Daily Research Updates
Morning Briefings
Expert market analysis delivered every morning. Stay informed with comprehensive research and data-driven insights.
China’s Syndromes
(1) Downgrading outlook for China’s economy. (2) Trump’s trade war with China is really about slowing China’s advance to becoming a superpower. (3) Moving out of China into Vietnam. (4) Peter Navarro’s protectionist agenda isn’t just about trade. (5) Trump is shopping around for fairer trade. (6) Arms race in and around the South China Sea. (7) After China entered WTO, manufacturers left the US. (8) Aging demographics may already be weighing on real retail sales in China. (9) Less and less bang per yuan. (10) Urbanization and legacy of one-child policy depressing China’s fertility rate and economy. (11) Movie review: “A Simple Favor” (+ + +).
Home in the Range
(1) Consumers feeling fine, homebuilders not so much. (2) Home unaffordability hurts. (3) Home buyers out of juice or just catching their breath? (4) Dour homebuilder stocks worth a look. (5) Quantum computers make data vulnerable. (6) Cryptographers have job security for years.
Morning Briefing 2018-09-26
Morning Briefing is available as well. (1) Introducing Generation Z! (2) Post-Millennials are not mini-Millennials. (3) Gen Zers are motivated self-directed doers. (4) Predicting good things for US labor force with career-minded Gen Zers headed up the ladder. (5) Lots of Gen Zers want to start a business. (6) Forget traditional education, say Gen Zers; hack online school instead! (7) Will Gen Zers eschew Millennials’ minimalism? (8) Attention: Gen Z shoppers want cool products with no hassle, in hand fast. (9) Not just tech savvy, Gen Zers are “always on” digital natives. (10) Future Gen Z households to be full of “framilies.” (11) Watch out for pre-K Gen Alpha kids flying drones!
See You in 2020!
(1) Smoking hot pot stocks. (2) Second-hand smoke making industry analysts high? (3) No Wile E. Coyote scenario in S&P 500 revenue estimates. (4) Above-trend earnings growth in 2019 and 2020? (5) High on life. (6) Will S&P 500 profits make new record highs over the next two years? Unlikely. (7) Go Global investment strategy outperformed last week. We are sticking with Stay Home for now. (8) Stay Home has been the big winner during the current bull market.
Bear Tracks
(1) Goldman’s Bear-Market Risk Indicator and others like it suggest it may be time to get out of stocks. (2) By our count, there have been 61 panic attacks in this bull market, yet it is still making new highs. (3) The most obvious bear trap for the bull market is a recession. (4) Yet both leading and coincident indicators are still making record highs. (5) Current bull market charged right through 2015 growth recession and this year’s emerging markets crisis (so far). (6) Six good reasons to dump bonds and one really good reason to hold onto them (because doing so is still working!). (7) Movie review: “White Boy Rick” (+ +).
Rotating Tech & Flying Taxis
(1) Bull market rotating again and again. (2) Tech under attack by regulators and protectionists. (3) Semi Equipment industry also feeling pain of protectionism? (4) Tech margins keep notching records. (5) New Communications Services sector: New home for some FANGs. (6) Communications sector offers more offense, less defense. (7) Flying cars?
Remarkable Revenues
(1) Nothing funky about strong revenues growth. (2) The bottom line is that the top line is looking good across the board. (3) Trump’s policies are mostly bullish for business sales, which are at record highs. (4) S&P 500 forward revenues at record high again, and again. (5) There is a divergence between strong S&P 500 revenues and weak OECD leading indicators. (6) The dollar doesn’t seem to matter much. (7) Mario Draghi says ECB’s policy is a work in progress. (8) BOJ still dreaming the impossible dream: A 2% inflation rate. (8) Bottom line: ECB and BOJ will continue to be ultra-easy until further notice.
Debt Roundup
(1) Debt worries making a comeback. (2) Record debt levels may matter again if inflation rebounds, which we don’t expect. (3) Federal government interest payments soaring along with Treasury debt and rising interest rates. (4) Fed’s rate hiking could push government interest payments over $500 billion by 2020. (5) Record bank loans in China. (6) Chinese government wants more babies. (7) Trump’s trade war depressing Chinese stocks despite solid production growth. (8) China’s real retail sales growth is weakening as aging demography weighs on consumer spending. (9) Getting less output bang per yuan of bank debt. (10) Beige Book has lots of green signals about growth, yellow signals about tight labor market, and a few red signals about price inflation.
