This is the heart of the
#SahmRule
. You can quibble about the level of increase needed. Her main point was that the unemployment rate tends to trend, and when it gets going to the upside it tends to keep going until the
#FOMC
takes action, or we cycle through a recession.
Morningstar out of consensus take:
#lithium
concerns are overdone.
"As supply growth slows, undersupply conditions will emerge, supporting rising prices in [2H 2024]...we expect prices will remain volatile but average $25,000 per metric ton [over the next decade]."
#oott
MORE BULL PORN
If you bought $SPX at the close Dec 31, the most you have been down at any point during the first 33 trading days of 2019 is -2.51% (yes, that's it).
Here's every year since 1983 that started with no worse than a -3% draw down in the first 33 days.
BoA trucking demand indicator falls to 3rd lowest weekly level since 2020, remaining at/below 50 for the 21st time over the past 26 issues and is well below the 54.2 average level of the ’12, ’15, ’19 Freight Recession periods.
BoA (Hartnett): "we buy any
#China
dips as policy makers saying capital markets to be used aggressively to boost domestic animal spirits & demand, and expect China GDP upgrades from 4.6%"
Love Odd Lots, but this one might be the best. And it's not just an "ex-CIA officer" but the guy who literally "wrote the book". And it's not just "in business" but for Jacobs, a serial acquirer of co's, meaning the process has been thoroughly tested (w/lots of examples).
BONUS ODD LOTS
AN EX-CIA OFFICER EXPLAINS HOW TO SPOT A LIE IN BUSINESS
@TheStalwart
and I first heard about Phil Houston from billionaire Brad Jacobs, who said that he works with the former CIA polygrapher as part of his due diligence for potential acquisitions.
So we invited
@hmeisler
At 9:21:21 PM it will be the 21st second of the 21st minute of the 21st hour of the 21st day of the 21st year of the 21st century.
Just thought you should know.
Carson Group's
@RyanDetrick
unsurprisingly thinks Dow 40k is just a mile marker:
Can stocks keep going? “We think they can,” Detrick said. “Earnings continue to surprise to the upside, balance sheets for Corporate America are in great shape, while the consumer might have some
Two really interesting guests this week.
@WarrenPies
is a solid stream of interesting thoughts/data. Learn all about OER (from both guests), why Warren thinks the gains aren't done for the $SPX, why he sees a potential Dec/Jan top, and how he's allocating his investments.
The key issue for inflation today is shelter inflation.
This week BTM pod we talk w/
@sffed
research advisor John Mondragon about his views on shelter costs.
@WarrenPies
also shares his take and gives us a second half outlook.
Check it out.
WELLS: "Our year-end CIO survey suggests [I.T.] budget growth next year, with >90% of respondents suggesting budgets will grow in '24 (~50% low-single-digit growth, ~50% high-single-digit growth or higher) and $MSFT receiving the most mentions .. We view the stable-to-improving
Owning the market when the average strategist target implies a <5% gain improves returns and lowers drawdowns (blue line).
On the other hand, get out of the market once strategists become euphoric (purple line)...
HOLY. SHIT.
Ok, follow me here, because this is a fucked up OddStat worth popping your eyes at.
3 of the past 4 months on $SPX have seen a return of at least +/- 6.5%, something that honestly doesn't happen that often.
Here are the forward returns for every event since WW2.
Hermes CEO: "The solid performance in Q3 reflects the desirability of our collections all over the world, with still a sustained momentum in Asia & in the Americas"
—Leather Goods:+16%
—Ready-to-wear:+18%
—Silk & textiles:+6.3%
—Perfume & Beauty:+6.3%
—Watches:+22%
FUNDSTRAT: today’s selloff “is probably a ‘gift’ .. In fact, stocks being weak into the jobs report is actually a positive setup. .. raises the probability of a rally .. we are buying this short-term dip.”
@fundstrat
$SPX
BoA: "The
#Fed
typically only surprises the market in a dovish direction. The Fed generally likes hawkish signals to be well telegraphed so as not to surprisingly tighten financial conditions."
#FOMC
Well worth the read, and a great reminder:
"stock prices are mostly driven by earnings growth and the return of profits to shareholders. Of [the] 163% return for the S&P 500 over the last seven years, 103% of it was from earnings growth and 32% from dividends."
The whole
@CarsonResearch
team is super proud to share our Midyear Outlook!
