Greetings, The United States: Here is the explanation for the massive gap between the CBO’s federal budget projections and reality (including a forecast). Equity Markets: The tech sector, together with financials, has dominated fund inflows in recent weeks. Given the rotation taking place now, this week’s flows data could look quite different. …
The Daily Shot Brief – March 27th, 2018
Greetings, The United States: Moody’s forecasts US defense spending to be significantly higher than the CBO’s. This is bad news for the federal deficit over the next few years. Equity Markets: US stock-market implied volatility remains elevated relative to other markets. This scatter-plot shows the Nations VolDex index (VIX-equivalent for SPY) vs. …
The Daily Shot Brief – March 27th, 2018
Greetings, The United States: Is the FOMC’s projection for the Fed Funds rate at the end of 2020 way too optimistic? Many economists and the market do not expect rate hikes during that year because growth is likely to slow by then. Some economists even expect the Fed to cut rates in 2020. …
The Daily Shot Brief – March 26th, 2018
Greetings, The United States: Small banks anticipate increases in their mortgage business even as the industry braces for the possibility of lower loan volumes. Equity Markets: More fund managers now want to see companies cut leverage. That’s why the market has been rewarding firms that have stronger balance sheets (second chart below). According …
The Daily Shot Brief – March 23rd, 2018
Greetings, The United States: Which sectors could be impacted by higher prices due to the new tariffs on products from China? Which sectors will be hurt by China’s trade retaliation? Equity Markets: The consensus forward P/E ratio for the S&P 500 dipped below 17x again. When will the analysts begin revising their …
The Daily Shot Brief – March 22nd, 2018
Greetings, The United States: Let’s begin with the FOMC decision, which, despite the 25bps rate hike, was more dovish than anticipated. While some economists expected the Fed to tilt toward four rate hikes in 2018, the ‘dot plot’ rate projections were unchanged for this year (still three hikes). As expected, the guidance for …
The Daily Shot Brief – March 21st, 2018
Greetings, The United States: The US could be running a $2 trillion annual budget deficit in less than a decade. That’s a lot of new debt for the market to absorb each year. Equity Markets: Proforma earnings add-backs for M&A deals have risen sharply in recent years. China: The China SMI …
The Daily Shot Brief – March 20th, 2018
Greetings, The United States: Trade-war scenarios aside, economists expect the US unemployment rate to fall further as fewer workers enter/reenter the labor force from the ‘sidelines.’ Equity Markets: Most analysts don’t see a tech bubble because valuations do not appear to be significantly richer than the S&P 500. China: China’s growing fiscal impulse is …
The Daily Shot Brief – March 19th, 2018
Greetings, The United States: The federal debt has jumped $1.2 trillion since the debt ceiling has been lifted. Equity Markets: Equity ETFs saw record inflows last week. Japan: Here is the breakdown of Japan’s PPI. Energy Markets: Energy stocks have reversed their underperformance over the past week, finishing in line …
The Daily Shot Brief – March 16th, 2018
Greetings, The United States: The NY Fed’s Nowcast model is downgrading the Q1 GDP growth. And this model is yet to incorporate the recent weakness in retail sales. Equity Markets: Companies with strong earnings (the Bloomberg Pure Growth Portfolio) have done tremendously well this year. Rates: Economists continue to raise their …