Daily Research Updates
Morning Briefings
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Detecting Irrational Exuberance
(1) Greenspan’s unanswered question about irrational exuberance. (2) The Maestro says stocks are cheap. (3) Fink says investors may be “overzealous.” (4) How to recognize irrational exuberance. (5) Why has the Fed Model been useless? (6) How much should we pay for subpar growth? (7) Bad news is good news until it isn’t. (8) S&P 500 diverging from fundamentals thanks to Fed. (9) A melt-up portfolio: betting that the first shall continue to be first. (10) Focus on market-weighted S&P 500 Retailers.
Global Tour
(1) Muddling along still path of least resistance for global economy. (2) Headwinds in US, Europe, and China. (3) Industrial commodities index drifting lower despite weaker dollar. (4) Flash PMIs uninspiring on balance. (5) Global output at new high, as US production edges higher. (6) Euro area credit still shrinking. (7) Forward earnings at record highs in US, recovering elsewhere. (8) Focus on overweight-rated S&P 500 Information Technology.
Pushing on a Cloud
(1) Yellen’s footnote. (2) Is unemployment cyclical or structural? (3) Fed’s liquidity lifting all stocks, not all jobs. (4) What is Yellen watching out for? (5) Involuntary part-timers, U-6, median time unemployed, permanent job losers, and the participation rate. (6) Five reasons why unemployment is structural. (7) The trauma of 2008 and business caution. (8) Policy uncertainty boosting unemployment. (9) Knowledge workers have their heads in the Cloud. (10) Working to put us out of work. (11) The government is subsidizing unemployment, and getting more of it. (12) Latest US data confirm all of the above.
Slim Pickings
(1) Let’s stay rational. (2) The worry list is short. (3) Employment disappoints as labor force dropouts hit record high. (4) China’s known unknown will soon be known. (5) China’s old normal way of growing. (6) Too many bulls? (7) Greenspan is bullish. (8) S&P 500 earnings edging lower, but remain bullish.
Thinking About A Melt-Up
(1) Worrying more about less to worry about. (2) Deep in the heart of Texas. (3) Smaller stocks with higher P/Es beating the bigger ones with lower valuations. (4) Three months til Yellen replaces Bernanke. (5) Record liquidity and margin debt. (6) A market for momentum players. (7) An impressionistic picture of stock prices that may continue to go vertical. (8) How will we recognize irrational exuberance? (9) Yellen will have lots to talk about at her first press conference on March 19. (10) Labor force dropouts continue to push jobless rate lower.
Not Much Bang per Buck or Yen
(1) Texas is gushing oil. (2) Washington is back to gushing debt. (3) Monetary base is gushing, but both M2 multiplier and velocity are falling. (4) Stocks getting most of the bang per DC buck. (5) Krugmanomics here and Abenomics over there. (6) Weaker yen boosting the cost of imports more than lifting exports in Japan. (7) Focus on underweight-rated S&P 500 Energy.
The Sky Is the Limit
(1) The huddled masses vs. Washington’s elite. (2) The streets are paved with gold in DC. (3) Unlimited opportunities for fiscal and monetary policies. (4) A suspended ceiling. (5) Evans: Only the Shadow knows when QE will be tapered. (6) Another relief rally to record highs. (7) Nothing to fear but nothing to fear. (8) Nose-bleed valuations. (9) Flying high with the high flyers. (10) No more pain in Spain?
The Trauma of 2008
(1) No serious correction since last June. (2) Bad news doesn’t faze the bull. (3) Fretting but not selling. (4) A unified theory of the bull market. (5) Near-death experience. (6) People don’t do pain very well any more. (7) All together now: “No more Lehmans!” (8) Profitable businesses running scared. (9) Investors showing signs of anxiety fatigue. (10) Subpar growth is bullish. (11) Nothing to fear but nothing to fear. (12) High flyers.
