Morning Briefings
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(A) Few Differences This Time?
(1) Not all valuation measures are flashing red. (2) Misery Index near previous cyclical lows. (3) Misery-adjusted forward P/E around its mean. (4) Rule of 20 no longer bullish. (5) Buffett isn’t giving much weight to his ratio. (6) Price-to-sales ratio awfully high. (7) Fed Model says stocks cheap compared to bonds. (8) China’s demography remains bullish for growth. (9) China’s population growth slows. (10) But China’s rural-to-urban migration continues apace.
Where Is This Leading?
(1) The latest panic attack lasted one day. (2) Keeping a diary of anxiety attacks. (3) VIX taking regular doses of Valium to stay calm. (4) Pills for the President. (5) One monthly and two weekly LEIs all at record highs. (6) CEI benchmark model sees next recession starting March 2019. (7) CEI confirming 2% trend growth in real GDP. (8) Resource Utilization Rate and LEI/CEI ratio are bullish for profit margin. (9) Yield curve signaling neither boom nor bust. (10) NY & Philly Fed surveys showing animal spirits remain spirited.
Fall from Grace
(1) Yesterday’s fall. (2) Seeking impeachable offenses. (3) Loose Lips Donald. (4) White House busy playing whack-a-mole all day. (5) Keeping targets for S&P, but swapping 2017 & 2018 for earnings. (6) Adam & Eve & Trump. (7) The Swamp of Eden. (8) Tech has been chosen for great things. (9) Software for the cloud. (10) Chips for the cloud.
Back in the Cage?
(1) Swamps, zoos, and Washington, D.C. (2) City slicker in White House doesn’t know much about swamps. (3) Less mojo in soft data, which are mostly holding onto post-election bounces. (4) Economic Surprise Index showing weaker-than-expected hard data. (5) Key rail and truck gauges have stalled. (6) Business loans rise to record high despite slow pace of growth. (7) Plenty of good news in earnings. (8) Smooth sailing for stocks in the swamp, so far.
US Underperforming
(1) Dipping vs. plunging offshore. (2) Go with the flows for now. (3) US fund flows can’t explain US underperformance. (4) Global investors must be bullish on global growth, and betting on it with cheaper foreign stocks. (5) Bullish on a world that can deal with gradual Fed tightening. (6) Overseas forward earnings turning up so far this year. (7) Too many eggs in Emerging Markets MSCI basket? (8) The case for actively managing an EM portfolio. (9) Fragile Five are less fragile now.
Death by Amazon
(1) Dropping anchors. (2) Piranhas like fresh water and red meat. (3) Reading the business obituaries. (4) Eating someone else’s lunch. (5) Amazon expanding C2B and moving into B2B. (6) Media man says Amazon is “ridiculously scary.” (7) Clothes on demand. (8) A deflationary cloud. (9) Death by Amazon is a spreading plague. (10) Bricks-and-mortar getting hammered in stock market. (11) Buffett, saying Amazon hurting IBM, cuts his position by 1/3. (12) Business demand for computers has been flat after AWS opened the cloud. (13) Movie review: “The Dinner” (- -).
On the Road Again
(1) Leaving home. (2) Time for fun. (3) Cruising for dollars. (4) Spending on lasting memories on the high seas. (5) More Asians with wanderlust. (6) The hotels are occupied. (7) Having magical days at the theme parks. (8) More CEOs talking about wage pressures. (9) Labor shortages. (10) Peak plastic? (11) India going from cash to mobile pay. (12) Selfie Pay: Look into my eye.
Outperforming
(1) Ka-ching: Equity ETF inflows at record high. (2) Double-digit gains for S&P 500/400/600 since Election Day. (3) Analysts see double-digit earnings growth in 2017 and 2018. (4) Significant upside hooks during Q1 earnings season. (5) Alpha, beta, and SmallCaps. (6) Buddy, can you spare some time (to work)? (7) Europe is hot, hot, hot. (8) Eurozone’s economic indicators are strong. (9) IMF recommends actively managing EM portfolios, and provides investment guidelines.
China Down
(1) Bulls and bears in china shop. (2) China’s credit tightening is #1 concern currently. (3) Chinese stocks mixed. (4) Chinese officials go to war against shadow banking system. (5) Are Wealth Management Products weapons of mass financial destruction? (6) Lots of yuan in grey areas. (7) Don’t trust entrusted investments. (8) Shadow banks account for almost 1/3 of “social financing.” (9) China isn’t as fragile as some fear. (10) Plenty of growth in exports and imports. (11) Capital outflows still a problem.
