Fireside Charts: Analyzing Friday's Rally and Are Emerging Markets Preparing to Surge?
October 7, 2019Happy Monday, Fireside Charts readers! We know Mondays can be a little rough (and you've got a lot of emails to get through), so we'll stick with the highlights today: We saw a modest rally on the back of Friday's better-than-feared jobs report, but it appears primarily driven by anticipation of additional rate cuts rather than a surge in economic confidence. Even the hawks don't seem to be completely closed to further easing, as yesterday
Fireside Charts: Services Finally Feeling the Drag of the Manufacturing Contraction, and U.S. CEO Confidence Hits a Decade Low
October 4, 2019While we digest today's job's report (50-year unemployment low, 136,000 jobs added, lower-than-expected wage growth—it's a lot of data), take a look at some of the other major economic trends we've had our eyes on this week: The trade war spread deeper into Europe this week as the WTO approved tariffs on $7.5 billion worth of EU exports on Wednesday. This comes in the same week that the organization slashed their forecast for global trade growth and attributed it almost ...
Fireside Charts: Plummeting Manufacturing and Exports Set Post-Recession Records
October 2, 2019The ISM Manufacturing fell to a decade low yesterday and market reaction was swift: all 11 sectors of the S&P closed out the day in the red, with Industrials leading the way with a 2.4% drop. September marks both the largest single-month drop in U.S. manufacturing since the '07 financial crisis and the fifth straight month that global manufacturing has contracted. While President Trump again lay the blame at the feet of Jerome Powell and the Federal Reserve, economists cite trade war uncertainty as the driving force of the slowdown. In fact, the WTO lowered it's
Fireside Charts: U.S. Real Net Exports Sink Past Financial Crisis Lows and USD Continues to Climb Higher
September 30, 2019The S&P 500 composite hit an all-time high in late July and is up over 344% from the cycle low point in 2009, but we've seen a wedge forming as we progress deeper into the economic cycle. A break-out is coming, but on which side? Meanwhile, yields on the 10-year U.S. Treasury seem to be testing resistance levels and flirting with 2012 and 2016 lows—given the recent Fed actions and bond-market activity, should we expect yields to continue sinking? Real exports of goods and services dropped 5.65% in Q2, erasing all Q1 gains and catapulting the U.S. trade deficit past levels last seen ...
Fireside Charts: Consumer Debt Skyrockets in China and Unprofitable IPOs Party Like it's 1999
September 27, 2019Goldman Sachs analysts anticipate that less than 25% of companies going public in 2019 will net any income this year, and are expected to produce the lowest profits since the dot-com era two decades ago—despite raising a record amount of cash from their IPOs. Could a little Y2K-era anxiety be in order as well? Shale-oil output is on the rise in the top five U.S. basins as well completions tick up and more DUCs are brought online in ...
Fireside Charts: U.S. Manufacturing Hits 5-month High as Europe Contracts and a Look at How Stimulus Affects the Markets
September 25, 2019Employment indices are softening in Europe as it ventures deeper into manufacturing contraction, helmed by Germany which saw its manufacturing PMI decline at it's fastest pace in a decade (re: since the recession era). We've already seen the yield curve invert; is this another signal of impending recession? Stateside manufacturing, however, ticked up slightly this month, beating expectations at a print of 51.0, hitting a ...
Fireside Charts: U.S. Household Net Worth to GDP Ratio Hits Record High, The USD Continues to Climb, And Junk Bond Yields Approach 2017 Lows
September 23, 2019Warning: the Fed's recent shopping spree may leave you with sticker shock. They added over $75 billion of assets to their balance sheet last week alone, and plan to continue injecting money into the markets daily through October in an attempt to stabilize rates. Will this and other easing measures be enough to stave off a large-scale slowdown though, when credit expansion has primarily been serving to drive asset prices higher and having a much smaller effect on GDP ...
Fireside Charts: U.S. Broad Money Supply Continues to Climb, Manufacturing Slows in Philadelphia, and a Historical Look at Stocks Following 25 bps Interest Rate Cuts
September 20, 2019While the Fed's second consecutive quarter-point rate cut this week disappointed many—including President Trump—who were hoping for more aggressive action, we're encouraged by a look at how the S&P has historically performed in similar circumstances. An average 12-month return of 16.7% doesn't sound too shabby! The market is now pricing in a ~65% chance of another cut by the end of 2019, but mounting ...
Fireside Charts: U.S. Industrial Production Hits 2019 High, Core Inflation Measures Diverge and Growth vs. Value Outperformance
September 18, 2019While we wait on Chairman Powell's speech this afternoon, let's take a look at what else is going on: U.S. Industrial Production rebounded in August to reach a 2019 peak, approximately tripling the expected 0.2% print. Could this be a good sign of impending recovery for U.S. manufacturing? Turning an eye to consumers, the spread between core CPI and core PCE rose sharply in 2019, approaching all-time highs and complicating interpretations of inflation. While the Fed favors PCE, should we expect the nearly 1% higher CPI to factor into their decision today? Finally, ...
Fireside Charts: Real U.S. Treasury Curve Turns Positive Heading into FOMC Meeting and More Evidence of Slowdown in China
September 16, 2019While futures have declined slightly following the Saudi oil attacks, we saw equities rally last week thanks largely to renewed trade war optimism. Both nations have made concessions in recent weeks, leading to increased expectations that an interim deal could be struck when negotiators meet in October. Economic reports out of China have added fuel to the speculative fire as industrial production, retail sales, and fixed asset investment all fell short of estimates in a broad demonstration of