Waiting for Godot
(1) Depressing dysfunction. (2) Private study finds that fiscal uncertainty boosted unemployment rate by 0.6 ppt. (3) Fed study estimates that jobless rate would be at 6.5% but for fiscal and monetary policy uncertainty. (4) Fed president says $600 billion of QE lowered jobless rate by just 0.25 ppt! (5) The government is here to help. (6) Beckett’s absurd drama is our script. (7) US is under review. (8) Industrial commodity prices drifting lower. (9) China getting less bang per yuan of borrowing. (10) Earnings and margins rising in China. (11) Europe has hit bottom, and struggling to recover. (12) Output remains flat in most EMs. (13) Focusing on overweight-rated fun-related stocks.
Blissful Ignorance
(1) Known unknowns. (2) FOMC is data-less and clueless. (3) Ode to Ignorance. (4) Stocks remain blissfully complacent. (5) Where have you gone, Joe? (6) Mind-boggling complexity of Obamacare in one flow chart. (7) Ode to bullish forward earnings and revenues. (8) Refiners weighing down Q3 earnings. (9) Not much gas in gasoline recently.
Another Cliffhanger
(1) No news is bullish news. (2) An early 2014 timeline for the FOMC. (3) Jobless rate of 7.0% could be Yellen’s threshold for tapering, and 6.5% for terminating QE. (4) Fed Gov. talks about the failure to communicate. (5) Another “close call” on FOMC. (6) Melt-up, then go away next May? (7) Will McConnell be the McFixer again? (8) Market discounting a happy ending. (9) Guidelines for a deal. (10) The Bates Motel. (11) Obamacare “IPO” bombs badly. (12) Compromise: Delaying Obamacare may be the only viable option for both sides. (13) “Captain Phillips” (+ +).
Growing Pains
(1) Back to (law) school. (2) Multiple unconstitutional options. (3) The IMF is globally gloomy. (4) OECD leading indicators are upbeat. (5) Europe has hit bottom. The question is, Will it recover? (6) German indicators are mixed. (7) Emerging markets face some challenges.
It’s Starting To Hurt
(1) The prioritization question. (2) Gallup poll shows plunging consumer confidence. (3) Shutdown already bad for some businesses. (4) Strengthening euro can’t be good for Europe. (5) Bad timing and execution for Obamacare’s IPO. (6) A curse on both their Houses. (7) They should soon feel our pain. (8) Stocks losing complacency and altitude. (9) A very ugly auction. (10) We’ve seen this scary movie before.
Cabin Fever
(1) Beijing tells Washington to shape up. (2) The 14th Amendment says default is not a constitutional option. (3) Plenty of tax revenues for everything but defense and parks. (4) An angst-free earnings season ahead? (5) Revenue expectations are rising. (6) Stay Home or Go Global? (7) Going abroad to get away from Washington. (8) More good happenings in Europe. (9) ECB official likes banks. (10) Abe’s missing arrow. (11) Labor unrest and stalled commodity prices weighing on EMs. (12) Focus on overweight-rated S&P 500 Transportation.
Binary Outcome
(1) On the verge of either a meltdown or a melt-up. (2) Tailwinds from October to April. (3) Obama said buy on March 3, 2009. Now he says sell! (4) The 14th Amendment. (5) Boehner may have to fall on his sword. (6) Hastert Rule may not rule on debt ceiling. (7) Right-wing vs. left-wing conspiracies. (8) Fed remains clueless and is now data-less. (9) Talking Fed heads. (10) QE’s bang per buck is tiny. (11) “Gravity.” (+ +).
Blue Angels
(1) The Rosengren rehash. (2) Focusing on payroll data, which may be postponed. (3) ADP shows lackluster job gains. (4) Wasn’t QE supposed to create more jobs? (5) Is it the Fed’s job to counter fiscal recklessness? (6) Flying in circles inside the Beltway. (7) Doing remarkably well despite Washington. (8) US has bestlooking Blue Angels profile in the world. (9) Analysts say profit margins have more upside in the US. (10) Rising labor costs squeezing margins in emerging economies.
Gold, Inflation, & Profit Margins
(1) Bad days for gold. (2) QE isn’t working for gold anymore. (3) Gold is negative indicator for other commodity prices. (4) Path of least resistance. (5) Gold suggests that emerging markets have lost their groove. (6) A hedge against reckless monetary and fiscal policies? (7) Inflation in assets rather than in CPI. (8) The 2008 trauma is keeping a lid on inflation. (9) All good for profit margins. (10) Focus on marketweight-rated S&P 500 Autos.
