Daily Research Updates
Morning Briefings
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Breaking China
(1) POTUS-elect stir-fries One China policy. (2) The disestablishmentarian is at it again. (3) CEO of United Technologies explains it all to Cramer. (4) Carrier gets $7 million to replace humans with robots in Indiana. (5) “The End of Jobs.” (6) Productivity has spurts and slumps lasting a few years. (7) Trump World needs productivity to spurt. (8) Manufacturing productivity growth the lowest on record. (9) China wants “dark factories” full of robots. (10) China imposes capital controls to stop both net capital outflows and drop in reserves. (11) Yuan is a social media sensation.
Just-Walk-Out Technology
(1) App & Carry shopping. (2) Amazon uses self-driving technologies to drive self-service stores. (3) Help not needed. (4) Fight-for-$15 movement didn’t get the memo. (5) Ex-CEO of McDonald’s: “I told you so.” (6) Demography and technology weighing on wages. (7) Productivity stagnation actually led by manufacturing more than services. (8) The Economist cover story about low rates forever might be a keeper for contrarians. (9) NM-PMIs around the world and retail sales in Eurozone look like Old Normal. (10) Euro hard hit by Brexit and now possibility of Italeave.
Running Hotter
(1) Yellen wanted hotter economy, and so it is. (2) Don’t read the last rites for Old Normal just yet. (3) Economic Surprise Index is surprisingly strong. (4) Our Weekly Leading Index is soaring along with our Boom-Bust Barometer. (5) Our Earned Income Proxy stalled last month at record high. (6) Construction data boost GDPNow forecast. (7) M-PMIs looking mostly solid around the world. (8) Giving Trump’s plans some credit, but giving more to China’s economy. (9) Riding the rails in China. (10) Trump’s corporate tax cut may be less than meets the eye if tax loopholes are terminated. (11) “Manchester by the Sea” (+).
Trumpcare
(1) Trump is hiring. (2) Powerful tag team for Treasury and Commerce. (3) Trump’s Great Moderation. (4) Valuations reflect hopes that faster economic growth, less regulation, and tax cuts will offset rising inflation and interest rates. (5) Mnuchin aiming to cut corporate tax rate to 15%, and pay for income-tax cuts by eliminating/capping deductions. (6) Ross says tariffs are last resort. (7) Yellen can rest easier. (8) Is Price right for HHS? (9) Jackie interviews health care expert Kim Monk. (10) From Obamacare to Trumpcare.
Happy Days Are Here Again, For Now
(1) Consumers and stock investors are exuberant. (2) Big divergence in sector performances. (3) Another relief rally to record highs. (4) Carter handed Reagan hard-to-clean mess, while Obama’s messes might be cleaned up faster. (5) GDP and retail sales at record highs. (6) Rising mortgage rates should boost buy-inadvance housing sales. (7) Consumer Optimism Index at cyclical high. (8) Profits recovering from Energy-led recession. (9) The half-full Monte. (10) Arrivederci, Renzi? (11) Italy’s bail-in problem. (12) The ECB is ready to help as best it can.
We Are All Populists Now
(1) Socialists, populists, and others. (2) Men of the people: Trump, Pence, Hannity, and Moore. (3) FDR’s “forgotten man” is back. (4) Are we all Keynesians now, again? (5) US manufacturing capacity stopped growing when China joined WTO. (6) Productivity stagnation coincides with flattening of capacity and slowdown in real pay growth. (7) US has biggest trade deficit by far with China, not Mexico. (8) Globalization benefits all consumers, but harms some workers. (9) Protectionism could bring jobs back home to robots.
Trump’s New Reality Show
(1) Let’s hope America can make Trump great! (2) Poolside tweets and dinner with Kellyanne. (3) We are all now in Trump’s latest reality show. (4) Founder of supply-side economics goes rogue, turns into a populist. (5) Sorcerer’s apprentice: Romney looks like SOS to Trump, SOB to others. (6) Will Trump bring back Old Normal business cycle with higher growth, inflation, and interest rates? (7) It all depends on productivity. (8) Star-crossed correlations among commodities, the dollar, and EMs. (9) Thanks to repatriated cash, nosebleed valuations won’t matter until they do matter. (10) Donald’s box of chocolates. (11) “Billy Lynn’s Long Halftime Walk” (+).
