Daily Research Updates
Morning Briefings
Expert market analysis delivered every morning. Stay informed with comprehensive research and data-driven insights.
October Feast or Famine?
(1) Aging vs. maturing bull. (2) Bull killers. (3) Bull stumbled during September, tripped yesterday. (4) This may be the month for fasting rather than feasting. (5) Three main issues to worry about. (6) Could a tiny rate hike unglue illiquid bond markets? (7) Record bond issuance by corporations in US and Europe. (8) Blackrock sounds the alarm. (9) Central bankers’ credibility on the line. (10) Are Eurozone and Japan exporting their weak economic performances to US? (11) Focus on market-weight-rated S&P 500 Auto industries.
Good Break
(1) A couple of timely calls on energy stocks and the price of oil. (2) Bombing ISIS oil. (3) A happy story in the US oil patch of more output and exports, and fewer imports. (4) Rising fuel efficiency is part of the happy story. (5) The US is #1 in liquids. (6) Demand for oil still falling in Eurozone and Japan. (7) The strong dollar is depressing oil price, which is strengthening the dollar. (8) Khrushchev didn’t bury us, but we can drown Putin. (9) A brief history and requiem for Peak Oil.
Life After QE
(1) Will end of QE kill the bull? (2) Market is getting nervous about Fed rate hikes next year. (3) Can Richard Fisher really move markets? (4) More Fed doves than hawks, especially next year. (5) Charles Evans gets to vote in 2015. (6) Bullard says time to drop “considerable time.” (7) Dudley puts the dollar on the table. (8) More tightening tantrums ahead. (9) Profits for accountants. (10) Regional surveys showing very strong economy during September. (11) The wage stagnation myth.
The Top?
(1) Did BABA make the top? (2) The bears have been seeing tops since the start of the bull market. (3) The lamest argument. (4) Bears now focus more on technicals than fundamentals. (5) Another test for buy on dips. (6) “Death Cross” in the Russell 2000. (7) The “internal correction” continues from high to low P/Es as earnings outlook for SmallCaps cools relative to LargeCaps. (8) Manufacturing renaissance finally showing up in the data. (9) No renaissance in the Eurozone and Japan. (10) Updating our “Stay Home” investment strategy. (11) Have EMs become “story” stocks?
Cyclical Sectors & the M-PMI
(1) US is hot. Europe is not. (2) Germany’s indicators are falling. (3) US flash M-PMI strong and could be bearish for P/Es of cyclical sectors, or not. (4) Valuation multiples more likely to move sideways for cyclicals, which could be driven higher by earnings. (5) Global oil demand at record high, but growth is decelerating. (6) Both OECD and non-OECD oil demand growth rates slowing. (7) Demand/supply ratio for crude oil has turned bearish lately. (8) Focus on underweight-rated S&P 500 Energy.
Super-Cycles
(1) No more buzz about commodity super-cycle. (2) China’s super-cycle may be petering out. (3) The best cure for high commodity prices. (4) CRB spot index falling. (5) Capacity expansion. (6) Remember the Baltic Dry Index? (7) Bumper crops in US and China too. (8) US & Canada out-produce Saudi Arabia. (9) Heavy metals weighing on prices. (10) The dollar is weighing on commodity prices too. (11) Chinese government not rushing to stimulate. (12) Super-cycle in Age Wave suggests low inflation and bond yields for many more years.
Our Three Scenarios
(1) What’s next: melt-up or meltdown? (2) Rational exuberance scenario remains our most likely. (3) Inflation remains a no-show in all three scenarios. (4) In irrational exuberance scenario, foreigners could pile into the US dollar, bonds, and stocks. (5) 30% up and down? (6) The secular bull survives in two of our three scenarios. (7) Are small-cap stocks signaling that the end is near? (8) Hard to see recession in US. (9) Not so hard to see recessions in Eurozone and Japan, and slowdown in China. (10) Focus on market-weightrated S&P 500 housing-related industries.
Yellen’s Spin
(1) Fairy dust in the air. (2) “2014 by 2014” was achieved intra-day on Friday. (3) The third press conference was the charm--giving a new meaning to time. (4) Yellen says pay no attention to “dot plot” for the third time. (5) Will interest-rate hikes be at a “measured” pace? (6) How the Fed caused the last financial crisis. (7) The other Bond King explains the yield curve. (8) TLTRO disappoints. (9) Selfies and their BFFs. (10) Married couples in households with and without kids are no longer the majority. (11) Singles living solo account for 28% of households, while those living with someone else are at 24%. (12) “This Is Where I Leave You” (+).
