Higher US yields and the firmer dollar follow better than expected US economic data this morning, while overnight Q4 earnings get a mixed response. Tomorrow’s FOMC meeting generates previews mostly focused on future meetings and the complications of eventually ending current balance sheet expansion. Meanwhile… China’s
It’s still too early to judge the ultimate size and scope of the coronavirus outbreak but we’re using the 2003 SARS outbreak as a market forecasting template nonetheless. At this point, the mortality rate of the Wuhan coronavirus is much lower than
Japan flash manufacturing PMI for January improved to 49.3 from 48.4 last month and Eurozone flash manufacturing PMI improved to 47.8 from 46.8. Both numbers still indicate contraction, but both improve at a pace that’s slightly ahead past episodes of recovering global growth.
Last Friday we noted some price deceleration in the S&P 500. That trend has continued this week and comes at a time of ‘elevated’ short-term bullish sentiment in the AAII polling data. Sentiment indicators tend to be reliable contrarian indicators only at extremes.
During the last week of December we discussed our 2020 forecast, which centers on expectations for above-trend global growth sometime around mid-year. Today’s South Korea Q4 GDP beat and strong Industrial Production out of Taiwan help make the case, but our best forward-looking indicator are
At current levels, the S&P 500 trades at ~18.4x our 2020 EPS estimate of $180. There’s probably room for even more multiple expansion given the current state of policy accommodation and expectations for improved fundamentals in the months ahead.
US equities continue to benefit from an unchallenged bullish narrative that includes a de-escalation in trade tensions, monetary accommodation (Fed still increasing its balance sheet), rising expectations for an earnings rebound and still-light positioning given large net outflows in 2019. Valuation concerns at almost 19x
The first week of earnings season is always dominated by large cap banks. We expect the numbers and guidance will be fine as most management teams sounded upbeat when they spoke at the Goldman conference in mid-December. But investors looking for vastly improved Net Interest
Most investors are underestimating the durability of the economic cycle, which is probably influenced by last summer’s brief yield curve inversion and the duration of the recovery. We all know that economic cycles don’t just die of old age. Most of the time, they die
We think we’ve seen this before. The monetary and fiscal stimulus to buffer trade tensions has already started to improve the leading indicators of global growth. Monetary easing is in the pipeline and fiscal measures in Emerging Asia should continue to provide tailwinds. We expect