Bali Hai
(1) Bond Vigilantes Model too bearish on nominal GDP. (2) Ignore q/q real GDP. Focus on stronger y/y comps. (3) Variations on a theme: Lower-for-longer growth, no-boom-no-bust, inflation is dead. (4) FOMC says Q1 slowdown was temporary. (5) Welcome to Bali Hai, with ideal weather conditions for investors. (6) Just beware of the dormant volcano. (7) Wage and price inflation remain as calm as the trade winds on a South Pacific island. (8) Earned Income Proxy is smoking. (9) Storm clouds in the commodity pits? (10) Chinese officials pumping the brakes while stepping on accelerator.
Where Credit Is Due
(1) Coffee, tea, or plastic? (2) A flight with no fights. (3) Auto and student loans leading consumer credit to new highs. Revolving credit lagging. (4) Consumer delinquencies rising back to old normal. (5) No signs of trouble in debt-servicing ratio. (6) Dearth of deadbeats. (7) Payments processing is a great business. (8) But beware of the Great Disruptor. (9) Some cracks in commercial real estate’s foundation. (10) Want to buy the Brooklyn Bridge and get a free taxi medallion?
Seinfeld’s Market
(1) Jerry & George pitch a sitcom about nothing. (2) The Trauma of 2008 may be finally wearing off. (3) Counting anxiety attacks. (4) Fully invested bears are less panic prone. (5) Other than earnings rising, nothing much is happening for stock investors to get excited about one way or the other. (6) In case you missed them: Recent commotions in Greece, China, and Washington were largely ignored. (7) Breadth remains bullish. (8) Are the rich paying their fair share of taxes?
Rolling Recessions & Recoveries
(1) The long good buy. (2) The oil industry’s rolling recession has come and gone. (3) Texas and North Dakota are not the only oil-producing states. (4) Warehouse clubs, super-stores, and online retailers killing department stores. (5) The auto industry may be next on the disassembly line. (6) Another happy hook for another earnings season. (7) Broad-based earnings recovery. (8) Q1 consumer spending disappointing, but household formation is looking better. (9) Increase in households led by owner-occupiers rather than renters. (10) Record-high standard of living for average American household.
Hot Money
(1) Definitive definitions of meltdown and melt-up. (2) The numbers game. (3) Trump’s YUGE tax-cut plan cut from 3½ pages to 1 page. (4) Statutory vs effective corporate rates. (5) In my dreams: 15% tax rate on sole proprietorships. (6) Nervous about sky-high valuations, but even more nervous about missing more gains. (7) Equity ETF bubble continues to inflate. (8) Animal spirits a bit less spirited, but still high given softness in hard data. (9) Stocks’ pep rally led by spirited actual and expected earnings. (10) Movie review: “The Lost City of Z” (- -).
Earnings Boosting Stocks
(1) Nasdaq titans breach 6000. (2) Yet Industrials and Materials are leading April run in S&P 500 so far. (3) Beating expectations and raising guidance. (4) Finding more traction in the slippery oil patch. (5) CAT purring with Asian tigers. (6) Solstice: One of Honeywell’s sweet spots. (7) Are Millennials childish or adultish? (8) The basement suburban legend. (9) Education matters. Having children not so much.
Brain Drain
(1) Turing Test. (2) Tech’s latest Great Disruption: From brawn to brain. (3) Robots are easy-going, but will AI make them cranky? (4) AI at YRI. (5) Head in the Cloud. (6) The sinister goal of knowledge workers. (7) IT+R&D spending up from 26% to 44% of capital spending since 1981. (8) Consumers are spending more than business on computers, really. (9) Swamp vs Valley people. (10) The Great Disruptors want to read your mind with a quantum computer, while you are cruising in an electric flying car. (11) When taxing robots, beware of the one called “Spartacus.”
Minimalist Millennials
(1) Millennials are different than Baby Boomers. (2) Not rushing to get married. (3) Baby dearth. (4) Turn-ons and turn-offs. (5) Still renting. (6) Our in-house Millennial. (7) Cool experiences. (8) Lifestyles-of-the-rich-and-famous is so yesterday. (9) Cars are just cars. (10) Habitats for Hobbits. (11) An alternative way to be an adult.
