Dr. Ed's Blog

May 11 (Wednesday)

Latest Morning Briefing Executive Summary: More on Inflation & Stocks
The S&P 500 is undergoing a correction more persistent than the 72 panic attacks we’ve counted during this bull market, but will it become a bear market? The jury is still out. There is precedent for a valuation-led bear market despite stellar corporate fundamentals, during 1987. There was no recession that time, and the bear market was short-lived. … Is the real earnings yield as bearish as it seems? … Also: We look at what stock markets do during inflationary periods. … And: The collective voice of small business suggests the economy is in a stagflationary funk. … Finally: A look at what’s happening on Japan’s monetary and fiscal policy fronts.
(subscribers’ link)

YRI
Daily Markets Overview
Replay of Dr. Ed’s webinar on May 9.

Markets
Stocks Turmoil Spreads to Junk Bonds, Hurts Deals | W

Energy & food
Oil rises as Russia gas flow to Europe falls, EU Russian oil ban looms | R
Ukraine claims battlefield successes, curbs Russian gas to Europe | R
Big Oil braces for shareholder revolt over climate plans in proxy voting season | C
Ukraine Accuses Russia of Stealing Its Grain | W

Central banks
ECB’s Lagarde cements expectations for upcoming rate hike | C
Senate confirms Lisa Cook as first Black woman on Federal Reserve Board | C

US
U.S. Inflation Eased in April to 8.3% Annual Rate | W
Americans Planning Summer Travel Face a New Hurdle: High Inflation | W
Adjustable-rate mortgage demand surges to 14-year high, as homebuyers try to afford this pricey spring market | C

Europe
EU proposes tax incentives for equity financing like those for debt | R

China
China Consumer Inflation Accelerates Modestly | W
China calls WHO chief ‘irresponsible’ for saying zero-COVID strategy ‘not sustainable’ | R

Japan
Japan is set to open its doors in June, but some locals aren’t happy about it | C

Geopolitics & trade
Russia’s War in Ukraine Sparks Bomb-Shelter Revival in Poland | W

Industries & companies
Airlines: Traveler satisfaction is down as planes fill up and airfare rises, survey finds | C
Autos: How Ford’s F-150 Lightning stacks up against Rivian and Hummer electric pickups | C

May 10 (Tuesday)

Latest Morning Briefing Executive Summary: Inflation, Bonds & Stocks
Since 2008, the Fed’s quantitative easing had kept a lid on bond yields. But with the Fed now tightening—releasing bond yields to move solely by market forces—will yields be pushed above the inflation rate (where they usually reside)? A reversal from negative to positive real bond yields could trigger a credit crisis and recession; but we put the odds of that scenario at only 30%. Rather, we expect a soft landing for the economy, inflation moderating soon, and the Treasury bond yield marking time between 3.00%-3.25%. … For the stock market, high inflation boosts earnings yet depresses the valuations investors are willing to pay for those earnings. The lower valuations reflect investors’ fears that this will all end badly.
(subscribers’ link)

YRI
Daily Markets Overview
Replay of Dr. Ed’s webinar on May 9.

Markets
Stocks Slide to Lowest in 2022 as Rout Continues | W
Tech giants lost more than $1 trillion in value in the last three trading days | C
 
Central banks
Fed Rate Hikes Are Good for Banks—Unless They End in a Recession | W

US
Inflation outlook for consumers falls from record high, Fed survey shows | C
Taming inflation: The role of businesses and employees | The Hill
Biden calls on Congress to ‘immediately’ pass major Ukraine aid package before new Covid funding | C
Yellen says financial system working well despite ‘potential for continued volatility’ | C

Geopolitics & trade
The EU can’t quite get it together on a Russian oil embargo | Vox
Hungary Holds Up European Oil Embargo on Russia | W
Putin Uses Russia’s Victory Day Parade to Justify Invasion of Ukraine | W
Putin’s Victory Day speech gives no clue on Ukraine escalation | R
Putin’s Ukraine Adventure Unleashes Nuclear Genies | W

