The Day Before Comey’s Testimony & The ECB Meeting

Wednesday’s market action was tepid because it is the day before two important events. The former FBI director, James Comey, will be testifying in front of Congress and the ECB will be meeting tomorrow. There’s not much I can say about Comey’s testimony which will add to the conversation about the potential political consequences for…

ISM & JOLTS Are Solid Despite Citi Surprise Weakness

In my last article, I mentioned the April JOLTS labor report which was released Tuesday. Let’s look at it more closely because it’s known as Janet Yellen’s favorite labor report. Personally, my favorite labor report is the Atlanta Fed’s 3-month smoothed average of wage growth, but everything is worth reviewing. The JOLTS report was good…

Stocks & Treasuries Are Living In Separate Worlds

The stock market and the bond market are in two separate worlds. Ever since the March bottom at 2.64%, the ten-year bond has been rallying. The selloff after the all-time low in yields in the summer of 2016 didn’t even get the yield to have a higher high. The downtrend in yields is still intact.…

The Stock Market Barely Moves As It Awaits Fed Meeting Next Week

The stock market on Monday had another sluggish day as the trading range was tight. In the past 27 years the S&P 500 has had 15 days with ranges of less than 0.25% and four of them have been in the past month. It’s quite unusual action. I think this trend of low volatility begets…

Earnings Expectations Have Declined Less Than Average

The S&P 500 earnings season is almost completed. Q1 operating earnings, which are 97.3% completed, were $27.90 on a bottom up basis. That’s the third highest earnings in history. On an as reported basis, earnings were $27.60 which is the highest ever. Operating margins increased from 8.75% in Q1 2016 to 9.89%. It was a…

The VIX Has It’s 4th Lowest Close (9.75)

The weak jobs report was ignored by the stock market on Friday. The S&P 500 was up 0.37% and the Nasdaq was up 0.94% bringing both to a new record high. The small correction at the end of May was a great buying opportunity as the S&P 500 is up 3.5% since then. This ‘buy…

Margins Might Not Expand In The Next Few Quarters

The stock market closed at a new record high on Thursday. The main reason for this rally is seen in the chart below. It shows year over year quarterly operating earnings growth since 1995. The mini-decline in earnings growth in 2015 and 2016 is like the one in 1998. Earnings growth had been sinking prior…

BLS Report Shows 138,000 Jobs Created

The ADP May private sector jobs report on Thursday signaled a great BLS jobs report would come on Friday. Sometimes the ADP report doesn’t indicate how the BLS report will be. This was one of those months as the BLS report was bad across the board. It looked like the online job listings report that…

Are Economic Earnings Weakening?

The last article was about corporate earnings. There are many ways to measure earnings. The top measurements are GAAP results and operating earnings. As I have shown in past articles, the BEA’s measurement of corporate profits shows lower growth than bottom up GAAP analysis. The BEA’s estimate is a top down analysis which looks at…

Earnings Beat Rate Was 74.01% In Q1 (Highest Since At Least Q2 2013)

In this article, I will discuss some more of the details of the aggregate earnings reports as of May 22nd. Unsurprisingly, energy is the sector which is expected to have the highest projected annual 5-year earnings growth rate. This isn’t surprising because the sector is starting from a low base. Some of that growth is…