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