Morning Briefings
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High Flyers
(1) Looking for froth. (2) Breadth indicators showing broad-based advance. (3) Analysts turning even more bullish on S&P 500 revenues, and see double-digit earnings growth this year and next two years. (4) Revenues and earnings are flying for the high-flying Magnificent 10 of the S&P 500. (5) Six Republican senators are on the fence. Trump needs four of them to pass tax reform. (6) What do the six fence sitters want?
Thanksgiving
Happy Thanksgiving! We will be back on Monday, November 27. (1) Thanks to family, friends, and others. (2) Next stop for S&P 500: 4 x 666, then 5 x 666. (3) Second best bull market since 1928. (4) Raising S&P 500 target for mid-2018 to 2700-2800. (5) Tax cuts could trigger meltup. (6) Oh no! FY 2017 federal deficit was $666 billion. (7) Federal government outlays at record high, led by spending on redistributing income. (8) Tax receipts flatten despite strong payroll tax receipts. (9) Actual corporate tax receipts suggest even lower effective tax rate. (10) Leading indicators pointing higher for economy.
Giving Thanks
(1) Trick question: Who creates jobs, politicians or employers? (2) Businesses doing well despite Washington. (3) Cutting the government-imposed costs of doing business is a good thing. (4) For small business owners, government regulations are less of a problem than finding workers. (5) Small and medium companies hire more workers than large ones. (6) Just in time for the holidays: Cornucopia of good revenues and earnings. (7) Record-high forward revenues and earnings are bullish. (8) Profit margin remains at record high. (9) Q3 earnings would have been better but for the hurricanes.
Looking a Lot Like Xmas
(1) Three in a row 3% real GDP. (2) Is the New Normal morphing into the Old Normal? (3) Lots of freight getting hauled on the rails and the roads. (4) Business sales growth is just dandy. (5) Buying retailers on the bad news. (6) Consumers: Solid incomes and manageable debt. (7) Home improvement spending is very strong. (8) Old-fashioned retailers are cheap for a reason. (9) Tesla, solar panels, and batteries electrifying Australia and Puerto Rico.
Sausage for the Holidays?
(1) Senate Republicans complicate tax reform. (2) Sausage or humbug for Christmas? (3) Repatriated earnings with no strings attached? (4) The polar opposite of the fiscal cliff, or not? (5) A very recent history of tax reform. (6) What’s the difference? House and Senate plans not that far apart before Obamacare hit the fan, again. (7) SALT vs. SALT-lite. (8) Rules for policy wonks. (10) The net result with or without tax reform will be bigger federal budget deficits and more debt.
Commodity Currents
(1) In 2017, oil is up, while raw industrials are flat. (2) Oil price tends to have a lot of geopolitical noise. (3) YRI Global Growth Barometer going strong. (4) Remember the Baltic Dry Index? It is up sharply since early last year. (5) Dr. Copper is signaling that all is well. (6) Oil price up despite rebound in US output as inventories drop. (7) Relative performance: S&P 500 Materials & Energy lagging commodity prices. (8) Global industrial production at record high. (9) Emerging markets are emerging.
Meltup Medley
(1) It’s beginning to look a lot like Xmas. (2) Santa Claus meltup? (3) Will Republicans deliver honey cake or humbug for the holidays? (4) Solid earnings and global fundamentals driving stock prices up more than expectations of tax cuts. (5) The bulls are all coming home for the holidays. (6) Nothing to fear but unrealistically high LTEG. (7) As P/E goes up, PEG comes down. (8) Gift wrap up some equity ETFs with foreign exposure to give to your loved ones. (9) Movie review: “LBJ” (+ + +).
Chips & Chile
(1) No more drivers in Waymo’s cars. (2) Autos will be using more chips, less gasoline. (3) Soaring semiconductor sales and stock prices. (4) Chips are still relatively cheap! (5) Lots of mergers, acquisitions, and partnerships in dynamic semiconductor industry. (6) Media industry is a fast-moving picture. (7) Chile has what self-driving electric cars need: copper and lithium. (8) Mexico may underperform until NAFTA issues with Trump administration are resolved.