Crypto
Bitcoin Price Falls 54% From Its High | W
40% of bitcoin investors are now underwater, new data shows | C

Corporate finance
Tech’s latest IPOs are getting demolished, with Robinhood, Rivian, UiPath down over 70% from offer price | C
Rivian stock plummets as Ford unloads 8 million shares of EV start-up | C
Big Tech is subtly controlling our lives—and we need to fight back | P

May 9 (Monday)

Latest Morning Briefing Executive Summary: Inflation Peak-a-Boo
We concur with Fed Chair Powell that getting inflation back to Earth needn’t crash our strong, liquid economy. The Bond Vigilantes aren’t as far behind the inflation curve as the Fed: They’ve already tightened credit conditions in the financial markets significantly. We expect inflation to peak this summer between 6%-7% and to recede to 3%-4% next year with no recession. … We may have spotted the first signs of peaking inflation already, in lower three-month than y/y rises of several price and wage measures. … But there are certainly plenty of indicators that cast doubt on the peaking-soon scenario. … Also, a movie review: “Summit of the Gods” (+ + +).
(subscribers’ link)

YRI
Daily Markets Overview
Replay of Dr. Ed’s webinar on May 2.

Markets
Market’s 2022 Slide Has Already Changed Investor Behavior | W
Rates Are Rising and Stocks Are Taking a Beating. It Won’t End Soon. | BR
The Stock Market Looks Like a Bear. How to Avoid Getting Eaten. | BR
Big Up Big Down Days – The Big Picture | ritholtz.com

Global
Port Labor Talks Pose New Complication for Supply Chain | W

US
With Higher Pay and Better Hours, Teens Jump Into the Job Market | W
Pay Raises Are Historically High. Inflation Is Still Eclipsing Those Gains. | W
Hospitals Look to Raise Treatment Costs as Nurses’ Salaries Increase | W
Why is there a union boom? | C
They Came, They Hiked, They Stayed: Retirees Lift Fortunes in Rural America | W
The cities Americans moved to the most in 2021, according to Penske | C
Energy secretary: Why feds are spending $2.5 billion on carbon capture | C
Economic growth is generally modeled exponentially. But, what if that’s wrong? | Vox

China
China Remains an Outlier in a World of Surging Inflation | W
‘Stop asking why’: Shanghai tightens COVID lockdown, Beijing keeps testing | R

Geopolitics & trade
EU edges towards oil sanctions on Russia, no deal yet | R
How the West should respond to China’s search for foreign outposts | E

Industries & companies
Autos: The Future of Transportation Is a Lot More Than Tesla. How to Invest. | BR
Autos: GM’s Stock Is a Buy—Even Though the Company Must Do More to Challenge Tesla | BR
Autos: Toyota Is Trying to Catch Up in the Crowded EV Race. It May Be Too Late. | BR
Autos: Ford is selling 8 million Rivian shares, sources say | C
Biotech: This Biotech Company Sees DNA Testing as Formula for Growth | BR
Communications services: Meta is opening a store as VR headset sales inch closer to mainstream | C
Health Care: Wearable devices are connecting health care to daily life | E
Tech: The Tech Industry’s Epic Two-Year Run Sputters | W
Travel: Travel Is Recovering, but Travel Stocks Aren’t. Here’s Where the Opportunities Are. | BR

Corporate finance
Mergers Have Slowed, but a Wave of Deals Could Be Coming | BR
Musk’s $44 billion Twitter buyout challenged in shareholder lawsuit | R

May 7 (Saturday)

Latest Morning Briefing Executive Summary: Powell, Travel, Forward Earnings & Quantum Sensors
Investors liked the middle-of-the-road approach Fed Chair Powell laid out after yesterday’s FOMC meeting. We did too. … Travel-related industries are booming! Their Q1 earnings calls were brimming with optimism. Yet investors seem to have missed the memo: The share price indexes of most travel-related S&P 500 industries have plunged ytd ..: And it’s not just a travel thing: Most industries are seeing disconnects between earnings prospects and share price performance. Someone’s wrong: Either industry analysts are too optimistic in their estimates or investors too pessimistic about valuations. … Also: A developing technology with diverse potential uses: quantum sensors.
(subscribers’ link)

YRI
Daily Markets Overview
Replay of Dr. Ed’s webinar on May 2.

