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Morning Briefing Bullet Points & Chart Collections

2020

Anatomy of a Virus
(1) Panic Attack #66 hit investors hard yesterday. (2) A viral panic attack. (3) In the spring, there should be healthier weather. (4) Counting on the flu model. (5) Travel and tourism industries are sick. (6) P/E-led correction following P/E-led meltup. (7) The man from WHO isn’t ready to call it a pandemic despite spread to Iran, Italy, and Korea. (8) Getting harder to breathe for millions of small businesses. (9) Fed may need to deliver a couple more rate cuts to keep US economy in a good place. (10) Wuhan Institute of Virology may be China’s Chernobyl.

Snorting vs Sneezing Bull
(1) Known unknown and known knowns. (2) Fed’s policy report mentions COVID-19 as a risk, but Clarida says US economy remains strong and uninfected. (3) China is a weak link in global supply chains. (4) Impressive rebound in February’s manufacturing activity according to NY & Philly Fed surveys. (5) US factories getting a boost from strong housing starts. (6) Consumer optimism lifted by lots of jobs. (7) LEI and CESI confirm economy still expanding. (8) February’s flash PMIs weakened in US and Japan, improved in Eurozone. (9) Bull sneezed on Friday. (10) Investors reaching for yield in bond and stock markets. (11) Tech accounts for nearly half of capital spending. (12) Outperforming stocks include those of the Stay Home, LargeCap, and Growth varieties. (13) Movie review: “The Traitor” (+ + +).

Small World
(1) China’s quarantine disrupts global supply chains. (2) Chinese factory workers are staying home. (3) Coronavirus hits Apple’s demand for phones and supplies of parts. (4) Some auto companies facing parts shortages too. (5) Flying parts on jets. (6) At new highs, stocks still taking it all in stride. (7) Global MSCI forward earnings and revenue estimates holding up. (8) However, industry analysts are starting to cut their S&P 500 earnings estimates for Q1-Q3. (9) Musk’s hyperloop getting bored toward reality in Vegas.

In a Good Place?
(1) Some light reading. (2) From good to very good. (3) Beware of Fed mantras. (4) US beats China currently in the health department. (5) Soft patch in US manufacturing not worrying Fed. (6) Powell is pleased to see labor force participation rate rising. (7) Housing and consumer spending looking good, while capital spending is not so good. (8) Advanced economies should advance as trade tensions ease. (9) Fed worrying more about subdued inflation than feverish virus. (10) Submerging emerging economies are a concern. (11) China’s virus mentioned several times in Fed’s report. (12) Lots of risky businesses in the corporate debt markets. (13) Running out of room to lower interest rates.

Valentine’s Day: Investors Still Love Stocks
(1) Love (for stocks) conquers all (including viruses). (2) Our 3500 target on S&P 500 is 3.5% from here. (3) SuperCaps leading the way. (4) Latest weekly proxies show revenues and earnings growth picking up—but that was before the virus outbreak. (5) Stocks remain on a liquidity diet catered by the major central banks. (6) Fed’s balance sheet expanding again. (7) GDPNow still tracking north of 2.0% for Q1. (8) Consumers may be stuffed with stuff. (9) Online shopping accounting for over a third of GAFO sales. (10) More single than married people in US. (11) Consumers are saving more.

US Stocks With Immunity
(1) Markets feeling better after shaking off the coronavirus. (2) Even the most sickly industries bounced on Wednesday. (3) Investors still loving FAANGMs and LargeCap Growth stocks. (4) Look, Ma, no steering wheel! Feds give first approval for autonomous car. (5) Nuro and many other players fighting for the autonomous vehicle delivery business. (6) Waymo’s AV taxi service offering limited rides around Phoenix. (7) GM and Ford have a long road ahead. (8) Musk says AV coming, but playing defense on Autopilot crashes. (9) Chinese food prices soaring, while retail sales may fall to Earth.

