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Fireside Charts: FED Has Room to Cut Interest Rates, Fair Pricing of Market is Questionable, the Consequences of Tariffs

June 12, 2019

According to our first chart today, the U.S. Federal Reserve has exceptionally more room to cut rates compared to its developed market peers. U.S. firms better show robust earnings in the coming quarters because there isn't a great deal of room for multiple expansion. This begs the question, are stocks fairly priced? The trade war has nasty consequences, such as slowing of growth in manufacturing payrolls. The PPI was a bit softer than expected in May. In China, the PPI also slowed. 

Fireside Charts: Interest Rate Cut Probability up to 80%, A Weakening Dollar, and Mixed Industrial Production Results in Europe

June 10, 2019

The Fed is indicating that a rate cut is coming and the U.S. dollar is showing signs of weakening. The probability of a rate cute before July's Federal Open Market Committee leaped to over 80%. But is the market too aggressive in its pricing of Fed rate cuts? Germany's April industrial production report was disappointing and now back in negative territory year-over-year while French industrial production is holding up (for now). Finally, the 10 year UST yield is back at its 2017 bottom. Where will it go from ...

Fireside Charts: A Weak Jobs Report, EPS outlook, and will the FED be our Knight in Shining Armor?

June 7, 2019

Economists predicted to see 180,000 jobs added in May, but the report came in at a dismal 75,000. Unemployment is still at 3.6%. Now it's a matter of when, not if, the FED will move to cut interest rates. We are seeing the formerly resilient job market being affected by the same factors (read: the trade war) hurting other areas of the U.S. economy.  Meanwhile, treasury yields continue to fall sharply. Today in the blog, we cover everything from jobs to the trade war to cell phones and productivity. Wishing you a safe and happy weekend! 

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Fireside Charts: 70% of No Recession in the Next 12 months from NY FED, Global Manufacturing in Contraction Mode, FED Easing During Trade War

June 5, 2019

The Mega Millions jackpot has climbed higher yet again. The top prize is now $530 million. However, you may not need to rush out and test your numbers on this jackpot... the NY Fed's yield-curve model is putting the probability of a recession in 12 months at 30%. Global manufacturing is in contraction mode, with the weakness driven by advanced economies. Our northern neighbor Canada is unfortunately in that category, and has entered a manufacturing recession.  Will a rate cut from the FED keep the bull market going? It will be a challenge to turn the ...

Fireside Charts: The Trade War Continues, Bond Market Strength Holds, and the Possibility of a Recession in Nine Months

June 3, 2019

Will you be watching Jeopardy tonight? James Holzhauer is less than $59,000 from breaking the 2004 record for most money won on the show. Meanwhile, the trade war rages on, leaving a wake of job cuts in its path. Next, will 10 Year U.S. Treasury Yields soon reach the lows of 2012 and 2016? The bond market is holding on to its strength while the FED takes advantage of prices by selling nearly $9 billion of its assets. Lastly, a look at where we are in the business cycle— 

Fireside Charts: The Dollar Rises Higher, a Trade War With Europe Looms, Tension Heightens Between the U.S. and Mexico

May 31, 2019

Before we dive into the latest global trade and international relations developments, we take a look at the U.S. dollar, which continues to rise. New fronts have arisen in the U.S. trade war. Trump is imposing 5% tariffs on Mexico in an attempt to slow the migration of illegal immigrants across U.S. borders. How will Mexico retaliate? 67% of U.S. imports from Mexico are intra-company trade. In other frightening scenarios, if the U.S. launches a trade war with the EU, Germany's job market could deteriorate rapidly. If this ...

Our Take on Volatility: When You Are More Likely to Realize Good Investment Outcomes

May 30, 2019

What is volatility? From a purely technical standpoint,

Fireside Charts: S&P 500 Earnings Expectations, U.S. Federal Government Mandatory Spending will Overwhelm Revenue, Chinese Banks Expose Skeletons in the Closet

May 29, 2019

The latest in 2019 S&P 500 earnings predictions is not a healthy earnings outlook. Yet, U.S. consumer confidence is at a multi-year high. U.S. grains picked up in the latest percentage change for commodities like gold, crude oil, and copper. The U.S. federal government's interest expense and mandatory spending will overwhelm revenue around 2030. The bond curve has gotten steeper just in one week. Finally, China's first bank seizure in 20 years spooks investors as over 10% of banks are deemed risky in the People's Bank of China ...

Fireside Charts: Tariffs Benefit from De-escalation of NAFTA,  U.S. Manufacturing at 9-Year Low, Presidential Elects During Recessions

May 24, 2019

We begin today's blog by sharing the industries that will benefit from the de-escalation of North American trade tensions. The U.S. manufacturing PMI (purchasing managers index) was 50.6 in May, the lowest level since September 2009. Japanese manufacturing PMI dipped below 50 again, which tends to indicate contraction. On this Memorial Day weekend, we thank those who have made the ultimate sacrifice for our nation in their service. Have a safe and happy Memorial Day! 

Fireside Charts: Threatened vs. Imposed Tariffs, the Plight of the U.S. Farmer, U.K. Policy Rates at their Lowest

May 22, 2019

The U.S. dollar is inching higher, but this trend tends to have a negative impact on manufacturing, stock performance, and emerging markets. Have you ever wondered how the market performed in the months prior to a recession? Next, we share a nice visual summary of the proportion of U.S. imported goods impacted by existing/potential tariffs. Agriculture has been among the U.S. economic sectors hit hardest by the yearlong trade conflict with China. See which kind of farmers they have hit the most. The Bank of Japan now owns over three-quarters of its nation's ...