Countering a Rash of Pessimism
(1) Rash of articles about 2008 financial crisis. (2) Feldstein confident that a bear market is coming. (3) Latest price inflation news fairly benign. (4) Trump’s trade war isn’t boosting import prices so far. (5) Productivity growth finally making a comeback? (6) Trump’s tax cuts making America a great place to do business. (7) Lots of minimalists are bullish for economy and stocks. (8) US federal deficit balloons along with entitlement outlays, defense spending, and interest payments. (9) S&P 500 forward revenues and earnings continue to set records. (10) Outlook for long-term stock returns depends on starting point.
Healthy M&A, Musk’s Potcast & Digital Tulips
(1) A very healthy sector. (2) Lots of winners in Health Care, though Biotech lags. (3) Small is beautiful for takeover targets. (4) Stocks of acquirers also benefit from M&A deals. (5) Is Musk a pothead, or just high on life? (6) Just another quirky genius. (7) We will all be geniuses if Musk’s Neuralink links our brains directly to the Internet. (8) Crypto currencies are like digital tulips.
All About Wages
(1) Labor market tight enough to revive Phillips curve finally? (2) Wage inflation still below Yellen’s “normal.” (3) Labor costs don’t automatically get marked up into prices. (4) Record profit margin implies more productivity growth than official data show. (5) Lots of industries with above-average wage inflation don’t have much pricing power. (6) Real wage and other compensation measures show rising trends, not stagnation. (7) The Council of Economic Advisers posts a useful primer on wages, which confirms upbeat trend. (8) Gene Epstein explains why labor’s share of national income isn’t as bad as shown by official data, and widely reported.
Red, Blue, and Green Waves
(1) Bull-market haters as apoplectic as ever. (2) Lots of reasons to hate this bull market, yet it continues to make new record highs. (3) Is emerging market crisis about to kill the US bull? (4) What if Trump’s red wave is drowned by Democrats’ blue wave? (5) Lots of red ink in federal budget under both blue and red presidents. (6) Despite drop in its commodity price component, our Fundamental Stock Market Indicator remains near recent record high. (7) The green wave: Jobless claims still falling, as consumer confidence continues to soar. (8) Tech’s earnings share at record high, boosting its market-cap share. (9) Financials signaling calm in US, but trouble in Europe.
US Stocks’ Boon Is Global Stocks’ Bane
(1) More good news for US economy, which is bad news for other economies. (2) US economic strength giving confidence to Trump to escalate trade war and to Powell to raise rates. (3) Three whammies for emerging market economies. (4) New factory orders tumbling in Germany. (5) Wage inflation unnerves bond yield, which remains a tad below 3.00%. (6) US yield would be higher but for global influences. (7) No weakness yet in global forward revenues. (8) Global M-PMI is down since late last year. (9) Commodity prices also signaling global weakness.
Inflation, Where Art Thou?
(1) Technology is inherently deflationary. (2) The Gig Economy’s low-fee freelancers are disrupting lots of services businesses. (3) No-fees ETFs and brokerage accounts. (4) How inflationary would tariffs on Chinese imports be for the US consumer? (5) Record-high profit margins could absorb some cost increases. (6) Productivity could be making a comeback. (7) Regional and national prices-paid indexes up sharply since 2015, but looking toppy recently. (8) No sign of inflationary pressure in CPI goods excluding food and energy. (9) CPI services inflation boosted by rent increases, which are starting to slow.
US vs Them
(1) Trump vs Hamlet. (2) Strong US M-PMI bodes well for S&P 500 revenues growth. (3) Consumer Optimism Index is strong, led by current conditions component. (4) Jobless rate on the way to 3.0%. (5) Less exuberance in China. More pain in emerging economies. (6) Stay Home! (7) Sandra goes to Europe. (8) From Greek crisis to an Italian one. (9) Brexit is hard to do. (10) Trump rejects Europe’s generous offer. (11) Weighing on Europe: Italy, immigration, Brexit, and Trump.
A Sustainable Meltup?
(1) The meltup question is back. (2) Nothing to fear but a trade war and an emerging markets crisis. (3) Precisely defining terms. (4) Must a meltup be followed by a meltdown? (5) S&P 500 revenues growth remarkably strong. (6) S&P 500 earnings even stronger. (7) Record profit margin. (8) Trump’s tax cuts boosted after-tax earnings, undistributed profits, and cash flow. (9) US equities have been a risk-off trade compared to equities abroad. (10) Mr. Wonderful’s meltup scenario. (11) Movie review: “Operation Finale” (+ +).
