Daily Research Updates
Morning Briefings
Expert market analysis delivered every morning. Stay informed with comprehensive research and data-driven insights.
Productivity Is Making a Comeback!
(1) Another Powell gaffe, or just a market overreaction? (2) Still bullish on earnings, a China trade deal, and a rebound in productivity. (3) Word game: From “patient” to “transient.” (4) Powell says persistently low interest rates possible. (5) The pragmatic case for one or two rate hikes before Election Day 2020. (6) Powell says “transient.” We say “persistent.” (7) The “Amazon Effect.” (8) Guiding inflationary expectations. (9) Room to grow if productivity continues to rebound with enough slack in labor market. (10) Productivity growth is looking up.
FANGs’ Rivalry Heating Up
(1) FANGs eyeing each other’s turf. (2) Hey, when you’ve gotta grow, you’ve gotta grow. (3) FANGs’ rivalry hasn’t fazed investors much so far. (4) Collectively, FANGs make up a tenth of the S&P 500’s market cap. (5) Facebook’s next act: e-commerce and payments. (6) Amazon’s non-retail businesses—e.g., web services and advertising—growing faster than the core store. (7) Google elbows into video streaming à la Prime and Netflix. (8) Only Netflix is sticking to its knitting.
It’s a Slow World After All
(1) No boom, no bust. (2) An ideal scenario for staying home. (3) Commodity markets waiting for a peace dividend when Trump’s trade war ends with China. (4) Global revenues continue to rise slowly. (5) China dips, while Europe turns weaker. (6) Not enough Tiger cubs in Asia. (7) Q1 real GDP was an upside surprise. (8) Business capital spending remains solid. (9) Consumers coming out of winter hibernation. (10) Confidence among consumers younger than 35 years old is soaring. (11) Obituary for inflation makes the front cover. (12) The PCED inflation rate is back below Fed’s 2.0% target. (13) Setting the stage for lower-for-longer federal funds rate.
Abigail vs Scrooge McDuck
(1) Abigail’s complaint. (2) How much is too much? (3) The ultra-rich are different than the rest of us. (4) In 2016, the “1%” included 1.3 million taxpayers earning $500,000 or more. (5) Either round them all up, or make them pay more taxes. (6) Stiglitz’s complaint. (7) Have incomes stagnated for 90% of Americans since 1989? (8) A very flawed measure of income. (9) Using PCED rather than CPI eliminates a great deal of stagnation. (10) Households with singles have fewer mouths to feed than those with married couples and their children. (11) Lots of measures of income and consumption confirm that the standard of living is at a record high for many, if not most, Americans.
Sound of Silence
(1) The good old days are back for bonds. (2) Falling in love with bonds again? (3) Turning up the volume. (4) The bond yield’s two quirky components. (5) Oil greases the widely followed 10-year expected inflation yield spread. (6) US bond yields still tethered to overseas yields. (7) Bond yields driven by fertility rates? (8) Central banks stuck in a rut. (9) Flat yield curves predicting no change in monetary policies of the Fed, ECB, and BOJ. (10) The TIPS yield is unreal.
Health Care for Socialists
(1) Health care stocks sickened by “Medicare for All,” which investors fear is “traditional insurance for none.” (2) Single-payer health care is an old idea getting new legs. (3) Bernie’s Buddies: Lots of Dem POTUS candidates are for socialized medicine. (4) The disruptive impacts on insurers and other health care industries could be HUGE. (5) Two new health care technologies have disruptive potential as well: drug compounding and 3D joint printing.
Run, Bull, Run!
(1) Run, Forrest, run! (2) Earnings leading the charge to record highs. (3) The bears grumble that the Fed is feeding the bull. (4) Two charts that have been the downfall of the bears so far. (5) Our Boom-Bust Barometer at record high lending support to record high for stocks. (6) S&P 500 forward earnings is the comeback kid. (7) Fairly valued again. (8) Lots of black-and-blue PMIs during April in the US, Europe, and Japan.
Tale of Two Countries
(1) Bull market appears in two recent cover stories. Time to worry? (2) Bull/Bear Ratio staged V-shaped recovery since last Xmas. (3) There was growth in the winter, and there will be more of it in the spring. (4) Will Trump save China? (5) China is getting less bang per yuan for its fiscal and monetary stimulus. (6) OECD report says China has some homegrown, structural problems that need to be fixed. (7) Chinese trade data was weaker than widely perceived during Q1-2019. (8) Latest Chinese GDP and production stats were strong thanks to government stimulus. (9) Explosion in Chinese bank loans is cushioning the decline in economic growth with less effect.