Yellen’s Theory of Relativity
(1) Fed is in no rush to hike rates. (2) What is the meaning of time? (3) Yellen says “considerable time” is data dependent, not date related. (4) So time is relative, or simply irrelevant. (5) Don’t watch the clock, watch the game. (6) PBOC stealthily injecting liquidity? (7) Inflation remains a no-show. (8) Friedman’s phenomenon remains a phantom. (9) Nonmonetary explanations for lowflation. (10) Europe is on the edge of deflation, while Japan edges away from it.
Bear Necessities
(1) Is the bull market aging or maturing? (2) A stealth bear market in the Nasdaq. (3) Internal correction of speculative SmallCaps is bullish for overall bull market. (4) Some wise guys are bearish. (5) Bears are MIA. Do we really need them? (6) Fed may issue hawkish statement, but Yellen should remain dovish. (7) Some things to fear. (8) Bulls don’t die from old age. They are killed by recessions. (9) Recession scenarios not compelling right now. (10) Nothing to fear but a melt-up? (11) Earnings roundup.
Losing Energy
(1) Interesting week. (2) Separatists are agitating in Scotland & Spain. (3) Draghi throwing more spaghetti on the wall to see if it sticks. (4) Oil and gasoline prices plunging. (5) Oil at $75 would be bad news for RasPutin. (6) A timely call to underweight Energy. (7) US oil output close to 9.0mbd. (8) Industrial commodity prices also losing altitude. (9) China has too much debt, corruption, and capacity. (10) Chinese output fell in August m/m. (11) Railways freight traffic on slow track in China. (12) China’s shadow banks are getting squeezed. (13) Focus on overweight-rated S&P 500 IT.
A Brief History of Considerable Time
(1) Fed will normalize once the economy has escaped. (2) Are we there yet? (3) Charles Evans saw it coming last year. (4) “Considerable time” has been around for a considerable time. So has NZIRP. (5) Time to drop time? (6) The case for 2.5%-3.0% bond yields. (7) Hilsenrath’s take. (8) Yellen will soften the blow. (9) How can we measure escape velocity? (10) Another solid batch of US economic indicators. (11) Upward revisions give retail sales a boost. (12) Focus on market-weight-rated S&P 500 Consumer Discretionary Retailers. (13) “The Drop” (+ +).
Decoding Currencies
(1) Interesting times. (2) When dollar goes up, commodities go down, and vice versa. (3) That’s especially true for industrial commodities, crude oil, and gold. (4) Fundamental driver of dollar and commodity prices is relative strength of US economy. (5) Dollar should strengthen as US becomes less dependent on oil imports. (6) Draghinomics and Abenomics boil down to currency depreciation policies. (7) Scots free? (8) Australian and Canadian dollars remain commodity currencies. (9) Focus on underweight-rated S&P 500 Materials.
Ahead of the Pack
(1) US is ahead of the world benchmark this year and since the start of the bull market. (2) Faltering economies weighing on EMU and Japan MSCIs. (3) No sign of secular stagnation in US stock market performance. (4) Emerging Markets MSCI also outperforming this year despite weakening commodity prices and strengthening dollar. (5) Homegrown stories may be boosting EM stocks. (6) Or maybe they are just relatively cheap. (7) Forward earnings at record highs for 7 of 10 S&P 500 sectors. (8) Interest-rate-sensitive sectors underperforming again. (9) Energy has had a round trip this year in the performance derby. (10) Consumer Discretionary showing some life.
Good Trade
(1) Most reliable indicators. (2) Volume of global exports up 3.4% y/y. (3) US exports at record high, fueled by petroleum. (4) Surprising strength in German orders, output, and exports during July. (5) Canada, France, and Italy exporting more. (6) Abenomics isn’t working for Japanese exporters. (7) Mexico and India are EM export leaders. (8) China isn’t so hot and spicy anymore. (9) Transportation’s forward earnings at record high. (10) Focus on overweight-rated S&P 500 Transportation.
Selfies
(1) Half of US adults are now single. (2) More one-person households. (3) Childless singles are more selfcentered in the way they spend. (4) Increase in singles is exaggerating income inequality. (5) They earn less, but have fewer mouths to feed. (6) Singles tend to rent. (7) Are they more liberal or conservative? (8) Weak August payrolls distracts from improvements in Yellen’s dashboard and strength in earned income. (9) Euro trashed by ECB. (10) “The Last of Robin Hood” (+).
Bumper Crops
(1) No shortage of beans. (2) The commodity “super-cycle” wasn’t so super. (3) Old adage from the pits. (4) Message from the commodity pits: Ample supplies and slow global growth. (5) Food and energy inflation heading lower. (6) We still recommend underweighting Energy and Materials. (7) Stronger dollar and weaker commodities tend to tango. (8) Gold’s message. (9) Fewest bears since 1987! (10) From nothing to fear to some things to fear. (11) US is rolling down the highway. (12) Focus on market-weight-rated Autos.
