Earnings Are Blooming
Executive Summary: We don’t expect any recession this year that the Fed would have to address by easing. But since some investors think that may happen, the Fed Put is back. With it comes increased risk of a stock
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Executive Summary: We don’t expect any recession this year that the Fed would have to address by easing. But since some investors think that may happen, the Fed Put is back. With it comes increased risk of a stock
Executive Summary: Investors in both stock and bond markets are suddenly blooming with optimism. Both markets rallied on Friday’s (mostly) positive employment report, including yet another sub-4.0% jobless rate and despite some negatives in the report. Stoking the optimism,
Executive Summary: The copper price has skyrocketed in recent months, but not for the usual reason of strong global growth. Instead, Jackie reports, a perfect storm of circumstances has created an unusually tight market, with uncommon supply constraints at
Executive Summary: The European Central Bank is widely expected to start easing in June, lowering interest rates at a measured pace to prevent a weakening of the euro. But real GDP growth in the Eurozone already resumed last quarter
Executive Summary: Economic indicators aren’t always indicative of what’s happening with economies. The Index of Leading Economic Indicators continues to cry “Wolf!,” as it’s been doing for more than two years. Yet no US recession is in sight. That’s confirmed
Executive Summary: One quarter does not stagflation make. True, the March quarter’s real GDP growth rate was down from the December quarter’s, while inflation was up—a combination that calls to mind “stagflation.” But the current economic scenario is nothing like
Executive Summary: Two regional banks’ Q1 earnings reports highlighted the drag higher interest rates are having on results and showed that office building real estate loan defaults may be manageable. Zions and Truist managements struck some optimistic notes about the
Executive Summary: We often call copper “the metal with the PhD in Economics,” because its price rises and falls in step with the strength/weakness of the global economy. So why is Dr. Copper suddenly acting like the global economy
Executive Summary: It’s widely believed that high interest rates act as brakes on economic activity. But do they? Today, we re-examine our fringe view that perhaps the economy is so strong because of high interest rates, not despite them.
Executive Summary: Today, we rant about rent and the housing market. Like a fun house mirror without the fun, several housing-related forces are distorting economic activity. There’s the distortive way rent inflation is measured in the headline CPI; if
Executive Summary: After the Q1 earnings reports of several big financial services firms, it’s clear that those exposed to the financial markets through brokerage and investment banking arms lucked out while large commercial banks suffered. Jackie discusses the reasons
Executive Summary: The global economy is growing slowly, tugged along by the strength of the US economy. Certain indicators suggest improving global growth, but their messages could be deceptive: The wars are likely hiking commodity prices, and inflation is
Executive Summary: The geopolitical backdrop for investing is foggy with uncertainties. Israel and Iran are flailing with no strategic plan on either side, their aggressions simply reactions to the other’s provocations. Financial markets are bracing for global economic impacts
Executive Summary: As the war in the Middle East escalates, it could send the oil price flying toward $100 per barrel and wipe out our expectations of continued moderation in US inflation (notwithstanding March’s anomalous CPI). … Barring that
Executive Summary: Federal incentives coaxing manufacturers to produce in the USA are hitting their mark. Willing takers may see up to 15% of their factory construction costs covered by Uncle Sam. Some states are sweetening the deal further. Jackie
Executive Summary: The Q1 reporting season should be a good one, with plenty of S&P 500 companies exceeding analysts’ expectations, Joe reports. His analysis of patterns in estimate revisions as reporting seasons approach shows the stage is set for
Executive Summary: Today, we examine a plausible and concerning scenario for the stock market: The war in the Middle East drives the price of oil above $100 a barrel. That would trigger expectations of resurgent inflation à la the
Executive Summary: There was no recession last year, but the widespread expectation of one depressed certain economic activities, like hiring. With that depressant now lifted, several labor market indicators shot to record highs in March. … Consumer spending has
Executive Summary: The widespread expectation that the Fed will lower interest rates this year is linked to the widespread expectation that the labor market will weaken. Both may be misguided. If the economy remains resilient and the labor market
Executive Summary: The unforeseen pandemic briefly derailed our “Roaring 2020s” outlook early this decade. The one big potential risk to it that we had identified back in 2020 is a war between Israel and Iran that disrupts oil markets
Executive Summary: The US economy is flying high and should continue to do so. It has defied the past two years’ widespread expectations that it would land hard or fall into recession. In fact, last year’s real GDP growth
Executive Summary: If the market for existing homes revs up as mortgage rates drop, will homebuilders be able to clear their excess inventories? Investors don’t seem worried, Jackie notes. … Also: The sole constituent of the S&P 500 Drug
Executive Summary: Melissa reviews the challenges facing the central banks of Japan, China, and the Eurozone as they eye—or make—monetary policy moves. The BOJ is finally unwinding its extreme monetary ease (no more sub-zero interest rates!). The PBOC is
Executive Summary: Reading between the lines of Fed Chair Powell’s recent press conference, he seems to be reassuring financial markets that the Fed has their backs. We see that in his emphasis that labor market weakness—should it unexpectedly arise—could
Executive Summary: Is the “Fed Put” back? Might the Fed’s assurances that interest rates will be brought down this year (as long as inflation behaves as expected) fuel irrational exuberance among investors? And what if interest rates really don’t
Executive Summary: China’s economic woes are having a disinflationary domino effect on the economies of its major trading partners; the US is a case in point. The heightened trade tensions that might result could prompt those trading partners to
Executive Summary: With excitement over Nvidia’s AI-enabling offerings never greater than after its GTC conference this week, Jackie offers a timely word of caution: Nvidia investors would do well to keep an eye out for the peaking of the
Executive Summary: Confidence measures among both consumers and small business owners are depressed, somewhat counterintuitively given the strength of the economy. Depressed sentiment doesn’t typically cause recessions, and the Fed has plenty of room to ease, nipping in the
Executive Summary: Unlike in January, investors’ rate-cut expectations now appear to be in sync with FOMC members’ projections. Both seem to be anticipating two or three 25-basis-point cuts over the coming months. … Whether the apolitical Fed might time
Executive Summary: A quarter century ago, people saw Cisco as a way to invest in the enormous potential of the Internet. Investors bid up its shares, and purchasing managers over-ordered its products, expecting rationing since supplies were tight. What