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Morning Briefings
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The Dark Side of the Moon
(1) China’s lunar landing to collect moon’s fairy dust. (2) China’s Xi has problems back on Earth. (3) Wilbur Ross disagrees with Tim Cook. (4) China’s M-PMIs are below 50.0. (5) China’s real retail sales growth slowing. (6) Getting harder to sell autos and apartments in China. (7) Trump and Ross believe China needs a deal badly. (8) The talks are going “well.” (9) The end of the ceasefire is approaching. (10) PBOC cutting reserve requirements.
Morning Briefing 2019-01-09
(1) China’s lunar landing to collect moon’s fairy dust. (2) China’s Xi has problems back on Earth. (3) Wilbur Ross disagrees with Tim Cook. (4) China’s M-PMIs are below 50.0. (5) China’s real retail sales growth slowing. (6) Getting harder to sell autos and apartments in China. (7) Trump and Ross believe China needs a deal badly. (8) The talks are going “well.” (9) The end of the ceasefire is approaching. (10) PBOC cutting reserve requirements.
Deflationary Demographic Developments
(1) Humans on a demographic path to self-extinction. (2) Crowded nursing homes. Empty maternity wards. (3) China will soon be world's largest nursing home. (4) Japan is leading the way with more deaths than births. (5) China's misguided one-child policy now turning into a demographic nightmare. (6) Births fall in US to lowest since 1979. (7) Too many minimalists? (8) Prices-paid indexes taking a dive along with oil prices. (9) Q4 earnings season starting.
Morning Briefing 2019-01-08
(1) Humans on a demographic path to self-extinction. (2) Crowded nursing homes. Empty maternity wards. (3) China will soon be world's largest nursing home. (4) Japan is leading the way with more deaths than births. (5) China's misguided one-child policy now turning into a demographic nightmare. (6) Births fall in US to lowest since 1979. (7) Too many minimalists? (8) Prices-paid indexes taking a dive along with oil prices. (9) Q4 earnings season starting.
Patient Powell’s Put
(1) No recession in GDPNow model. (2) Credit market indicators say Fed is done tightening. (3) There was a December “flash recession” in Fed district surveys, led by drop in new orders. (4) A few leading indicators flashing yellow. (5) Labor market still booming. (6) Trucking indicators still barreling along. (7) Powell turns from hawk to dove. (8) Pressing the pause button. (9) Fed going from “gradual” to “flexible.” (10) The Dow Vigilantes have gotten the Powell Put for now. (11) Powell concedes that financial markets matter. (12) Movie review: “Vice” (-).
Morning Briefing 2019-01-07
(1) No recession in GDPNow model. (2) Credit market indicators say Fed is done tightening. (3) There was a December “flash recession” in Fed district surveys, led by drop in new orders. (4) A few leading indicators flashing yellow. (5) Labor market still booming. (6) Trucking indicators still barreling along. (7) Powell turns from hawk to dove. (8) Pressing the pause button. (9) Fed going from “gradual” to “flexible.” (10) The Dow Vigilantes have gotten the Powell Put for now. (11) Powell concedes that financial markets matter. (12) Movie review: “Vice” (-).
Unhealthy Developments
The next Morning Briefing will be sent on Monday, January 7. We wish you all the best during the holidays and the year ahead. (1) Powell is no Santa. (2) Bonds rally as stocks sink. (3) Mnuchin suspects HFTs adding to volatility. (4) Judges making Health Care sick. (5) Autonomous cars hit the road but still need driver’s ed. (6) Manufacturers to China: “We’re outta here.”
European Disunion
(1) Analysts starting to cut earnings estimates for 2019 and 2020. (2) Tough comps ahead. (3) Analysts still remarkably upbeat about revenues outlook. (4) But they are lowering their earnings estimates for Q4-2018 through Q4-2019. (5) After 20 years of monetary unification, Eurozone faces lots of challenges. (6) The Brits may be leaving the EU at a good time if forces of disunion mount. (7) Bad timing: ECB moving to normalize policy as Eurozone economy weakens. (8) Brexit is hard to do. (9) Political agitations in France, Germany, and Italy.
The True Story
(1) Druckenmiller and Warsh speak for the Dow Vigilantes. (2) Jerome, Virginia, and Santa. (3) Yield curve has a good track record excluding the false alarms. (4) Focusing on bank net interest margin. (5) No credit crunch in banking sector. (6) Capital spending is at a record high despite record buybacks plus dividends. (7) Net bond borrowing by nonfinancial corporations is falling fast. (8) Fed vice chair is a folk-rock singer and about to take the Fed on a magical mystery tour of monetary policy. (9) Alternative ways to target inflation under Fed consideration.
