Archive for March, 2019

• Morning News: March 22, 2019
  Eddy Elfenbein, March 22nd, 2019 at 7:04 am

  Oil Prices Could Stay High, Thanks to Vladimir Putin and OPEC

  Manufacturing Slump Deals Another Blow to Europe’s Economic Outlook

  Drug Company Protections Are Latest Stumbling Block for Nafta Rewrite

  Fed’s New Abnormal Marks a Watershed Moment in a Low-Rate World

  The Bond Market’s Blind Faith in a Do-Nothing Fed

  Traders Are Blindsided Again by Treasuries Paying Same as Cash

  The Surprising Winners and Losers of This Year’s Tax Season

  The Great American Cardboard Comeback

  Chinese Smartphone Firms Jazz Up Products, Seize Turf in Home Market from Apple

  Apple’s iPhone Struggles Unravel Ambitions of Japan Display

  Levi’s Goes Public, With Jeans on the Trading Floor

  A Beginner’s Guide to MMT

  Cullen Roche: The Shortest (and Best) MMT Primer You’ll Ever Read

  Joshua Brown: The Kindergarten

  Howard Lindzon: Software Ate A Lot Of The World Since December… Relative Strength Primer

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• Morning News: March 21, 2019
  Eddy Elfenbein, March 21st, 2019 at 7:04 am

  Where Are We In The Current Cycle?

  From California to Oslo: Foreign Subsidies Fuel Norway’s E-Car Boom, for Now

  S&P 500 Setup Has Only Occurred One Other Time In Last 70 Years

  Markets Are Reeling After a ‘Bizarre’ Fed Surprise

  Powell Aims to Dodge Japan Deflation Trap With Dovish Fed Tilt

  Levi Strauss Heads Back to Public Markets Amid IPO Boom

  Tesla’s Meandering Energy Strategy Sows Pessimism

  What General Mills Could Teach Kraft Heinz

  Giant Military Contract Has a Hitch: A Little-Known Entrepreneur

  U.S. Whiskey Exports Dry Up As Tariffs Bite

  Doomed Jets Lacked 2 Key Safety Features That Boeing Sold as Extras

  Jury Finding Upends Bayer’s Roundup Defense Strategy

  Ben Carlson: The Market Won’t Provide High Returns Just Because You Need Them

  Animal Spirits: The Expectations Gap

  Jeff Miller: Are You Trading On Psychological Tilt?

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• Raytheon Raises Dividend
  Eddy Elfenbein, March 20th, 2019 at 5:25 pm

  For the 15th year in a row, Raytheon (RTN) has raised its dividend. The quarterly payout will rise from from 86.75 cents to 94.25 cents per share. That’s an increase of 8.6%.

  “With today’s announcement, we have increased our annual dividend for 15 consecutive years,” said Thomas A. Kennedy, Raytheon Chairman and CEO. “The dividend increase is a key part of our capital deployment strategy, and reflects our confidence in the company’s growth outlook and our continued focus on creating value for shareholders.”

  The new dividend will be paid on May 9 to shareholders of record as of the close of business on April 10.

• The Fed Keeps Rate the Same
  Eddy Elfenbein, March 20th, 2019 at 4:24 pm

  As expected, the Federal Reserve made no change in interest rates. This is about as short a statement as you’ll see:

  Information received since the Federal Open Market Committee met in January indicates that the labor market remains strong but that growth of economic activity has slowed from its solid rate in the fourth quarter. Payroll employment was little changed in February, but job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Recent indicators point to slower growth of household spending and business fixed investment in the first quarter. On a 12-month basis, overall inflation has declined, largely as a result of lower energy prices; inflation for items other than food and energy remains near 2 percent. On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed.

  Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes. In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.

  In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

  Voting for the FOMC monetary policy action were: Jerome H. Powell, Chairman; John C. Williams, Vice Chairman; Michelle W. Bowman; Lael Brainard; James Bullard; Richard H. Clarida; Charles L. Evans; Esther L. George; Randal K. Quarles; and Eric S. Rosengren.

  Here are the economic projections. This is where it gets interesting. Eleven of the 17 FOMC members don’t see any rate increases this year. They want the Fed funds range to stay at 2.25% to 2.5%. The median vote sees only one rate hike next year, and none in 2021.

  These new forecasts are a big change since the December meeting. The Fed is finally getting inline with reality. Interestingly, the Fed’s economic projections haven’t much changed. The FOMC seems to view real rates as stabilizing at 1%.

  After the news came out, the S&P 500 gapped from about 2,820 to about 2,835. But as the day wore on, it gave back that bump. The index closed the day at 2,824.23.

  The middle part of the yield curve rallied. The three- and five-year Treasuries closed eight basis points lower, while the seven- and ten-year both lost seven basis points.

• Morning News: March 20, 2019
  Eddy Elfenbein, March 20th, 2019 at 7:05 am

  EU Regulators Fine Google 1.49 Billion Euros for Blocking Advertising Rivals

  In Greece, an Economic Revival Fueled by ‘Golden Visas’ and Tourism

  Wall Street Is Betting the Fed’s Rate-Raising Days Are Done for Now

  Fed May Retain Bias to Hike Interest Rates: Decision-Day Guide

  Disney Closes $71 Billion Deal for Fox Entertainment Assets

  UBS Says First Quarter Was ‘One of the Worst’ in Recent History

  Ford Explorer Owners Say Their SUVs Are Making Them Sick

  How Dow Chemical Got Woke

  BMW Warns of Profit Slump and Sets a $14 Billion Savings Plan

  Jury Finds Bayer’s Roundup Weedkiller Caused Man’s Cancer

  Lyft IPO Oversubscribed Ahead of Listing Next Week

  Tesla’s Meandering Energy Strategy Is Still Killing Solar

  Cullen Roche: Is Government Debt “Equity”?

