Morning News: May 14, 2020
Posted by Eddy Elfenbein on May 14th, 2020 at 7:05 am

Second Waves Are Plaguing Asia’s Virus Recovery

China’s ‘OK Boomer’: Generations Clash Over the Nation’s Future

IEA Sees Oil Market Improving Amid Sharp Drop in Production

Fed Chair Warns the Economy May Need More as Congress Hesitates

U.S. Weekly Jobless Benefits to Stay Elevated as Coronavirus Layoffs Widen

Wall Street Heavyweights Sound Alarm About Stock Prices

Goldman Sachs Says A Second Wave of Coronavirus Could Make the Fed Rethink Negative Interest Rates

US Leaders Should Approach Current Economic Issues Like A VC Investor Would, According To An Economist From Chicago Booth

JPMorgan’s U.S. Credit Card Holders Spent 40% Less Due to Coronavirus

Coronavirus Wrecked Tesla’s Momentum and Elon Musk Is Furious

Americans’ Commitment to Social Distancing Is Eroding

Ben Carlson: Animal Spirits: Fallen Angels

Michael Batnick: How Value Investing Works

Howard Lindzon: Buying Exhaustion? …And The Banks

Joshua Brown: tHe sToCk MarKeT is iGnorInG tHe rEaL EcONomY & Why Value Investing Will Never Die

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Financial Stocks Are Getting Crushed
Posted by Eddy Elfenbein on May 13th, 2020 at 11:29 am

Check out this chart of the S&P 500 Financial Sector divided by the S&P 500:

Here’s the same chart but YTD:

Financial stocks lagged during the bull, the bear and the new bull. What does it mean? My hunch is that the market is beginning to realize that rates may have to go negative and stay that way for some time.

Powell: 40% of Households Making Less Than $40K Lost a Job
Posted by Eddy Elfenbein on May 13th, 2020 at 11:25 am

Fed Chairman Jay Powell gave an online speech today. In it, he said that Congress and the White House need to spend more money to combat the economic crisis. That is, on top of what’s already been spent.

While he did not specify what those measures are and where they would come from, Powell said the coronavirus has triggered a situation unlike previous recessions the U.S. has endured, and the response may have to be more from Congress than the Fed.

He noted the unprecedented strength of the fiscal and monetary measures already taken but stressed the importance of making sure that the deepest slump since the Great Depression does not get out of control. The Fed has cut its benchmark rate to near zero and instituted multiple lending and liquidity programs, while Congress has appropriated close to $3 trillion in rescue funding.

The market is mixed so far today. The S&P 500 and Nasdaq are up, while the Dow and Russell 2000 are down. Powell said that 40% of households making less than $40,000 lost a job.

Morning News: May 13, 2020
Posted by Eddy Elfenbein on May 13th, 2020 at 7:05 am

UK Economy Posts Sharpest Monthly Decline On Record As Coronavirus Lockdowns Begin To Take Toll

U.S. Reports Record $738 Billion Budget Deficit in April

New Normal 2.0 for U.S. Economy Looks Awful, Long and Perilous

CPI and Core CPI in Rare Negative Territory

The Pandemic Will Permanently Change the Auto Industry

Americans Keep Clicking to Buy, Minting New Online Shopping Winners

Musk, Texas Governor Talk About Potential Tesla Move to Lone Star State

The Work-From-Home Trader Who Shook Global Markets

‘Pandemic Profiteering’: Uber’s Grubhub Proposal Draws Swift Rebukes

The World’s Most Controversial Gas Pipeline Is Nearing Its Endgame

Nick Maggiulli: How Much Could You Lose?

Ben Carlson: Does Better Virus Response Lead to Better Stock Market Outcomes?

Roger Nusbaum: Is A Depression-Like Event Coming? Is It Here Already?

Joshua Brown: Value Investing Is Immortal

Michael Batnick: The Price Is Wrong & The Case Against Value Investing

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Lowest Core Inflation on Record
Posted by Eddy Elfenbein on May 12th, 2020 at 10:32 am

This morning’s CPI report showed that consumer prices fell 0.8% in April. This is the second month in a row of deflation. Core inflation was down 0.4% which is the lowest on record (starting in 1957).

While the decline in prices was broad-based, the biggest swoons in the “core” part of the index came in apparel and transportation services, which dropped 4.7% apiece. Commodities not including food and energy fell 0.7% and medical care services prices were off 0.5%.

Used cars saw a 0.4% decline amid a slide in auto sales.

Big drops within the categories were car and truck rentals (-16.6%), airline fares (-15.2%) and men’s suits (-11.3%).

On a year-over-year basis, core CPI rose 1.4%, the smallest move since April 2011.

