Tuesday, April 30, 2019

Bonus Headline of the Day

In theory, the market should rally on this one. It'll test our currently cautious near-term assessment:
"President Donald Trump and leading Democratic lawmakers agreed that $2 trillion were needed for a plan to overhaul U.S. infrastructure..."

Headline of the Day

In case you're wondering what's ailing the market this morning (Dow down 130), here you go:

This Morning's Log Entry: In No Mood to Rally -- And, Alas!, THE Existential Economic/Market Risk

The Dow future contract was up 100 points in the premarket on McDonald’s earnings beat, however, since the open it’s been vacillating around the flat line. GE also just posted an earnings beat, and while MCD has already come back down to earth, GE is still up 7% as I type.

Google missed its number after the close yesterday, which is weighing heavy on the stock this morning, Apple reports after the close tonight.

Monday, April 29, 2019

Sunday, April 28, 2019

Earnings Season Signals

While Q1 earnings season has a ways yet to run, enough companies have reported at this point for us to begin gleaning general market signals from the results.

Saturday, April 27, 2019

Hoping We Avoid "A World of Pain"

Believe me, it is my sincere hope that we'll soon be able to dispense with our intense focus herein on the present state of international trade relations. 

Otherwise, as Asia Society Policy Institute president Kevin Rudd states at the end of the 2-minute video clip below:

This Week's Message: Still A Mixed Picture

I think the best way to describe my current read on the vast array of economic and market-related data that we track week in and week out is (as it was a month ago) simply "mixed".

Friday, April 26, 2019

Chart of the Day: Digging Into This Morning's GDP Number

Again, the GDP number was fine and speaks to our present macro assessment: Conditions aren't what they were a year ago, but they're certainly okay.

Now, that said, as we dig into the report, we look to assess its quality to determine if the headline number reflects the kind of growth that says we should expect more good things going forward.

This Morning's Log Entry

U.S. equity futures turned green this morning, after trading in the red overnight and early morning, on the better than expected GDP print. However, beyond the initial reaction, futures have vacillated around the flat line.

Thursday, April 25, 2019

Somewhat Doubting These Levels, In The Very Near-Term (video)

Warning! This one is ideal for those of you who like digging deeper into the weeds. That said, for those who perhaps don't, you may still want to take this one is, as it offers a bit more insight into my somewhat guarded-sounding commentary of late...

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:

How To Legitimately Deal With China

On the topic of tariffs, I've been asked during client review meetings, and via email from blog subscribers, what other solutions might there be to the legitimate issues surrounding global trade.

Here's essentially my response (taken from an email conversation yesterday morning):

This Morning's Log Entry


Yesterday saw selling into the close, confirming my view that sentiment among traders is presently waning.

After the close Facebook and Microsoft beat earnings estimates handsomely, and, therefore, their shares are trading up 8% and 4% respectively in the premarket this morning. 3M (MMM) on the other hand lowered guidance, citing (like CAT yesterday) dynamics around China sales as a concern going forward.

Wednesday, April 24, 2019

Chart of the Day: CAT and The Economy

Caterpillar (CAT) is of particular interest to us for two reasons: One, it sits prominently in our industrial sector allocation (7th largest position in XLI), two, its global sales results are one of the 86 data points that make up our PWA [Macro] Index.

Brief Commentary on the Latest Action (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:

Tuesday, April 23, 2019

Quote of the Day -- And -- Via A Letter to the President, An Excellent Primer on The Tariff Issue

Here's Thomas Fang (UBS Head of China Equities), from a Bloomberg interview this evening, on UBS's base case for U.S./China trade negotiations:

This Morning's Log Entry

4/23/19 Tuesday

Equities are rallying nicely this morning on very good corporate earnings results. Interestingly, the bond market ain’t buying it (TLT [long-term treasury bond ETF] is also trading higher this morning).

It’ll be interesting to see if traders don’t fade this morning’s strength, if not today, as the week progresses.

