Monday, June 18, 2018

This Week's Message: Good Time For A War? Well, That's What Pyrrhus Once Thought....

Three of the world's major central banks held their policy meetings last week and issued statements in line with what we anticipated and  expressed herein. Asset prices responded as we suggested they would as well; that is until the threat of a global trade war was thrust back onto the scene in a big way.

Friday, June 15, 2018

Thursday, June 14, 2018

This Morning's Log Entry: A Followup To Yesterday's Blog Post

6/14/18 (Thursday)

The Fed and the ECB meetings played out precisely as we scripted  yesterday: The Fed was more hawkish with 4 hikes this year now being the consensus, and the ECB softened up by pushing QE through year-end, and announcing that – as economic things currently stand -- interest rates won’t be touched until we’re well into 2019.

Wednesday, June 13, 2018

The Fed Says The Economy's In "Great" Shape, And Won't Weigh In On Fiscal Policy, However.....

As you've noticed, we're not the least bit shy in expressing our concerns over the potential for an increase in protectionism between us and our trading partners. Listening this morning to Fed Chairman Powell's post-meeting press conference, he had to field a few questions on the topic.

Today's Log Entry: The Dollar vs The Euro

Currencies have my attention this week; particularly the U.S. dollar and the Euro.

Monday, June 11, 2018

This Week's Message: Many Things Have Gotten Better With Time

Keeping this week's message brief, as there'll be quite the number of pending issues we're likely to circle back with over the next few days...
----------------------------------------------------------------------
We here at PWA, on behalf of our clients, have to set aside our personal politics -- as well as our proclivities toward optimism or pessimism -- and forever let the data instruct what we do inside of client portfolios. While I know that can be frustrating at times -- particularly when we state empirically proven facts that conflict with certain public policies -- trust me, you shouldn't want it any other way!

Sunday, June 10, 2018

Quote of the Day: Moving On Up

The notion that the U.S. middle class is being "hollowed out" has been a curiously popular one for years. This morning I'm borrowing Don Boudreaux's quote of the day, including his followup comment:

Saturday, June 9, 2018

A Consumer and An Economist Talk Protectionism

Experience compels me to preface the below with a statement about politics. I've found over the years that when I go to a place that conflicts with a position taken by the party in power I generally touch a few nerves. Thus, over the past few years I've devoted far less time herein than previously to topics other than those directly related to the business of investing. That said, some of the topics that tend to touch political nerves -- such as tariffs -- are indeed related to (impact) the business of investing. 

Gauging Smiles and Wrinkles

Confirmation on the strength, or lack thereof, of the economy can come from multiple sources. In that the consumer accounts for 2/3rds of U.S. economic activity, we are forever digging deep for data that instruct us as to how the everyday American is faring (we recently touched on  the presently high hotel occupancy rates).

Apple Amid the Noise

Apple's performance amid the news flow, with regard to its messaging to suppliers, of the past couple of years speaks to the importance of not  relying on media accounts, on doing your own research and on properly assessing current conditions.

Thursday, June 7, 2018

Chart (and quote) of the Day: Banks Well Positioned and Undervalued

Oppenheimer's Chris Kotowski shares our present view of the financial sector (our current top target weighting):

Wednesday, June 6, 2018

Quote of the Day: What 'Might' Happen If We Abandon the Trade War Notion?

While I'd never pretend that I could quantify to what percent a rally might ensue should we survive the current onslaught on global trade, in a note to (I presume) JP Morgan's clients today its top quantitative strategist, Marko Kolanovic, basically echoed the sentiment in our earlier blog posts, here and here:

What's Driving This Week's Rally?

The Dow's having a heck of a week! Closed over 300 points higher today alone. And while that makes some sense in that, amid a notably positive backdropthe index was negative (-1.23%) on the year less than a week ago (5/31)  -- i.e., in theory it's only a matter of time before stock prices reflect the fundamental backdrop -- make no mistake, news that this year's primary headwind may be abating is the present  driver:

Economic Data Looks Very Good to Start June, However....

June is starting off very nicely in terms of economic data reported. Here's from our June 2018 trends file:

Thursday, May 31, 2018

Stat of the Day: The Consumer's In Good Shape

This morning's release of the Bureau of Economic Analysis's Personal Income and Outlays Report confirms what we've been seeing consistently in our weekly macro analysis; that the U.S. consumer -- who's responsible for 2/3rds of U.S. economic activity -- remains in pretty good shape.

Today's Podcast: Why The Market Hates Protectionism

In yesterday's "Headlines of the Day" my closing line included:
....the market reaction to a U.S./China/EU trade war will be the definition of ugly.
Per this morning's headline -- "Trump Slaps Steel Tariffs on EU, Canada, Mexico as Tensions Rise" -- we can add Canada and Mexico to the list of combatants in a potential trade war.

Wednesday, May 30, 2018

Headlines of the Day

As I type ahead of this morning's open Dow futures point to a nice rebound after Tuesday's bludgeoning. 

In yesterday's podcast I suggested that while the market's reaction to Italian politics was understandable, given the time frame and the process to come before Italy succumbs to populist rule (if it indeed does), the quick, steep decline could only be described as knee-jerk (Italian stocks are up 3% in the premarket this morning).

Unfortunately, stocks had something else to contend with in yesterday's headlines; a something else that stands to dampen what could be a substantially strong rally off of yesterday's lows:

Tuesday, May 29, 2018

Stat of the Day: A Little More On Housing

Over the weekend we offered up our tracking of 4 key data points that suggest that the housing market is a-ok for the time being. Today's release of the S&P CoreLogic Case-Shiller Home Price Index says essentially the same thing:

The Present State of the Correction (video)

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

This Week's Message: The European Problem and Probabilities Going Forward (podcast)

A quick note on financials to add to this week's commentary: The financial sector -- our largest target weighting -- is leading the way lower this morning amid a global equity market selloff. This looks to us to be a reaction to a strong move into U.S. treasuries, forcing yields lower, in response to present Eurozone woes (which I touch on in the audio). Lately, financials have shown strong correlation to interest rates, as higher rates would lead to higher earnings on loan portfolios. Therefore, a move lower -- the likes of what we've seen the past few days -- virtually has to hit the sector harder than we might've otherwise expected. 

Sunday, May 27, 2018

The Current Look of the Housing Market

Seems like folks are thinking a lot about housing these days, as I've been fielding more than the usual inquiries on the subject of late. Just this morning a young mortgage broker solicited my opinion on the basketball court, of all places. 

Friday, May 25, 2018

The "Key to Understanding the World" (video)

While I am certain that I have personally viewed this video rendition of Leonard Read's 1958 classic essay I, Pencil  dozens of times over the past 6 years, I find myself as awestruck today as I was during my first viewing, and as I was when I first read the essay umpteen years ago.

