Greetings, Equities: As discussed yesterday (#2 here), President Trump’s approval ratings have been climbing, which is encouraging him to get more aggressive on trade. That’s why this latest news shouldn’t be a surprise. The White House strategy now is to tack on an additional $100 billion in new tariffs which would result …
Greetings, The United States: After being a drag on the GDP (austerity), the federal government now has a positive contribution to growth. Equity Markets: Analysts remain constructive on the stock market amid sharply higher earnings revisions last quarter. Credit: The Moody’s Liquidity Stress Indicator remains near the lows amid ‘tepid defaults.’ …
Greetings, The United States: US inflation has been staying within a relatively narrow band for over two decades. Deutsche Bank predicts that it will be moving toward the upper end of the range. Tight labor markets and stronger economic growth, fueled in part by the massive injection of fiscal stimulus, are some of …
Greetings, The United States: Here is how homeowners have been tapping their home equity (blue = home-equity loans, gray = cash-out refinancing). Equity Markets: The S&P 500 valuations are back to the early-2016 levels. Are earnings projections way off? Is the market pricing in the end of the economic cycle? Despite the …
Greetings, The United States: The US working-age population growth is expected to contract further in the next few years. As a result, some suggest that even a 2% GDP growth will be challenging without significant improvements in productivity. Emerging Markets: A quote from Turkey’s Recep Tayyip Erdogan showing incredible ignorance: The interest rate …
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. …
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. …
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. …
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 …
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 …
