Trade Growth Expands, Defying Protectionist Fears
An interesting analysis talking point is the cyclical improvement in the global economy spurred by the emerging markets. The chart below shows the improvement in global trade. Everything the mainstream economists and investors said about the global economy last year was wrong. They misunderstood the trade weakness, saying it caused by politics. If you think…
International Earnings Seize The Day
Let’s continue to look at this earnings period because it will direct stocks for the next few months unless North Korea and the debt ceiling bring new headline risk. As you can see from the chart below, the firms that had more international exposure had better revenue growth and margin expansion (their profits showed even…
Earnings Are Amazing, But Investors Leave Disappointed
The earnings season is now about 90% over, so when we look at the results, they are close to what the finalized ones will look like. The biggest lever of this great earnings season remains margins. The latest results show margins were 10.22%. That’s higher than the previous cycle high which was 10.10% in Q3…
North Korean Risk Fades As Stocks Rebound
Geopolitical Risk The market calmed down on Friday which was slightly surprising because of the North Korean threat. Investors didn’t have a problem going into the weekend with their money invested in stocks even though the situation could become volatile again. The S&P 500 was up 0.13% and the Nasdaq was up 0.64% as Amazon…
Inflation Is Below Expectations, Flummoxing The Fed
The all-important CPI was released this week. It showed more of the same disinflationary trend we have been seeing in the past 6 months. I have been looking for an uptick in inflation heading into the back half of the year because of the base effect comparisons oil has since oil fell at this time…
Snap Stock Crashing To New All-Time Lows On Bad Earnings
The theme with Snap stock is that the company shouldn’t have gone public because it doesn’t have a business model that allows it to be profitable. The company decided to go public because user growth was slowing. That allowed it to raise more money this year than if it went public next year. In the…
Swiss Central Bank Has Been A Consistent Buyer Of Stocks
Will The Swiss Buy More Stocks? An interesting dynamic at play is what will happen when the ECB and the Fed start to reverse course and taper and unwind respectively. We’ve discussed this many times in articles. The new wrinkle to this mix is what the Swiss Central bank will do especially if stocks start…
Productivity Growth Accelerates As The Economic Cycle Fully Matures
Economic News Let’s continue looking into the NFIB survey to get a complete grasp of the state of small businesses as of July. The chart below is the most important one in the survey as it shows the credit conditions small businesses face. Credit conditions remain solid as they inch up to the highs made…
Misery Index Low- Stock Market Nirvana Maintained
Just because valuation is important as a predictor of future results, that doesn’t mean there’s only one way of doing it. Investing is an art and a science. If it was just a science, everyone could predict where it was going so everyone’s returns would match. Obviously, cash flaws and earnings are the best way…
Small Businesses Are Excited Despite Weak Margins
The biggest story of the year is probably the decline in inflation. The other top stories of a rising stock market with no volatility and the decline in the dollar are all related. Lower inflation allows for stock valuations to increase and the Fed to stay dovish. A dovish Fed hurts the dollar. Earlier in…