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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 ...

Fireside Charts: Trade Deficit Deepens, Trade War Spreads to Other Areas of our Economy, Credit Card Crisis

May 20, 2019

Starting today, Mexico and Canada have begun the process to lift the retaliatory tariffs they had imposed on several American goods, including agricultural products. Yet, as of the end of April, our 12-month trailing trade deficit amounted to -$0.9244 trillion and little to no progress has been made with our nation's trade war with China as net U.S. Treasury purchases post largest negative since 2016. Conversely, across the East China Sea, the perceived "safe haven" status of Japan is showing up in their latest GDP figures. In other news, the ...

Fireside Charts: Equities and Bonds Tell Conflicting Stories, Tariffs Erode Tax Cut Benefits, Cautiously Optimistic FED Manufacturing Data

May 17, 2019

 

Legend has it, on this day in 1792, 24 merchants and stockbrokers started the New York Stock Exchange under a Buttonwood tree at 68 Wall Street, marking its 217th year. The first security to be listed? Bank of New York Melon, which now sits at #136 in the S&P 500® Index in terms of market cap. 

 

In other news: while the S&P 500 has mostly rebounded since Monday, the bond markets might be telling a different story. Ned Davis proves that stock buybacks provide a boost to the S&P 500, a 19% ...

Fireside Charts: Companies Hurt from Trade War, Fannie and Freddie Pile on High Leverage Mortgages, Bitcoin Inches Back

May 15, 2019

 

The S&P 500 companies with the most exposure to China are getting hurt, as seen in their Q1 earnings. Fannie and Freddie are piling on high-leverage mortgages. What did we learn in the last recession is regards to high-leverage mortgages? How will inflation look if there is a further escalation in the US-China trade war? Next, the renminibi's decline illustrates how a nation can lose control in a trade war environment. Germany's GDP rebounded in the first quarter. Bitcoin is... back? It is now over ...

Fireside Charts: Current Chances of a Recession, Indices Fail to Reach New Highs, Impact of Tariffs Shows in CPI and PPI

May 13, 2019

The yield curve model puts the chance of a recession between 25-33%. It is now at its highest since 2008. Only the S&P 500 and the NASDAQ have reached new highs in 2019...every other major U.S. average index has yet to do so. In an update on the trade balance, the total for March was -$50 billion up from February. The CPI report showed us that consumer inflation remains near the Fed's 2% target. How have the tariff increases impacted inflation in the US thus far? They have made an impact, and most clearly in PCE. 

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Fireside Charts: Trade Dispute May Derail LEIs, Dr. Copper Prescribes Caution, Nations with Twin Deficits

May 10, 2019

Today's blog post begins with a wedge being formed between the S&P 500's 50 and 200 moving day averages. Is this cause for concern? According to some data, leading indicators have improved, except for copper, which has held well up until recently. We have written about our concern for the crippling debt in our country. Nobody wants to buy the 10-year note. Will this week's trade dispute derail this momentum? Lastly, which nations are running twin deficits?

Fireside Charts: Implications of New Tariffs, Energy Underperforms Crude Oil, Record Defaulter of 2019

May 8, 2019

We can only hope the latest round of tariffs is a negotiation tactic from Trump. The new tariffs under consideration will have a much larger drag on growth, and they will come into effect in two days. U.S. farmers don't expect the soybean trade dispute with China to be resolved by July. Meanwhile, company defaults in China are headed towards a record high in 2019. How have earnings per share forecasts performed one month into each quarter? Energy has been under-performing crude oil over the past couple of years. Finally, ...

Fireside Charts: Hours of Work Necessary to Buy S&P 500, an Update on the U.S. Dollar, the Losing Streak Continues for Global PMI

May 6, 2019

How many hours of work are needed to buy the S&P 500? As of the most recent data, 126.37 hours at 23.31/hr is needed. What about compared to the amount of working hours to buy gold, or buy a barrel of oil? Next, the dollar continues to crush its growing trend. Corporate guidance is still worsening as U.S. CEOs have skeptical outlooks despite near-record earnings. This skepticism will not let up if U.S.-China trade fears still exist. ...