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‘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.
Earnings Season’s Greetings
(1) Big downward revision in Q3 earnings consensus. (2) Industry analysts turn from overly optimistic to too pessimistic as earnings reporting seasons approach. (3) 77/98 quarters of upside earnings hooks. (4) Another record high for forward earnings. (5) Global challenges for revenues growth. (6) US consumers consuming. (7) Shipments data mixed for S&P 500 Industrials and Information Technology. (8) Railroads huffing and puffing, while truckers are cruising. (9) Financials have loan demand, while margins are getting squeezed a bit. (10) Commodity producers face weak pricing.
Below the Headlines
(1) Spinning wheels to new highs. (2) Higher highs and higher lows. (3) Is Trump the pied piper for stock investors, or just the tweeter-in-chief? (4) Deal or truce? US and China stop escalating their trade war. (5) The art of the no-big-deal. (6) Forward revenues and earnings story remains resiliently bullish. (7) Profit margins reverting to the highs. (8) S&P 500 Railroads has same profit margin as lots of tech stocks. (9) Movie review: “Joker” (+ + +).
Flygskam
(1) It’s a shame to fly. (2) Will soaring flight-shaming ground airlines? (3) Environmentalism is just one of three big headwinds slamming travel-related companies. (4) Trade tensions and strong dollar are deterring foreign vacationers from US. (5) Travel analysts’ optimism is undeterred, though. (6) Will electric planes fly? (7) Mechanizing the human body. (8) The Terminator next door: New technologies equip humans with superhuman capabilities.
Helicopter Money
(1) Despite uncertainty about trade wars, small business owners remain upbeat. (2) Small business owners still want help. (3) Pricing pressures easing. (4) Earnings driving the business cycle. (5) Fewer complaints. (6) Central bankers taking helicopter flying lessons? (7) Bernanke likes the idea of monetary-financed tax cut for next recession. (8) Another round of QE could face opposition from the Left. (9) “Free” money may not be cost-free.
Cabin Fever
(1) Stay Home vs Go Global update. (2) Tactical opportunities abroad. (3) Not venturing too far. (4) US stocks are expensive, but they have better-looking revenues, earnings, and margins. (5) PMIs of emerging economies holding up well, but it would take rebounding commodity prices to warrant overweighting their shares. (6) Lots of woes in Europe, as Trump escalates trade war with the region. (7) Bad sentiment and orders. (8) German auto output may be bottoming. (9) Euro is down, which is good for exporters. (10) ECB ready and willing to fund MMT in Germany.
Depressed Purchasing Managers
(1) M-PMI distressing, while NM-PMI disconcerting. (2) Average PMI at 50.2, well above recession level of 45.8. (3) Consistent with 1.5% real GDP growth. (4) Some hard data on production and orders confirm weak average PMI; hard data on employment not so much. (5) The Fed isn’t done easing, as Powell wants to keep us in “a good place.” (6) Fed may be aiming to avert an inverted yield curve. (7) No recession in credit-quality spreads. (8) Weak PMIs bad for S&P 500 revenues growth but good for prospects of Fed easing. (9) PMIs explain Growth vs Value performance derby. (10) Emerging markets' PMIs showing some life; advanced economies not so much.
No Recession in Analysts’ Forecasts
(1) Taking no prisoners: Manufacturing gloom hits both safety and growth stocks. (2) Analysts’ 2020 earnings estimates hold firm-so far. (3) Boeing boosts Industrials’ 2020 earnings, if it can get the 737 Max in the air. (4) IPO market shows some sense by rejecting WeWork. (5) Shared office space providers will abound, with or without WeWork. (6) Landlords: Beware of SPEs. (7) Plastic Energy has one solution for the world’s plastic problem.
Looking Forward to 2021
(1) We didn’t start the fire. (2) Updating Billy Joel’s list of troubles. (3) M-PMI drops below 50.0, but not to recession level. (4) Regional business surveys also weak through September. (5) Exports index takes a dive. (6) M-PMI signaling S&P 500 revenues recession, but NM-PMI remained upbeat through August. (7) Meanwhile, S&P 500 forward revenues and earnings at record highs. (8) Forward profit margin holding steady around 12.0%. (9) Another regime change ahead: From community organizers to deal makers to central planners? (10) Catching up on Elizabeth Warren’s 45 plans.
Inflation Roundup
(1) Consumer inflation remains subdued. (2) Hard to hit 2.0% inflation target. (3) No inflation in consumer nondurable goods. (4) Medical care services has lower inflation and higher weight in PCED than CPI. (5) Rent of shelter has above-average inflation rate in both PCED and CPI, but less weight in the former. (6) Why is CPI inflation higher in US than in Eurozone and Japan? (7) Nonsensical vs sensible: CPI-adjusted wages have been stagnating for 40 years, while PCED-adjusted wages have been on solid uptrend since mid-1990s. (8) Will Brexit be postponed again?
California Dreamin’
(1) Never say “never.” (2) Asking favors. (3) Trump berates China at UN. (4) Banning US investments in China? (5) Fatalistic pessimism in California: Socialism is coming. (6) Funding a Universal Basic Income with taxes on the wealthy and MMT. (7) The next financial crisis. (8) The curse of negative interest rates. (9) Happy thoughts. (10) Four alternative scenarios for the impeachment process. (11) Down and out in Beverly Hills. (12) Movie review: “Downton Abbey” (+ +).
The Utility of Utilities
(1) Political storms send investors running for cover. (2) Utilities fill the bill. (3) Safety in dividend and earnings numbers. (4) Investors take defensive refuge in other fast-growing and income-providing S&P 500 sectors too. (5) Onward and upward for technology innovation. (6) Prepare to be disrupted: the latest in quantum computing, robots, drones, and high-tech tunneling. (7) Are used cars the new new cars? (8) CarMax: not your father’s Oldsmobile dealer.
Flow of Funds (FOF)
(1) Americans collectively are richer than ever. (2) Record wealth-to-income ratio. (3) Americans own lots of equities directly and indirectly. (4) Biggest asset for households is value of their pension entitlements. (5) Homeowners and small business owners prospering too. (6) State & local pensions are 48% unfunded, while private pensions are fully funded. (7) Home mortgage debt has been flat since the Great Financial Crisis. (8) Fed data cast doubt on three common myths about nonfinancial corporations. (9) Draghi’s swan song: All he is saying is give MMT a chance.
The Dissenters
(1) Ugly data out of Germany. (2) What’s wrong with Germany’s economy? (3) German autos getting sideswiped. (4) Chinese EVs are coming. (5) Germans like budget surpluses. (6) Germany’s green new deal likely to weigh on economy. (7) Despite global economic slowdown, S&P 500 revenues continue to grow. (8) Powell sees dissent as healthy counter to groupthink at the Fed. (9) Three dissenters. (10) Rosengren makes a persuasive case against easing. (11) Not so persuasive on financial instability. (12) Is co-working model bad for real estate?
Powell’s Latest Mid-Cycle Adjustment
(1) Avoiding off-the-cuff remarks. (2) Powell repeats his mantra more often: “Fed is data dependent.” (3) More uncertainty. (4) On the same page with Powell: Yield curve’s recession signal distorted by negative bond yields overseas. (5) Powell not ready to satisfy Trump’s NIRP envy. (6) The Fed may be done for the rest of the year. (7) Trade uncertainty weighing on business spending. (8) Fed’s dot plot is a work in progress.