America’s Got Oomph
(1) Oomph lost and found. (2) Bearish cover stories are bullish contrary indicators. (3) Secular bears turning into secular bulls may be bearish contrary indicators. (4) Parker sees 3000 on S&P 500 by 2020 if there’s no recession along the way. (5) First-term presidents tend to get first-year recessions…like in 2017. (6) Secular pessimists worrying about slowdown in labor force growth. (7) Productivity has upside. (8) Manufacturing renaissance showing up in recent M-PMI, capital goods orders, and factory construction. (9) Focus on overweight-rated S&P 500 Financials.
A Dozen Lessons
(1) Doing our homework. (2) A dozen lessons. (3) Central bankers are know-it-alls who don’t. (4) Deflation may be a monetary phenomenon too. (5) Bond vigilantes go on a European vacation. (6) Yellen admits she is guessing about slack. (7) Could it be that low price inflation is driving low wage inflation? (8) Europe and Japan going down same dirt road. (9) US remains outstanding. (10) Corporations are managed to be profitable. (11) Time to pull out reasons why P/Es have more upside. (12) Demography can explain a lot. (13) Hillary vs. Mitt. (14) Jihadists on a deadly crusade. (15) “The November Man” (+ +).
2015 By 2015?
(1) Bullseye! (2) Bull running ahead of schedule. (3) 2015 math: E = $140, P/E = 16.5, P = 2310. (4) No recession in 2015, so no bear market. (5) Positive thoughts on revenues, margins, and buybacks. (6) The longer the expected economic expansion, the higher the P/E. (7) Won’t Fed tightening be frightening in 2015? (8) Monetary normalization coming in baby steps. (9) The fifth-longest bull market of the 44 since 1928. (10) Consumer confidence rising because jobs are more plentiful. (11) Focus on overweight-rated S&P 500 Industrials.
Recoupling & Decoupling
(1) The bears keep seeing market tops as the bull charges ahead. (2) Market leaders leading again. (3) SmallCaps still lagging. (4) Retailers recharging. (5) Financials keeping pace with bull run. (6) Dow Theory is bullish. (7) IT and Health Care are hot this year. (8) 2014 by 2014 is just around the corner. (9) Oil made in USA is very bullish for US stocks. (10) The bull is maturing, not aging. (11) Why is Eurozone decoupling from US? (12) Draghi ready to do more whatever-it-takes. (13) US and German yields falling toward Japanese yields. (14) Focus on now-underweight-rated S&P 500 Energy.
Taking Issue With Yellen
(1) Are social media and biotech stocks still “stretched?” (2) Greenspan’s clever contributions to investment strategy: irrational exuberance and the Lottery Principle. (3) The biotech lottery. (4) Binary outcomes with all or nothing payouts. (5) Is the Fed registered to give investment advice? (6) Biotech earnings expectations are soaring. (7) The Internet’s fundamentals are also hot. (8) Yellen is a two-handed economist on wages. (9) The wage stagnation myth again. (10) Are baby boomers dropping out of the labor market, or staying in too long?
Jackson Hole
(1) Central bankers just wanna have fun. (2) Talking about the dynamics of the labor market. (3) Are investors jumping the gun ahead of Yellen? (4) She won’t let us down. (5) Pleasing the boss. (6) Less slack, yet wage and price inflation remain subdued. (7) Wage stagnation is a bit of a myth. (8) Drilling down to forward earnings by industries finds some gushers. (9) Standouts include Internet Retail, Oil & Gas Exploration, Consumer Finance, Biotech, Semiconductors, Specialty Chemicals, and Gas Utilities.
Staying Close To Home
(1) All the comforts of home are at home. (2) Eurozone may still have some upside. (3) Missing out on Abenomics, which may be striking out. (4) Emerging markets rally not confirmed by weak industrial commodity prices and strong dollar. (5) Nevertheless, EMs are still relatively cheap. (6) US MSCI still leading the pack this year, and since March 9, 2009. (7) Might easy money be deflationary? (8) Low inflation allows central banks to delay normalizing their ultra-easy policies. (9) US CPI gives Yellen more time to create more jobs.
Another Relief Rally
(1) Corrections followed by dips. (2) Averted “fiscal cliff” led to anxiety fatigue. (3) Ten dips since start of 2013. (4) Good buying opportunities at the 50-dma line. (5) The latest dip was on rising geopolitical risks. (6) Some relief on Ukraine, Gaza, and ISIS sparks latest relief rally. (7) “Fairy Godmother” will speak on Friday. (8) Yellen said it all in 2009 speech: Premature tightening would be a mistake. (9) Broken record: Forward earnings does it again. (10) Q2 had lots of positive earnings surprises.