Powell’s Vaccine
(1) So far, coronavirus is a minor panic attack for stocks. (2) Investors betting virus will soon go away or that Fed will inject liquidity if it infects global economic growth. (3) Powell is “closely monitoring” the situation. (4) No sign of virus in forward revenues or earnings, yet. (5) Industry analysts are cutting Q1-Q3 earnings, but boosting Q4. (6) FAANGMs remain immune to the virus and are leading the meltup. (7) There’s no place like S&P 500 Homebuilders during the coronavirus outbreak. (8) Millennials starting to turn into homeowners.

China’s Chernobyl?
(1) Three Mile Island, Chernobyl, and China’s syndromes. (2) The collapse of corrupt regimes. (3) Will Dr. Li’s death lead to the China Spring? (4) Autocrats are sickening. (5) Another reason to leave China. (6) The Great Quarantine of China. (7) Signs of life in global PMIs during January, just before the virus made headline news. (8) Eurozone sentiment may have bottomed, though German auto production has not. (9) US productivity growth is moving in the right direction

Hysteria vs Hysteresis
(1) Pessimism vs optimism. (2) Timeline of the viral impact on DJIA. (3) A major known unknown. (4) Online dashboard showing rising body count. (5) Monitoring financial markets for clues. (6) Chinese stocks, copper/gold price ratio, and bond yield signaling risk-off. (7) S&P 500 Energy and Materials have been infected. (8) Stay Home again until virus crisis blows over. (9) Homebuilders and video games outperforming cruise lines, casinos, hotels, and air freight. (10) The US labor market is hot, yet wage inflation is not. (11) Powell says there is room to run as long as labor force participation rate continues to rise.

Social Insurance Is Inflating
(1) Comparing and contrasting. (2) Ford vs Tesla. (3) Insurance brokers vs insurance companies. (4) Rising premiums help the top line. (5) Low interest rates are a drag. (6) Social inflation translation: juries on the war path and attorneys on the hunt. (7) Anti-solar panels generate electricity while the moon shines.

Central Bankers Agonistes
(1) The sun is shining brighter in the US still. (2) Healthier to Stay Home during coronavirus outbreak. (3) Stocks aren’t cheap in the US compared to elsewhere in the world. (4) US revenues and earnings fundamentals look better than elsewhere in the world. (5) Fed is on hold for now, but the next rate move might be lower rather than higher. (6) inflation remains stubbornly below central bankers’ 2.0% target. (7) Powell’s list of six major uncertainties. (8) ECB and BOJ sticking with negative official interest rates, while buying more assets. (9) PBOC injecting liquidity to combat the virus. (10) Waiting on Fed and ECB reviews of their monetary policies.

The NABNAB Scenario
(1) Taking a break from the virus, and DC too. (2) The secret formula is NABNAB 2-2-2. (3) Failing to stall. (4) The Trauma of 2008 is still boosting profit margins today. (5) Productivity could be a game changer. (6) Consumers continue to spend, especially on health care. (7) Real wages at record high and rising along a trend line of 1.2% real annual growth. (8) Capital-spending growth falls along with CEO confidence. (9) Tech-related capital spending at record high. (10) Some evidence of Millennials turning from renters to homeowners. (11) Other possible sources of GDP strength in 2020: defense, infrastructure, and trade.

Made in China
(1) On the road again. (2) Unmasked man. (3) Coronavirus going viral. (4) Not as bad as the flu? (5) Great Quarantine of China. (6) Wet markets full of weird and tainted meats. (7) Coronavirus makes it into the Panic Attacks record book as #66. (8) Before the virus hit the tape, forward revenues and forward earnings rose to new record highs. (9) LargeCaps dropping less than SMidCaps. (10) Why is Growth beating Value again? (11) Stay Home beating Go Global during health crisis. (12) Movie review: “Little Women” (+).

Content Wars
(1) Crowded streaming market makes grabbing eyeballs harder. (2) Netflix growing fastest but spending more cash than it has. (3) Netflix says good-bye to departing Friends and relocating Office. (4) Competitors start hoarding content; Netflix responds by developing its own. (5) Comcast proud of Peacock; AT&T bets on HBO Now. (6) UK bids adieu to EU, now has lots to do. (7) UK’s stock market lags other countries’ in price performance and valuation.