Thursday, May 24, 2018

Today's Podcast

On the Auto Tariff News

Here's the close to my note to staff this morning regarding yesterday's announcement that the Commerce Dept will explore, on national security grounds, the prospects for imposing tariffs on foreign-made cars:

Wednesday, May 23, 2018

Charts of the Day: Trade and the Dow

We'll just keep this thread going as the headlines on trade roll in:

Hugely Successful People Can Be Hugely Bad Economists

In Don Boudreaux's reply (below) to a concerned reader he makes the point that I find myself making over and over again to family, friends and business associates about the likes of Warren Buffett, Bill Gates, Mark Zuckerberg, Wilbur Ross and other famously successful people in their chosen fields: That is, having mastered the art of, say, locating and buying undervalued companies, technological innovation, social media or spanning the globe in search of distressed debt to buy, does not, in any way shape or form, make one a great, good, or even mediocre economist. Fact is -- based on notions these gents have passed along over the years about taxation, regulation, universal income, trade and per below the relationship between technology and employment -- they are at times profoundly bad economists.

Tuesday, May 22, 2018

CEOs Feeling Good

The latest Fortune 500 CEO Poll jibes with our analysis of present conditions. I.e., looks (at this juncture) like there's room for the expansion to run.

Here are the highlights from this morning's Fortune CEO Daily Report:

Monday, May 21, 2018

Charts of the Day

Last Thursday we got this headline:
Trump Says He Doubts China Negotiations Will Succeed
And we got this price action in the Dow:

Sunday, May 20, 2018

This Week's Message: Don't Be A Bull Or A Bear: Be What Conditions Dictate!

Seems like I'm getting more emails lately with folks forwarding often pithy analyses of why some data point spells imminent doom for the economy and, by default, for the equity market. Problem being, the last few have featured, as I just hinted, merely one data point.

Friday, May 18, 2018

Way Wrong Wilbur!

The protectionism debate has been a fascination of mine ever since I read the 1946 classic Economics in One Lesson (still my top economics book pick) many many moons ago. 

Tuesday, May 15, 2018

Market Brief

Here's this morning's entry to our internal market log:

5/15/18 (Tuesday)

After 8 up days in a row, the Dow is off ~200 points this morning. Headlines say it’s Home Depot’s earnings miss and positive econ data pushing up interest rates.

Monday, May 14, 2018

This Week's Message: Our Present View of Conditions; Technically and Fundamentally (video)

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Sunday, May 13, 2018

Better Book Your Room Now!

I read somewhere that there's presently a bull market in recession predictions. That is, there are these days a lot of folks, some credentialed, some not, desirous of making names for themselves by calling the next great downturn. 

Friday, May 11, 2018

Don't Get Too Excited Over This Week's Inflation Data

While we should all welcome this week's tamer than expected inflation data (bonds, gold, and emerging markets bulls, and dollar bears, certainly have), 

Thursday, May 10, 2018

This Morning's Log Entry

Thought I'd share with you this morning's entry to our firm's market journal:

5/10/18 (Thursday)

Equities are having a strong week thus far, with the S&P up 1%. 

Tuesday, May 8, 2018

Stat of the Day: Yep, More Jobs Than Workers

In this week's message (posted yesterday) we suggested that last Friday's weaker than anticipated jobs number may have had more to do with a lack of workers than it did a lack of jobs:

Monday, May 7, 2018

This Week's Message: Four Hikes Are In The Cards, But That's Totally Okay

Friday’s jobs number missed the consensus estimate by 29k, and wage growth was a bit softer than expected. The unemployment rate fell to 3.9%, although that can be explained away (and is by naysayers galore!) by a drop in the labor force participation rate (LFP).

Sunday, May 6, 2018

Coming Treasury Auctions Will Be Telling

We've made the case from the get-go that a serious risk (one of many) of inciting trade disputes is the potential to notably hurt the demand for U.S. treasury debt -- at a time (tax cuts and spending increases) when it's needed most.

Thursday, May 3, 2018

Quotes of the Day

The Non-Manufacturing (services) Institute for Supply Management survey for April was just released. Like the manufacturing report it was on balance a positive read on the present state of the economy.

Here we'll do what we did yesterday with the April manufacturing survey and highlight the comment section as follows:

What It Is


I keep hearing that the reason the market isn’t rallying hard during this amazing earnings season is that “it was all priced in”. Nothing new here. Everybody knew earnings were going to be great, so now what?” Nah… I don’t buy it… If it were all priced in so many companies’ stocks wouldn’t be screaming higher as earnings are announced, only to give it all back the next day…

Wednesday, May 2, 2018

Quotes of the Day

We view the Institute for Supply Management's (ISM)'s monthly purchasing managers surveys as critical inputs to our macro index.
We've added highlights as follows to the April manufacturing report's featured respondents' comments below:

Tuesday, May 1, 2018

Monday, April 30, 2018

This Week's Message: The Good, The Bad, And The Probabilities...

You'd think investors would be feeling pretty good right about now.

After all, the earnings season thus far has been all (actually, more than) it was billed to be; 73% of reporting companies have beaten expectations on the bottom line, with growth rates at multi-year highs. As, if not more, importantly, top line beats are coming in at a remarkable 71% clip. 

Not to mention the fact that the economy (the U.S. economy in particular) continues to expand at a healthy pace; our PWA Macro Index has increased in 3 of the past 4 weeks, with this morning's reading coming in at an historically healthy +61. 

Yet the market hasn’t been able to make any real headway, despite having set the stage with a double-digit correction heading in.

Friday, April 27, 2018

So What Gives?

If you're wondering why, amid exceptional earnings reports and on balance strong economic data, the market remains in a technical downtrend from the January 26 high:

Thursday, April 26, 2018

Wow! And Dang It!!

The first chart below jibes perfectly with our reporting herein on general conditions for stocks:

Tuesday, April 24, 2018

Weaning Ain't Fun!

Well, dang! 

Thanks – more than anything else -- to threats of a global trade war, stocks essentially missed out on (unless of course we see a big advance as we close out April) what was a really nice setup going into the seasonally-special March/April period. I.e., having just suffered through the first 10+% correction since early 2016, the market was ripe for a rally as it entered the historically two best months of the year. 

This Week's Message: Should We Fret The Yield Curve?

As we've been reporting, our analysis of current conditions suggests very low risk of recession on the near-term horizon. However, to some, one popular economic indicator -- one that happens to be an important input to our weekly analysis -- is flashing red! That would be what's called the treasury yield curve. 