Markets
Stocks fall on Friday to close out tumultuous week, Dow drops for sixth straight week | C
Wall Street ends down on fears inflation will force tougher Fed tightening | R
Nasdaq records first five-week losing streak since 2012 | C
It’s the Worst Bond Market Since 1842. That’s the Good News. | W
 
Central banks
Ex-Fed Official Says Rates of at Least 3.5% Will Be Needed to Slow Inflation | W
The Fed could have trouble avoiding a double-dip recession | NN

US
U.S. unemployment rate expected to fall to 3.5% in April, job gains to slow | R
Rapid Pace of U.S. Job Growth Stretched Into April | W
Here’s where the jobs were in April 2022 — in one chart | C
The U.S. Economy Is Desperately Seeking Workers | W
Pay Raises Are Historically High. Inflation Is Still Eclipsing Those Gains. | W
Used-car prices are down from record highs, easing the impact of inflation | C
Baby Formula Is Getting Even Harder to Find | W

Europe
Pent-up demand prompts European travel recovery as COVID curbs ease | R

Geopolitics & trade
Biden announces military aid package to Ukraine | C
Chinese Tech Giants Quietly Retreat From Doing Business With Russia | W

Climate
U.S. takes unprecedented steps to replenish Colorado River’s Lake Powell | R

Crypto
Nvidia, SEC reach deal on cryptocurrency disclosures in 2017 | C
Opinion | What Is Happening to the People Falling for Crypto and NFTs | N

Technology
Unilever to offer robotic direct-to-consumer ice cream sales | Chain Store Age

May 6 (Friday)

Latest Morning Briefing Executive Summary:
Powell, Travel, Forward Earnings & Quantum Sensors
Investors liked the middle-of-the-road approach Fed Chair Powell laid out after yesterday’s FOMC meeting. We did too. … Travel-related industries are booming! Their Q1 earnings calls were brimming with optimism. Yet investors seem to have missed the memo: The share price indexes of most travel-related S&P 500 industries have plunged ytd ..: And it’s not just a travel thing: Most industries are seeing disconnects between earnings prospects and share price performance. Someone’s wrong: Either industry analysts are too optimistic in their estimates or investors too pessimistic about valuations. … Also: A developing technology with diverse potential uses: quantum sensors.
(subscribers’ link)

YRI
Daily Markets Overview
Replay of Dr. Ed’s webinar on May 2.

Markets
Dow Slides More Than 1,000 Points as Investors Reassess Fed Comments | W
Stocks are tumbling. Here’s what to keep in mind | C
Elon Musk and Cathie Wood knock passive index investing, saying it’s gone too far | C
U.S. bonds: 10-year Treasury yield surges to 3.06% | C
Mortgage Rates Hit 5.27%, Highest Level Since 2009 | W

Central banks
Ex-Fed Vice Chair Richard Clarida Says Rates Must Rise to at Least 3.5% | B
Why the market is taking Powell’s ‘soft-ish’ economic language so hard | C
Fed, Biden Administration Float New Lending Rules for Lower-Income Areas | W
BoE flags risk of recession and 10% inflation as it raises rates again | R

US
Worker output fell 7.5% in the first quarter, the biggest decline since 1947 | C
‘Unretirement’ is becoming a hot new trend in the sizzling U.S. labor market | C
E-commerce stocks plummet as consumers pull back online spending | C
Here’s what Americans plan to spend more money on as inflation rises | C
Jim Cramer says he sees signs inflation is peaking | C
Why the child tax credit has not been expanded, despite Democrats’ support | C
Karine Jean-Pierre to Be Next White House Press Secretary | B

