growth indicators. Are they nearing bottoms? (6) Intermodal railcar traffic is in a recession. (7) Soft patch for earnings, or just tough y/y comps? (8) Forward earnings at record high. (9) Doing the math on S&P 500 targets.
Productivity Could Frustrate Endgamers
(1) Dueling leading indicators: The yield curve vs the S&P 500. (2) Trump doesn’t like inverted yield curves. (3) Meetings in the Heartland. (4) No recession evident in retail sales or GDPNow estimate. (5) Predicting 10 out of 7 recessions. (6) No sign of a credit crunch. (7) The endgame doomsters love bad news. (8) Labor shortages should stimulate productivity. (9) The beginning of a major rebound in productivity growth? (10) Real compensation growth is really making a comeback. (11) Unit labor cost inflation based on ECI remains subdued, which is subduing price inflation. (12) Revisions don’t change the productivity story. (13) Movie review: “One Child Nation” (+ + +).
Another Curve Ball
(1) Inverted yield curve panics algos. (2) Our research shows it’s credit crunches that cause recessions, not inverted yield curves. (3) So far, credit is flowing freely and the Fed is easing. (4) Inverted yield curves don’t invert net interest margins for the banks. (5) China’s version of Amazon thrives despite slowing growth. (6) Semis get battered on global growth fears. (7) Tesla’s stock going nowhere, but its business is still growing. (8) Plummeting battery prices and tough European regulations making renewable energy and electric cars viable.
China, China, China
(1) Growing old before growing rich. (2) Dazzling infrastructure. (3) Ghost trains and ghost airports? (4) Bordering on PPI deflation again. (5) M1 growth weak, while M2 growth heading lower. (6) Less bang per yuan. (7) Trump’s Christmas present. (8) Hong Kong is a no-win for Beijing. (9) Meet Xi Jinping. (10) Meet Hu Xijin.
Less Than Zero: From FOMO to FONIR
(1) Long trip to Boston. (2) Like the weather, the stock market is volatile this summer. (3) More nervousness about recession scenario. (4) Credit crunches cause recessions. (5) Is the Fed listening to the yield curve, Trump, or both? (6) Sentiment remains bullish on balance. (7) TINA, FOMO, and FONIR. (8) Trump has NIRP envy. (9) NIRP not doing much to revive Eurozone and Japan. (10) US bond yields tethered to yields in Germany and Japan.
What’s the Matter With Profits?
(1) Record Chinese exports despite global slowdown. (2) OECD economies bottoming? (3) US labor market remains strong. (4) Annual revisions don’t change big picture on GDP, but profits are weaker than before. (5) Compensation revised higher. (6) S&P 500 aggregate earnings don’t get revised and are in record-high territory. (7) So why the downward revision in NIPA profits if S&P 1500 earnings remains strong? (8) Sub-chapter S corporations have a big impact on profits-related comparisons. (9) Profits’ share of National Income down, while compensation’s share is up. (10) S&P 500 profit margin and comparable NIPA measure diverging in recent years. (11) Fruit cocktail vs orange juice. (12) Warning label.
World Woe I
(1) Trump is a disruptor. (2) Trump may outsmart himself. (3) Lots of huffing and puffing. (4) Trump needs the Fed to lower interest rates to offset delayed China deal. (5) Commodity prices falling. (6) Germany is the gasping canary in the factory. (7) Energy is the biggest loser. (8) China has lots of dollar-denominated debt. (9) Technology continues to disrupt.
Tariff Man vs Mao Man
(1) Deal or no deal? (2) Hardliners in China and in the US have the upper hand. (3) Escalating trade war. (4) Chinese checkers is a game with winners and losers. (5) Trade works best when there are no losers. (6) China has more at risk than US. (7) Currency war unlikely. (8) Xi wants Trump to lose the next election. (9) Trump expects Xi to do a deal once he wins another term in the White House. (10) Trumping the Fed. (11) Xi’s homegrown problems. (12) For Trump, the endgame may be simply to push supply chains out of China, which is happening already.
TINA Versus TIAA
(1) The case for cash. (2) Yet another panic attack? (3) Trade war morphs into currency war. (4) Is Hong Kong about to become Tiananmen Square? (5) Weaker yuan offsets some of tariff costs to US consumers. (6) Buffett sitting on record pile of cash. (7) Despite the depressing global economic headlines, S&P 500 forward revenues and earnings at record highs! (8) Will global manufacturing growth recession turn into a full-blown downturn? (9) Eurozone, China, and Japan have homegrown problems.
