Daily Research Updates
Morning Briefings
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Central Banks: Out of Ammo?
(1) Zweig’s mantra. (2) El-Erian, Gundlach, & Hilsenrath raise the ammo question. (3) Credit and credibility. (4) ECB and BOJ aren’t planning to expand their ultra-easy policies at this time. (5) Fischer and Williams contributed to market rout at start of year. (6) Now Williams says China is keeping him up at night. (7) Bullard is turning dovish as oil prices keep falling. (8) Dudley high-fives the economy. (9) The Fed’s low inflation problem. (10) Cost-push inflation model too simplistic. (11) Prices can keep a lid on wages.
Taking Stock
(1) DiCaprio’s bear deserves an Oscar. (2) Among the grizzliest of the lot. (3) Back-to-back corrections. (4) The China and commodity bubbles burst. (5) The negative feedback loop from too much supply to weaker demand for commodities. (6) 2008 all over again? (7) Signs of life in oil demand and in industrial commodity price index. (8) Puzzling: US consumers driving more, but saving more too. (9) China has a huge debt overhang and hangover. (10) CSX, Walmart, and Intel all unsettle investors. (11) The curse of tall skyscrapers. (12) Lowering our targets for earnings and S&P 500.
Falling Leaders
(1) Lots of profit-taking raising lots of cash yielding almost nothing. (2) Bull/Bear Ratio back under 1.00. (3) Seeking leadership to the upside in a widespread market rout. (4) All the major sectors seem to have challenges. (5) Market falling on Known Knowns rather than Black Swans. (6) Health Care leaders now lagging. (7) Amazon killing storefront retailers. (8) Smart cars stripping Detroit’s gears. (9) Learning to share.
China Matters, Again
(1) A widely anticipated recession. (2) The stock market’s prediction. (3) Samuelson, Summers, Levy, and Laing alarmed by China. (4) The weakness in China’s manufacturing sector is old news. (5) The jury is out on China’s transition from goods to services. (6) The big problem in China is capital outflows. (7) Weakening yuan is a problem for other emerging economies, not so much for US.
Litany of Pessimism
(1) Wise guys tend to be pessimists these days. (2) January Barometer and Bull/Bear Ratio. (3) El-Erian says central bankers out of ammo. (4) Fischer picks a fight with the markets. (5) VIX isn’t abnormally high. (6) Backing off buybacks? (7) Assessing the urge to merge in 2016. (8) China Syndrome bad news for EMs. (9) Commodity bust weighing on global economy. (10) Industry analysts didn’t get a copy of the worry list. (11) Transitions don’t have to end badly.
Revenant
(1) Bull mauled by a grizzly bear. (2) Grizzly technical picture. (3) During current bull market, average stock has done much better than shown by S&P 500. (4) Nifty Nine less nifty last week. (5) Lots of technical wounds. (6) Sentiment is very bearish again, which is bullish. (7) Bloodied, but not buried. (8) Chaos doesn’t have to end badly. (9) Rerating valuation? (10) The bursting of the commodity bubble shouldn’t be as bad as those of other recent bubbles. (11) China’s devaluation worse for other EMs than for US. (12) Europe is wide open for trouble. (13) US is an oasis of tranquility. (14) “The Revenant” (+ +) & “Joy” (+).
Wrong Side of the Bed
(1) Tripping on both feet. (2) Cold Chinese noodles. (3) Mixed signals about China’s services economy. (4) US auto sales probably at speed limit. (5) Bad batch of US PMIs. (6) Trade, construction, and manufacturing indicators cut Q4’s GDP. (7) Delusional Fed heads. (8) Disturbing the peace. (9) Weak Energy earnings, expensive go-go FANGs, highly valued defensive stocks boost S&P 500 P/E. (10) AutoTech is stealing the show in Vegas. (11) Seeing red in Q4 earnings season.
Another List of Surprises
(1) Market saturated with lists of surprises. (2) Wien cornered the market. (3) The main source of secular stagnation is too much government. (4) IMF’s forecast is a good place to start. (5) Positive surprises likely offset by negative ones in US. (6) Global inflation should remain unsurprisingly low. (7) Not much more downside for commodity prices, but hard to see any upside. (8) One-and-done more likely than four-anddone in 2016. (9) Stocks either up, flat, or down--in that order of probability. (10) Consumers may be done saving their gasoline windfalls.