Europe
Germany to help eastern EU states without ports access LNG -Scholz | R

China
China’s Services Sector in Doldrums as Covid-19 Lockdowns Bite | W
 
Geopolitics & trade
Unexplained Attacks Inside Russian Territory Raise Prospect of Wider Conflict | W
Inside Ukraine’s Besieged Azovstal Steel Plant: Siphoning Fuel, Singing Songs and Surviving the Night | W
How Elon Musk’s Starlink Got Battle-Tested in Ukraine | foreignpolicy.com

Industries & companies
Consumer discretionary: Union leader slams Amazon’s labor practices at Senate hearing | C
Communications services: Digital-Ad Giants Google, Facebook, Amazon Come Down From Pandemic Highs | W
Communications services: Facebook Parent Meta Hits the Brakes on Hiring as Growth Stalls | W
Energy: The Most-Hated Solar Company in America | W

Corporate finance
Shell Takes $3.9 Billion Charge Related to Russia Exit | W
Bausch + Lomb Expected to Price IPO at Low End or Below Targeted Range | W
Elon Musk Gets $7 Billion in Fresh Financing for Twitter Deal | W
Musk to lead Twitter temporarily after $44 bln takeover – source | R

May 5 (Thursday)

Latest Morning Briefing Executive Summary: Powell, Travel, Forward Earnings & Quantum Sensors
Investors liked the middle-of-the-road approach Fed Chair Powell laid out after yesterday’s FOMC meeting. We did too. … Travel-related industries are booming! Their Q1 earnings calls were brimming with optimism. Yet investors seem to have missed the memo: The share price indexes of most travel-related S&P 500 industries have plunged ytd ..: And it’s not just a travel thing: Most industries are seeing disconnects between earnings prospects and share price performance. Someone’s wrong: Either industry analysts are too optimistic in their estimates or investors too pessimistic about valuations. … Also: A developing technology with diverse potential uses: quantum sensors.
(subscribers’ link)

YRI
Daily Markets Overview
Replay of Dr. Ed’s webinar on May 2.

Markets
Wall Street closes with sharp gains after Fed’s interest rate hike | R
U.S. Stocks Close Sharply Higher as Investors Digest Powell’s Comments | W
Why Surging Natural-Gas Prices Haven’t Sparked a Drilling Boom | W
Russian Oil Ban, Ukraine War Present Risks to Global Economy, Janet Yellen Says | W
Treasury Yields Fall After Powell Downplays Chance of 0.75 Percentage Point Rate Increase | W

Central banks
Fed raises rates by half a percentage point — the biggest hike in two decades — to fight inflation | C
 
Global
Shanghai Lockdown Reignites Supply-Chain Problems for U.S. Companies | W

US
American Consumers Are Shopping, Traveling and Working Out Like It’s 2019 | W
More Americans than ever say it’s not a good time to buy a home | C

Geopolitics & trade
EU Proposes Ban on Russian Oil Imports | W
Are sanctions against Russia working? | Vox
Prolonged truce needed for Mariupol evacuations, Ukraine’s president says | R

Climate
The Salton Sea could produce the world’s greenest lithium, if new extraction technologies work | C

Beyond markets
Everything’s a WeWork Now  | Wired

May 4 (Wednesday)

Latest Morning Briefing Executive Summary: Fed Set To Hike By 200 Basis Points
The financial markets have thoroughly discounted the Fed’s plan to raise the federal funds rate incrementally by a total of 200bps, so why not dispense with the increments and go for it? That’s not in the Fed’s data-dependent DNA. … Today, we examine the case for investing in bonds: The Fed is bound to tame inflation one way or another. If inflation drops back to 3.0%-4.0% next year and 2.0% in 2024, as we expect, then a 3.00% 10-year Treasury bond yield is quite interesting. … Also: A look at the ECB’s policy playbook, which is much less hawkish than the Fed’s.
(subscribers’ link)

YRI
Daily Markets Overview
Replay of Dr. Ed’s webinar on May 2.