Eyes on the Prize is something you can use to show where we've been, but also where we could be headed.
Enjoy!
BofA’s Bull & Bear Indicator “surges” the most this year “to 7.0 from 6.0 [highest since May ‘21] driven by record inflows to EM equities & debt, plus stronger credit technicals".
To get "BofA Bull & Bear Indicator up to 'sell signal' of >8.0 in coming weeks" need "a. BofA
To reiterate what I think is a key piece of information we get from the
#NFP
report: total payrolls income (the collective sum of take-home pay) came in at a blazing +0.84% m/m, +5.9% y/y (up from +5.3% in Feb) which will be very supportive to household balance sheets.
Mar
#NFP
quicklook is another beat at +303k vs +214k exp’d & above the 12mth avg of +231k. Also Jan/Feb rev’d up by +22k, and the household survey which has been lagging saw big jump of +498k. Still unempl rate falls to 3.8% as exp’d, as jump in employed offset by +469k incr in
Another house divided. You've got Slimmon pushing equities while Wilson and Shalett remain v bearish at MS. Similar to Hartnett (bearish) and Subramanian (bullish cyclicals) over at BoA.
MORGAN STANLEY: "As we get closer to the end of the year, the pain of being underweight equities and the resultant lack of performance is going to intensify -- forcing positive fund flows."
$SPX
@FortuneMagazine
Goldman sees job market "at a potential 'inflection point' where any further softness in demand for workers will hit jobs, not just job openings," and despite "moderate pickup" in 2H "most of the recent slowdown is likely here to stay."
BoA Sell Side Indicator: "Getting bullisher and bullisher".
The contrarian sentiment signal (tracks sell side strategists’ avg recommended allocation to equities in a balanced fund) +61bp to 56.2% in Aug, now the closest to “Sell” since Jan '22 (1.8pt away vs. 4.9pt from “Buy”).
While returns 1-yr out after new highs are a little better than avg,
"looking at the 12 times (since WWII) the Dow went at least one year without a new high and then finally made one, ol’ Papa Dow was higher a year later 10 times [up an avg +14.1% w/median return of 16.4%.]"
@AOC
@seemacnbc
Comparing Amazon to Foxconn is not helpful to your cause and displays a certain amount of ignorance. End of the day, NY would have been better off even if they gave back $3B to Amazon. Now those benefits are lost. There's no other way to square this circle.
@morganhousel
Not exactly. It's like a secret language. Sometimes it's like "I'm about to do this unbelievably dangerous maneuver so don't go left or we all die" or something similar. I've thought I understand it only to realize if I was driving I would have just died...
This is a great chart from
@topdowncharts
that shows one of the primary reasons I am remaining constructive. If you notice, every time there is a lot of global tightening there is an economic pullback (08, 11, 15, 19) that is reversed by loosening.
BofA Bull & Bear Indicator rose a tenth to 6.2, the 1st incr in 5wks after falling from the highest since May ‘21. The incr was “on big inflows to stocks & bonds despite higher FMS cash (4.3%) and additional hedges against lower S&P500 and stronger Japanese yen; note hedge funds
BoA (Hartnett): "
#Fed
50bps cut sees Wall St follow 'soft cuts'/'panic cuts' script…trade classic 'Fed pivot' (see asset rally of 1975-76 as Fed slashed from 9% to 4%) on expectation Fed can prevent payrolls <100k & rise in delinquencies/defaults"
BoA (Hartnett): "12 occasions since 1970 that Fed cut rates for 1st time…3 types of cuts & 3 types of Wall St reaction:
1. "Soft cuts"…Fed cuts into "soft landing", e.g. 1984, 1995, 2019... positive for stocks (S&P 500 up 10% in 6 months after 1st cut) and bonds (10-year UST
For those wondering why there's no updates on the hotly anticipated
#NFP
benchmark revisions from the BLS, it's b/c they appear to not have been posted yet.
Golden Pass was supposed to be most of the incr'd $LNG export capacity coming online in N America in 2024. Sounds like that's not happening.
#natgas
$UNG
#oott
Golden Pass LNG Warns of Delays After Contractor’s Bankruptcy
Texas gas-export project has 140 workers left from Zachry
Venture looking to hire new contractor after firm’s collapse
With CEO Bakish not backing the Skydance takeover, the board & Shari Redstone's National Amusements want to create an “Office of the CEO” to run the co. What a complete mess (full disclosure I'm still long hoping value will emerge despite their best efforts).
