Productivity Fell 0.2% In 2016; Stocks Rose 5.5% In Q1

The first quarter is now in the books. It was quite an interesting three months as President Trump was sworn in and stocks had an amazing run as they maintained the post-election momentum. The chart below shows the powerful rally in the S&P 500 since the election. The S&P 500 was up 5.5% for the…

WTI Was Up 5.5% This Week

In this article, I will review some of the trends I have been discussing and the news surrounding them. Then I will discuss the latest movements in oil. After the crash to the upper $40s, the commodity has moved back above the $50 level this week. This is great news for the American shale firms.…

Record Margin Debt Makes Stock Market Vulnerable

In this article, I will tie up some loose ends from a previous article. I’ll give more supporting facts to further my points. Then I will contextualize the recent statements made by President Trump and NY Fed President Bill Dudley. I have an interesting chart which supports my analysis on the likelihood of various fiscal…

Auto & Student Loan Bubbles

The markets have reversed some the recent trends where the Trump trade was unwinding. This could mean there will be a pause or a continuation of the Trump trade into the spring. The S&P 500 is up less than 1% from the lows of the mini-correction. There are many dip-buyers who are praying for a…

What Is The True Aggregate S&P 500 Earnings?

Before I get into the meat of this article, I will provide supporting evidence and clarification for points I made in a previous article. I described the recent political polarization which has occurred in consumer sentiment surveys. In the Gallup survey below, you can see how Republicans have become more likely to make a major…

Fuzzy Tax Reform Math

Much is being made of the GOP’s fiscal policy because of the shift in monetary policy towards hawkishness and because there’s a high amount of uncertainty over what legislation will be passed and when it will be passed. The chart below is Barclay’s estimation of when various policies will be passed along with some key…

‘Dumb Money’ Most Bullish 2000

The S&P 500 rallied 0.72% on Tuesday, ending the sell-off which was driven by the GOP’s failure to deliver healthcare reform. The hope trade is not going away easily even though many of the market supporting factors have gone away or gotten weaker. The stock market is like a Jenga game. Taking away healthcare reform…

Is The Credit Market Signaling Recession?

Stocks are slightly off their all-time high, but remain over extended according to most valuation metrics. The hope investors have is for tax cuts. Even though the GOP appears dysfunctional, all its members want to cut taxes. All hope for a tax cut isn’t lost, but the difficult part is finding cuts in the budget…

The Trump Trade Seems Mostly Reversed

The stock market sold off moderately on Monday due to the continued negative momentum caused by the failed GOP healthcare bill. There is talk of Paul Ryan possibly being removed from the Speaker of the House position which is something I discussed previously. Ordinarily, that would be bearish for stocks because it adds to the…

Real Economic Weakness?

The stock market doesn't seem to be reflecting the economic weakness we are seeing. The bullish counterpoint to any negative data is that the economy will improve due to fiscal stimulus. The latest blunders in the attempt to pass healthcare reform makes fiscal stimulus seem less likely. To simplify this further, the bears say the…