Financials Going High Tech
(1) Bankers upbeat on economy. (2) Financials: From laggard to leader? (3) Nothing to fear but shadowy fintech upstarts. (4) Old bankers learning new tricks. (5) JayDee watching shadows. (6) A by-the-way comment on leveraged loans. (7) Spending big bucks on high tech. (8) Marcus and Siri getting hitched. (9) Drones are already on the job, and helped Parisian firefighters fight Notre Dame fire. (10) Look up in the sky: More industries using drones to cut costs and increase productivity.
Many Unhappy Returns?
(1) “Tax Return” is a non sequitur for more Americans this year. (2) Failure to increase withholding rate boosted take-home pay for many last year, reducing refunds this year. (3) Pleasant surprise for high-income earners. (4) Rising personal saving offsetting the stimulus from tax cuts. (5) Corporate tax rate falls to 13.2% on “kitchen-sink” transactions. (6) S&P 500 capital spending during 2018 back at 2014 record high. (7) Buybacks widely misunderstood, though tech companies did boost EPS last year with buybacks.
Hipsters and Oldsters
(1) Overweight replacement parts for knees and hips. (2) No shortage of seniors. (3) Health care equipment may be more popular than gym equipment for a while. (4) Medicare for all would be bad for the health of working stiffs. (5) The Age Wave continues to be disinflationary and bullish for bonds. (6) Are Millennials finally starting to buy homes? (7) Homebuilders and homeowners could get squeezed by dearth of demand for big homes. (8) Millennials want to live where homes are cheap, while Baby Boomers want to live where taxes are low.
The Fed Is Listening
(1) The Fed’s review of the Fed. (2) Open minds. (3) Despite renewed commitment to data dependence, FOMC folks can’t resist forecasting interest rates. (4) Clarida suggests Fed’s review is focusing on alternative ways to target inflation. (5) Trying to find something to do when the federal funds rate is at the effective lower bound. (6) Targeting the price level vs the inflation rate. (7) Inflation misses: Should bygones be bygones? (8) Bernanke and Yellen still matter.
Trouble Spots
(1) Manufacturing employment slipped in March—blip or inkling of trouble? (2) If Captains of Industry suffer, so do their supply-chain crews. (3) Are new cars getting too pricey in an Uber-enabled world? (4) GM and Ford both rerouting themselves operationally. (5) Drones finally deliver. (6) Alphabet-owned Wing beats Amazon to the skies.
Is the Earnings Recession Over?
(1) Stock market looks forward, not backward. (2) Green shoots popping up in revenues and earnings estimates. (3) S&P 500 forward earnings may be starting to bottom. (4) Consensus Q1 earnings estimate is down y/y, but actual results could be up slightly thanks to the “hook.” (5) Lots of angst about income inequality despite record readings for labor market indicators. (6) Income inequality seems to be worst during boom times. (7) Still more job openings than jobless workers. (8) Real hourly wage at record high. (9) The income stagnation myth is based on one flawed data series. (10) Consumption equality: We all eat about the same every day.
Global Growth Dearth
(1) Everybody is easing, so why is the global economy so weak? (2) Still expecting a peace dividend once Trump wins his trade wars. (3) The 1990s all over again with a few differences. (4) There are signs of life in the commodity pits. (5) Global PMIs are mixed. (6) OECD leading indicators are awful. But are they accurate? (7) Is Germany a big canary? (8) Good and bad news for fans of Phillips curve tradeoff. (9) Wages rising fastest in industries that can’t pass costs on into prices.
Topical Topics
(1) Reviving our Topical Studies. (2) More thoughts on the yield curve. (3) Yield-Curve Rules for the Fed’s money-meisters. (4) The Fed pauses just as suggested by Rule #2. (5) More upside for stocks if Fed pause averts a (meaningful) yield-curve inversion. (6) Labor market is golden for Goldilocks. (7) Running out of workers? Not yet. (8) Wages still rising ahead of price inflation. (9) Rooting for a rebound in productivity. (10) Movie review: “The Highwaymen” (+).