$PARA
Total BoA card spending per h/h +2.8% y/y in wk ending Aug 31, "likely driven by the change in the timing of Labor Day compared to last year."
Furniture saw the biggest increase w/w, entertainment the largest decline.
BofA: Total card spending rose 0.4% MoM in February on a seasonally adjusted basis
Lower-income households' spending growth appears to have slackened.
Overall, consumer spending momentum appears soft, but stable
This is an interesting point. Depending on where you draw the line, this is the first time $VIX has closed above the downtrend line from Oct '22 for 2 consec wks (although it was guaranteed to happen eventually).
@neilksethi
Yup a Doji week !
Second consecutive weekly close above the 4month DTL !
March 23 - SVB
Oct 23 - Bottom of July 23 High
April 24 - Iran War panic bottom
July 24 - breakout on what news may be weekend or next week has rhe answer ... 👌
Next week shud be fireworks !
#Cocoa
now at 45yr high, up 100% since start of 2023, rivaling spike in 1977 on similar crop issues which show no sign of abating. During that spike Hershey $HSY raised wholesale prices 18% in 1976 then 46% in 1977.
#oott
Goldman models CTAs as buyers this week "under all scenarios" as well as the next 2 weeks & the next month under 2/3 of scenarios. That will hopefully offset the lack of corporate buyers w/the buyback blackout window at 80%.
via
@dailychartbook
With inflation expectations little changed, real rates fell along with nominal rates this week pushing 10yr real rates (based on 10yr inflation-indexed bonds) -7bps w/w to +1.63% the least since July ‘23.
#ISM
services
#PMI
comments again mixed this month w/many noting demand and/or rising costs, although as w/last month it’s clearly not across the board. Also seems to be a higher level of uncertainty on a variety of fronts (economic, political, etc.).
CNN Fear & Greed Index continued to move up, ending the week at 74, the highest since March, up from 39 four wks ago & on the cusp of Extreme Greed territory (i.e., their sell signal).
While Iraq, Kazakhstan & Russia are the countries which
#OPEC
has officially called out as overproducers, Javier says "the biggest problem, however, lies elsewhere" w/the
#UAE
pumping up to 600kbd above its official OPEC numbers according to private estimates.
#oott
#WTI
COLUMN: Some OPEC+ members aren't playing fair.
Year-to-date, the cartel has pumped more than 600,000 b/d above its self-imposed limits.
Cheating is an own goal -- and a key reason why oil is down 20% from a year ago to ~$75 a barrel.
@Opinion
#OOTT
#NAHB
: “Buyer traffic is improving as even small declines in interest rates will produce a disproportionate positive response among likely home purchasers…With [exp’s of 2H 2024 rate cuts], NAHB is forecasting that single-family starts will rise about 5% this year.”
#housing
#NAHB
homebuilder index up 4 pts to 48, highest since Aug, though still under 50 poor/good div line. Sales exp’s +3pts to 60, best since June 2020, current sales +3pts to 57 & buyer traffic 4 pts to 33, 8 & 6 mth highs resp. Regions all improve led by NE at 62.
BoA on Port strike: "A strike lasting a few days is unlikely to significantly tighten the market... [but] a prolonged strike lasting a few weeks could drive global congestion levels to all-time highs and potentially drive a surge in spot freight rates particularly on transpacific
#China
's oil refinery throughput in August rose to a record (Crude throughput at 15.23 mln bpd, +19.6% yr/yr), as processors in the world's second-largest crude consumer kept run rates high to meet summer travel demand and capitalise on strengthening export margins.
#oott
Summary of some points from Richmond
#Fed
Pres ('24 voter) Odd Lots interview (w/link). Big takeaway seems to be that he doesn't see the current "no hiring, no firing" situation as persisting indefinitely but sounds like he sees risks that it goes in either direction.
#FOMC
@carlquintanilla
And don't look now but GDI rev'd up +2.1% to 3.4% (real)/6.0% (nominal). The avg (an NBR recession indicator) was 3.2/5.8%, so those hanging their recession hats on GDI telling the "real story" of the economy will need a new hatrack (as it were).
Today is
#FibonacciDay
in honor of the Fibonacci sequence, where every number is the sum of the two that precede it. (Today is 11/23, or 1123.) The Fibonacci sequence describes much of what we see in nature from meteorology to astronomy to biology.