Sunday, April 22, 2018

Quote of the Day: The Post Office Needs A Large Dose of the Free Market

Ironic how the U.S. Postal Service remains mired in government bureaucracy while Germany and Britain turned theirs over to the private sector, and they're fixed.

Monday, April 16, 2018

One Example of Why Tariffs Really Bug Me!

A friend, and BTL reader, told me recently that in reading the blog he senses that talk of tariffs for me is akin to someone scraping their fingernails on a chalk board.

I must confess, he was spot on!

This morning's Empire State Manufacturing Survey release gives you one reason (among multiple) why:  emphasis mine...


note: Paragraph 3 supports our bullish view of current conditions; paragraph 1 explains why we stressed at the beginning of the year that protectionism poses the greatest threat to our thesis...

Sunday, April 15, 2018

This Week's Message: Long-term trend intact, short-term setup in question...

Bringing you this week's message early, as I'll be away from the office Tuesday through Friday (what'll you do with all that extra reading time?). 

While recent volatility has delivered some short-term technical damage to equities, the longer-term bullish trend remains intact; per the three long-term trend indicators (the slope of the S&P 500's 200-day moving average, the positioning and slope of our weekly moving average indicator, and the signal indicated in our monthly Bollinger Band chart) featured below: 

Saturday, April 14, 2018

From Our April Current Trends File

The entries thus far to our April current trends file pretty much jibe with the latest reading from our macro index. 

In a nutshell: Under the weight of rising geopolitical uncertainty, global trends are not what they were a few months ago. The U.S. economy nonetheless remains in good shape with probabilities pointing to no recession on the near-term horizon. In the meantime, inflation is picking up at a healthy enough pace to justify at least 3 Fed rate hikes this year. 

Friday, April 13, 2018

Stat of the Day: Workers! Workers! Workers!

You and I can have a legitimate debate about the good and bad of employment trends in manufacturing. And we can legitimately debate the quality of jobs available across all sectors. But, frankly, there's no debating the fact that the U.S. economy is in no way shape or form wanting for job opportunities. 

Don't Celebrate This Stronger Week Just Yet -- And -- Is China On The Ropes Or Playing Rope-A-Dope?

While we're ultimately concerned with general conditions, and allocate accordingly, we nonetheless pay very close attention to the day-to-day developments that impact short-term market moves. 

Two reasons: One, the media, in an effort to capture our attention, often doesn't capture the true catalyst(s) for a given market move; we thus feel compelled to offer our readers what we view to be the straight unbiased scoop. And, two, we want to help our clients keep the noise in perspective, as, often -- as it pertains to our/their time horizon -- that's all it is.

A 'Fundamental' Silver Lining To A Volatile Market

If you're our client financials is presently your portfolio's top sector weighting. We outlined our bullish thesis in our 2017 year-end letter. Per point #5 in the excerpt at the bottom, we saw market volatility in 2018 as a distinct positive for the sector's earnings prospects.

Citigroup's earnings announcement this morning confirmed our suspicions:

Thursday, April 12, 2018

Quote of the Day: Market-Friendly Stuff

While commentary from Washington has been the definition of volatile/uncertain of late, some of the latest is market-friendly stuff:

Wednesday, April 11, 2018

Quote of the Day: Anything can happen in three months time...

Jack Schwager -- in an interview for his highly insightful book Hedge Fund Market Wizards -- asked GMT Capital (multi-billion dollar money management firm) founder Tom Claugus about his early years as a hedge fund manager. 

We entirely sympathize with his response; which describes plain and simply why we decline all requests to manage short-horizon portfolios:

Tuesday, April 10, 2018

This Week's Message: It's All About Trade, For Now...

About mid-morning yesterday at the office we discussed the then big rally in stocks (the Dow peaked 450+ points higher on the day). We concluded that the advance had little chance of lasting the day as it was clear from the open that it was predicated upon softer trade talk out of Washington. I.e., given that Chinese President Xi's address at the BOAO Forum was scheduled for the evening, it simply didn't make sense that traders would want to be long at the close.

Monday, April 9, 2018

Our Present View of the Tech Sector

Thought I'd share with you our updated internal narrative on the technology sector. In addition to summarizing our assessment of the tech space, it offers some insight into the dynamics presently pushing stock prices in both directions:

Sunday, April 8, 2018

Lee and Li Do a Deal

Let's say that Lee, an American, gets together with Li, a Chinese artist, via the internet and buys one of his paintings for $2,000. Li is happy to have 2,000 U.S. dollars, and Lee and his wife are thrilled with the beautiful piece of art now displayed above their mantel: A win/win by definition.

In my story, Lee happens to be a spender, while Li happens to be a saver; Lee likes nice artwork, Li likes to save and invest.

Saturday, April 7, 2018

"The Sensible, Rational Thing For Us To Do"

I'm with Milton Friedman on this one (have been for decades as I've watched both sides of the aisle exploit the American consumer's confusion and abuse him/her in the process):

Friday, April 6, 2018

Where the Jobs Are, and Comparative Advantage

There's a thing called comparative advantage; I actually did a Youtube video on it a few years ago (first video below) -- you'll find it instructive.

In a nutshell, different countries do different things more efficiently, and when we allow for/exploit those comparative advantages we ALL get richer.

Stat of the Day: One more on why we like financials (our highest present conviction) right here...

Bloomberg's Chart of the Hour:

Median and Meek

While the headlines and price swings may feel freaky, it's always good during times like these to step back -- as we did in last night's video -- and put things in historical perspective:

"Selloffs can be waved off. However..."

Market researcher Bespoke Investment Group did an excellent job this morning outlining present risks:   emphasis mine...
It is impossible to view the announcement of expanded tariffs by the US last night as anything but a major escalation. Thus far, every tariff announcement by the US has been responded to in similar size with Chinese proposals, so China’s response is likely only a matter of time.

So, Was the Market Right About Trump to Begin With? -- Or -- How This Likely Plays Out...

Thought I'd share with you my entry this morning to our internal market log:

4/6/18 Friday

Upon leaving the office the afternoon of the 2016 Presidential election, I recall telling Jeannette that “Trump’s not going to win, but if he does the Dow will be down a thousand points tomorrow.” Well, of course I was wrong on both counts; he won, and the Dow opened only a couple hundred points lower (although Dow futures were down nearly 900 points overnight after the results were announced), and closed I believe 300+ points higher.

So why all the pessimism going in, and the ~900-pt drop the night of?

Thursday, April 5, 2018

Video Commentary: Very Much the Norm 'So Far'...

Well, like I said yesterday, we do video commentaries during unusually rough days for the market. While the night's still young, it looks as though the market may be in for a rough ride come tomorrow morning.