  Nick Maggiulli: We All Make Mistakes

  Jeff Carter: An Epic Fail in America & Costs Are Going Up Because The Economy is So Good

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• Morning News: March 19, 2019
  Eddy Elfenbein, March 19th, 2019 at 7:12 am

  Germany Makes Its Big Bank Problem Even Bigger

  JP Morgan and Goldman Sachs are Getting More Bullish on India

  Fed Chairman Powell Keeps Peddling A Dangerous Economic Myth

  Banking’s Back-Office Workhorses Are Merging as Technology Reshapes Finance

  Levi’s, Whose Jeans Are a Rugged Symbol of Americana, Prepares to Go Public

  Intel and the Department of Energy are Building America’s First Exascale Supercomputer, a Computer Capable of a Quintillion Calculations Per Second

  It’s Showtime For Apple – Not So Much For Investors

  Tesla Is Reportedly Gearing Up for a Big Quarter-End Delivery Push

  IBM Launches A Blockchain-Based Global Payments Network Using Stellar’s Cryptocurrency

  GM Considers Options for Its Lyft Stake Following IPO

  Trump Rebukes General Motors and Union Over Idling of Lordstown Plant

  Electric Vehicles: Fruitless Search For An Impossible Dream?

  Tilray Stock Gains Because Earnings Don’t Matter When the Marijuana Opportunity Is This Big

  Joshua Brown: Monopolies Consumers ❤

  Michael Batnick: You’re a Liar

  Ben Carlson: Talk Your Book: The Low Volatility Anomaly, Will the U.S. Continue to Dominate? & Daniel Kahneman on Intuition

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• S&P 500 Trades at Five-Month High
  Eddy Elfenbein, March 18th, 2019 at 9:59 am

  For the first time since October, the S&P 500 is above 2,830.

  

  Note how much the daily ranges have narrowed. Going by intra-day highs and lows, the S&P 500 has now made back 82% of what it lost.

• Another Mega-Deal for Payments
  Eddy Elfenbein, March 18th, 2019 at 8:36 am

  A few weeks ago, Fiserv (FISV) agreed to buy First Data in a mega-deal. Whenever you see a big deal in an industry, you often see the other players strike back. Today, FIS said it’s going to buy Worldpay for $34 billion.

  The industry is now at the heart of a dealmaking boom as consumers change the way they pay for goods and legacy providers are challenged by rivals from startups to Apple Pay. Industrywide revenue is projected to surge to $2.4 trillion by 2027, according to a report from Boston Consulting Group and Swift.

  (…)

  Payments companies earn fees from charging to service the billions of dollars of purchases made by consumers and businesses, and many have been turning to deals to grab market share. The rise of contactless payments, and the need to update back-end infrastructure, also have spurred mergers.

  We’re not done yet. Expect to see more deals ahead. There are also IPOs coming onboard. This is good news for Fiserv.

• Morning News: March 18, 2019
  Eddy Elfenbein, March 18th, 2019 at 6:57 am

  OPEC, Russia Deepen Oil Output Cuts but Disagree on Their Duration

  Nearly Half of Americans Don’t Expect to Live Comfortably in Retirement, But It’s Not Too Late

  FIS’s $34 Billion Bid for Worldpay Drives Payments Deal Spree

  Deutsche Bank Is in Talks With Commerzbank After Turnaround Efforts Failed

  Lyft to Seek Valuation of Up to $23 Billion in Its IPO

  Instagram Stories Will Generate More Ad Revenue Than All of Snap This Year

  Flying Taxis. Seriously?

  Heart Replacement Valves From Edwards and Medtronic Beat Surgery

  General Electric: Falling To Rock Bottom

  Why Are So Many Farmers Markets Failing? Because The Market Is Saturated

  Jelly Belly Creator Debuts Cannabis-Infused Jelly Beans

  Jeff Miller: Will the Fed Hint at a New Course?

  Cullen Roche: Is Government Debt “Equity”?

  Roger Nusbaum: Is “Your Number” Hokum

  Howard Lindzon: Momentum Monday – Sneaky Good Market Action

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• Industrial Production +0.1% in February
  Eddy Elfenbein, March 15th, 2019 at 10:59 am

  This morning’s Industrial Production report showed a slight increase last month. Last month, IP rose by 0.1% while the Street had been expecting an increase of 0.3%.

  Last month’s production rise was driven in large part by a 3.7% increase in utilities, a category subject to weather fluctuations. It also likely reflects some recovery from a weak January, when industry output fell a revised 0.4%.

  But manufacturing, which accounts for nearly three-fourths of the nation’s industrial production, remained on shaky footing last month. Output at all U.S. factories decreased 0.4% after falling 0.5% in January. The decline was spread across multiple sectors, with output of machinery, electronics and apparel all dropping.

  Economists are increasingly worried that recent trends in global industry, and a slowing world economy more broadly, will filter into the U.S. manufacturing industry.

  While recent Commerce Department figures showed domestic demand for manufactured goods remains solid, other measures have shown some cooling. The Institute for Supply Management said its measure of factory-sector activity weakened in February, and hiring in the sector has also slowed, according to the Labor Department.

  Industrial Production for February was below where it was in November.