Monday, April 22, 2019

Latest Log Entries

4/22/19 Monday

Last Thursday’s positive momentum died overnight as reports that Chinese authorities are concerned with the bubbly nature (in terms of the speed of the advance) of this year’s huge rally in Chinese equities and, thus, are inclined to ease back on the stimulus.

Per this weekend’s log entry, despite generally strong internals (and seasonality), in my view the very near-term setup is showing a few cracks.

Friday, April 19, 2019

This Week's Message: Just Ain't Feeling It

With a consistent slew of decent enough data releases (not too hot [to embolden the Fed] and not too cold [to worry about recession]), with a start to the earnings season that has thus far seen 72% of S&P 500 members beat bottom line expectations, with relatively (or perhaps ostensibly) positive headlines around ongoing U.S./China trade negotiations, with Brexit now on hold till the fall, and with a presidential impeachment seemingly off the table, one might think that the U.S. stock market would be barreling through last September's all-time highs. 

Thursday, April 18, 2019

Goldilockish Data

My overall assessment of today's U.S. data releases is that -- from an equity market perspective -- one almost couldn't ask for more. I.e., the numbers are good enough to imply that recession risk remains notably low, but not so good as to suggest that the Fed needs to cool things off by raising interest rates anytime soon. Call it Goldilockish...

Here's my rundown:

#1 Corporate America Worry

Indeed -- as some friends and colleagues have stressed to me in response to my persistent whining over the perniciousness of protectionism -- tariffs may very well be simply the negotiating tool of choice by the Trump Administration. Nevertheless, per the 54-second clip below, JP Morgan's chief quantitative strategist agrees that they pose a "headwind" (in my view THE headwind) and finds them to be literally the number one "discussed topic" (read worry) among corporate America. He also stresses, as our analysis suggests, that good things are likely to happen if/when that headwind abates (provided general conditions hold up in the meantime):

Wednesday, April 17, 2019

This Morning's 2nd Log Entry

Forgot to touch on the health care sector earlier...

Clearly, health care stocks are doing a number on the major averages of late.

This Morning's Log Entry

This morning's log entry only reflects my view of the short-term setup. For a deeper dive, and insight into what guides our allocation decisions, be sure to watch my latest video commentary (if you haven't already):

4/17/19 Wednesday

Tuesday, April 16, 2019

This Morning's Log Entry


Futures are pointing to a strong U.S. open this morning after an impressive overnight rally in China and positive earnings reports in the U.S. premarket; 9 of the 10 companies reporting exceeded earnings estimates, with the 10th meeting expectations.

Monday, April 15, 2019

Weekend Log Entry

Once again, I offer up my very short-term (inexhaustive, and always subject to abrupt change) assessment with some reservation. I.e., there's no trading advice herein, and you have to consider the following within the context of our exhaustive longer-term assessment. With the latter in mind, in case you missed it, be sure and watch last weekend's video commentary. 

I think the most you can glean from the following is that we're in for a pickup in near-term volatility:

4/13/19 Saturday

Near-term positives:

Sunday, April 14, 2019

Optimism Picking Up! Uh-Oh!

Sentiment is definitely picking up.

The widely watched American Association of Individual Investors (AAII) weekly sentiment survey presently shows bullishness rising/bearishness falling:

It's Not Just Me

In our year-end 2017 letter I reported the following:
"...our macro score presently sits at a very bullish +60, with 85% of the data reading positive, 3% negative and 12% neutral."

Saturday, April 13, 2019

This Week's Message: Highlights From Our Current Assessment of General Conditions (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:

Friday, April 12, 2019

Quote of the Day

JP Morgan CEO Jamie Dimon, in this morning's earnings conference call, sang the same tune we've been singing herein for months.

This Morning's Log Entry


U.S. equity futures are set to open sharply higher this morning on positive bank earnings reports (JPM in particular), on strong loan growth out of China, on a huge rally in Disney shares (per yesterday’s announcement that its streaming service [that’ll be unprofitable for years btw] is about to come on line), and on news that Chevron has agreed to pony up $33 billion to purchase Anadarko.

