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:

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:

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:

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. 

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.

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:

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.

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:

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. 

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. 

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.

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. 

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.

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!

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:

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?

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:

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:

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!"