Archive for January 2019

Yesterday, in a surprise, the Fed strongly suggested it won’t raise rates for a while and that more hikes might be history. Autos and especially housing will be large beneficiaries. What’s troubling is that the Fed is calling timeout with Fed funds a half-point above the rate of inflation, compared to two points historically. This…

Since 1926, only 11 companies have ranked #1 by market capitalization; Amazon is the latest. Firms that become #1 remain in that position for an average of about 15 months and outperform the market by an average of 48 percentage points over the five years leading up to becoming #1. The other ten firms that…

With San Francisco Bay Area housing prices in the stratosphere, the private sector is now planning to raise $500 million for affordable housing. Assuming affordable housing costs $400,000/unit, this will create just 1,250 units! The real problem: since 2010 the region has gained 700,000 jobs and built just over 100,000 units! Worse, since 1990 the…

For the week ending 1/19/19, first-time claims through state programs for unemployment fell to 199,000, the lowest level since 11/15/1969! Moreover, first-time claims have been below 300,000, a level associated with strong job growth, since 3/21/15, or 200 straight weeks, the best streak since record keeping began in 1967. 25,419 furloughed federal workers file through…

The Friday File: The priciest spice in the world is saffron at $5,000/lb. It takes 50,000 to 75,000 flowers to get one pound of saffron, with the best coming from Kashmir and Iran. A distant second is vanilla, which primarily comes from Madagascar and costs $600/lb. It’s so costly because the flowers must be hand-pollinated,…

December existing home sales came in at rate of just 4.99 million, the lowest since 11/15. Sales are down 10.3% Y-o-Y, 6.4% M-o-M, and the median price increased just 2.9% Y-o-Y, the weakest since 2/12, to $253,600. CY2018 sales were 5.34 million, versus 5.51 million in 2017 and the 2016 cyclical peak of 5.45 million.…

According to Trump’s Chairman of the Council of Economic Advisors, the government closure is knocking 0.13 of a point/week off GDP, not 0.05%/week as previously assumed. If the closure last through March, and that’s a big if, 19Q1 GDP growth would fall by 1.7 percentage points, reducing 19Q1 growth to 0.8% rather than the 2.5%…

Despite volatile equities, slowing global growth, a stronger dollar, trade disputes, and rising wages, corporate earnings look good. While 18Q4 earnings growth estimates have fallen from 20.1% to 14% over the past four months, the current ratio of negative to positive preannouncements is very low, and among firms that have announced, 75% have topped estimates.…

Chinese exports to the US fell 3.5% Y-o-Y in December, while global Chinese exports declined 4.4% Y-o-Y in December. Worse, imports fell 7.6% Y-o-Y in December, suggesting domestic Chinese demand is skidding. In another sign of a Chinese slowdown, the official purchasing managers’ index for Guangdong has suddenly disappeared. Add slowing global growth and that’s…

The Friday File: Earlier this week, John Bogle, a crusader for investor’s rights and the man who virtually single-handedly invented index funds, died at 89. His relentless focus on cutting investment fees at his firm (Vanguard), and the reduction in fees at other firms that resulted due to competition has probably saved investors $1 trillion,…