Here We Go Again
(1) New year, old panics. (2) Everyone knows China’s M-PMI has been weak. (3) Fewer know that its output component has been solid. (4) China’s NM-PMI confirms transition to services is happening. (5) Chinese leaders planning more fiscal stimulus. (6) Hatfields and McCoys of the Middle East are at it again. (7) US manufacturing hit by contraction in energy sector and depressed exports. (8) Profit-takers take a bite out of FANGs.
The Panics of 2016
(1) Hunches about 2016. (2) Looking backward and forward to more panic attacks. (3) Timely cut in outlook for earnings and S&P 500 early last year. (4) Hanging onto relatively upbeat earnings outlook. (5) Deenergized earnings looking good. (6) Energy has lost a lot of weight. (7) Dollar headwind may be offset by commodity tailwinds for earnings of some companies. (8) Labor costs remain subdued. (9) Global oil demand growth picking up smartly, but demand/supply ratio still bearish for oil. (10) China’s M-PMI not so bad. (11) A few canaries gasping for air. (12) Round up the usual pessimists. (13) “In the Heart of the Sea” (+ +).
Dear Santa & Virginia
Dear Santa & Virginia
May the Force Be With You!
(1) Disney makes and takes a hit. (2) The Force awakens to challenge the Dark Side. (3) The tug of war continues on Planet Earth. (4) The dollar and oil are on the Dark Side. (5) Valuation is a headwind. (6) Hard to grow earnings without some financial engineering. (7) Levy’s recession scenario for 2016. (8) Leading indicators remain on Light Side. (9) Does Santa Claus own Treasuries this year? (10) The Great Disruption: From brawn to brain. (11) Smart machines are coming to help us do our jobs, or take them away. (12) “Star Wars: The Force Awakens” (+ +).
The Great Disruption
(1) NZIRP+0.25. (2) Hamlet’s monetary policy. (3) Fed hikes as manufacturing sinks. (4) 13 mentions of “gradual” in Yellen’s press conference. (5) Another panic attack comes and goes. (6) Third Avenue was the roach motel for distressed assets. (7) Everybody start reaching for yield again. (8) A warm and fuzzy melt-up scenario for the holidays. (9) Technology is very disruptive. (10) New New Things in EnergyTech and FinTech. (11) Getting a big charge out of Elon’s batteries. (12) Buddy can you spare a bitcoin, or better yet a blockchain algorithm?
Bottoms Up
(1) Focusing on the Fed again. (2) Top to bottom. (3) A stiff drink at the end of the day. (4) A more sober perspective from the analysts. (5) Other than missing recessions, they are usually on target. (6) Forward revenues and earnings at or near record highs. (7) Energy has been a drag. (8) More energy in revenues and earnings excluding Energy. (9) Strong dollar not showing up in overseas revenues and earnings. (10) Focus on S&P 500 Financials.
Divergence & Convergence
(1) Janet & Mario in “Divergent.” (2) A short history of divergence. (3) Cut-and-done may be next after oneand-done. (4) Hilsenrath said so. (5) Central banks reversing rate hikes. (6) Solving the inflation mystery. (7) Divergent views on the ECB’s Governing Council. (8) Paying the price for over-reaching for yield. (9) Highyield alarm squad. (10) A Fed governor saw it coming in 2013. (11) A comforting conclusion. (12) Tracking systematic risk in the investment-grade corporate bond market. (13) A world of economic upticks.
Junkyard Dogs
(1) Jim Croce’s junkyard dog. (2) Rabid canines attacking the bull. (3) Damage report. (4) When bubbles burst. (5) One-and-done followed by cut-and-done? (6) Bubbles are always about too much debt. (7) Junkyard is relatively small. (8) Distressing accident on Third Ave. (9) Liquidity is fluid. (10) The end of financial engineering? (11) Yellen’s “prudent risk-taking.” (12) Joe assesses dividend payouts in Energy. (13) Consumers still spending. (14) “Trumbo” (+ +).
Meltdowns & Melt-Ups
(1) Fed officials may need to reconsider two assumptions. (2) Big reversal of fortune since summer 2014. (3) Dividend cuts will depress confidence of yield-reachers. (4) More out-of-pocket payments for health care. (5) The rent is too d@*n high! (6) Yearend melt-up starting 12/16 pm? (7) Dividend meltdown in Energy. (8) Miners getting buried. (9) More restructuring and M&A among chemical companies. (10) Health Care sector’s winners and losers. (11) The urge to merge among hospitals and insurers.