Markets
U.S. Stocks Finish Higher Ahead of Fed Meeting | W
Stocks rise, U.S. yields slip as markets await Fed rate hike | R
China’s Covid-19 Outbreak Cools Metals Rally | W

Central banks
The Fed’s half-point rate boost is expected; investors on edge | C
Fed’s Message on Interest-Rate Path, Destination Will Be Scrutinized | W
 
Energy
Oil gains 1% after U.S. crude stocks signal tighter supply | R
Europe Is About to Ban Russian Oil: What Happens Next? | NYT
Russia Wants to Sell More Energy to Asia, but Has to Slash Prices | NYT
High Electric Bills Get Ready for Another Energy Price Spike: High Electric Bills | NYT

US
U.S. Job Openings, Quits Reach March Records in Tight Labor Market | W
Immigrants to Get Extension for Expiring or Expired U.S. Work Permits | W
Starbucks Plans Barista Raises, Says Unionized Cafes Will Need to Bargain | W

Geopolitics & trade
Europe Moves to Sanction Russia Again, Closing In on Oil Embargo | W
Ukrainian Civilians Describe Desperate Efforts to Flee Bombed-Out Mariupol | W
Kremlin on high alert as coup rumors grow in Moscow: Disgruntled generals join FSB looking to oust Putin and end Ukraine war
Zelensky Says Companies Are Supporting Russia’s ‘War Machine’ if They Stay There | W
Biden Officials Divided Over Easing China Tariffs to Slow Inflation | W

Industries & companies
Tech: Global Chip Shortage’s Latest Worry: Too Few Chips for Chip-Making | W

Corporate finance
BP Takes $25.5 Billion Hit From Russia Exit | W

Virus
U.S. CDC says travelers should still wear masks on airplanes | R

May 3 (Tuesday)

Latest Morning Briefing Executive Summary: Too Much Pessimism?
To look at analysts’ record-high and rising estimates for the companies they follow, you’d never guess that investors are sweating bullets over prospects for the US economy. But are their fears of imminent recession justified? Today, we tackle that question, assessing both the negatives that investors are accentuating as well as the positives that some economic indicators are signaling. Importantly, the US economy is shipshape. … And we remind readers: Corrections, such as the S&P 500 is in now, tend to turn into bear markets only when investors’ recession fears materialize; when they fail to, valuation multiples tend to rebound.
(subscribers’ link)

YRI
Daily Markets Overview
Replay of Dr. Ed’s webinar on May 2.

Markets
U.S. stocks gain in seesaw session, benchmark Treasury yield hits 3% ahead of Fed | R
Stocks Climb After Worst Month Since 2020 | W
50% of market is in a bubble, Dan Suzuki warns as Fed gets ready to meet | C
U.S. Treasury: 10-year Treasury yield tops 3% for first time since 2018 | C

Central banks
Fears of a Fed mistake grow as this week’s anticipated interest rate hike looms | C

Global
Facing a Wheat Crisis, Countries Race to Remake an Entire Market on the Fly | W

US I
U.S. manufacturing activity slowest in more than 1-1/2 years as workers quit | R
Mortgage rates surge as home affordability nears record worst | C
-1.4% GDP Just Reminds Us of the Abject Stupidity of GDP | FO

US II
Home Buyers Are Finding Ways to Take the Sting Out of Rising Mortgage Rates | W
How much in student debt could Biden forgive? What’s on the table | C
New York’s Waldorf Astoria Hotel Finds a Rocky Path to Condo Conversion | W

Europe
Euro zone factory output growth stalled in April | R

Geopolitics & trade
In shift, Germany could back immediate EU ban on Russian oil | R
Ukraine evacuees flee to safety after ordeal in Mariupol steel works | R
Was Russia’s decision to cut off natural gas exports to Poland and Bulgaria a mistake?  | Vox
 
Corporate finance
Spirit Airlines Rejects JetBlue Bid, Sticks With Frontier Deal | W
 
Crypto
Warren Buffett wouldn’t spend $25 on ‘all of the bitcoin in the world’ | C