The danger of deflation is that it could turn into a vicious cycle of constantly lower prices. In other words, people hold off on buying things because they think prices will fall even more. As a result, businesses lower prices. And so on and so on.

Morning News: May 12, 2020
Posted by Eddy Elfenbein on May 12th, 2020 at 7:03 am

Saudi Arabia’s Latest Oil Production Cuts Show It Is Back In ‘Whatever It Takes’ Mode

Natural Gas Exports Slow as Pandemic Reduces Global Demand

China Announces New Tariff Waivers for Some U.S. Imports

Once Taboo, Investors Begin to Imagine Negative U.S. Rates

Fed Says It Will Begin Buying Corporate-Debt ETFs on Tuesday

Employers Rush to Adopt Virus Screening. The Tools May Not Help Much.

Boeing CEO Says a U.S. Airline Will ‘Most Likely’ Fold This Year

If Airlines Are Suffering, Why Are Some Planes So Full?

Popeyes Sticks to China Expansion Plan in Spite of Virus

Musk Reopens Tesla’s Plant, Dares Authorities to Arrest Him

Who Buys a $100 Million Shopping Mall in the Middle of a Pandemic?

Montana Judge Upholds Ruling That Canceled Keystone XL Pipeline Permit

Ben Carlson: Does Covid-19 Prove the Stock Market is Inefficient?

Howard Lindzon: Momentum Monday – The Stock Market Is Not The Economy and ‘The Road To Nasdaq 10,000’

Jeff Carter: Stick Necks Out Together

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Morning News: May 11, 2020
Posted by Eddy Elfenbein on May 11th, 2020 at 7:12 am

For Central Banks, Hope For Precision Fades Amid Pandemic Uncertainty

Chinese Investment in U.S. Drops, Pandemic to Weigh On This Year’s Bilateral Flows

Mysterious 2,572% Stock Rally Has Traders Scratching Their Heads

Repeat After Me: The Markets Are Not the Economy

3 Bitter Truths About Coronavirus Job Losses And The Economy

White House Considers More Coronavirus Aid As Jobs Picture Worsens

Small Firms Join Rush to Return Bailouts After Rules Revisions

Pork Chops vs. People: Battling Coronavirus in an Iowa Meat Plant

The Airline Business Is Terrible. It Will Probably Get Even Worse.

Scarred and Scared, the Reshaping of American Consumer Begins

Why Chicken Is Plentiful During the Pandemic and Beef Is Not

The Grapelord of Napa Faces a Threat Worse Than Plague

A Cape Cod Ice Cream Shop Reopened – And Faced Harassment So Bad One Worker Quit, Owner Says

Jeff Miller: Weighing the Week Ahead: Roadblocks to Recovery

Joshua Brown: Talking With Professor Galloway About the Economy vs the Stock Market

Ben Carlson: What Happens to Stocks After a Big Up Month?, Some Thoughts, Worries and Questions About the Crisis & The 5 Types of Investors In This Market

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20.5 Million Jobs Lost
Posted by Eddy Elfenbein on May 8th, 2020 at 11:03 am

The jobs report is out and it’s a rough one. A total of 20.5 million jobs were lost last month. The unemployment rate rose to 14.7%.

Both numbers easily smashed post-World War II era records and help reflect the profound damage done through efforts used to combat the virus.

Economists surveyed by Dow Jones had been expecting payrolls to shed 21.5 million and the unemployment rate to go to 16%. April’s unemployment rate topped the post-war record 10.8% but was short of the Great Depression high estimated at 24.9%. The financial crisis peak was 10% in October 2009.

Broadridge Financial Earns $1.67 per Share
Posted by Eddy Elfenbein on May 8th, 2020 at 11:02 am

We got our final earnings report this morning when Broadridge Financial Solutions (BR) said it made $1.67 per share for its fiscal Q3. That was below Wall Street’s view of $1.72 per share.

“Our financial performance during the Third Quarter and our outlook for Fiscal Year 2020 underscores the resilience of Broadridge’s business model. Third Quarter Recurring revenues rose 9% and Adjusted EPS rose 5% even in the face of significantly lower event-driven activity and proxy timing shift. While tempered by lower event-driven activity, our updated guidance calls for continued growth in the fourth quarter, reflecting the essential nature of our work and the dedication of our associates,” Mr. Gokey added.

Here’s their guidance:

The stock is basically flat for the day.

Q1 2020 Earnings Calendar
Posted by Eddy Elfenbein on May 8th, 2020 at 10:03 am

Twenty-one of our 25 Buy List stocks are reporting their Q1 earnings during this earnings season. Here’s a list of reporting dates, Wall Street’s consensus estimates and actual reported results.