Global Warming
(1) Lots of good explanations for secular stagnation. (2) Lots of good explanations for emerging global boom. (3) Looks like Rogoff was right, while Summers was wrong, about secular stagnation. (4) Time does heal lots of wounds. (5) Global M-PMIs strong. (6) German factory orders and Eurozone retail sales at record highs. (7) Forward revenues confirming strong global growth. (8) Global stock markets running with the bulls.
Animal Spirits Revisited
(1) The disconnect between soft and hard data is gone. (2) Boom ahead? (3) Nirvana scenario could set stage for Meltup scenario. (4) Q1-2018 could test boom hypothesis. (5) Surprise Index makes a not-so-surprising comeback. (6) More buying and less renting of homes. (7) Unemployment rates confirm tight labor market. (8) CEOs remain upbeat, and it shows in capital spending. (9) Transportation indicators are booming. (10) Business surveys are hot. (11) S&P 500 forward earnings making weekly record highs. (12) Are there too many bulls?
TGI . . . TCJA?
(1) Radical overhaul. (2) Now the hard part. (3) The losers are mostly wealthy individuals with big bills for SALT including property taxes. (4) A stealth 46% tax rate. (5) Mass migration from SALT to SALT-free states. (6) A boon for SmallCaps. (7) Budget resolution for the Byrd. (8) Trump’s tax reform mostly bullish for business and stocks. (9) Reagan’s tax reform mostly benefited individuals. (10) Movie review: “The Florida Project” (+ +).
High on Lithium & Paint
(1) Materials: The comeback sector. (2) Basic Materials industries are unimpressive. (3) It’s all chemicals and paints. (4) Lithium is no laughing matter. (5) OPEC’s surprising compliance boosts Energy sector. (6) The price is right for US frackers. (7) US motorists driving more on less gas. (8) Bitcoin makes less sense than tulip bulbs. (9) More fake news?
AC vs DC
(1) Alternating vs direct currents in DC and in earnings. (2) Jolt from DC. (3) Trick or treat? (4) Instant gratification vs phasing in tax reform. (5) Rubbing SALT: Raising taxes to cut taxes. (6) Will growth pay for tax cut? No money-back guarantee. (7) Forward revenues and earnings remain charged up. (8) Consumers are happy because jobs are plentiful and wages are rising faster than prices.
Is Everybody Happy?
(1) Remembering Ted Lewis’ catchphrases. (2) Consumer confidence highest since 2004. (3) Five Fed district business surveys pointing higher. (4) Eurozone confidence index points to faster real GDP growth. (5) Flash M-PMIs are hot. (6) Go Global beating Stay Home. (7) In perfect harmony. (8) Real hourly wage at record high. (9) Proprietors’ income is strong, and as important as corporate profits to jobs growth. (10) Comprehensive measures of standard of living have been rising to record highs for quite some time.
Everything’s Just Rosy
(1) Everything is just swell too. (2) Cyclicals confirming global boom with performance and earnings growth. (3) An earnings-led meltup isn’t a meltup. It’s a bull market. (4) Capital spending rises to record high. (5) Spending on manufacturing structures is weak, but industrial equipment spending is at a record high. (6) Spending on IT equipment and software continues to soar into record-high territory. (7) Caterpillar operating on all cylinders, while Union Pacific is chugging along, and GE is sputtering. (8) Movie review: “The Foreigner” (+ +).
Birth Dearth
(1) P&G not sure why sales are weak. (2) Bringing up fewer babies. (3) Fewer diapers and less shampoo. (4) Pulp nonfiction. (5) Abe wants Japanese to have more babies. (6) Abe also wants to beef up military. (7) Another sales tax hike is on the way. (8) Better Japanese GDP growth led by exports. (9) Inflation remains MIA. (10) In Japan, 75 is the new 65. (11) Will daycare revive Japan?
Fearless
(1) Where have all the black swans gone? (2) Trump’s white swan. (3) Hurricanes depressed Q3 results. (4) Q4 earnings estimates showing double-digit growth. (5) Analysts upbeat about 2018 and 2019 revenues and earnings. (6) On the lookout for gray swans. (7) Reprise of 1987? (8) Fed regime change. (9) When all QEs terminate, will stocks fall? (10) Black swans sighted in the South China Sea.
