Morgan Stanley's chief US equity strategist, Michael Wilson, has predicted what's known as an "earnings recession," for 2019. The FT reports: A string of disappointing forecasts from S&P 500 companies has led one of Wall Street’s leading market strategists to warn of a potential drop in earnings this year. Michael Wilson, chief US equity strategist for Morgan Stanley, slashed his base-case estimate for 2019 earnings per share growth to 1 per cent, down from 4.3 per cent. By contrast, Wall Street’s consensus estimate calls for earnings to grow 5 per cent to $170 a share, according to … [Read more...]
Record Hiring in Canada
Despite some weak data, Canada's employers are hiring at a record pace. Paul Vieira reports in The Wall Street Journal: Employment in Canada surged in January, led by the biggest one-month private-sector hiring spree on record, while the unemployment rate climbed on a sharp increase in the number of young people looking for a job. The Canadian economy added a net 66,800 jobs in January on a seasonally adjusted basis, Statistics Canada said Friday. That easily smashed market expectations for a net jobs increase of 5,000, according to economists at Royal Bank of Canada. In the previous … [Read more...]
This Leading Indicator Says U.S. Economy Still Strong
Some investors have pointed to the recent correction in stocks as a warning of recession and a reason for the Fed back-off of its interest rate hiking cycle. Recessions are often accompanied by falling stock prices, but falling prices don’t guarantee economic contraction. There have been plenty of false positives throughout history. While the jury is still out on whether the current stock market correction is a signal of recession, the coincident economic data continues to show economic strength. GDP is growing close to 3% according to the Atlanta Fed GDPNow forecast, industrial production … [Read more...]
Is China’s Weak Economy Hurting American Manufacturers?
Data on sales and earnings are painting a bleak picture of the Chinese economy. The trend could have an impact on U.S. manufacturers. Austen Hufford and Patrick McGroarty report for The Wall Street Journal: A growing number of industrial companies said their sales are softening in China, threatening a strong three-year run for U.S. manufacturers. Makers of everything from bulldozers to computer chips have bet heavily on expanding their business in a country of 1.4 billion people with an increasing appetite for world-class consumer goods and infrastructure. U.S. exports to China doubled … [Read more...]
Have Democrats Killed the Trump Bump?
In what may be a reaction to Nancy Pelosi's Democrats winning control of the House of Representative in November, small businesses' outlook for the future has declined sharply. Patrick Thomas reports for The Wall Street Journal: Optimism among small-business owners fell slightly in November for the third straight month, mainly due to concerns about slower economic growth and moderating expectations for sales, according to a survey from the National Federation of Independent Business. The NFIB Small Business Optimism Index had a November reading of 104.8, down 2.6 points from the prior … [Read more...]
Inflated Assets for All and to All a Good Night
Looks like the Fed is keeping the punch bowl full for the holidays with a cheery: “Inflated assets for all and to all a good night.” We’ll see how this plays out when the going gets tough next year. The Fed is already in the danger zone. Originally posted on Your Survival Guy. … [Read more...]
American Factories Booming
America's factories surprised economists with a stronger than expected reading on the Institute for Supply Management's manufacturing index. Economists had expected a reading of 57.9, but were pleasantly surprised with a strong reading of 59.3. Harriet Torry reports for The Wall Street Journal: Readings above 50 indicate activity is expanding across the manufacturing sector, while numbers below 50 signal contraction. November’s reading exceeded the 57.9 economists surveyed by The Wall Street Journal had expected. The report was compiled before this weekend’s announcement of a trade truce … [Read more...]
Millennials Want to Spend like their Parents, but Can’t Afford It
Millennials are known in some circles as not wanting to spend any money on anything. They live with their parents, they buy brandless goods at cheaper prices, and many times they would prefer to take an Uber than buy a car of their own. But this characterization of Millennial spending habits may be misconstrued. New research from the Fed indicates that Millennials may have all the same desire to spend as their parents, but simply can't afford it. Bloomberg's Jeremy Herron and Luke Kawa report: Millennials, long presumed to have less interest in the nonstop consumption of goods that … [Read more...]
Trump is Right to be “Angry” about GM
The drive by media has a lot of heart—giving President Trump a hard time about GM (Government Motors) cutting jobs—running headlines that he’s “Angry” and is “Threatening” the company. Talk about inheriting a government disaster. It was the Obama administration’s misguided bailout of the autos in 2008 that lead to this mess to begin with. And it was put on Trump’s plate. An industry reckoning was simply delayed as Obama doled out $11.3 billion to resuscitate—essentially an underfunded pension plan that happens to make cars and trucks—a dying business. And it was under Obama’s watch … [Read more...]
Top Gun: The Fed’s Powell in a Danger Zone
“When we were first starting out our mortgage rate was ten percent, not a two percent adjustable.” --says any parent who bought a home in the 1970s Remember when you understood how the banking system worked? They lent you money, you bought a home, paid them back for what felt like the rest of your life and dreamed of a mortgage burning party. The bank was happy, you had a roof over your head and they spread more money around town. In other words, the fractional banking system worked. Today? Sure, houses are being bought and sold. But who’s really … [Read more...]
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