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Fireside Charts: Small Caps and Transportation Shares Tumble, Europe Manufacturing Meltdown, Emerging Market Relative Performance May be Bottoming

June 26, 2019

Two groups of stocks are about to send crisis-era signals on the economy. Do you know which ones they are? The Dallas Fed Manufacturing Index was the third regional index this month that came in well below economists' forecasts. Weakness in the Europe's manufacturing sector is showing up in the labor markets. In an update in emerging market performance, the EM equities' under-performance bottoming? Over in Taiwan, their industrial production slowed more than expected.

Fireside Charts: U.S. Housing Remains at Recessionary Level, U.S. Business Activity Stalls in June, Intellectual Property in China

June 24, 2019

The financial press is reporting the dollar is "collapsing", but despite the losses due to the recently-turned Dovish FED, make sure to look at the USD over a long time horizon. U.S housing has still not fully recovered and remains at the same trough level as the previous 4 recessions. The PMI indices show U.S. business activity stalling in June. Also this month, the Baltic Dry shipping index is recovering. Europe's manufacturing is still contracting. Lastly, intellectual property claims in China are on the rise.

Fireside Charts: FED Rates Left Unchanged, the Most Vulnerable Sectors, Equity Fund Outflows at Near Record Levels

June 21, 2019

The Federal Reserve left interest rates unchanged during its two-day meeting this week and despite heightened pressure from the markets and Trump administration, left the door open to cuts later this year. The word "patient" was dropped from their statement. Now, the market is predicting a 70% probability of three or more rate cuts this year. Which sector has the highest amount of debt outstanding? Meanwhile, equity fund outflows are near record levels. Will slower economic growth finally pull down corporate earnings? Finally, our Dovish ...

Fireside Charts: Acceleration of Stock Buybacks, Latin America's Countries Falter Socially and Financially, Rate Cuts in Europe

June 19, 2019

In today's chart blog, we dive into the net purchases of stocks from 2014 to 2018. The accelerating pace of stock buybacks has made corporations the largest sole  net purchaser of stocks for the last several years. The Empire Manufacturing Index showed factory sentiment lowering by -8.6%. Meanwhile, we are in the midst of the largest increase in commercial debt on record. Between the economic and social turmoil of Venezuela and other Latin American countries, the entire continent is suffering. Lastly, in Mario Draghi's final weeks of his ...

Fireside Charts: Longest Bull Market on Record Continues, U.S. Farmers Giving Up, and China's Growth Far Below Target

June 17, 2019

Ready for a pulse-check on the current bull market in the U.S.? It has lasted nearly 3,750 days, surpassing every other previous bull run. Some domestic farmers are giving up on this year's corn planting altogether, which is causing corn futures to soar. The next round of US tariffs will put China's growth well below Beijing's target range. The negative trend still remains for U.S. manufacturing as U.S. consumer prices barely rise. Finally, industrial production is another negatively affected indicator in China. 

Fireside Charts: Information Technology Rebounds, CPI is Muted, High Oil Inventories Put Pressure on Prices

June 14, 2019

Happy Friday to our Fireside Charts readers! On this day 33 years ago, Standard & Poor's (S&P) began disseminating S&P 500 index values once every 15 seconds. The market values of the three largest companies in the United States (Microsoft, Apple, and Amazon) have grown in June. This contributes the S&P 500 information-technology sector rebounding nearly 9% in the past six sessions and the technology sector being up 24% for the year. The U.S. CPI report is benign for now, and higher wage growth is not feeding through to ...

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 ...