Halloween Is Coming
(1) Gee, the year is almost over! (2) September and October haven’t been scary this year. (3) Will Republicans deliver tricks or treats? (4) Nothing to fear but nothing from the Republicans on tax reform. (5) Market says: The correct question is “What if tax reforms happens?” (6) The way is cleared for the bulls. (7) Best tax code money can buy. (8) Supply-siders offer self-financing tax cuts. (9) Ratio of federal government revenues to GDP is very procyclical in a flat trend. (10) Government spending relative to GDP is countercyclical, with an upward bias since the Great Society entitlements extravaganza. (11) Two Fed districts are really hot this month.
From Seinfeld to Sinatra
(1) The last stock market correction until the next one. (2) Seinfeld market goes from flat (nothing happening) to new highs on nothing bad happening. (3) Investors to bull: Fly us to the moon. (4) Four times more bulls than bears. (5) S&P 500 sectors: Widespread bull market momentum in 200-dmas. (6) Leading the charge this year are IT, Industrials, Financials, and Materials. (7) Fed head tossup: winning whether it’s heads or tails. (8) Republicans scrambling to get tax reform done. (9) American demographics: The Fifties are so over. (10) Movie review: “Blade Runner” (+).
Path of Least Resistance
(1) Climb every mountain. (2) Stock prices rising day after day as forward earnings rises week after week. (3) Drug prices are too d%$!m high, but CPI drug inflation rate has come down a lot. (4) Public health concern. (5) FDA approving drugs at faster pace. (6) Amazon’s Rx. (7) Government struggling to manage health care.
Yellen Sees Rational Exuberance
(1) Group of 30 gabfest. (2) Yellen says valuations are normal in New Normal. (3) Yellen channeling Greenspan on valuation question. (4) Back to the ’90s: Long-term expected earnings growth estimates going up again led by Tech. (5) Trump’s election seems to have boosted LTEG on expectations of deregulation and tax cuts. (6) Meet John Taylor, who might be next Fed chair. (7) Taylor says rules beat discretion, which is prone to chaos. (8) Rules may not rule without some discretion if Taylor rules. (9) For Fed watchers: Anybody but Taylor, please!
Addictions
(1) Global monetary conditions remain bullish. (2) Forward consensus expected revenues growth rates up from a year ago. (3) China is world’s biggest debt abuser. (4) China’s “social financing” at record high, led by bank loans and supplemented with lots of shadowy money. (5) China’s M2 growing fast too. (6) Ben Bernanke has some advice for the Fed. (7) What if central banks really don’t control inflation at all? (8) Then their efforts to boost it will fail, and they will inflate asset prices trying to do so.
Bitdollars
(1) Global economy lifting all boats. (2) Consensus earnings expectations rising around the world. (3) Another happy canary chirping in Malaysia. (4) China’s imports and exports showing solid y/y gains. (5) US retail sales and CPI lift GDPNow to 2.7% for Q3. (6) Fed officials obsessed with solving the “lowflation” puzzle. (7) Fed’s doves cooing more loudly. (8) True confession by ex-Fed governor: Inflation model is broken. (9) Bernanke calls on Fed to overshoot inflation target. (10) Brainard voices by-the-way concerns about asset price melt-ups. (11) Melissa explains central bank backed cryptocurrencies. (12) Get ready for bitdollars.
2018 Is Coming
(1) Q3 earnings cut by hurricanes and by analysts doing what comes naturally. (2) Industry analysts expecting solid revenues growth in 2018, with higher profit margins also boosting earnings. (3) Catalonians want to secede from Spain. (4) Companies ready to say adios. (5) Spanish economic indicators are muy bueno across the board. (6) Spanish stocks remain relatively cheap despite separatist issue.
Blue Skies for Blue Angels
(1) Is low unemployment bad for stock returns? (2) An eternal disclaimer. (3) Might booming labor market with low inflation remain bullish for stocks? (4) Guess what? Unemployment always bottoms before recessions and bear markets. (5) MAPE showing stocks still fairly valued. (6) Nirvana continues for now. (7) Blue Angels flying into the wild blue yonder.