Morning Briefings
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Hard To Reconcile
(1) Easy to believe Trump reviving animal spirits in US. (2) Hard to imagine he is doing that overseas. (3) The recovery from the Energy recession explains some of the recent global upturn. (4) China still addicted to credit, which soared $2.7 trillion over past 12 months through January. (5) Flash PMIs are flashing green. (6) Retail sales strong in Europe. (7) Two-step: Reconcile Trump-Cohen and Ryan-Brady bills then get merged one fast-tracked through Congress with reconciliation process. (8) A couple of hurdles such as border adjustment tax and R&R of ACA. (9) Bismarck’s sausage warning.
Rules for Paranoids
(1) Historic times, maybe. (2) Paranoids vs. paranoids out to get one another. (3) Alinsky’s rule book for middle-class revolutionary youths. (4) Hillary’s 1969 senior thesis now available online. (5) OFA organizing to keep Obama’s status quo. (6) Historian Hofstadter wrote the book on “paranoid style” in American politics. (7) Rahm tells Trump to cut taxes post haste. (8) More animal spirits in the zoo. (9) Blanchard says secular stagnation wasn’t so secular after all.
Game of Thrones
The next Morning Briefing will be sent on Tuesday, February 21. (1) Trump trip. (2) Bullish plans vs. bearish bluster. (3) Declarations of war lead to wars. (4) Obama’s throne in DC and his supporters around the country. (5) OFA all the way? (6) The first casualty. (7) The shoe is on the other foot. (8) Time to fast-track tax and regulation reform. (9) Catch-22: Too much of a good thing. (10) Tech is leading the pack. (11) Jackie explains the media industry’s Game of Thrones.
Running Hotter
(1) Small Business Optimism Index goes vertical. (2) Reagan, Volcker, and now Trump. (3) Small business owners don’t like big government. (4) Business owners saying jobs are hard to fill, while workers are saying jobs are plentiful. (5) Let’s see how far China’s rooster can fly in the new year. (6) China’s trade data, PPI, and stock prices all are upbeat. (7) Yellen is pleased and signaling more rate hikes coming. (8) No more talk about hysteresis.
Bada-Bing, Bada-Boom
(1) Sonny and Michael Corleone. (2) Improv. (3) Knowing when to walk out. (4) Is this the melt-up? (5) Sell on the tax news, or just go away in May? (6) Consensus 2018 earnings estimates are steady and bullish. (7) Going vertical: Stock prices, our Boom-Bust Barometer, and YRI Weekly Leading Index. (8) From “The economy, stupid!” to “Populism, stupid! (9) Bond spreads widening in Europe. (10) What if Brexit is a success? (11) Le Pen will bring crowbar to Frexit door. (12) ECB getting bada-chinged.
Good Rotation
(1) Dictionary definitions. (2) Chump change, chunk of change, and Trump change. (3) QE was terminated in late 2014, yet equity bull continues to charge ahead. (4) No Great Rotation so far, but maybe the start of a Good Rotation. (5) Piling into savings deposits. (6) December was a good month for equity funds. (7) China’s rooster starts the new year with a loud crow. (8) UK factories booming. (9) No sign of zerosumitis. (10) Movie Review: “A Dog’s Purpose” (+ +).
Here Come the Jetsons
(1) Correction time yet? (2) Bulls dwarf bears—but sell signals were never the Bull/Bear Ratio’s forte. (3) Investors putting trust in earnings and Trump’s bullish plans for now, while ignoring his bearish ones. (4) We’d prefer to see fewer bulls and less bullying. (5) Jackie goes for a drive in the auto industry. (6) Subprime is making a comeback in auto loans. (7) Autonomous cars may change almost everything. (8) Uber drones. (9) S&P 500 Automobile Manufacturers’ single-digit P/E reflects concerns more so than promise at this point.
Holey Walls
(1) Practical issues with a wall on US border with Mexico. (2) Maybe it needs to be south of Mexico rather than south of the US. (3) Believe it or not: Chinese believe in free markets! (4) Not when it comes to capital flows, as they slap controls to stem outflows. (5) China’s international reserves fall to $3 trillion. (6) Railway freight traffic improving. (7) A billionaire disappears. (8) The Silk Route project is rolling down the tracks.
A Winning Scenario
(1) Second place is for losers. (2) Might “America First” be a winning strategy for the world? (3) America’s gift to the world: $700bn trade deficit. (4) Group hug overseas? (5) Time for emerging economies to emerge. (6) Remarkable recovery for commodity prices. (7) Emerging market currencies stable over past year despite Fed’s rate hikes. (8) EM stock prices rallying. (9) Global PMIs were solid in January. (10) Is owning gold a bet for or against Trump?
