Recession Indicator Avoided By A Hair
Leading Economic Indicators Disappoint Leading economic index was weak, but not weak enough to show negative yearly growth which would be a recession warning. Monthly growth in December fell from 0.1% to -0.3% which missed estimates by a tick. Yearly growth was 0.1%. A few reports are showing growth was actually -0.1%, but I’m going…
Risk Adjusted Returns In The 99th Percentile
S&P 500 Rebounds The stock market recovered after a morning selloff related to the coronavirus. From the low on the day, to the close, the S&P 500 rose 0.63%. WHO stated, it’s a “bit too early to consider this event as a public health emergency of international concern.” So far, there have been 600 confirmed…
Lowest Existing Housing Inventory On Record
Redbook Same Store Sales Growth Improves Preliminary January consumer sentiment index from the University of Michigan was basically unchanged. As you can see from the chart below, the Bloomberg Consumer Comfort index is at a 19 year high as it has increased with the stock market. Correlation with the S&P 500 is quite high. Low…
Utilities & Tesla Are In The Stratosphere
Rally Since The Top Investing is all about perspective. If you look at how stocks have done since Christmas Eve 2018, this looks like an unsustainable bubble. If you look at how stocks have done since the peak on September 2018, the returns are much more normal. S&P 500 is up 13.8% since September 20th which…
Regional Fed Reports Suggest Lower Stock Market Returns Are Coming
Manufacturing Improvement Coming? The equity market is very confident a cyclical recovery is coming. When poor economic data from Q4 comes out, it is discounted because investors are focused on 2020 which is expected to be the year where earnings growth recovers and the manufacturing sector rights itself. When the manufacturing sector actually does right…
Netflix Starts Off FANG Earnings
Slight Decline, But Stocks Still Overbought S&P 500 fell 0.27% on Tuesday, but let's discuss how overbought the market is. One modest decline doesn’t end that state. We need to see a decline of at least 5% for this market to become more normal. As I have said many times, this isn’t a bubble. For…
Hiring Increases & Consumers Stay Confident
Hiring Increases In November JOLTS In October, openings increased and hirings plummeted; in November it was the reverse. Headlines say this was a bad report, but I say it was ok. You can see the long term historical trends in hires, quits, openings, and layoffs & discharges in the chart below. Hires seem to be…
2020 Is The Year Of Extreme Greed
Euphoria Keeps Going With the great housing starts and mediocre industrial production reports out, stocks rallied on Friday like they seem to do almost every day. This rally has been very impressive. As of Thursday, the 14 day RSI was at 74.59. Usually, when it’s over 70, it means stocks are ready for a correction.…
Warm December Weather Hurts Utilities & Helps Housing
December Was Hot It’s very important to understand that December was a relatively hot month because it impacts December’s economic data. Specifically, utilities production fell because of hot weather and housing boomed. It was particularly hotter than average in the South which is the nation’s largest housing market. The map below shows the average temperature…
OK December Retail Sales: 2.2% Q4 GDP Growth Incoming
Weak PPI Report Signals No Rate Cuts Just like headline CPI, headline PPI was up because of energy prices. It increased from 1.1% to 1.3% which met estimates. Commodities inflation has been low in the past few years as most inflation has been coming from wages. PPI excluding energy and food fell from 1.3% to…