Atlanta Fed Says 0.2% Q1 GDP Growth

The Q1 GDP report will be released on Friday. Leading up the report, the Atlanta Fed’s GDP Now released its final estimate for Q1 which came in at 0.2% growth. This is down from 0.5% growth which makes it an outlier compared to the consensus GDP estimate. The estimate for real consumer spending growth fell…

Trump Releases Tax Reform Guidelines

In the lead up to the tax plan announcement, I made the point that if Trump was vague about his plan, stocks would rally on hope. Trump was vague, but it didn’t boost stocks because he was vague on the most important point stocks care about which is the repatriation tax holiday. Stocks care about…

Are Stocks Cheap Or Expensive?

The biggest question investors focused on earnings are trying to answer is how the gap between small cap and large cap firms’ margins will be closed. Either large cap firms will have their margins fall off the peak or small cap firms will see their margins rise to the 2013 peak. It’s possible that the…

Latest On Fiscal Policies (Government Shutdown)

Although some earnings reports have beaten expectations, it’s surprising to see the stock market whistling passed the grave yard as uncertainty on the fiscal front is heightened. Trump’s presidential legacy will be made in the next few months. The worst-case scenario would be a government shutdown with no tax cut and healthcare plan passed. The…

Will Margins Revert To The Mean?

As was mentioned in a previous article, the 12-month earnings which includes Q1 2017 are below the Q3 2014 peak. This 6.3% decline cannot be emphasized enough given misleading headlines about earnings growth driving stocks higher. If earnings falling didn’t push stocks lower, you can’t make the case that earnings growth is pushing them higher.…

Is Trump’s Tax Plan Feasible?

The stock market roared higher on Monday because Macron appears to have locked up the French presidential election. He beats Le Pen in all the polls by at least twenty points. This makes me wonder what it takes for stocks to fall. Stocks rallied after the populist wins which were Brexit and Trump. They then…

Stocks Rally As Macron and LePen Make Second Round Of French Presidential Election

Inflation Decelerates Before I get into the latest market moving headlines this week, I want to emphasize the recent movement in inflation. While I have mentioned the decelerating inflation in passing, I didn’t give it enough coverage considering the large movement the CPI had in March. As you can see from the chart below, the…

Tax Cuts And Healthcare Reform Coming Soon?

The stock market was down modestly on Friday as the S&P 500 remained within the recent trading range it has been in. The bulls have prevented a 5% correction, but the market hasn’t made a new closing high since March 1st. The pace the market was rallying at earlier in the year was unsustainable. There…

Weak Productivity Growth Is A Global Problem

The question of where American productivity growth has gone is plaguing policymakers. Without productivity growth, the economy must rely on credit growth to boost GDP. Credit growth is like food. If you eat a normal amount, you’ll be fine. If you eat too much food, you gain wait and become unhealthy. If the debt piles…

Stocks Rally On Fiscal Policy Progress By Republicans

The stock market rallied on Thursday as it appears the mini 3% correction is over. As I’ve mentioned, there is a large group of investors who are dying to get into the market. Whenever there is a 5% correction, they plow money into stocks. Because 5% corrections have become rare, these bullish investors preempt them…