Gushers vs. Gridlock
(1) America to Washington: DO NO HARM! (2) This too shall pass. (3) Might the Fed expand rather than taper QE? (4) Jobs survey suggests jobless rate heading for 7% soon. (5) Q3 earnings expected to be up 4.2% y/y. (6) Negative surprises among Financials? (7) The year after next is expected to be another good one for earnings. (8) New Industrial Revolution comes to the oil patch. (9) Heading towards energy independence at a faster pace. (10) Fracking with gas.
Dysfunctional Government
(1) Big Government weighing on global growth. (2) America is exceptional. (3) Halloween is a month early. (4) October can be bad, but a good buying opportunity for yearend rallies. (5) Policy uncertainty suppressing economic growth. (6) Nothing new: Italian government is unstable. (7) Mao is making a comeback in Beijing. (8) Lots of Indian politicians committing crimes. (9) Rising income inequality benefits Big Government most. (10) FSMI soaring, while commodity price index is flat-lining. (11) Earnings expectations very upbeat for 2015. (12) More recovering indicators in Europe. (13) "Rush" (+ +).
Breaking Bad
(1) Bad things might not happen. (2) Middle East always risky, but not imminently so for markets. (3) If German court rules against OMT, Draghi ready with more LTRO. (4) Oil and bonds going off the boil. (5) The Fed’s super-easy "BDY Troika" in no rush to taper. (6) Another upbeat German indicator. (7) Improving jobshard-to-get survey sees jobless rate under 7% soon. (8) Analysts raising revenue estimates. (9) Bulls charging out of correction camp could mean a correction is coming. (10) Focus on overweight-rated S&P 500 Industrials.
On The (Profit) Margin
(1) Fairness and prosperity. (2) North Korea and Cuba are fair and impoverished. (3) Bill de Blasio’s tale of two cities. (4) The “5%” includes public employees. (5) The distribution of income between labor and capital. (6) Labor is losing, while capital is gaining. (7) Why are NIPA profits soaring, while S&P 500 net income is flat-lining? (8) NIPA profit margin at record high, while S&P 500 measure is at cyclical high. (9) Government is the great equalizer. (10) Your taxes at work supporting those who don’t.
Less Uncertainty?
(1) Placing odds.. (2) Nothing to fear but another fiscal fiasco. (3) Latest batch of US economic indicators generally upbeat. (4) Global economic indicators showing some strength too. (5) S&P 500 revenues improving. (6) Forward earnings still making new highs. (7) Why subpar growth is bullish. (8) Secular bull case powered by broadening tech revolution. (9) Intelligent machines, cheaper solar panels, electric cars on auto-pilot, and a drop of blood.
Taper Caper
(1) Leaves will change before Fed does. (2) Fed officials concerned about weaker economy and fiscal follies. (3) Also, tapering postponed so yields would stop rising as a result of tapering talk. (4) Bond yield may stay between 2.5%-3.0% for a while. (5) Gold goes up and down. Industrial commodity prices barely budge. (6) Emerging markets unlikely to outperform. (7) Europe may not continue to outperform unless data improve. (8) US stocks face some challenges in October. (9) Bernanke’s last two press conferences confuse rather than enlighten. (10) “Prisoners” (+).
Pullback & Buybacks
(1) The Fed and Providence. (2) Ben Bernanke and Emily Litella. (3) Back to QE-forever? (4) Fed adds fuel to the melt-up scenario. (5) Pay no attention to the Fed’s talking heads. (6) Transparency can be opaque. (7) Addicted to QE, but driven by corporate buybacks. (8) Life is good. (9) Focus on S&P 500 overweight-rated housing-related industries.
The Best Indicator
(1) Fundamental Stock Market Indicator remains bullish. (2) FSMI vs. ECRI. (3) Top secret vs. open source. (4) Latest jobless claims distorted, but trend is down. (5) Weekly consumer confidence down, but on uptrend. (6) Industrial commodity price index flat-lining. (7) The best cure for high commodity prices. (8) That was a short super-cycle. (9) EMEs and commodity prices joined at the hip. (10) Will China grow fast enough to boost commodity prices again? (11) Focus on underweight-rated S&P 500 Materials.