WEEKLY DIGEST – THIS WEEK’S TOP POSTS
Capex at Risk of Slowing Across the Globe
Better than 90% of developed economies have increased fixed capital formation, which has a habit of marking cycle peaks. Search trends for an array of capital expenditures are beginning to slow, suggesting euphoric surveys are over their skis.
Jim’s View: Where Are The Tariff Effects?
When a new dynamic is introduced to a market, the reaction can often be clearly measured. The 20% decline in stocks when S&P downgraded the U.S credit rating in 2011 and the 14% selloff in the S&P 500 in August 2015 when China devalued its currency are but two examples. Many believe tariffs will prove to be a similar example of a new dynamic that changes market behavior. However, we find little evidence tariffs are changing market dynamics.
Investors Fearing Recession, but Oddly See Little Risk of Volatility
Economic growth has slowed into the summer of 2018, but investors continue to believe low volatility conditions will persist. We are very closely watching the decline in the percentage of economies producing above-average data changes. Continued deterioration would be a surprise to investors as conditions would be most ripe for drawdowns and higher volatility.
FOMC and ECB Policy Ready to Converge
FOMC and ECB policy divergence is set to return to convergence. We see an opportunity for December ’19 Euribor to cheapen on the curve and December ’19 Eurodollar to richen on the curve.
Home Equity Shunned, Credit Cards Remain Top Choice
Credit cards remain the spending vehicle of choice for consumers, who have shunned home equity post-crisis. Growing balances and rising delinquencies among smaller banks are of concern.
Markets Losing Confidence in OPEC
Oil markets are expecting prices to stay higher for longer. Sanctions on Iran are making the headlines but the situation in Venezuela could overwhelm any spare capacity response.
WEEKLY & MONTHLY REPORTS
Conference Call Replay – The State of the Markets at Mid-Year
The handout, audio replay and webinar replay of our July 12, 2018 conference call titled The State of the Markets at Mid-Year.
Inflation Watch – Gasoline Inflation Heating Up
Inflation statistics through June 2018.
Q2 2018 Earnings Season Preview
Q2 1018 earnings season gets underway this week. Earnings growth expectations are above 20% for the second time since 2010, while revenue expectations are their highest since 2011. Guidance is its most positive in about 20 years. With expectations so high, merely good results could be seen as a disappointment.