Now, Voyager
(1) Team tours abroad. (2) Voyager now on Google Earth. (3) France: The more things change, the more they stay the same. (4) Commodity prices still trending higher. (5) High PMIs. (6) French and German shoppers are shopping. (7) Inflation disinflating again? (8) Overseas revenues and earnings growth rates rising. (9) Asian exports data showing widespread strength. (10) IMF raising rather than lowering growth outlook, for a change. (11) Bette Davis assesses the global economy.
Financials: Out of Favor Again?
(1) Bronx cheer. (2) C&I loans and flatter yield curve are turn-offs. (3) Net interest margins expanding. (4) Capital markets issuance boom may explain weakness in business loan demand. (5) No alarms about credit quality, even in auto loans, on bank conference calls. (6) Goldman was an outlier with a miss for a change. (7) S&P 500/400/600 forward revenues and earnings continue to rise in record territory.
Go With the Flows
(1) Fed provides lots of data about capital market flows. (2) Looking at US-based equity mutual funds and ETFs that invest in the US or around the world, we see big inflows to domestic ETFs since election. (3) World equity mutual funds and ETFs (based in US) were less popular last year. (4) Production is yet another weak indicator in auto industry’s soft patch. (5) Truck freight and sales stalled. (6) Economic Surprise Index is down. (7) Washington may have to respond sooner with fiscal stimulus, while the Fed can wait on next rate hike. (8) Chinese economy remains too dependent on government and debt.
The Trump Doctrine
(1) Eye on the prize. (2) Alternative leadership styles. (3) Obama vs. Trump Doctrines. (4) Geopolitics hasn’t shocked this bull market so far. (5) Might stocks stall if Trump puts Foreign Policy First, ahead of America First? (6) Mixing it up in Yemen, Syria, Afghanistan, and North Korea. (7) Running out of strategic patience. (8) Trump has a few kind words for Yellen. (9) Auto industry is main soft patch in US economy. (10) China’s economy is doing a wheely, really.
Creative Destruction
(1) The headline stories that aren’t on front pages are important too. (2) Now that Fed is tightening, bull market in stocks feeds on earnings. (3) Thursdays are when we contemplate creative destruction throughout the US economy. (4) US economy continues to create more jobs than it destroys. (5) JOLTS and NFIB survey showing lots of unfilled job openings. (6) Apple is disrupting chip industry as it turns to making its own hardware. (7) Google’s TPU is another example of a software company making its own hardware. (8) Will Tesla clobber auto dealers the way Amazon is clobbering malls? (9) Spring is in the air for home prices as demand exceeds supply.
Back to the Future?
(1) Chauncey Gardner’s favorite season. (2) S&P 500 revenues and earnings are growing again. (3) Green shoots. (4) Forward revenues and earnings at record highs for S&P 500/400/600. (5) Industry analysts may be boosting 2018 estimates to reflect impact of Trumponomics. (6) A few downbeat hard-data indicators. (7) Back to slower, but longer growth? (8) Demography and technology did not change on Election Day. (9) The CBO’s estimate for potential real GDP growth at odds with Trump’s MAGA ambitions for economy. (10) Hard to Make America Young Again. (11) Both labor force and productivity growth weighing on economic growth. (12) Earnings remain on growth track for stock market.
DIY Fed Policy
(1) The old normal vs. the new abnormal for Fed policymaking. (2) Monetarism’s brief day in the sun. (3) Normalization now involves reducing an abnormally large balance sheet. (4) Learning-by-doing at the Fed. (5) Dudley and Yellen gang up on Taylor. (6) Taylor worked for Greenspan, then devised a linear equation to replace him. (7) Inflation and output gaps. (8) Atlanta Fed has an app for running monetary policy.
Over There & Over Here
(1) Getting around London town. (2) Fairly relaxed about both Brexit and Trump. (3) Not so relaxed about US stock valuation multiples. (4) Frexit would face a bigger constitutional challenge than did Brexit. (5) EMU looks cheaper than US MSCI now that forward earnings are improving in Eurozone. (6) A sector perspective shows that EMU may not be as cheap as it looks relative to US. (7) Employment still among strongest hard data, except for big job losses among retail stores. (8) Is Trump bringing back factory jobs already? (9) Fed getting ready to unwind balance sheet as securities purchased under QE mature. (10) Another reason to expect gradual rate hikes. (11) Movie Review: “Cézanne et Moi” (+).