In this evening's video I apply a popular technical concept throughout the current bull market to make the point that present volatility is -- to this point -- very much within the norm:

Service Sector Purchasing Managers are Upbeat, Save for one big concern....

The ISM Non-Mfg (Services) Survey -- a highly regarded indicator of economic prospects -- came in on balance strong for March. Which is consistent with how our macro index is scoring.

Wednesday, April 4, 2018

Kudlow Breaks His Silence!

Had a technical difficulty with this morning's promised video commentary. In that we tend to produce those during major down moves, we've decided to hold off till the next one of those days. 

Where This is Coming From, The Facts, and Simon and Garfunkel on the real problem...

As you readers should absolutely expect (and, at this point, be unrattled by) -- based on the headlines of the past 18 hours or so -- Dow futures are pointing to a 500 point decline at this morning's open. We'll put a video commentary together a little later this morning.

In the meantime, here's something to help you understand where this all is coming from:

Tuesday, April 3, 2018

This Week's Message: The Long and the Short of Current Conditions

As managers of what we'll label long-term (retirement, generational wealth, institutional, etc.) portfolios, it's general conditions and the long-term setup that we're ultimately concerned with. That said, in that in our view good communication ultimately leads to emotional comfort among our clients (our ultimate aim), we believe it's important to continually offer insight into the day-to-day goings on that influence short-term market movement and, alas, the financial media's messaging. 

Monday, April 2, 2018

Some Good News Amid the Noise

We view the Institute for Supply Management's monthly manufacturing and service sector surveys as very important inputs to our macro model. 
As we suggested in a post this morning, February's manufacturing survey suggests that the economy remains in decent (in fact, very decent) shape.

Same Story, Same Macro Setup... For Now...

The Dow's down 670 points as I type. Ironically, exactly one week ago the Dow closed up 670 points. While you might think it's all about Amazon, don't! Not that the signal the President -- in his attack of Amazon -- is sending to the market isn't concerning on a number of fronts, the energy underneath today's selloff generates from the same issue du jour that inspired last Monday's rally; trade.

Economy Looks Decent, So What's the Problem With the Market?

This morning's selloff in stocks isn't about the economy, per the following results from two key manufacturing surveys just released. Ironically, however, the Manufacturing Purchasing Managers report offers a clue (my highlight):

Sunday, April 1, 2018

Headline of the Day -- And -- Near-Term Prospects

In last Sunday's "Headline of the Day" we suggested that the market would warmly greet Secretary Mnuchin's comments that he was hopeful that the U.S. could come to a workable, non-tariff, solution with China. As it tuned out, the Dow screamed higher on Monday to the tune of 667 points.

Unless the headlines out of Washington improve on this Easter Sunday 2018 (by the way, Happy Easter!!), we won't be looking for another monster Monday rally tomorrow. 

The President has been active on Twitter this morning:

Friday, March 30, 2018

Quote of the Day -- And -- Protectionism is a Bipartisan Affliction...

Last Tuesday we explained why the market aggressively sold off (after opening with strong momentum following Monday's 660 point rally in the Dow) on news that Washington was about to take serious measures to limit foreign capital investment into the U.S. economy. 

Wednesday, March 28, 2018

More On Why We Like Financials Right Here

On March 13th we devoted our weekly message to why we like financials right here. Sharing our view of a given sector's prospects serves to accomplish two aims: One, it helps clients understand what they see us doing within their portfolios and, two, it can offer some insight into general economic conditions -- as each sector's prospects are largely dependent upon the macro setup.

The Trade Deficit Was Perfect Last Month!

Now hear me out, I'll keep it short:

While this morning's trade report provides yet more fuel for the Administration's fire (the "deficit" came in above consensus expectations), I would argue that it was actually a very bullish report and totally supports Washington's ambitions going forward.

Tuesday, March 27, 2018

Quotes of the Day: Can't Have It Both Ways!

From the get go, we've expressed our concerns with regard to the risk of the Administration making good on what many thought was mere protectionist rhetoric; while all along acknowledging that its other ambitions, like tax reform and deregulation, had absolutely moved the business sentiment needle in a positive direction. And the latter is no small deal when it comes to the economy. I.e., when producers and consumers feel good about their lots, they become very stimulative economic agents.

Like I Said, Still in the Woods!

Like I suggested this morning, we're still very much stuck in the short-term woods. Here's the latest out of Washington:

This Week's Message: Rally Makes Sense, Not Out of the Short-Term Woods, and Long-Term Continues to Look Good...

In Saturday's blog post we said that the backdrop for equities is such that if the U.S. protectionist push 
"doesn't get drawn out long enough to crack the general setup we'll see a sharp rally in stocks, likely to new highs." 

Sunday, March 25, 2018

Headlines of the Day: Mnuchin Looking To Calm Markets Come Monday

While the market's understandable tanking last Thursday and Friday -- along with the accelerated selling right at the close for the week -- bodes bearish for tomorrow morning, here are a couple of news items that could offer stocks a respite:

Saturday, March 24, 2018

Quick Thought On Near-Term Prospects For The Market

Here's a snippet from this morning's entry to our internal log. In essence, it's what I'm thinking about the immediate market impact of recent events, as well as the near-term prospects for equities: 

Friday, March 23, 2018

Durable Goods Orders are Encouraging, Big Time! -- AND -- From whom would you take counsel on trade?

Durable goods orders for February were exceptionally strong! The bright spot to us being core capital goods; i.e., businesses in the U.S. are expanding, which should help you understand why our country's business leaders, virtually across the board, are literally pleading with Washington to rethink its position on trade:

Thursday, March 22, 2018

Still a Sissy of a Correction!

Days like this (Dow down 724) virtually require, say, 4 blog posts (by 3 pm). 

You may recall, or perhaps not (given recent action), that 2018 started out like gang busters. In fact it was the 7th best start to a year (as of Jan 23rd) in stock market history. 

Video Commentary: Current Conditions

We featured a beautiful eagle flowing over a snowy mountain range as our visual in the intro, then I completely forgot to share the analogy. So you'll find it in print below the video player:

The market -- per this morning's futures action -- is bracing for the tariff announcement...

Regular readers by now are well-versed on our position with regard to protectionism. A few minutes ago we posted a quick piece on its impact on the Dow Jones Industrial Average's most influential (from a volatility standpoint) constituent. 

Quote of the Day: A Happy Day for Boeing's European Competition!

The following from Bloomberg Intelligence's aerospace and defense analysts should help you understand why the stock market hates protectionism:

Wednesday, March 21, 2018

Uh Oh! The Tariffs Have Been Announced! But Wait!

