$5 Trillion In A $1.5 Trillion Hole
Tax Cuts Will Be Proposed By The House Next Week In 2016, we were used to having high political uncertainty. The Brexit and U.S. presidential elections were cause for concern as populism ruled the day. 2017 was nothing like that as France and Germany had elections where the establishment won (Macron and Merkel respectively). The…
The Buy America Trade Is Working
Is The Short Dollar Trade Over Since discussing the possibility of the dollar strengthening over the past few days, it’s important to recognize the effects it will have. One effect is that global equity market returns will look worse when looking at them in U.S. dollar terms. When looking at the table, which has almost…
Great Durable Goods Orders
The chart below is in keeping with the previous article about how stocks rallied on the hopes of a tax reform plan passing the Senate as early as November. As you can see, the companies that benefit the most from the plan, the high taxed firms, outperformed the overall market. When you break out the…
Tax Cut Rally Part Infinity
Wednesday was a huge up day for stocks which extended some of the latest trends making the statistics look even more gaudy. As you can see from the chart below, the 10 day realized volatility of S&P 500 is at 2.57. This makes sense because none of the risks I talked about in August have…
Yellen Admits She Was Wrong About Inflation
The top news on Tuesday was Yellen’s speech delivered to the National Association for Business Economics in Cleveland. The topic of conversation was how badly the Fed has miscalculated inflation. It’s surprising to see this coming up so soon after the Fed’s decision on rates because the Fed was hawkish and this was a dovish speech. At…
Hurricane Harvey Leaves Its Mark
Dallas Fed Shows The Impact From Harvey Let’s look at some of the other points from the Dallas Fed survey to get a complete look at what’s happening in Texas after hurricane Harvey. A transportation equipment manufacturing firm said “Fortunately, we only had minor issues due to Hurricane Harvey, and those were mostly related to…
Credit Spreads Tighten For 18 Months
The chart below shows the situation the bond market is currently in. The tightening of credit spreads has occurred for the past 18 months as the ECB’s bond buying has been combined with animal spirits creating a great scenario for risky bonds. As you can see, this is the longest period of tightening since the…
Q3 Earnings To Be Impacted By The Hurricanes
It appears the healthcare debate is over for the time being. The conversation will now move towards tax reform in the next few weeks. The chart below is a great representation of how each reform measure would affect people in various income groups. Each color represents one of the 6 reform measures being discussed. Of…
Valuation Won’t Be A Catalyst
Q3 GDP Will Be Impacted By The Storms The chart below shows the NY Fed’s GDP Now estimate for Q3. It’s been consistently the most negative forecast out of any I follow. As you can see, it’s estimate improved 0.22% from last week mainly because of the lift from the building permits data. The current…
No Lines For iPhone 8 In China
A couple of the stories we’ve been watching this week had notable information released about them. The first news was that Apple’s iPhone 8/ 8 Plus was met with little excitement in China which caused AAPL stock to fall again. There were barricades put up in front of the Apple store on the day the…
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