Entrepreneurial vs. Crony Capitalists
(1) Trump takes credit for latest strong jobs report. (2) Does anyone in Washington really “create” jobs? (3) Keynes vs. Bastiat on buried bottles and broken windows. (4) Small and medium-sized companies do most of the hiring as they grow. (5) Crony capitalists tend to run big companies that want to protect what they’ve got. (6) Are Trump’s billionaires populists or cronies? (7) Goldman doing God’s work again. (8) Demographic impediments to Trump’s goal of 25 million new jobs. (9) Can the Phillips Curve be saved? (10) The Fed is lying low. (11) Movie review: “Fences” (+ +).
Panning for Gold
(1) Looking for good buys. (2) Looking for earnings outperformers. (3) A simple screen. (4) Industrials benefitting from end of energy recession. (5) Railroads hauling more fracking sand, again, and even coal. (6) Lots of Financials making the grade. (7) Some Tech industries stand out. (8) Specialty Chemicals are special. (9) Surprising finds among consumer-related industries. (10) Mexicans who lose their factory jobs will be shovel-ready. (11) We reckon there are only 900,000 jobs to bring back from Mexico.
Now the Hard Part
(1) Trump hits the (muddy) ground running. (2) Mud is key feature of Washington’s terrain. (3) Hill Republicans want 200 days to implement Trump’s 100-day agenda. (4) Running out of momentum, for now. (5) Earnings picture remains bright. (6) Impressive rebound in commodity prices. (7) European economies looking better. (8) Consumer Optimism Index holds post-election gain in January. (9) The best and the brightest wheeler-dealers. (10) Let’s make a deal!
Devilish Details
(1) Politics is a blood sport. (2) Aneurin Bevan and Ivanka Trump say so. (3) The cradle of civilization is no longer so civilized. (4) Mexico is Trump’s piñata. (5) Noise-to-signal ratio rising. (6) Bond Vigilantes Model says bond yield should be 3.50%, not 2.50%. (7) Despite upturn, bond yields remain near zero in Germany and Japan. (8) Record highs for S&P 500 forward revenues and earnings, as well as for our Boom Bust Barometer and Weekly Leading Index. (9) Spirited animals.
New Normal World Order
(1) Back to the future on trade? (2) Trump’s World Order: From multilateral back to bilateral. (3) Trump channeling FDR’s Reciprocal Trade Agreements and Reagan’s voluntary export restraints. (4) Ross Perot’s giant sucking sound. (5) Can Globalization be saved? (6) Excluding soybean exports, real GDP rose 2.5% during Q3 & Q4. (7) Manufacturing capacity, flat since 2001, may be heading higher soon. (8) Leading indicators all pointing higher. (9) Movie review: “Moonlight” (- -).
Another Milestone
(1) Another nice round number. (2) Is popularity overrated? (3) Love him, or hate him. (4) Lots of happy surveys of consumer confidence, purchasing managers, regional business activity, and investor sentiment. (5) Silicon Valley may change the future more than Washington will. (6) Jackie explains why there might be more upside in both Semiconductors and Homebuilding.
Earnings World
(1) Pay no attention to the clowns behind the curtain. (2) From Ringling Brothers to Cirque du Trump. (3) S&P 500 revenues and earnings recovering to new record highs from Energy-led recession. (4) Q4 earning season likely to deliver 6% gain. (5) Analysts are raising their 2018 earnings estimates. (6) Energy, Financials, & IT showing best earnings revisions and forward earnings momentum. (7) Managing companies well despite Washington. (8) Some signs of life in overseas forward earnings. (9) Plenty of life in flash M-PMIs for US, Eurozone, and Japan.
The First 100 Hours
(1) Andrew Jackson’s song. (2) Power to the forgotten people. (3) Trump is channeling Jackson, FDR, JFK, and Perot. (4) Jury still out on extent of Trump’s protectionism. (5) DJT is no JFK on world stage. (6) Isolationism vs interventionism. (7) Foxconn pays the entry price. (8) Merkel seeks compromises with Trump. (9) China’s sore point. (10) Mexico getting stomped by 800lb gorilla north of the border. (11) NAFTA will be renegotiated one way or another.
Too Hot for Goldilocks?
