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Fireside Charts: U.S. GDP, Trade Talks, and the "Fight for $15"

July 29, 2019

While many were relieved to see U.S. GDP beat expectations last week at 2.1%, is our economy is too reliant on major cities if our 25 largest cities carry 51.8% of GDP, versus non-metro areas accounting for only 9.9%? Another hot topic of debate between rural and metro areas—the "fight for $15"—heats up this week on the back of the House passing a bill to reach a $15/hour federal minimum wage by 2025. 21 states ...

Fireside Charts: GDP Beats Expectations Despite Declining Manufacturing Reports, Coloring Expectations for Next Week's Fed Meeting

July 26, 2019

U.S. Q2 GDP was released this morning at 2.1%, dropping from Q1's 3.1% figure but still beating expectations. While many are relieved and take the news as a positive sign of dodging consequences of the trade war, US Manufacturing PMI has hit its lowest point since August 2009 and is now riding the line between growth and contraction at 50.0—a significant slide that is largely attributable to depressed trade. Meanwhile, the Kansas City Fed ...

Fireside Charts: Boris, Brexit, and Bad News for Tech Stocks

July 24, 2019

It's a busy week for the markets as we all eagerly await the results of Robert Mueller's testimony, the ECB's release of PMI data, and earnings reports from Facebook, Amazon, Alphabet, and others. Here are a few things we're focusing on in the meantime:

 

While the S&P 500® Index continues its bullish trend, we're feeling echoes of the 1999 tech bubble as we observe that nearly 20% of the Index's total return can be attributed to only four stocks—Microsoft, Apple, Amazon, and Facebook. This news is particularly ...

Fireside Charts: "Great Expectations" for Earnings, a Struggling Housing Market, and Surging Chinese Buybacks

July 22, 2019

While analysts seem optimistic about future earnings—with the consensus expectation at ~7% for 4Q19—a potentially weakening USD, ongoing debt ceiling negotiations, and a weak print for June housing completions paint a less-rosy overall economic picture. Emerging market equities continue to struggle, as EM value stocks currently trade at 1/4 the valuation of U.S. equities. Buybacks surged to record highs in China after regulators eased restrictions that previously limited their use. Will this be enough to stymie their

Fireside Charts: “Puzzling” News for the U.S. Economy, Spreading Trade Tensions, and Rate Cuts – Oh My!

July 19, 2019

CSX President and CEO James Foote calls Trump's economy "one of the most puzzling" he's seen in his 40 year career following the company's miss on Q2 earnings, leading to the company's largest drop in stock price since the financial crisis. The trade tensions indicated as a factor in CSX's performance are clearly top of mind at the Fed, where the count of "trade" and "uncertainty" related ...

Fireside Charts: A Mixed Bag of Economic News for the U.S., Soaring Iron Ore Prices in China, Addressing the Bond Market

July 17, 2019

The U.S.’s current economic expansion is now the longest on record, but its rate of growth has been the slowest. Federal Reserve Chairman Jerome Powell has reiterated the Fed’s commitment to sustaining the expansion, but the Fed’s expectations do not seem to align with current futures market activity. Sentiment may be colored by reports of the country again approaching its debt ceiling, with an early September deadline to raise or suspend looming. Nonetheless, we are encouraged by news of the New York Manufacturing Index continuing its upward trend and ...

Fireside Charts: June PPI and CPI Reports, Mexico's Industrial Production Falls to its Biggest Drop in a Decade, No Hope for Global Trade Recovery

July 15, 2019

June's Producer Price Index (PPI) report confirmed inflation stayed near the FED's target of 2%. June’s PPI and Core CPI reports both confirmed inflation hovering around the FED’s 2% target at 1.7% and 2.3%, respectively. Nonetheless, global trade is not showing any signs of recovery with yet another drop in June. Mexico's industrial production made its sharpest drop since 2009 while China's production rebounded slightly. About $600 billion of negative-yielding corporate bonds are trading in the market, most coming from European countries. Finally, the time ...

Fireside Charts: FED Minutes More Dovish than Expected, Wage Growth Acceleration: Peak or Temporary Setback?, Iron-Ore Prices in Emerging Market Economies Surge

July 12, 2019

Following the June FOMC meetings minutes release, Federal Reserve Chair Jerome Powell continued to underscore the threat of a global slowdown and its risks to our domestic economy. Arguably, these may be the most dovish minutes released all year. Bloomberg's Consumer Sentiment Index hit its highest level in nearly two decades. What could be the reason for the spread between wage and core inflation? Has wage inflation officially peaked? In ...

Fireside Charts: Average Credit Card Rate Exceeds 17%, Debt Distribution by Age, China's Slowdown Hurts Big Business

July 10, 2019

In 2019 so far, 48% of S&P 500 stocks with dividend yields are greater than the 10-Year U.S. Treasury. Utilities and Real Estate led the sector lineup on a trailing 1-year basis through the start of July. U.S. credit card rates hit the highest level in decades. Does this make sense? More food for thought: what does debt distribution by age look like beyond our assumptions? Student loans are not reserved just for the younger generation. Over in Europe, many junk bonds now have negative yields. Finally, China may be facing a budding ...

Fireside Charts: Manufacturing Hiring Rebounds, U.S. Wages Adjusted for Inflation Down Since 1973, Shipping Costs' at Rapid Highs

July 8, 2019

Ready to get back into the chart blog after the holiday weekend? Today we start with a manufacturing data surprise with employment growth jumping significantly since January. Although the short-term trend looks more promising, real U.S. wages (inflation adjusted) are down 2.7% since 1973. The USD started to tick up as the markets responded to a more moderate FED versus its ultra-Dovish stance previously. High yield bonds are showing little sign of trouble although it might be flashing something less optimistic when we look at the historical data. ...