Uh oh, the tariffs have been announced (well, the announcement of the coming announcement of the tariffs has been announced)! But wait, after freezing in place while details were dispensed, the Dow rallied to up 150 (+117 now). So, tariffs good? No, not at all, but at least round one appears to be substantially muted relative to the rhetoric going in.

Headlines Speak a Thousand Words -- And -- Look for 4 Fed Hikes This Year, Regardless of Today's Comments

More often than not, when a headline inspires me to click through to an article (typically they don't), I can glean all I need from the first few lines.

Here's a handful from this morning, and one from yesterday. There's a theme here:

Tuesday, March 20, 2018

This Week Message: The Fed and the Market -- And -- The President and the Market

I recall early in my career growing frustrated over what I viewed as Alan Greenspan's obsession with the stock market. I remember thinking that it wasn't the Fed's responsibility to hold the market's hand through volatile times; that its members should just focus on their mandate, which makes no mention of the stock market, and let equity prices react accordingly. 

Monday, March 19, 2018

Headline Update -- And -- As For What Matters

Not to belabor one morning's worth of volatility, but since I jumped out early with an always-to-be-questioned-headline (and based on the unusual number of hits it fetched) I figured I'd offer a quick followup since that first headline reason for the selloff has been basically abandoned by the media. 

Now it's:
Dow drops 300 points, S&P slides more than 1% as Facebook drags tech stocks lower

This Morning's Action

This morning's always-to-be-questioned headline says:
Dow falls 200 points on Trump's Twitter meltdown

Sunday, March 18, 2018

Headline of the Day: Bitcoin a serious threat, not! -- And -- Blockchain itself, however, is another proposition altogether.

From day-one, when anyone asked me how I felt about bitcoin I'd reply, "I absolutely love the concept, but fuggetaboutit if you think it's going to take over the world. I mean, imagine the threat to the global monetary system. The powers that be will have nothing of it, I promise."

Saturday, March 17, 2018

We Still Think the Market's a Bit Behind the Inflation Curve

On balance, last week's economic data releases were decent; better than decent when we look at consumer confidence, jobs-related data and industrial production. We're seeing virtually no signs presently of any heightened risk of a near-term recession; which is of course what we're forever on the watch for as we consider our equity exposures.

Friday, March 16, 2018

Don's Mom

The mother of the best economist I know passed away on this day in 2008. The tribute he penned to her a decade a go is timeless, and most inspiring. 

We Had A Huge Trade Surplus In January!!

Wow! We had a huge trade surplus in January!

Well, not by popular definition, but certainly by your investment consultant's 😇.

Wednesday, March 14, 2018

Why Media Headlines are Virtually Worthless

Now, it is true that the Dow is down over 100 points as I type. And it is true that retail sales unexpectedly dropped last month (something we'll dig into and apply to our model). However, does the message implied by the following headline paint an accurate picture of this morning's move in the Dow?

Data of the Day: Small Business Owners Continue to Like What They See

Small business is the employer of U.S. citizens, and, thus, the internals of the National Federation of Independent Business monthly survey account for 3 (of the 49) inputs to the economic component of our macro index. 

Tuesday, March 13, 2018

This Week's Message: Why We Like Financials Right Here -- And March Trends

This week we raised our financial sector target weighting to 18% (from 16%) of equities, making it our single heaviest position (previously tied with materials and industrials [still at 16% each]). Here's why:

Market News of the Day: Protectionism putting the bull market to the test...

For the umpteenth time, we emphasize that, while our analysis of current conditions favors equities going forward, we see a U.S. push toward protectionism as the development that will put the data, and, thus, our thesis, to the test. 

We Remain Constructive on Tech, However........

The following headline crosses my screen after what was a strong start for the market this morning:
The S&P 500 and the Nasdaq turn negative as tech rolls over.
We do remain constructive on tech going forward, however, per the following, not as much as we were this time last year:

Sunday, March 11, 2018

Milton Friedman on Steel Tariffs (VIDEO)

If you suffer any ambiguity over the steel and aluminum tariff debate, allow Milton Friedman six minutes to clear it up for you:

Saturday, March 10, 2018

Data of the Day: Capex easy to do going forward...

While getting a jump this morning on our internal weekly macro update, one of the inputs to our index -- the "corporate financing gap" -- jumped out at me. By comparing non-residential fixed investment (i.e., business capital investment) to corporate cash flows this indicator gauges corporate America's wherewithal to expand. 

Quote of the Day: More than Goldilocks

In yesterday's blog post we suggested that the stock market (participants in the aggregate) -- based on its strong positive response (Dow +441) to the February jobs report -- is betting that interest rates will remain tepid despite the economy picking up some real steam. 

Our suggestion lies partly in the fact that when January's healthy jobs report featured a surprise pickup in wages (exceeded estimates, while February's missed) -- presumed inflationary -- the market tanked (Dow -667):

Thursday, March 8, 2018

Let's Talk Economics, Not Politics!

Here's the headline:
(Bloomberg) -- China’s exports surged and its trade surplus unexpectedly widened in February, illustrating the lopsided nature of global commerce that Donald Trump is preparing to introduce protectionist measures against. Overall exports rose 44.5 percent in February from a year earlier and those to the U.S. surged 46.1 percent, customs data showed...
Here's one possible spin:

Wednesday, March 7, 2018

Video Commentary: More On Current Conditions

This morning's video commentary piggy backs onto last night's with a little deeper dive into our ongoing research and assessment of current conditions.

Highly recommended for clients!

A Little Clarity on the Mucky Protectionism Debate

Here's a slice of my end of a friendly dialogue regarding current events. I'm offering this up to inject some clarity into the very mucky protectionism debate:

Tuesday, March 6, 2018

Video Commentary: Putting Tomorrow's (literally tomorrow's) Volatility Into Perspective, and More on the Current Setup

The President's chief economic adviser -- one the capable advisers (who adamantly opposed the recently unveiled tariff scheme) we referred to in an earlier post -- announced his resignation this evening. As I type, Dow futures are pointing to a 400 point decline at the open. 

Here's some perspective:

This Week's Message: Hey, Chicken and Paper Clips Say There Ain't No Inflation -- And -- This Week's Vision Test

In a recent weekly message we suggested that a strong two-day rally in stocks at the time was based on false pretenses: the notion that the economy isn't in fact exhibiting the kind of strength that would see interest rates notably higher over the foreseeable future, and that that's a good thing for stocks. 

Again, we think the data, and market history, fly directly in the face of such thinking.

Monday, March 5, 2018

Quote of the Day: What Could Bring the Bears Back...

