Daily Research Updates
Morning Briefings
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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” (+ +).
Leading from Behind
(1) Stay home, go global, or emerge? (2) Trump favors “Stay Home” investment strategy. (3) Commodity prices seem to matter more for emerging markets than does the Fed or the dollar. (4) Asian economies doing well now, but facing Trump tweets on trade. (5) Profits rising in China. (6) South Korea has a political crisis, while India has a currency crisis. (7) Taiwan’s M-PMI confirming upturn in tech business. (8) Brazil remains in deep recession, while Mexico may be starting to stumble on troubles north of the border. (9) Jackie explains Health Care’s wounded performance. (10) Is a shortage of new drugs pushing up prices of old drugs? (11) Drug distributors getting squeezed.
Who’s Afraid of the Big Bad Wolf?
(1) He will huff and puff, but will he blow the house down? (2) Time for lots of little piggies to shape up? (3) Wish list full of wishful thinking? (4) Lil’ Kim and the Supremes. (5) Impressive, but not unprecedented, rally in stocks since T-Day. (6) Investors are front-running Trump’s tax cuts. (7) Reaganomics faced completely different economy than Trumponomics. (8) Lots of upbeat M-PMIs. (9) Boom-Bust Barometer booming, which is bullish for S&P 500 forward earnings and stock index. (10) China’s M-PMI price index confirms upturn in PPI inflation rate.
Rogue One
(1) Prequels and sequels. (2) Going rogue on 2017 earnings outlook. (3) Does it matter whether tax cuts start in 2017 or 2018? (4) S&P 500 forward revenues and earnings rising to record highs. (5) Energy industry’s recession is over, and it didn’t spill over to the broader economy. (6) Consumer optimism booming since Election Day. (7) Trump’s “America First” inspired by Lord Palmerston. (8) Radical regime change: From community organizers to dealmakers. (9) Two kinds of rogues. (10) May the force be with us. (11) “Rogue One” (-).
Big Deals in 2017
(1) No guarantees in past performance. (2) No recession in sight. (3) Do Trump’s plans suggest next recession will be sooner rather than later? (4) Q4 GDP estimates losing air. (5) Animal spirits have been stirred. (6) Dealmakers could be good for the economy, unless they are just a bunch of cronies. (7) Old Normal business cycle may be back, though technology, productivity, and the strong dollar could keep a lid on inflation. (8) Getting ready for 2017’s simpler and mostly lower taxes in Trump World. (9) More on the border tax, and who wins and loses.
Dissent & Assent
(1) Season of red and green leaves Blue and Red Americans black and blue. (2) The Electoral College isn’t popular with Clinton’s fans. (3) Liberals are fit to be tied, claiming Trump is unfit. (4) From a government run by community organizers to one run by wheeler-dealers. (5) Wilbur Ross isn’t Reed Smoot or Willis Hawley. (6) Rex T. and the Russians. (7) It’s almost always about the economy. (8) Financial and survey indicators providing lots of votes of confidence in Trumponomics. (9) Credit markets signal better growth ahead. (10) Upbeat business surveys. (11) Janet’s Adventures in Trumpland.
’Tis the Season
(1) Glad tidings for retailers as post-election cheer spreads to consumers. (2) Jackie interviews retail research pro Craig Johnson, who sees 4.5% y/y holiday sales growth. (3) Cyber and off-price retailers have more reason to rejoice than mall retailers. (4) Hot categories include health and beauty, consumer electronics, and jewelry. (5) S&P 500 Consumer Discretionary sector may lift in line with earnings, despite historically high P/E. (6) Potential dark cloud looming: import taxation. (7) Despite rally, S&P 500 forward P/E has barely budged vs a year ago. (8) Energy tops lists of S&P sectors with the best growth forecasts (revenue & earnings), most improved P/E vs a year ago, and least inflated P/E relative to earnings growth. (9) Financials still attractive to us.
Fiscal Spending in Trump World
(1) Don the Builder’s $1 trillion infrastructure stimulus pledge. (2) Could fiscal boost be too much, too late? (3) In Trump World, it’s the goal that matters. (4) Wilbur Ross likes tax credits and other incentives to lure private funding. (5) A plan to entice companies to use offshore cash stash for domestic infrastructure. (6) Are there enough workers to fill new fiscally created jobs? (7) Stimulus target is idle army of NEETs. (8) Both wages and productivity might get a boost. (9) Yellen is waiting on Trump.
Earnings in Trump World
(1) Raising earnings estimates on assumption of big corporate tax cuts and fewer regulations. (2) Investors have been doing the same on expectations that industry analysts will do so too when they know more about specifics. (3) So maybe recent melt-up isn’t irrational exuberance. (4) Here’s why earnings might be up 20% next year. (5) Modest headwinds from higher dollar and bond yields. (6) Republicans have a controversial border tax plan. (7) If WTO shoots it down, VAT might be backup plan.
Presidential Super-Cycle
(1) It’s all very subjective. (2) A traumatic experience. (3) The latest relief rally is looking like a melt-up. (4) Donald and the beanstalks. (5) Lots of cash coming from overseas for buybacks and dividends. (6) The valuation multiple could rise further as almost-free money comes back home, after 10% haircut. (7) Bullish sentiment is charging ahead. (8) Joe looks at the first year of the first term of presidents. (9) Economy and earnings were improving before Election Day. (10) Just how much will tax cut boost after-tax earnings? (11) Credit yield spread may tell us when to sell stocks. (12) Welcome to Trump World. Now pick Door #1, #2, or #3. (13) “Nocturnal Animals” (+).
Financially Secure At Home
(1) Trump World favors “Stay Home” strategy. (2) America First: US stocks have been first during the current bull market. (3) SmallCaps may benefit more from tax cut than LargeCaps. (4) US accounts for 40% of global equities’ market cap. (5) Emerging Markets are cheap, some with good reasons. (6) S&P 500 Financials have come back from the dead big time. (7) Jamie Dimon’s excellent trade. (8) Yield curve is looking up for Financials. (9) Earnings estimates rising for Financials. (10) Regulators are looking to regulate Fintech firms.