Bullish Myth: Has The Consumer Deleveraged?

The biggest problem with bearish charts is their using of GDP to measure valuations because GDP isn’t 100% correlated to earnings. If you start out when making a chart with the goal of having it prove a certain point, it’s easy to show whatever you want. Anyone can create a slide deck which shows the…

Employment Figures Are Solid In July

In this article, we’ll look at the latest employment figures which were released this week. The strong labor market continued in July as both the ADP report and the non-farm payrolls had solid results. This has led the Dow to reach a record close for the 8th straight time. The S&P 500 is very close…

Are The Bears Calling For A Sharp Rally?

Jesse Felder recently shared the chart below which supports the same narrative which has been going on in bearish circles for months. The bears believe we are in another housing bubble. They never met an asset which they didn’t think was in a bubble. As you can see in the chart below, the residential housing…

TSLA Reports Earnings As All Eyes Are On Model 3

The story that got the most buzz in the financial press on Wednesday was TSLA - Tesla’s earnings report which beat expectations sending the stock soaring over 7% after hours. The adjusted loss per share was $1.33 which was less than the expected loss of $1.82. The revenue was $2.79 billion which beat expectations for…

AAPL Beats Earnings Driving The Indexes Up

AAPL (Apple) beat its earnings estimates so its stock soared 4.73% on Wednesday to a record high. This pushed the S&P 500 to the black as it was up 0.05%; the Dow was up 52 points and the Nasdaq was flat. Investors might have been extra aggressive because of the anticipation surrounding the new product…

Junk Bonds May Be Foolish Investment Despite Low Default Rates

The chart below shows that the consumer confidence has diverged from personal consumption. The consumer might be anticipating a tax cut. I am surprised at the resiliency of the sentiment indicators given the fact that there haven’t been any votes on tax cuts in Congress yet. Congress plans to raise the debt ceiling, cut taxes,…

Is The Consumer Doing Well?

Let’s look at various indicators of the health of the consumer to try to get a picture of where economic growth is headed in the second half now that the first half is mostly in the books. Technically, first half GDP is subject to many revisions, but most investors have moved their focus to the…

Weak Dollar To Help Earnings

The Dollar & President Trump The two most bullish catalysts for stocks in the next twelve months are the repatriation tax holiday which will spur buybacks and the weak dollar. The chart below compares the dollar’s value at the start of President Trump’s term compared with all the presidencies since 1968. As you can see,…

Earnings In Q2 Were Fantastic

Last week was the busiest week in earnings season. Most of the trends that we’ve been seeing continued. It is shaping up to be a great quarter. The details of the reports give us information about what to expect in the next few quarters. Forward earnings expectations are what will drive stocks, so it’s critical…

Moving On To Tax Reform

Healthcare Reform Failed The GOP’s healthcare reform ended up being a bust. It’s all about game theory. As I said, the House could decide to simply pass the “skinny bill” without doing a conference like many of the moderates and some of the conservatives wanted. For Paul Ryan and Mitch McConnell, it was a matter…