Economist Ed Yardeni echoes our chief concern for the market coming into this year (as expressed in our 2017 year-end letter), and the idiosyncrasy that we've stated will likely mute the specifics of what might otherwise test our bullish thesis going forward:

February Surveys Confirm Our View of Present Conditions

This morning's releases of the services sector surveys by Markit Inc. (PMI Services Index) and the Institute for Supply Management (ISM Non-Manufacturing Index) essentially confirm what our macro analysis tells us about the current state of the U.S. economy.

Sunday, March 4, 2018

Pins and Needles Over Protectionism

Much like other head-scratching phenomena (read tweets and other public commentary of an impulsive nature) of the past year+, the latest calls for anything but knee-jerk reaction. It does, however, demand that we assess our various areas of exposure to what in my humble view is the most ill-advised impulse thus far. 

Saturday, March 3, 2018

Quote of the day: These things take time...

Bespoke Investment Group's guidance on present circumstances mirrors ours:

One More on Tariffs

Okay, we'll do just one more very quick post on the potential economic/market/political effects of tariffs. 

Going forward we'll wait for the details and monitor the immediate impact on market technicals and begin assessing the potential longer-term fundamental implications for both our U.S. and non-US exposures, if any:

So much for this being about U.S. Jobs:

Friday, March 2, 2018

The Simple Sad Truth About Tariffs (Q&A)

In this morning's video commentary I suggested that I'd offer up more on protectionism and markets over the weekend. Thinking about it, the brief mention in this morning's written post pretty much sums up the why of the market's negative reaction:

Video Commentary: The Correction and Our Assessment of Present Conditions

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Present volatility -- per all of our commentary -- makes sense, however....

We've been strongly suggesting that the correction has yet to run its course, which means days like the last three (we'll see about today) were in the offing with or without the ill-timed (always ill-timed!!) announcement that the U.S. is about to do a number on its own consumers, its exporters, its manufacturers who import all manner of components, and of course its key international relationships.

Thursday, March 1, 2018

Oops! Scratch the Earlier "Market-Centric Trump!" Post

Forgive all of the intrusions this morning, this should be the last time I bug you today! But I want you to understand that recent volatility has at this point nothing to do with the fundamental market setup.

Headline from a minute ago:

Quote of the Day: The Fed and the Financial Sector

Bloomberg sees financials as the sector to benefit the most under the new Fed regime. As evidenced by it being our current top sector weighting, we happen to agree (although a financials-friendly Fed is not the only thing that has us bullish on the space):

Market-Centric Trump!

Per this morning's blog post, I'm thinking the pending tariff announcement could (depending on severity) be a negative event for the stock market. I suggested that the President is very market focused and would ultimately look to escape any measure that clearly hits stocks in a bad way.

Another Potential Catalyst for Volatility -- And the Market's Definitely In the Mood For (or in need of) Volatility!

We've been pounding aplenty herein on the normalness and, frankly, the necessity (this bull market is overdue for a pause/shakeout) of present volatility! So the bottom line is that stocks remain ripe for some pain, regardless of the catalyst. I.e., the market has to be in the mood to correct for, say, a more hawkish Fed stance -- and/or something else -- to set things in motion.

Wednesday, February 28, 2018

Nothing Surprising Here!

Day's like yesterday (Dow down 399) and today (Dow down 382) almost demand that we say something here on the blog (not that it takes much to get us saying stuff here on the blog).

Our Quick Take on Housing

One might surmise that rising interest rates would be a no-brainer reason to short (sell) housing-related stocks. And this morning's report on pending home sales -- down 4.7% month-over-month -- certainly supports that notion. 

Tuesday, February 27, 2018

Why stocks are struggling a bit this morning...

From this week's message: (be sure to read the whole thing)

This Week's Message: Rallying on the Wrong Theme!

Regular readers know that we remain constructive on global equity markets going forward. In fact, "constructive", frankly -- based on the weight of both the technical and fundamental evidence -- puts it mildly. I.e., We're -- heightened volatility notwithstanding -- downright bullish for the foreseeable future. That said, I find the otherwise impressive two-day (last Friday and yesterday) rally uninspiring. 

Monday, February 26, 2018

Stats of the Day, Plus a Heads Up

To put it bluntly, U.S. companies are doing exceptionally well at the moment. 

The following charts and commentary from Bespoke Investment Group tell the story:

Wednesday, February 21, 2018

Uncertainty Is A Certainty

Just a couple quick thoughts to help you put today's action -- the Dow first rallying 300, then declining 460 presumably in response to the release of the Fed's January meeting minutes -- into perspective.

Monday, February 19, 2018

This Week's Message: General Conditions Update -- And -- Timeless Insight

Our job, as we see it, as portfolio managers is to make sure that each client's portfolio is properly aligned with present general conditions. Our job, as we see it, as portfolio counselors is to make sure that each client's portfolio is aligned with his or her personality. 

Frankly, the latter is every bit as critical as the former, and in many ways it's the more challenging of the two!

As for us as portfolio managers: We just completed this week's technical analysis and updated our macro index. Here are the highlights:

Saturday, February 17, 2018

A Complete Sissy of a Correction So Far!

If you really think the current, or previous (if it's indeed over, which I dunno) correction is/was scary, horrific, terrifying or just plain bad, well, historically-speaking -- and to prepare yourself for the future -- you need to think again.

Friday, February 16, 2018

Today's Data Make Sense

This morning's economic releases happen to jibe with what we've been reporting herein; that is, an improving economy with an attendant pick up in inflation. 

Thursday, February 15, 2018

Chart of the Day: Home Builders Aren't Sweating Higher Mortgage Rates

The National Association of Home Builder monthly sentiment index (January's results just released) -- one of the 79 inputs to our macro model -- suggests that while housing contractors are struggling with shortages of land and labor, they aren't sweating the prospects for higher mortgage rates in the least:

How to Make "The Big Money"

Circa 1923, the otherwise media-aloof Jesse Livermore confided in journalist Edwin Lefevre and gave the world what became in my view history's greatest written work on the stock market. Livermore's observations are as pertinent, and prescient, today as they were nearly a century ago.

Wednesday, February 14, 2018

This Week's Message: Feeling At Home In The Markets

Having spent nearly my entire adult life in the investment arena, I must tell you that I feel completely at home in the stock market. That is, on behalf of myself as an investor, and on behalf of my family's financial well being, there's virtually no amount of volatility that rattles me. And it's instructive for you to know why.

Inflation Up! Duh!!

As I type Dow futures have dropped from +150 to -230. A 380 decline that began the minute the January Consumer Price Index came in at +.5% versus the +.3% consensus expectation. Yesterday virtually all of the experts were -- and clearly the "smart" money was -- betting it would come in below, at, say, .2%; thus quelling, for the moment, the market fears over higher interest rates. I sure saw it in rallying gold and bond prices yesterday, (bonds tanking [rates rising] as I type) and in equity futures this morning.