Thanksgiving
(1) A time to give thanks and avoid politics. (2) Bonds and stocks suggest US still on the right road. (3) First 100 days is coming soon. (4) Not a good idea to underestimate the President-elect. (5) But can he really deliver 4% real growth, or is inflation the more likely outcome of huge tax cuts and infrastructure spending? (6) A head-spinning scenario. (7) Will Italy’s “Demolition Man” become “Mr. Nobody” after Dec. 4 vote? (8) Italexit unlikely. (9) S&P 500 Materials shining except for Gold.
As the Trump World Turns
(1) A different world for sure. (2) Ford and Apple news suggests Trump’s bully pulpit has clout. (3) China is promoting free trade. (4) Iran is dumping heavy water. (5) Europeans suddenly feel defenseless. (6) Game of Thrones: Bond Kings and Vigilantes versus the King of Debt. (7) The Bond Vigilantes Model is bearish for bonds. (8) The Fed is no longer a friend. (9) Italians will vote on Dec. 4 for continuing “decrepit system.” (10) The long-term bull market in bonds is over until further notice.
It Pays To Quit
(1) Does economy really need more stimulus? (2) More quitters as job market tightens. (3) Job switchers enjoy bigger wage gains than job stayers, who are doing better too. (4) Yellen’s wish is coming true. (5) More quitters reflecting more confidence. (6) Consumers have the means and the will to spend. (7) For stocks, an old normal year (so far) with lots of abnormal moves. (8) Betting that President Trump won’t be as protectionist as candidate Trump. (9) Do-si-do: High and low P/Es changing sector partners.
Earnings Ascending Again
(1) From gridlock to landslide. (2) New regime seems pro-business, except for anti-trade rhetoric. (3) One more state for a Republican majority to pass amendments. (4) Dems are the walking dead. (5) Losing the battles in the battleground states. (6) Q3 earnings season has a happy hook. (7) S&P 500 earnings up 3.8% y/y during Q3, but actually bottomed during Q1-2016. (8) Slicing-and-dicing revenues. (9) Profit margin still above 10%, refusing to revert to the mean as demanded by the bears. (10) Forward-looking measures of revenues and earnings suggest a happy first year for Trump’s first term.
Is Trumponomics Inflationary?
(1) Mixing things up: Stir, don’t shake. (2) Trump’s yin and yang. (3) The secular bull market in bonds might have ended on July 8. (4) Don the Builder. (5) Globalization will survive. (6) Full employment setting stage for higher wage inflation. (7) Trump may need to place help-wanted ads in Mexico for construction workers. (8) The strong dollar and weak oil prices are disinflationary. (9) Faster demand growth could boost productivity. (10) Trump may be Fed’s BFF. (11) Less stagnation and more inflation ahead?
Welcome to Brave New Trump World
(1) Good for him: Laffer got the last laugh. (2) From burlesque to Reaganesque. (3) From Reaganomics to Trumponomics. (4) Trump’s tweets. (5) Trump’s Contract. (6) Term limits at the top of the list! (7) Acting President Mike Pence? (8) Trump & the Supremes. (9) Soros takes to the streets. (10) Obama’s legacy: the Trump dynasty. (11) Might Trump be a mix of Reagan and FDR? (12) Might bipartisanship make a surprising comeback? (13) Is Trump’s World bearish for bonds, but bullish for commodities, the dollar, and stocks? (14) Is Trump’s World inherently inflationary? (15) “Arrival” (+).
Antiestablishmentarianism
(1) Spelling bee word. (2) The ruling elite vs. the Silent Majority of “deplorables.” (3) Hoping the new President acts presidential. (4) Time to close Trump’s Twitter account. (5) Trump’s Cabinet buzz. (6) The day after: Trump’s winners and losers. (7) Trucks and railroads could lose if Trump seriously disrupts trade. (8) Health Care looks safer. (9) Industrials and Materials are shovel-ready. (10) Consumers could benefit from lower taxes. (11) Electric trucks.
Morning & Mourning in America
(1) Half and half. (2) More divisive gridlock, but still checks and balances. (3) Comey finds support at S&P 500’s 200-dma. (4) The one-and-done-per-year scenario for Fed rate hikes. (5) Fed officials giving more weight to r-star, which is down to zero by most estimates. (6) The question is part of the answer: Why is personal saving up so much since financial crisis? (7) Pre-retirement workers tend to earn more than younger and older workers, and have a higher savings rate.
Are Happy Days Here Again?
(1) A song for chasing rainbows. (2) Happy days are beer again. (3) Is the stock market rigged in favor of HRC? (4) A clean sweep for the Democrats could be messy for the market. (5) The relief rally has good fundamentals going for it. (6) Happy hook for earnings again. (7) In the US, employment, wages, and confidence all are upbeat. (8) Globally, commodity prices and PMIs are looking chipper. (9) EM stocks and currencies doing well despite coming Fed rate hike. (10) Going a little global: Seeing more upside for EMs.
