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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. ...

Fireside Charts: Surprising Look at Equity Returns vs. Long Treasuries, Bitcoin Losses, and a Sobering Look at Global Manufacturing

July 3, 2019

Are you ready for the holiday weekend? In case you are not sure where to watch the fireworks, here is a list CNN put together of the best firework shows nationwide. In terms of the markets, let's kick off the July 4th holiday with a view of equity returns versus long-term treasuries. Are you surprised? Since bitcoin has crept its way back into the news, here is a look where bitcoin stands versus its rivals. Then, the remainder of today's post shows a ...

Fireside Charts: 2019 Market Volatility, China Manufacturing Under Contraction Amidst Trade Truce Talks, Door for FED Rate Cut Open

July 1, 2019

Now that we are six months into 2019, we can confirm this year has presented a different picture of market volatility. While the lifting of the Huawei ban and “progress” in the trade war sparked new highs for stocks, weak manufacturing data rained on that parade. If we are going to see another leg up in this ascent, the financials sector needs to break out. With an update on the information technology sector, what will be the next disruptive tech? The official China Manufacturing PMI for June remains under contraction at 49.5 (under contraction < 50 PMI). ...

Fireside Charts: U.S. Consumer Seeing Highest Confidence Since 2000, Corporate Defaults Pick Up, Renewables Surpass Coal in U.S. Power Mix

June 28, 2019

The U.S. consumer, which represents about 70% of our economy, now has the highest confidence since 2000. In opposite form, corporate confidence continues to deteriorate.The string of disappointing regional manufacturing reports continued on Thursday with the latest data from the Kansas City Fed. Attention all junk bond owners: corporate defaults have picked up recently. Is there too much optimism in the bond market? Remember, bonds have bear markets too. The record high bond duration is one of the factors causing investors increasingly vulnerable to ...