Daily Research Updates
Morning Briefings
Expert market analysis delivered every morning. Stay informed with comprehensive research and data-driven insights.
Corporate Finance 101
(1) Nonfinancial corporations have record cash flow. (2) Q3 could be third quarter of 3% growth in real GDP. (3) Depreciation expense is a great tax shelter. (4) NFCs’ effective tax rate has been around 21% for a while. (5) No dearth of capital spending. (6) Lots of bond issuance, buybacks, and dividends. (7) More taxing matters. (8) Movie review: “Darkest Hour” (+ +).
Financials Are Catching Up
(1) The first digital tulip bubble. (2) Cornering the market. (3) Bitcoin vs. the banks. (4) Financials getting inflows, deals, and less regulation. (5) Wall Street returning to the business of trading. (6) Flatter yield curve. (7) Earnings optimism. (8) The Dark Web is very dark.
Go With the Flows
(1) From global energy-led rolling recession in 2015 to recovery in 2016, and boom in 2017-2018 (?). (2) Global manufacturing PMIs are running hot. (3) China’s exports and imports are back to record highs. (4) Citigroup Economic Surprise Index is highly elevated in the US. (5) Odd downward revision in GDPNow. (6) OECD leading indicators led higher by Germany and Brazil. (7) Americans collectively have never been richer as stock prices soar and home values rebound. (8) The Buffett Ratio is back to its previous record high.
Taxing Matters
(1) Puzzling over a big divergence on corporate taxes. (2) Thanks to QE programs, Fed’s profits soared along with its balance sheet. (3) Fed’s profits included in NIPA measure of corporate taxes, not in IRS tabulation. (4) NIPA also includes corporate taxes paid to other taxing authorities besides the IRS. (5) IRS data suggest corporate federal tax rate well below 20%. (6) Work in progress. (7) S&P 500 tax data suggest big corporations aren’t free-loading on the tax system as much as widely believed.
Hot Money
(1) What goes up attracts more buyers. (2) Is it a meltup if earnings are rising along with prices? (3) Flow-of-funds analysis showing lots of money pouring into stocks. (4) Equity ETF inflows at record high over past 12 months through October. (5) Lots of money pouring into mutual funds and ETFs that invest globally. (6) Revenue and earnings squiggles are upbeat. (7) Two obvious risks to the good times. (8) Labor market is tight, yet wages remain subdued. (9) Movie review: “Lady Bird” (+ +).
Tech Fender Bender
(1) Odd number. (2) The day the music died. (3) Tech gets hit on tax bill, net neutrality, and attack by old guard. (4) Taxing intellectual property. (5) Tax reform could increase taxes for tech companies. (6) FCC set to vote against net neutrality. (7) Tech still delivering good earnings growth. (8) No sign of geopolitical risk in S. Korea’s Kospi. (9) S. Korea, Singapore, and Taiwan all booming along with global demand for semiconductors.
World Equities & QE
(1) They didn’t read the memo. (2) Combined assets of Fed, ECB, & BOJ flattening. (3) The Fed taking baby steps to shrink balance sheet. (4) ECB scheduled to cut monthly asset purchases in half next year. (5) BOJ’s stealth tapering underway? (6) PBOC is back in the easing game. (7) S&P 500 forward earnings remarkably strong, outpacing lots of strengthening global economic indicators. (8) Bottom line: Global economic outlook remains upbeat.
Bountiful Profits
(1) Lots of GDP producing lots of profit. (2) Book profits at record high. (3) Dividends flat at record high. (4) Retained earnings recovering from energy-led profits recession. (5) Corporate cash flow at record high along with tax-based depreciation. (6) High profit margins. (7) Bottom line: Looking up. (8) Proprietor’s income is 60% the size of corporate profits.
Market Math
(1) Flynn, the Flim-Flam Man. (2) Another impeachment panic attack? (3) Bad news tends to be ignored during meltups. (4) Focusing on S&P 500’s tax rate. (5) A drop from an effective tax rate of 25% to a statutory rate of 20% would add an estimated $6 a share in 2018. (6) Targeting S&P 500 to hit 2800 by mid-2018 and 3100 by end 2018. (7) S&P 500 forward revenues and earnings making new highs. (8) OECD tax data for 2016 show corporate tax burden relatively light. (9) OECD: Americans paying relatively high property taxes, low sales and social security taxes.
Taxing & Shopping Matters
(1) Theories, urban legends, opinions, fake news, and facts. (2) Is the corporate tax rate currently 35%, 21%, or 13%? (3) Corporate tax reform may be about eliminating foreign tax dodges rather than cutting taxes. (4) ‘Tis the season for retailers. (5) Thor Industries makes RVs that are selling like hotcakes, confirming strong consumer trends. (6) 2018 is coming: Another double-digit year for earnings?
Barreling Along
(1) Full throttle, pedal to the metal, and escape velocity. (2) Truck tonnage index at record high. (3) Intramodal railcar loadings at record high. (4) Home shopping may be boosting truck traffic. (5) Animal spirits remain highly spirited. (6) Consumer optimism survey suggests jobless rate could soon fall below 4.0%! (7) Regional business surveys are upbeat. (8) Outlook for new orders looking good. (9) German business index hits a new high, which is bullish for German stocks. (10) Movie review: “Three Billboards” (+).
Electric Lights-Out Orchestra
(1) Cordless devices need cords for docking stations. (2) GE and Siemens generating less interest for their large turbines. (3) GE blames renewables. (4) Power is getting decentralized in the electric power business. (5) Less demand for coal-fired plants in China and India. (6) Emerging economies emerging into services. (7) Electric cars could juice up electricity demand, met by more solar panels. (8) Cobots are more human-friendly than robots. (9) Last one to leave the factory floor gets to shut the lights off forever.
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.