Climate for a Change
(1) LargeCap’s forward revenues & earnings beat the SMidCaps. (2) Profit margins lower for stocks of all sizes. (3) No new high for SmallCap index price. (4) Valuation for SMidCaps worsened compared to LargeCap. (5) Coronavirus fears spread through markets. (6) FAANGMs causing P/E divergence between LargeCap and SMidCaps. (7) Global elite and youth activists debate climate change in Davos. (8) Global prosperity linked to carbon emissions? (9) IPCC says eight years left before planet gets too hot. (10) Corporate CEOs focused on sustainability for good. (11) Capital reallocated to sustainable investments.

Something To Fear
(1) When wishes come true. (2) P/E-led meltup increases risk of correction. (3) From nothing to fear to fearing a pandemic. (4) We are all virologists now. (5) China’s autocrats: part of the solution or part of the problem? (6) China syndrome: a major health crisis has been waiting to happen. (7) Has technical picture been too bullish? (8) Too many winners? (9) Valuation models: different strokes for different folks. (10) Misery Adjusted P/E is neutral. (11) Sticking with 3500 S&P 500 target by year-end.

Going Viral?
(1) Panic attacks vs bear markets. (2) Going for a ride with the Blue Angels. (3) Will latest virus outbreak be Panic Attack #66, or something much worse? (4) SARS, MERS, EVD, and now nCoV. (5) We are all virologists now. (6) Bad start to the Year of the Rat in China. (7) Signs of global life in commodity prices and flash M-PMIs. (8) Housing-led growth in US during 2020? (9) US leading indicators may have run out of room to signal economic expansion. (10) Railcar loadings are depressing, while truck tonnage is upbeat. (11) Neither boom nor bust in global forward revenues and earnings. (12) What’s the message from the bond market? (13) Movie review: Jojo Rabbit (+).

Staying Defensive in a World of Danger
(1) Dangerous world means more defense spending. (2) Boeing shares grounded, but most other aerospace & defense stocks flying high. (3) Mergers, spending on aircraft, missile defense, and space all help. (4) If Dems win Oval Office, there may be trouble for defense stocks ahead. (5) Venture capital funding a bit soft in Q4 but strong for 2019 as a whole. (6) Internet companies are receiving the most funding, especially software as a service.

Happy Chinese New Year
(1) Pigs, rats, and politicians. (2) Pandemics and plagues. (3) China rapidly becoming the world’s largest nursing home as a result of ongoing urbanization and previous one-child policy. (4) Real retail sales growth cut by over two-thirds in past 10 years. (5) Less bang per yuan of monetary easing. (6) Soaring food prices depressing retail sales too. (7) China’s PPI is a good indicator of global growth, and is deflating slightly. (8) Vehicle sales weak in China. (9) Trump’s trade deal with China looks good on paper. (10) Tariffs won’t be eliminated until Phase 2 deal is done. (11) IMF sees modest pickup in global economic growth ahead. (12) Commodity prices are showing signs of life, as are European auto sales.

Love Songs for Investors
(1) To the moon. (2) Sinatra’s stock market. (3) Powell gets blame for Q4-2018 meltdown and credit for meltup since then. (4) Fed giving more weight to inflation indicators; so should investors. (5) Fed is back in patient mode as inflation remains subdued. (6) The CPI has an upward bias relative to PCED. (7) Trump is the stock market’s rainmaker. (8) Trump morphing global multilateral trade system into bilateral one. (9) GDP growth: more of the same. (10) Wage gains aren’t inflationary if driven by productivity. (11) Real wages suggesting faster productivity growth. (12) Movie review: “Bombshell” (+).

Banking on the Trade Deal
(1) Analysts following Financials have low expectations for 2020. (2) Financials stocks rallied last year. (3) JPM/Citi blow past Q4 estimates. (4) Trade deal may boost lending and open Chinese market. (5) Yield curve has reversed its inversion. (6) Q4 fixed-income trading surge will mean tougher comps in 2020. (7) CECL keeps accountants busy. (8) Rally means happy investors but pricey stocks. (9) China gets closer to introducing a digital yuan; Fed’s Brainard suggests more gradual change in US.