Vote for Gridlock!
(1) Rooting for gridlock, a.k.a. checks & balances. (2) Extremism vs. compromising. (3) A system designed not to work too often. (4) The next President could face lots of investigations. (5) An odd pardon scenario for President Clinton. (6) Republican establishment wouldn’t support President Trump much. (7) Is the country “shovel ready” this time? (8) Infrastructure spending could get politically gridlocked. (9) Might fiscal policy be too stimulative and blow up the bond market? (10) Health Care has a political cycle. (11) The future of three ladies: Yellen, Brainard, & Warren. (12) Recessions, bear markets, & the election cycle. (13) Joe looks at the 9-day losing streak. (14) “Hacksaw Ridge” (+ + +).
Old Wide World
(1) For economies, demography is destiny. (2) Demography’s effects on growth not evenly distributed. (3) Advanced economies aging faster, led by Europe’s. (4) Too little too late in China. (5) Japan a microcosm of graying growth. (6) Jackie interviews expert Ivy Zelman on housing demographics. (7) Millennials finally launch. (8) Bodes well for economy and housing-related industries.
Aging Is a Drag
(1) The most worrisome scenario is still very unlikely. (2) Not enough inflation to call it “stagflation.” (3) The laws of demography. (4) A Chinese proverb, the Rolling Stones, and Dolly Parton. (5) More elders, fewer babies. (6) Living longer with maybe more years of infirmity, and unpredictable out-of-pocket health care costs. (7) Fertility at record low. (8) Economic studies finding significant demographic drag on economy. (9) Brain drain bad for productivity. (10) Depressingly low interest income.
Hooking Up
(1) A positive quarter for a change. (2) Actual results beating estimates once again. (3) Earnings actually bottomed at start of the year. (4) Forward revenues and earnings both at record highs for S&P 500. (5) Some preliminary evidence that Millennials are starting to hitch up. (6) More homeowners. (7) Real personal income and consumption per household at record high. (8) No sign of secular stagnation for US consumers. (9) Holding onto more saving just in case.
Full of Beans
(1) Hill of beans. (2) Cruising at stall speed without stalling. (3) This time has been different, so far. (4) Government spending is no longer a drag. (5) The energy recession, which was also a drag, may be over. (6) Signs of life in capital spending. (7) Consumers can’t predict their health, facing higher out-of-pocket expenses. (8) No more upside surprises for exports. (9) Waiting for Millennials to settle down to boost growth. (10) Yellen is waiting for 3%-4% wage gains. (11) ECI wages up only 2.4%. (12) “A Man Called Ove” (+ +).
Disorderly Conduct
(1) Technology continuing to disrupt Energy. (2) Oil demand now expected to peak before supply. (3) Sunny outlook for electricity demand clouds outlook for oil demand. (4) Better batteries. (5) More fracking tricks and treats. (6) Iraq wants a pass. (7) Consumers still cutting their cords. (8) AT&T has a plan.
Animal Spirits
(1) Keynes: pro & con. (2) Is capitalism driven by “animal spirits”? (3) Age old question: What caused the Great Depression? (4) Blaming Messieurs Smoot & Hawley. (5) Cordell Hull to the rescue. (6) A very brief history of trade from RTAA to GATT to WTO. (7) Stanley Fischer thinks fiscal policy can revive animal spirits. (8) Signs of animal life in forward earnings, Markit PMIs, and German Ifo survey. (9) All is not quiet on either the Eastern or Western fronts.
Bull for All Seasons
(1) Two species of bulls. (2) A short history of our sector-neutral and stay-home calls. (3) Feeling the pain of active managers. (4) Active managers boxed in by their prospectuses and by consultants. (5) Consumer stocks held back by high costs of rent and health care, and too many stores. (6) Financials held down by flat yield curve, but revived M&A could boost Investment Bankers. (7) Health Care is discounting Hillarycare. (8) Buy cheap, sell dear?
Yellen’s Known Unknowns
(1) Boston confab reveals sad state of macroeconomics. (2) Six characters in search of a theory. (3) Six papers struggling to answer six key questions. (4) Forces that the Fed cannot control. (5) Okun’s Rule of Thumb. (6) Some prime-age men are in pain. (7) Mumbo jumbo on inflation. (8) Delong’s Minsky Moment. (9) Yellen’s 19 question marks. (10) No shortage of macroeconomists. (11) “Deepwater Horizon” (+).