Stat of the Day: U.S. Companies Doing Pretty Okay On The Global Stage!!

If you happen to be of the mind that somehow U.S. companies are getting a raw deal on the global stage, well, we're looking at the best bottom and top-line growth we've seen in many years and, ironically, the companies whose earnings and revenues come mostly via foreign customers are the cheif difference makers. I.e., they're seeing markedly better results than those whose earnings come primarily from within (although the latter's ain't nothin to sneeze at either!). Of course the weak U.S. dollar certainly hasn't hurt:

Tuesday, February 13, 2018

Stats of the Day: Small Business Attitudes And Present Recession Risk

Small businesses employ 2/3rds of the U.S. workforce. Hence, the monthly NFIB Small Business Optimism Index is one of the 79 inputs to our macro model.

Here's this morning's release:   click to enlarge...

Monday, February 12, 2018

Uninspired to React

Those of you who'd prefer to see the present correction end sooner than later will like how the market at least opens this morning. Those of you who understand that corrections amid a strong overall setup are the healthiest of things might prefer that it last a bit longer and purge a few more excesses. Best I suppose to be oblivious to the short-term and simply take what we get.

Sunday, February 11, 2018

Volatility Is Good News For Financials!

In our year-end letter we mentioned that our expectation for market volatility in 2018 was, ironically, one of the positives for financial firms' earnings going forward:

Saturday, February 10, 2018

Charts of the Day: Earnings Results Thus Far

While you wouldn't know it by recent price action, the current earnings season -- with over a thousand U.S. companies having issued their Q4 results -- thus far ranks among the best since the early 2000s.

Thursday, February 8, 2018

Your Daily Dose of Perspective: Awfully Windy Up There!

While I suspect we've said about all there is to be said about the present state of the market and the economy (btw, economic data has only gotten better this week [hence the interest rate fear]), we're feeling we should pop in on you, nonetheless, given this morning's 600+ point decline in the Dow. 

Wednesday, February 7, 2018

Bonus Chart of the Day: One You'll Like, But Still....

We're guessing you'll like this chart and commentary from Bloomberg; operative words being "during non-recession years."

This Week's Message: The Basics of This Particular Selloff, And Sour Grapes for Flat Footed Gurus

The last few days have seen a remarkable – relative to very recent history – selloff. Based on media accounts you’d think we’re seeing a shakeup that rivals history’s “worst”. When, in fact, this is the fifth time during the current bull market where a 7-day stretch has seen at least a 7% drawdown.

The question of course is, do present conditions suggest that this could be the beginning of something far more pernicious? While it’s of course within the realm of possibilities, the answer from the data is a resounding no.

Chart of the Day: Don't Hold Your Breath

In a blog post yesterday we featured a chart of the five periods during the present bull market that saw a 7%+ decline over 7 trading days. 

Tuesday, February 6, 2018

Times Like These (video)

You gotta be thinking that all we do here is blog. Actually, you'd be surprised how quickly we can churn these things out. I guess I've been writing on markets for so long that it just flows easily.

The reason you get so much, particularly during times like these, is because unequivocally times like these bring out the worst in individual investors. Times likes these are when their emotions can get in the way of prudent long-term investment management. I.e., times like these are when investors make the biggest mistakes!

Not An Economic Phenomenon, Not At All Unprecedented Even During The Current Bull Market, And, Again, Likely Not Over Just Yet

Along with our investment in the Bloomberg Terminal (considered the most robust data source for the investment industry), we've found our relationship with premium research provider Bespoke Investment Group to be most valuable over the years.

Video Commentary: The Selloff In Perspective

Today's video commentary is brief and to the point. Please take a minute and take it in:

Monday, February 5, 2018

The Mechanics of The Seloff -- And -- Expect More Of The Same For Awhile Longer

Yes, we've been preaching herein that volatility is coming, and that, in light of the extreme lack thereof for a record period of time, it was likely going to be uncomfortable at best. And while we're very much within the % range of your garden variety correction, the speed in which we got to this point, I must confess, I find remarkable.

More on History and Volatility

Not that we're not generally active here on the blog, but it's times like these when we get to step it up several notches. 

It's tempting to pull from the archives of past market corrections and offer up the quotes, videos, stats and so on from times when the market saw every bit (more at times) of the rapid % declines we're presently experiencing; times when the Dow was multiple thousands of points lower than where it is right now. We of course may indeed resort to that, but, for this particular post, I can draw from something as recent as 2 weeks ago.

Bonus Stat of the Day: Services Sector Remarkably Strong

This morning's release of the Institute for Supply Management's Non-Manufacturing Index for January speaks to the strong reading we're getting from our macro index (illustrated for you in this morning's video commentary). Read Bloomberg's notes for the detail:

Video Commentary: The Facts (the data) As To Why We're Not Remotely Concerned 'At This Juncture'

Toward the end of the video I suggest that follow through from Friday's selloff over next few days or weeks should be something to expect. I also emphasize that it would be the norm, and that the lack of volatility we've experienced over the past year is anything but.

Stats of the Day: Global Economy

Well, the recent dip in stocks has nothing to do with the strength of the global economy. Here are the freshly released service sector Purchasing Manager Indices for 13 major economies. 50 and above denotes economic expansion:

Friday, February 2, 2018

Quote of the Day: 3% Pullbacks Since the 1920s

If you're thinking this week was at all unusual, you'll think differently after you read the following.

This Week's Second Message: My Thoughts From Last November

Don't know if you're at all rattled by today's "plunge" in stock prices, but, seriously, we haven't been kidding here on the blog when we've said that such action is long overdue, and, in fact, necessary for the ongoing health of what remains for now a bull market.

I keep a journal that I've found to be most helpful for my own keeping-things-in-perspective. Below is the 11/10/2017 entry (unedited, other than bolding). 

The Heck Is.........

So, the U.S. economy created a net 200,000 new jobs in January, employee wages rose at the fastest pace in 9 years, and 95.9% of Americans show up somewhere to work most days of the week. On top of that, half of the S&P 500's constituents have reported 4th quarter results with 77% beating analysts' earnings estimates and 67% exceeding revenue expectations.

And, as I type, the Dow's down 400 points. What the heck?

Wednesday, January 31, 2018

Chart of the Day: Wages Rising!

The Fed finished up Janet Yellen's last meeting today, and while, as expected, there was no move on interest rates, the post meeting statement reflected a positive view of growth and (rising) inflation, and the will to move the policy rate higher multiple times going forward. 