Trump’s Trump
(1) Powell gets Trumped again. (2) Midcycle rate cut triggered by “uncertainties.” (3) The end of QT. (4) More rate cuts might still be appropriate, or not. (5) Powell is a perplexing pivoter. (6) Trump feeds Fed more trade uncertainty. (7) US real exports and imports have stopped growing. (8) Record US trade deficit even though oil deficit is almost gone. (9) With the exception of hours worked, latest employment report was solid. (10) Movie review: “The Farewell” (+ +).
Cleaning Up
(1) Innovation and pricing help Consumer Staples post positive surprises. (2) Shaving is out, but clean clothes are still in. (3) Chinese consumers are young, optimistic, and spending on cosmetics. (4) Coke and Pepsi courting the health conscious. (5) Nuclear fusion: It’s not fission or a spicy new cuisine. (6) Several companies chase the opportunity to jolt the world with nuclear fusion.
Dividing Up Wealth
(1) Exacerbated wealth inequality is a natural byproduct of a prolonged economic expansion. (2) Inevitably in a capitalist system, financial risk-takers benefit more than others in flush times, lose more in lean times. (3) A new Fed report on household net worth highlights these facts of capitalist life. (4) One takeaway: The wealthy’s wealth is more cyclical than other folks’ owing to bigger corporate equity stakes. (5) Another: Our rising economic tide of recent decades has lifted all boats, not just the yachts. (6) Should retired public-sector employees be counted among the wealthy?
The World According to Garp
(1) Global economic dysfunction isn’t all about Trump’s trade wars. (2) Low fertility rates around the world suggest voluntary self-extinction of the human race. (3) Debt financed fiscal spending on retirement benefits may be weighing on growth. (4) Central banks still doing whatever it takes, including enabling MMT. (5) Fiscal and monetary policies for geriatric economies. (6) Global manufacturing weighed down by trade wars and geriatric demographic profiles. (7) US economy seems less dysfunctional than many overseas economies.
The Fed Ahead
(1) Fed likely to reset policy course. (2) Economy doesn’t need a rate cut. (3) Risking a meltup and running out of ammo next time it is really needed. (4) Bostic isn’t flying with the FOMC doves, but he doesn’t have a vote either. (5) Bostic reviews the various measures of inflation. (6) Getting more attention: Dallas trimmed mean measure is around 2.0%. (7) More doves than hawks. (8) Movie review: “Once Upon a Time … in Hollywood” (- -).
Targeting Big Tech
(1) Internet War Game: DOJ vs FANGs. (2) Investors trust that anti-trust is tough to prove. (3) Harm to customers may be a lower bar for Barr. (4) S&P 500 Industrials is rocking it, outperforming the broad index and in third place among sectors ytd. (5) Boosting the sector ytd are ten industries, including Aerospace & Defense. (6) A scary world and a free-spending Congress mean defense won’t be attacked. (7) The industry’s P/E has fallen to a very grounded 16.6. (8) Crouching credit crunch in China? (9) Rising defaults are ominous in a slowing economy with mammoth amounts of debt outstanding: $25 trillion of corporate bonds and bank loans.
Mark to Market
(1) The Boom-Bust Barometer is running out of room to boom. (2) There’s no ceiling on forward earnings, which is in record-high territory. (3) Yet another record high for forward revenues. (4) Another hook up for quarterly earnings? (5) Using the Blue Angels as a valuation model. (6) Some moon shots in the fundamentals of selected retailers.
Valuation Here & There
(1) The ideal mix of inflation, interest rates, and growth might be 2-2-2. (2) Low growth is good growth the longer it lasts. (3) Why are analysts’ long-term earnings growth expectations so high? (4) Blame Consumer Discretionary, not Tech this time. (5) PEG ratios aren’t extreme. (6) Heads or tails? High P/Es win either way? (7) Stay Home investment strategy is still winning and driving up US P/Es relative to the rest of the world. (8) Five MSCI sectors have higher P/Es in US than abroad. Tech is not one of them!
Mixed Signals
(1) Trucks are rolling along better than freight trains. (2) Consumers boost some bank earnings. (3) Forward earnings at another record high. (4) Typical earnings hook ahead? (5) S&P 500 profit margin remains very profitable. (6) Lots of questions about valuation. (7) Low Misery Index boosting P/Es. (8) Real earnings yield fairly valued. (9) Buffett says ignore Buffett Ratio. (10) The economic data are mixed, while the Fed’s Williams is mixed up. (11) Is near-zero inflation really an “insidious disease?” (12) Clarida is ready to ease.
Consumers Unchained
(1) Consumers spending like there’s no tomorrow—just not at department stores. (2) Retail sales hit another record high. (3) Flying consumers send airline earnings flying. (4) Consumer borrowing boosts bank earnings. (5) Transports yet to make a new high. (6) Senate throws the book at Facebook’s Libra. (7) Trump, Mnuchin, Powell, and France question the digital currency.