Deflationary Demographics
(1) No relief yet for latest panic attack. (2) The new worry is that China’s weak data suggest global growth at risk. (3) Investors accentuating the negatives, ignoring the positives. (4) GDPNow now at 3%. (5) Jobless claims drop. (6) ECB ready to end QE, but not ready to lift interest rates. (7) China’s real retail sales growth continues to fall as a result of rapidly aging demography. (8) Baby Boomers are turning into minimalists, like the Millennials. (9) Demographic trends suggest consumer-led boom unlikely in US. (10) No boom, no bust. (11) Movie review: “The Mule” (+).
Unloved Industrious Industrials
(1) Industrials will fall or rise depending on whether US-China trade war does or does not escalate. (2) So far, trade war with China may be boosting US imports before tariffs are raised and spread. (3) US production remains strong. (4) GE weighs on Conglomerates. (5) Barron’s likes CAT. (6) Housing hammered. (7) Industrial services providers serving well. (8) Amazon is both a great disruptor and a great motivator for its competitors. (9) Did you take your pills today? (10) Walmart’s robots.
Morning Briefing 2018-12-12
Morning Briefing is also available. (1) Can Capitalism exist without HFT algorithms? (2) Information in a free market. (3) Leveling the playing field with supervision and regulation. (4) No answers, but lots of (rhetorical) questions. (5) Keynes on casinos. (6) Professor Gary Smith weighs in on HFT algos: Tax ’em. (7) Cooperman wants some answers from the SEC. (8) A short history of the uptick rule for short sellers. (9) Computers can’t read between the headlines.
Bonds, Stocks & the Latest Recession Scare
(1) Some irony in the bond yield’s recent drop. (2) The curse of the yield-curve curse. (3) Explaining the divergence between bond yield and nominal GDP growth with the help of the Bond Vigilante Model. (4) The Dow Vigilantes saddle up. (5) No recession signal yet in official yield-curve spread. (6) Inflation is moderating. (7) US bonds mighty attractive compared to comparable foreign alternatives. (8) Seeing eye-to-eye with Leon Cooperman on algos. (9) Transportation indicators remain robust, as does M-PMI.
Optimistic Analysts vs Pessimistic Investors
(1) Is the party over? (2) Analysts are still in a party mood. (3) S&P 500 forward revenues at another record high. (4) Analysts may finally be starting to curb their enthusiasm for earnings and profit margins. (5) Investors aren’t in a party mood. (6) Is the most widely anticipated recession imminent? (7) Fed’s expected rate pause is flattening yield curve and raising recession anxiety. (8) Tenuous trade ceasefire with China is also flattening yield curve. (9) Trump is a loose cannon. (10) Trump is glued to the tape. (11) Record full-time jobs. (12) Beige Book: Take this job and shove it.
Humans vs Machines
(1) Still Grinchy. (2) The algos that stole Christmas. (3) Do algos ever capitulate? (4) When algos sell ETFs, they sell everything. (5) The big problem for next year’s earnings is that the profit margin has been making record highs this year. (6) 2019’s earnings seasons: Not much to look forward to. (7) News flash: Trump is a “Tariff Man.” (8) The yield curve isn’t a problem yet. (9) Diamonds in the coal mine. (10) Taking sides in oil markets tug of war.
Trump Put
The next Morning Briefing will be sent on Thursday, December 6. (1) Santa’s workshop. (2) Two-year Treasury yield suggests one less rate hike next year. (3) Powell, Trump, and Xi are Santa and his two helpers. (4) Two corrections in 2018 about Fed and trade fears. (5) Dow Vigilantes. (6) Discussing the long good buy in London. (7) Hard to see more upside in profit margin. (8) Drilling down to the sectors. (9) The Fed’s new report on financial stability finds lots of it.
Restricting ‘Restrictive’
(1) Disinflating. (2) One more rate hike, then done until mid-2019? (3) Core consumer goods prices still deflating. (4) In consumer services inflation, rent looks toppy, while health care remains subdued. (5) Record-high real wages suggests productivity is fine. (6) So does record profit margin. (7) The Fed is less accommodative and also less restrictive. (8) A brief history of the Fed since late September. (9) Data dependent again. (10) Movie review: “Widows” (- - -).