Health Care’s Maladies
(1) From best to worst. (2) Trump attacks Obamacare and will fix it in 2021, maybe. (3) Drug pricing has become a political piñata. (4) Taking out some benefits from pharma-benefits managers. (5) AI will start suggesting you have fries with your order based on your license plate. (6) AI is micromanaging inventories. (7) Unlike Google, AI can do evil. (8) Mark Cuban keeps a book on AI for dummies next to his water closet.
Room with a View
(1) A CEO summit. (2) Avoiding cabin fever. (3) Anxiety about an imminent recession turns to concerns about high valuations. (4) S&P 500 revenues and earnings growth rates may be starting to bottom. (5) What about the earnings recession? (6) Flying to record highs with the Blue Angels. (7) Sentiment on outlook for China and the global economy improving. (8) What’s the matter with Germany? (9) Green regulations cause German auto sales to skid.
Another ‘Eureka!’ Moment on Buybacks
(1) Why does a senator from Wisconsin want to ban buybacks? (2) The Baldwin report is a fundamentally flawed analysis of corporate finance. (3) Are corporate executives looters? (4) We calculate that since 2011, S&P 500 companies repurchased 72 billion shares. So why is share count down only 22 billion? (5) Roughly 2/3 of buybacks may be offsetting share dilution from employee stock plans. (6) TCJA reduced incentive to pay employees with stock. (7) Meet the intellectual godfather behind the progressive movement to limit or ban buybacks.
Bonds Are from Venus, Stocks Are from Mars
(1) Bond yields showing signs of gravitational pull, while stock prices are on verge of escape velocity. (2) Mixed message from bond market. (3) Latest relief rally led by cyclical stocks (again). (4) Are stocks discounting a “peace dividend?” We think so. (5) The next recession could start on Election Day 2020, or not. (6) Q1 seasonality may still be an issue. (7) Commodity prices set for lift-off, maybe. (8) Forward earnings starting to look skyward. (9) MMT combines fiscal and monetary policies to take care of old people. (10) Is the bond market looking forward to AOC’s greener pastures with fewer humans? (11) Movie review: “Hotel Mumbai” (+ +).
FANG Fight
(1) More pie or just more whipped cream from Apple? (2) Do consumers value their privacy? (3) How much content is too much content even at $9.99/month? (4) Apple’s fan base: 1.4 billion is a big number. (5) Battle of the entertainment and media disruptors. (6) Lots of digital players want to play with our wallets.
Tossing a Curveball
(1) A hedged warning about rising recession risk in updated Fed study. (2) Recession risk up from 14% last summer to 50% now. (3) Then again, maybe the yield curve is forecasting monetary policy more than anything else. (4) Credit crunches cause recessions, not inverted yield curves! (5) A false positive signal, again? (6) Guess what the yield curve is predicting the Fed will do next: Nothing! (7) Buffett likes companies that buy back their shares. (8) We agree, as long as they don’t offset that with employee stock compensation.
The New Abnormal & the 4Ds
(1) Lots of global angst. (2) The 4Ds (Demography, Debt, Disruption, and Deflation) all weighing on global growth. (3) Industry analysts haven’t gotten the recession memo. (4) Global trade indicators still on uptrends. (5) Powell is right about the global economy. (6) Blame China for Europe’s weakness, or Uber? (7) Japan is in a soft patch. (8) In US, trucks and trains are cruising along just fine, and existing homes are selling well again. (9) The services sector is also fine in the US, and overseas too.
Sense of Humor
(1) The yield inversion show-and-tell. (2) A funny thing happened on the way to the next recession. (3) Lots of good material for Seinfeld. (4) Two-ring circus under the bond tent. (5) Trump is half right. (6) Meet Steve Moore, a fan of Abbott & Costello. (7) Comparing the yield curve to the business, monetary, and stock-market cycles. (8) Flat world, flat yield curve. (9) Fed study on yield curve yields less fear about a recession. (10) The secrets behind Powell’s pivot. (11) Movie review: “The Mustang (+ +).
Disrupting the Disruptors
(1) Internet pioneers circling the wagons. (2) Arrows, barbs, tar, and feathers. (3) Is sharing data criminal? (4) EU slaps Google with another big speeding ticket. (5) Horror in New Zealand. (6) Trust-busters on the warpath. (7) Chinese offering US semiconductor companies a raw deal. (8) Hybrids may be the next fashion statement in computing.