This Week's Message: Yesterday, Volatility in General, and the Energy Sector

For this week's message I'll share this morning's two entries to our market journal, cleaned up for your reading pleasure. The first speaks to recent market volatility, the second to my thoughts on the energy sector:

Tuesday, January 30, 2018

Quotes (our own) for a 363 Point Down Day

If today's 363 point decline in the Dow has you remotely rattled, here are some excerpts from stuff we wrote over just the past month  to help you keep the market in perspective:

Chart of the Day: Yeah, Infrastructure...

Yeah, I think there's some infrastructure spending on the horizon:

Monday, January 29, 2018

Chart of the Day: Really Really Good Earnings Guidance So Far

To round off our last two (here and here) charts of the day; in addition to exceptionally high earnings and revenue beats, the spread between positive and negative forward outlooks (generally THE mover of stock prices post earnings) has been extremely bullish so far this earnings season:

Sunday, January 28, 2018

Beware the Headlines!!

If you've been following us here on the blog you know that our analysis continues to paint quite the bullish picture going forward. And you know that we don't do hunches, we don't make predictions, we simply weigh the data and consider the go-forward probabilities. And, most importantly, we remain open to all possibilities. 

Saturday, January 27, 2018

Bonus Chart of the Day: Better Yet, Top Line Results Are Really Really Good So Far!

While the investment world tends to be laser-focused on earnings, we should never forget that publicly-traded companies employ the most creative accountants money can buy. I.e., certain items can be stuffed over there, tucked under here, and so on, to shed the most favorable light on an earnings statement. 

Chart of the Day: Really Really Good Earnings Reports So Far!

The fact that analysts were rushing to up their earning's estimates coming into January makes the chart below all the more impressive:

What's Up With Gold? And Should We Care?

Our presently bearish view of gold, from a macroeconomic standpoint, continues to make sense to us. Contrary to what some would have you believe, consumer demand (India's wedding season, for example), while it may appear to offer the metal a periodic seasonal boost, is no determinant of whether an investor (as opposed to a short-term trader) should take a position. The supply of gold in the world far outstrips all the functional demand the world marketplace could virtually ever serve up.

Friday, January 26, 2018

Headlines We Like!

Regular readers know how -- in multiple respects -- we feel about protectionism. Herein, however, we'll stick to investing. 

This past two days have brought some encouraging, investor friendly, headlines:

Wednesday, January 24, 2018

Headline of the Day: Wilbur Ross Talks Trade and Stocks Fade

Yes, the setup remains notably bullish, and we suspect, therefore, that this market can withstand a lot. But, as we all know, there are always risks. In our year-end letter we cited U.S.-led protectionism as being chief among them.

This Week's Message: Why We Keep Reminding You About Volatility

We've been fielding an unusual number of market-related  inquiries from clients of late. Interestingly, they're coming from two distinctly different angles; and I'd say the split is roughly 70/30. That is, it seems like better than 2/3rds are soliciting our thoughts on the market's amazing run from a skeptical point of view, others conversely are asking if perhaps we should untether some of their fixed income holdings (read cash and short-term CDs, currently) to get more capital working in the equity market.

Saturday, January 20, 2018

The Eagle

As we ponder this weekend the market implications of all things political, I thought I'd offer up the analogy we've been using during client review meetings. 

With few exceptions, and at times with virtual incredulousness, clients are asking about (commenting on) the record heights the stock market continues to mount. Here, metaphorically, is how we explain it:

Thursday, January 18, 2018

This Week's Message: Still Not a U.S.-Only Phenomenon, Options Traders Are Betting On Volatility, Macro Trends Remain Bullish, and Some Important Stuff Going Forward

As good as it feels to credit one's favored factor(s), development(s), person(s) or political party, the truth is that the market dynamic you and I are presently experiencing is a global affair. 

Tuesday, January 16, 2018

Quote of the Day

Jack Schwager, in his instructive and comprehensive A Complete Guide to the Futures Market  makes the point that we've been stressing of late in client review meetings: That while our fundamental analysis says the overall setup remains bullish for equity markets, it's  only useful in terms of assessing the prospects for the intermediate and longer-term horizons. We should always expect frequent counter-trend moves and corrections even under the best of conditions. 

Friday, January 12, 2018

Inflation Update

In last night's post we featured December import and export prices and the Producer Price Index -- each missing expectations -- and reiterated our stance that it's simply a matter of time.

Thursday, January 11, 2018

Despite the headline numbers, the market feels inflation coming...

We've been hinting herein that our view on inflation is that we're on the cusp. Not, mind you, remotely in the style of the late-70's/early-80s, but at a rate that jibes with an accelerating economy and an uber-tight labor market. 

This Week's Message: The Troubling Rumbling!

As we suggested yesterday, and in our year-end letter, the most troubling rumbling amid the presently bullish macro setup is the threat of U.S.-led protectionism. 

Wednesday, January 10, 2018

China's Dollars

Dow's down triple-digits as I type. Here's the headline:
"Dow falls 100 points amid concern China may stop buying U.S. debt"
Let me help you put that headline into perspective.

Tuesday, January 9, 2018

The good news may be bad news, which, if it is, makes it good news!

Well, the good news is that analysts are absolutely giddy about the current earnings season! The bad news is that analysts are absolutely giddy about the current earnings season!

Monday, January 8, 2018

Things 'presently' look good, the world over...

The monthly Purchasing Managers Surveys are priceless when it comes to assessing global economic conditions. 

Here's why:

Saturday, January 6, 2018

PWA 2017 Year-End Client Letter

Part 1: What Makes Us Tick

2017 has been quite the year for the stock market! Predictions annihilated, records smashed, and headwinds bucked like they were never there. My, where to begin?

Friday, January 5, 2018

This Week's Message: We're in the minority on the dollar, again...

After just bombarding you with our lengthy year-end treatise, this week's message will be very short and sweet.

Here's part of an interoffice memo I sent this morning:

Wednesday, January 3, 2018

Stat of the Day: We're hearing footsteps...

The results of December's Institute for Supply Management's 
manufacturing purchasing managers survey were released this morning. 

Given the macro backdrop we've been discussing herein, the above-consensus headline number -- and 14-year high for new orders -- should be no big surprise.

While this is of course very good news, one thing we're looking for in such releases is any whiff of inflation: Note the last line in paragraph 2:

Monday, January 1, 2018

Quote of the Day (Maybe the Year!)

So a young man says to me over the weekend "they say Apple is going down. What do you think?" I explain why I never listen to "they". I then offer up an alternative scenario and escape the conversation without making a recommendation. A minute later I overhear him complaining to my son Nick (we're between basketball games), "your Dad always answers my questions like an attorney!"