It's not just big tech, but as the story notes, the huge LNG projects in development also demand similar workers as the oil patch. A lack of available labor is another reason we may be near the top US production.
Big Tech Is Coming for the Oil Patch’s Workers, and Winning
Data center, crypto recruiters tap into oil and gas talent
Energy builders say Big Tech is a disruptor for labor
#oott
Goldman says energy stocks have diverged from
#oil
prices insinuating either upside for energy stocks or downside for
#crude
futures.
via
@dailychartbook
$XLE
BoA: Corp. client buybacks decelerated for a second week and were below seasonal levels as a % of S&P 500 market cap for only the second time in the last 25 weeks. YTD, buybacks as a % of mkt. cap are still on pace for a record year in our data history.
BoA: "In the [Sep] HH survey, total employment was up 430k (versus 168k in August), while unemployment fell by -281k (versus -48k in August). This came along with low layoffs (Exhibit 3), more entrants into the labor force, an increase in full-time jobs, and a decline in
BoA: " $SPX options suggest that the next two
#NFP
prints are the main catalysts until the election, consistent with the
#Fed
’s focus on the labor market. CPI and retail sales are seen as smaller risks, while this week is expected to be the quietest until at least Nov. The big 3Q
BoA (Hartnett): "12 occasions since 1970 that Fed cut rates for 1st time…3 types of cuts & 3 types of Wall St reaction:
1. "Soft cuts"…Fed cuts into "soft landing", e.g. 1984, 1995, 2019... positive for stocks (S&P 500 up 10% in 6 months after 1st cut) and bonds (10-year UST
Great chart from Citi which brings home 2024 is not so much all about Fed cuts (which are likely coming) but more about whether those are "adjustment" cuts or whether those are "recession" cuts.
via
@dailychartbook
I keep hearing that the difference between now and 2000 is that companies now have "real" growth. Well, according to Goldman, they were exp'd to grow faster (both top 10 and $SPX TMT median) in 2000. So, what's really different then is the valuation, and that's it.
via
Looks like the
#SPX
will finish above its downtrend line and up for the week but couldn't quite get over the 50-DMA (purple line). Positively, MACD crossed back over to "cover shorts" & RSI back over 50 to a 3wk high, so maybe next week?
Learned a lot from this:
-Why
#Egypt
needs to be monitored
-How VLCCs get through the
#Suez
-Why EV production is ST bullish oil
-Why Russia doesn't want higher oil prices
-80% of oil use is independent of autos
Also reaffirms my thinking that
#crude
is rangebound in 2024.
Goldman says CTAs (trend followers) are buying bonds in basically all scenarios other than a flat tape over the next month. If true, seems bullish for bonds (lower yields).
via
@dailychartbook
#FOMC
cut probabilities little changed following in-line
#retailsales
report w/67% chance of 50bps tmrw & 119bps of cuts priced for this yr.
2yr yield though up 4bps (10yr unch).
#UST
I've agreed and disagreed with
@jimcramer
over the years (although more the former ), but his thoughts on the trade war have been spot on of late (he called the breakdown over a month ago), and I think he may be right that Trump really isn't looking for a deal but much more.
Post from
@RyanDetrick
from last week "Busting 7 Common Myths". He tackles credit card and student loan debt, excess savings (although savings rate ticked down after it came out), retailer earnings, corp bankruptcies, higher rates, and gov't debt.
Invesco, JPM, HSBC, & Nomura are among those viewing the recent rebound in
#China
shares w/skepticism, looking for Beijing to back up stimulus pledges w/real money while Fidelity says “the rally can run."
Unfortunately for
#natgas
bulls, the area
#Francine
is exp'd to hit is home to 4 of the US' 7 currently operating
#LNG
export terminals. This will see a big disruption to exports.
$UNG
#oott
This is consistent with Goldman's analysis from last month that with corporate "excess savings" running down, buybacks would fall to the lowest since 2020 this year before rebounding somewhat in 2024.
"2023 is set to mark the weakest year of global corporate buyback announcements since we began tracking this metric in 2016."
@ChristineLShort
@FactSet
Nice stat from Goldman. Since 2019 almost all of Mag 7's returns are explained by earnings growth (just 1% of 28% return has been multiple expansion).
via
@dailychartbook