(1) Back to the Old Normal business cycle with a boom followed by a bust? (2) Our “benchmark model” sees the next recession starting in March 2019. (3) Bill, Larry, Janet, and Ronnie. (4) Fed’s Goldilocks now worrying that the economy might run too hot. (5) Obama’s jobless rate followed same track as Reagan’s! (6) The hottest market in America. (7) Buddy, can you spare a worker? (8) Auto industry running out of capacity, especially for light trucks. (9) Lots of tonnage to truck. (10) Driving to and from, and for, work. (11) Trump is the New Abnormal. (12) Movie review: “The Founder” (+ + +).
Rising & Setting Suns
(1) Banner Q4 for big banks and brokers. (2) Financials fundamentals may be just starting to shine. (3) Room for improvement in IPOs, in M&As, and asset management. (4) Financials playing catch-up after lagging for so long. (5) No bullseye for Abe’s “three arrows.” (6) 2020 Olympics could boost Japan a bit for a little while. (7) Not much CPI and export bang from the depreciating yen. (8) Aging is a big drag in Japan, as population shrinks. (9) Abe was first foreign leader to visit Trump. (10) A couple of signs of life.
Method to His Madness?
(1) A matter of style. (2) The Great Disruptor. (3) Polonius, Hamlet, and Trump. (4) Queen Victoria needed a Twitter account. (5) Who is madder? (6) CEOs kissing Trump’s ring. (7) Trump says border tax too complicated. (8) Trump’s Rules for Wheeler Dealers: Negotiate from your strength, and find their weakness. (9) IMF also drinking the Kool-Aid. (10) S&P 500 revenues and earnings indicators are mostly upbeat. (11) Fed’s talking heads are talking about more rate hikes.
Happy Daze
(1) Harry, Dwight, and Donald. (2) The Donald and the Fonz. (3) Happy days in Bull-Bear Ratio and P/Es. (4) Will investors soon be dazed and confused? (5) Trump’s tax plan is very similar to Ryan’s “A Better Way.” (6) Corporations won’t be able to deduct interest expense under Ryan plan, and will have a choice in Trump plan. (7) Both plans would allow for current expensing of equipment. (8) Border tax is confusing and controversial. (9) Ross/Navarro have a plan to attract VCs and private-sector players to invest in infrastructure. (10) Trump is a one-man good-cop/bad-cop. (11) Trump’s “team of rivals” agree more with one another than with Trump. (12) Melissa compares Reaganomics and Trumponomics. (13) Movie review: “Lion” (+ + +).
Blockchain & Border Taxes
(1) Comforting Financials. (2) Rays of sunshine. (3) Lots of Financial industries basking in the sun. (4) Timely split from REITs. (5) Blockchain: The future is now, and so are the cost savings. (6) Bitcoin: Blockchain’s evil offspring? (7) Jackie interviews Jim Lucier, Capital Alpha’s tax wizard, on border tax. (8) Border tax proposal is an onion. (9) Kind of like a VAT. (10) The end of dodging taxes? (11) How corporate tax reform could boost dollar and lower interest rates.
Zoology
(1) Trump and animal spirits. (2) More than 2 million Google links. (3) Government vs. business experience. (4) Keynes was a zoologist too. (5) Small business owners (SBOs) are going wild. (6) SBOs matter because they do lots of hiring. (7) New problem for SBOs: Shortage of workers. (8) Earnings season should confirm recovery that started during Q3. (9) Why small stocks are beautiful. (10) US frackers sending thank-you notes to Saudis.
Let’s Get Fiscal
(1) BeeGees, Olivia Newton-John, and Janet Yellen. (2) Counting words: “Fiscal” and “dollar” pop up often in FOMC minutes. (3) Trump may fill the wishes of Fed officials for more fiscal stimulus. (4) Fed officials hoping that fiscal policy can lift R*. (5) Mixed with confusion. (6) Dollar strength reflecting divergence between Fed and other major central banks. (7) Foreigners scrambling to repay dollar-denominated debts that financed carry trades. (8) Constructing an implied capital flows proxy for the world ex-US. (9) Our proxy explains strength of the dollar. (10) So does the drop in non-gold international reserves.
Labor’s Turn & Turnover
(1) What do you get when you play country songs backwards? (2) Johnny Paycheck would have voted for Trump. (3) Tighter labor market reflected in higher wages and quits, which are boosting consumer confidence. (4) Earned Income Proxy at record high. (5) Retiring Baby Boomers boosting NILF count. (6) Is the yuan done going down yet? (7) PBOC desperate to hold onto 7.0 yuan/$ and $3.0 trillion reserves. (8) China’s capital controls are latest desperate measures. (9) Trump’s pick of US ambassador to China is BFF of Xi. (10) Movie: “Hidden Figures” (+ +).