Full Pipelines & Killer Robots
(1) Too much of a good thing in the oil patch. (2) Frackers still fracking. (3) Rigs in search of pipelines. (4) Shipping costs rising along with costs to build pipelines as a result of steel tariffs. (5) Railroads better equipped to bring sand to frackers than to take their oil. (6) Terminators are coming. Can they be stopped? (7) Beautiful swarms can be deadly.
Dancing with the Stars
(1) The yield curve question gets a brief mention at Jackson Hole. (2) It may not be different this time, but the yield curve has yet to actually invert. (3) What’s really different this time is that the federal funds rate is 2%, while the comparable ECB and BOJ rates are slightly negative. (4) The 2-year Treasury is predicting a 2.6% fed funds rate in a year. (5) Italy’s new euroskeptic government may frustrate ECB’s hopes of normalizing policy. (6) How do you say “bond vigilantes” in Italian? (7) The chairman’s first speech: slow and steady. (8) Powell rejects navigating by the stars. (9) Academic portion of Jackson Hole was intellectually interesting, without much practical usefulness.
What If . . . ?
(1) Six bullish “what if” scenarios. (2) What if the trade war results in less protectionism? (3) Trade war escalating with China, deescalating with Mexico. (4) Our guess is that deregulation boosts S&P 500 earnings by $4 a share. (5) Small is beautiful: S&P 600 up 50% since Election Day! (6) Productivity growth could make a comeback. (7) Rapid pace of technological disruption keeping a lid on inflation. (8) Distressed asset funds are acting as shock absorbers. (9) If we are all minimalists now, this expansion may have a ways to go.
Teamsters & the Stock Market
(1) Social media can be downright anti-social. (2) Bull-market haters. (3) How many Teamsters does it take to change a light bulb? (4) Charles Dow is resting in peace. (5) The breadth issue rises again despite record highs for S&P 500/400/600 and several key sectors. (6) Stock buybacks and dividends continue to pump lots of liquidity into stock market. (7) S&P 500 share count is down for the count. (8) Record-high forward revenues and earnings driving stock prices to record highs. (9) Raising our 2019 S&P 500 earnings-per-share estimate by $4 to $173.
Trucks & Batteries
(1) Charles Dow is bullish. (2) Railroads are chugging along. (3) Truck freight index is off the charts again. (4) The next new new thing might be good old batteries. (5) The race to make more and better batteries is charged up. (6) The Tesla connection. (7) Solid-state batteries.
Superstars
(1) Nice view of the Grand Tetons. (2) Hot topic: “Changing Market Structure and Implications for Monetary Policy.” (3) Are multinationals getting too much market power? (4) And what about online shopping? (5) How has banking evolved since financial crisis of 2008? (6) “Superstar firms” are either depressing or boosting productivity. (7) Not enough creative destruction? (8) Expect déjà vu all over again from predictable Powell.
Superpower
(1) Trump, the newsmaker. (2) The Great Disruptor continues to do what he does best. (3) Nations have interests, not friends and enemies. (4) Method in the madness: Flexing America’s muscle. (5) What if he wins? (6) Trade war goes bilateral with ceasefires and some deal-making progress. (7) Trump talks loud and carries a big stick. (8) Tariffs and sanctions as economic artillery.
The Long Good Buy
(1) Benchmark framework remains bullish on economic expansion. (2) The longest bull market in history? Sure, why not? (3) Discounting what may soon be the longest economic expansion in history. (4) Age of bulls doesn’t predict their DOD. (5) Stock prices high on record-high revenues, earnings, and profit margin. (6) The yield curve is just one of 10 leading indicators. (7) Coincident economic indicators showing moderate growth. (8) What if they call a trade war and everyone declares a ceasefire? (9) Might productivity be making a comeback? (10) Movie review: “BlacKkKlansman” (+ + +).
Consumers Unchained
(1) As tax-cut-happy consumers go to town, retailers have been raking it in. (2) Amazon threat? So last year! (3) S&P 500 Consumer Discretionary sector’s earnings and revenue forecasts reflect the strength. (4) So do stock valuations, near historical highs, boosted by Amazon and Netflix. (5) In telecom, the 5G race is on—among countries and companies. (6) But does who comes in first really matter?