Powell Put
(1) Fed getting the message. (2) Powell takes it back: Rates no longer a long way from neutral. (3) Buffett’s big buffet of financials. (4) Financials are cheap, and should be overweighted. (5) The debanking of America. (6) Biggest mortgage lender isn’t a bank. (7) Nonbank middle-market lenders are proliferating. (8) The Fed’s financial stability report isn’t raising a red flag about CLOs yet. (9) Deep pockets. (10) Car wreck, housing slump. (11) Faster 3D printing.
Brexiting Is Hard To Do
(1) Touring London. (2) The short-term case for Go Global. (3) Around the world, around the luncheon table. (4) Taxi and informed opinion for hire. (5) Can a deal that is not too hard and not too soft get enough votes? (6) The upfront costs are set, while the trade deals are TBD. (7) Brexit with lots of regulatory strings attached. (8) Moving out of the UK. (9) Churchill weighs in.
Corporate Debt Bombs?
(1) Record nonfinancial corporate debt. (2) Revisiting the bubble question. (3) Alarming headlines not supported by actual stories. (4) Yellen and Warren both worrying about CLOs. (5) Fed Governor’s lame response. (6) Meanwhile, the US economy continues to have the pedal to the metal. (7) "We bring good things to life”: GE dropped its famous slogan in 2013, and now is on life support. (8) Defaults remain low thanks to previous refinancings at low interest rates. (9) AA-rated CLOs have a solid credit history. (10) Distressed asset funds are the credit markets’ shock absorber.
Turbulence
(1) A week in London. (2) Pence attacks China again. (3) Xi expects to outlive Trump politically. (4) Powell is Trump’s regrettable. (5) The Dow Vigilantes may not matter to Powell, but credit market stress cracks should get his attention. (6) Plunging oil prices depressing inflationary expectations. (7) Stock prices could stall along with our Boom-Bust Barometer. (8) Panic Attack #62 similar to #61, but with more of an attack on FAANGs. (9) Value likely to outperform Growth for a while. (10) Movie review: “Green Book” (+ + +).
Thanksgiving
We wish all of our readers a happy Thanksgiving. The next Morning Briefing will be sent on Monday, November 26. (1) Thank you. (2) An abundance of earnings. (3) Tax cut, revenues, and repatriated earnings all boosting earnings this year. (4) Q3 profit margins at record highs across the board, implying solid productivity gains offsetting rising costs. (5) Still not expecting price inflation to jump, but on the lookout. (6) ECI-based measure of unit labor costs remains remarkably subdued. (7) Strong dollar keeping a lid on import price inflation. (8) In the CPI, rent inflation is looking toppy, while medical care inflation remains below 2.0%. (9) Fed Governor Brainard discusses AI.
On Your Mark, Get Set, Pause
(1) Trump, Kudlow, Cramer, and moi. (2) Is neutral federal funds rate a long way off or getting closer? (3) Powell, Clarida, and Bostic weigh in. (4) Fed putting monetary policy under review until mid-2019. (5) Getting ready to do nothing? (6) Treasury yields fall on Clarida statement and drop in oil price. (7) Three and done? (8) During Q3, S&P 500 revenues and earnings jump 8.5% y/y and 27.5%, sending profit margin to yet another record high. (9) Joe sorts out the Q3 data for the S&P 500 sectors.
Better To Be Healthy Than Techie
(1) Old dog, new tricks. (2) A social media star is born, maybe. (3) Sonogram showing investors in fetal position. (4) Companies that build new headquarters are often cursed. (5) OPEC reports that oil supply exceeds demand. So does a chart of the price of oil. (6) For Energy industry analysts, it may be 2015 déjà vu all over again. (7) Quantum computing solves problems fast.
Volatile Situations
(1) Stock market volatility reflects bullish and bearish mix of Trump’s policies. (2) Meanwhile, Fed still tapping on the brakes. (3) An escalating trade war with China and an increasingly uncivil war at home. (4) Curbed enthusiasm. (5) Meet trade warrior Peter Navarro again. (6) “Globalists” to the rescue? (7) Lots of homegrown problems in China. (8) Lots of debt turning bad fast. (9) 50 million empty apartments. (10) Capital flight remains a big risk. (11) M2 confirming slowdown in real retail sales, which may be reflecting rapidly aging population. (12) One-day shopping spree.