Thursday, April 11, 2019

This Morning's Log Entry

Jobless claims took another incredible turn lower this week, other now-non-confirming related data (Challenger’s job-cut report, and JOLTs), however, suggest that this record trend of record low jobless claims may be nearing its end. This morning’s PPI report showed producer prices rising above consensus expectations. Futures sold off, but only momentarily, on the inflation data, as traders are sensitive to any data that might have the Fed rethinking their uber-dovish stance.

Wednesday, April 10, 2019

Post Fed Minutes Log Entry

11:15am Fed minutes (from the March meeting) released this morning pretty much confirmed the message of “patience” delivered by Powell's post-meeting commentary. However, the media made strong note of the fact that some members of the committee stressed their concern with that characterization, in that should things heat up and they feel the need to hike rates, it potentially conflicts with their would-be actions in a way that could hamper the committee’s ability to affect conditions with their verbiage in the future.

This Morning's Log Entry

Equity futures are pointing to a slightly higher open this morning. Yesterday's selloff was all about uncertainty over the present state of global general conditions, exacerbated by the U.S. proposing tariffs on $11 billion worth of European goods.

Tuesday, April 9, 2019

Brief Market Update (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:

Monday, April 8, 2019

Piling Into Financials

A couple weeks ago I shared our current narrative on the financial sector. Here's a snippet:

Sunday, April 7, 2019

This Evening's Log Entry

My entire log entry this evening is too wonky for public consumption, but I do think it's worth offering up the highlights. 

I'm essentially skipping the minutia on the pricing signals of the various markets I track during the evening session.

Friday, April 5, 2019

This Week's Message: Why the Blah Reaction to the Impressive Jobs Report?

In light of legitimate fears among the punditry over the state of the economy, today's employment report was virtually perfect: 196,000 jobs created, 3.8% unemployment, and decent wage growth.

Log Entry

4/4/19 Thursday


The world is waiting with bated breath for news out of this week’s trade talks. Trump met with China’s lead negotiator today and afterward said that they’re close but not there just yet.

Thursday, April 4, 2019

Update On The Latest Action and Current Conditions (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 Morning's Log Entry

German factory orders just released for March were abysmal; confirming other data of late that suggests the German economy is in anything but good shape presently.

Wednesday, April 3, 2019

This Morning's Log Entry

News that the U.S. and China are in “90%” agreement on the terms of a draft trade deal has futures rallying notably this morning. Global services PMIs coming in virtually across the board good is no doubt helping along what has been a broad overnight global rally.

Tuesday, April 2, 2019

Newsflash of the Day!

The following from The Financial Times just crossed my screen:
Top US and Chinese officials have resolved most of the issues standing in the way of a deal to end their long-running trade dispute...
Of course U.S. equity futures immediately went from red to green on the above newsflash. Thing is, the Dow future contract, for example went from down 50 to up 40, not from down 50 to up 400 (and some [a bunch]), as you might expect on such news.

THE Uncertainties in the Market

If you think I've been overemphasizing the monster economic and equity market risks inherent in a global trade war (I've been accused of such during President Trump's tenure), take 1 minute 43 seconds and listen to why the World Trade Organization just downgraded its global trade estimate to a 3-year low.

To regular readers this will sound very familiar:

This Morning's Log Entry

U.S. futures are flat this morning after trading lower most of last night. Treasuries were notably higher (yields lower) overnight, but they’re coming back a bit this morning.

Monday, April 1, 2019

Today's Log Entries


Per yesterday's entry, futures are pointing to a sharp spike higher at the open this morning (spx +20). Given ample liquidity and ho-hum sentiment readings, there’s the potential for sustainable upside from here. Although there are definitely risks looming that could limit the gains, if not see stocks lower: The biggest being trade talks, next being Brexit and U.S. data.