Super Bust
(1) A eulogy for the commodity super-cycle. (2) A relatively short one. (3) Old saying in the pits. (4) Unstable disequilibrium in commodity markets. (5) Oil’s zero-sum game. (6) Capital markets rather than banks absorbing the pain. (7) Adjusting commodity prices for strong dollar. (8) Lots of lackluster global economic indicators. (9) China’s trade data: More of the same. (10) Consumers less charged up.
De-Energized
(1) Polanyi vs. Hayek. (2) The four stages of economic development. (3) Monitoring the great transformation from manufacturing to services with monthly PMIs. (4) Manufacturing still matters in the US, and is weighed down by weak oil prices and strong dollar. (5) Eurozone services strong, with weak euro benefitting factories. (6) China’s great transformation is shaking things up. (7) OPEC R.I.P. (8) When a cartel is no longer a cartel. (9) Reversal of fortune. (10) Waiting for consumers to pinch themselves. (11) S&P 500 earnings and revenues look just fine excluding Energy sector.
Working for a Living
(1) Neither bullish nor bearish. (2) More caution on balance. (3) High on high-tech in the City by the Bay. (4) Bitcoin’s secret sauce goes mainstream. (5) Blockchain could disrupt lots of businesses, including central banking. (6) A yearend melt-up scenario. (7) The Fed’s “gradual” mantra. (8) Yellen says “neutral” fed funds rate is low. (9) Appreciable improvement, yet some residual slack in labor market. (10) Wage inflation still low. (11) Pay rising fastest for high- and low-wage jobs.
Ahead in the Cloud
(1) A drive with a former Klingon in LA. (2) Side jobs. (3) Another solid employment report from ADP. (4) Weak M-PMI was no surprise. (5) Bad news is still good news. (6) Brainard says “gradual” multiple times. (7) IT puts Internet in the Cloud. (8) From cashless to card-less society. (9) The Blockchain Conspiracy. (10) Playing games. (11) Paying up for growth and finding value in laggards. (12) Aging likely to stunt global growth.
Head Count
(1) Neo-noir comedy. (2) Even “The Dude” can find a good job. (3) Yellen’s felons. (4) Lots of jobs in services. (5) Regional employment surveys are weak, reflecting weak manufacturing. (6) Consumer survey finds that jobs are getting harder to find. (7) ADP payrolls data show steadier employment gains than official data. (8) Box stores may need fewer workers. (9) Cyber Monday was a moon shot. (10) “GAFO” retail sales are strong, but much more so including e-shopping. (11) E-shopping (E) now accounts for 25% of GAFO+E sales, up from 15% in early 2006. (12) Focus on S&P 500 auto-related industries.
Divergent Paths
(1) Robert Frost’s poem. (2) High vs. low roads. (3) Fed going north, while ECB going further south. (4) Global secular stagnation remains the end destination. (5) Strong dollar depressing commodity prices. (6) Headwinds for US exporters. (7) Easy money and cheaper currencies can’t solve all problems. (8) The unintended adverse consequences of negative interest rates. (9) Surprisingly little impact of strong dollar on S&P 500 aggregate earnings. (10) LargeCaps have led this year, but SmallCaps showing some leadership now.
Stuffed
(1) Puttin’ on the Ritz. (2) Getting stuffed at a fancy dinner. (3) Ben & me on the beach. (4) Ghost condos. (5) South American presale model. (6) Crying all the way to the condo. (7) Post-holiday sectors review: Neutral weight might be better than over- or underweight. (8) Creative financial engineering vs. challenging fundamentals. (9) Are US consumers turning cautious? (10) Energy recession weighing less on capital spending? (11) Materials aren’t so basic. (12) Energy isn’t cheap in the stock market. (13) December is usually a good month for stocks.
Back to Normal?
(1) Normalizing Fed policy makes sense if business cycle is normal again. (2) Labor market certainly looking more like Old Normal. (3) Will inflation rebound? (4) What if there is more downside to oil and other commodity prices? (5) What if the dollar hasn’t peaked yet? (6) The aggregate profits cycle has run out of gas. (7) The case for none-and-done again, but for next year. (8) Profit margin remains in record territory. (9) Materials sector outperforming despite falling commodity prices. (10) Happy Thanksgiving!