Lots of Good News
(1) Tough comps for 2019 earnings. (2) 2020 should be better for earnings. (3) S&P 500 forward revenues and earnings at record highs. (4) Forward earnings implies a 9% increase in earnings this year. (5) Last year’s worries are so yesterday. (6) The Mullahs are cornered, and must fear the US after their top general was droned. (7) Is there method to Trump’s madness? (8) Trump’s favorite popularity poll is the stock market. (9) Valuation multiples are flying closer to the sun.

The Fed: Rounding up the Usual Suspects
(1) Running out of basis points. (2) Bernanke’s presidential address. (3) Bernanke promotes QE as permanent tool for Fed. (4) QE plus forward guidance = 300bps cut in federal funds rate, according to Big Ben. (5) Yellen and Powell agree with Bernanke. (6) Summers sees “last hurrah” for central banks. (7) FOMC’s annual rotation still leaves the Fed on hold. (8) A roundup of the views of Fed officials. (9) “In a good place.” (10) Powell is patient again. (11) The global economy remains relatively weak, and is on Fed’s radar screen.

Stocks & Bonds: In the Fast Lane
(1) Back to the future: forward P/E back at 18.4. (2) Getting closer to 3500 too fast, too soon. (3) S&P 500 forward revenues at new high, while forward earnings has stalled. (4) Is the stock market discounting a productivity growth rebound in the decade ahead? (5) Technology: from jets to main frames to PCs to a brave new world. (6) Reach-for-yield driving stock and bond prices higher. (7) Falling high yields. (8) Counting the number of jobs versus the number of workers. (9) Percentage of full-time workers highest since March 2008. (10) Movie review: “1917” (+ +).

The Vegas Show
(1) 2030 is only 10 years away. (2) A future full of futuristic gadgets. (3) Elon Musk on our roofs. (4) Elon Musk’s new battery. (5) Microbes as household pets. (6) A Crispr future. (7) Smart toilets. (8) 3-D plus one. (9) Musk in our brains. (10) Flying cars. (11) We will all be Jetsons. (12) What’s cheap, what’s not cheap in the S&P 500. (13) Paying up for safety.

Will Inflation Make a Comeback in 2020?
(1) Another 2%+ quarter for real GDP. (2) Good news and not-so-good news in trade. (3) Purchasing managers are upbeat in services, still depressed in manufacturing. (4) No growth in factory orders. (5) Truck and rail traffic are on the weak side. (6) Auto sales are cruising at the same speed. (7) Employment indicators still showing a strong labor market. (8) Big issue in 2020: Will rising wage inflation boost price inflation? (9) More wage inflation in services than in goods industries. (10) Competitive pressures should keep a lid on price inflation and stimulate productivity.

More Happy Dividend Returns in 2020?
(1) Is the market high on a sugar high provided by the central banks? (2) Investors should not be preachers. (3) The problem with P/E-led meltups. (4) The Fed’s balance sheet is expanding again. (5) The ECB’s balance sheet is expanding again. (6) The BOJ’s balance sheet never stopped expanding. (7) The PBOC has cut reserve requirements 7 times since early 2018. (8) Dividends growing solidly despite earnings growth recession. (9) Dividends’ CAGR trend is around 6% still. (10) Latest bull market in S&P 500 hugging 2% dividend yield valuation model. (11) Compounding dividends are the 8th Wonder of the World.

Nothing To Fear But Nothing To Fear (and Iran)
(1) Iran again. (2) Executive action in Baghdad. (3) The ’20s vs the ’70s. (4) Is there more upside left in stocks following the Roaring ’10s? (5) The wall of worry. (6) Less to worry about? (7) Will Iran be Panic Attack #66? (8) The meltup could be on hold depending on geopolitical developments in the Middle East. (9) The valuation question. (10) The earnings question. (11) The global growth question. (12) Global manufacturing remained depressed according to December’s M-PMIs. (13) Movie review: “Richard Jewell” (+ +).