Beyond markets
California Four-Day Workweek Bill Is Shelved for Now | W

May 2 (Monday)

Latest Morning Briefing Executive Summary: The Big Leak
Spooked investors have driven valuation multiples down to the low end of our projected range and deposited the Nasdaq in a bear market and the S&P 500 back in correction territory. … Today we examine the causes and effects of global inflation. … Excessive US fiscal and monetary stimulus ignited the US inflation conflagration by triggering a demand shock that triggered a supply shock. When much of the stimulus leaked abroad (confirmed by trade data), it fueled global inflation. … Inflation has been deflating consumer spending on goods but not on services. But soon we expect durable goods inflation to peak and drop. Inflation has a history of being spikey. … Finally, movie review: “WeCrashed” (+ + +) is about WeWork, not the stock market.
(subscribers’ link)

YRI
Daily Markets Overview
Replay of Dr. Ed’s webinar on April 25.

Markets
Warren Buffett Says Markets Have Become a ‘Gambling Parlor’ | W
After a Long Bull Run for U.S. Stocks, Emerging Markets Are Now the Place to Be, Says This Global Investment Strategist | BR

Central banks
Fed Prepares Double-Barreled Tightening With Bond Runoff | W

Climate & sustainability
An ESG Fund That Isn’t Afraid of Energy Stocks | BR

Global
Can Brazil help with food shortages around the world? | E

US
U.S. consumers shrug off high inflation, lean on savings to boost spending | R
Inflation forces consumers to ask: Can I live without it? | C
Americans Are Showing Inflation Fatigue, and Some Companies See a Breaking Point | W
Republican Hutchinson, at odds with Trump, eyes 2024 U.S. presidential run | R
Biden roasts Trump, GOP, himself at correspondents’ dinner | C
The Great Resignation Is Just a Symptom of a Bigger Realignment | BR
 
Europe
Emmanuel Macron’s triumph, and the challenges he now faces | E

China
China ‘in a very tough spot’ as COVID-19 lockdowns hit economy, China Beige Book CEO explains
China claims Beijing is the true test of its pandemic policy | E
China’s martial rhetoric will not help it defeat covid | E

Geopolitics & trade
Russia Recasts Fight in Ukraine as War With the West | W
Putin Preparing Russians for War With NATO | Newsweek
Nancy Pelosi leads surprise delegation to Kyiv and Poland, and vows U.S. support | C
World War III is far more likely than anyone is prepared to admit
How rotten is Russia’s army? | E
Europe should levy a high tariff on Russian energy | E
How the war in Ukraine is changing Europe’s demography | E
Ukraine War Puts Spy Satellites for Hire in the Spotlight | W
Putin ‘will have cancer operation in the near future’ and ‘hand over power to hardline ex KGB chief’ | Daily Mail

Corporate finance
Elon Musk Needs to Make Twitter a Financial Success. Here’s How He Can Do It. | BR

Industries & companies
Cruise lines: The Cruise Crowd Is Back, Even if Investors Aren’t. Here’s Why It May Be Time to Take a Plunge. | BR
Pharma: Alzheimer’s Drugs Face a Crucial Test. It’s Unclear Whether Medicare Will Pay for Them. | BR
Retail: Retailers’ Stocks Are Priced for a Recession. The Market May Be Too Negative. | BR

Virus
Covid-19 Cases Rise in the U.S., With Limited Impact | W
Covid Latest: Omicron Sublineages Can Evade Antibodies | B
Moderna says its vaccine for ages under 6 will be ready for U.S. review in June | C

Technology
Amazon’s Astro Robot Is Crazy, Creepy and Fun | W

April 30 (Saturday)

Latest Morning Briefing Executive Summary: China, Tech & Electricity
With nearly a quarter of China’s people locked in their homes by strict Covid policies, China’s economy is suffering, its policymakers are reacting, and ripple effects are spreading throughout the globe. Today, we examine some of these effects on US companies with business ties to China and on financial markets. … Also: Investors have sent tech stocks to the doghouse, their collective performance down nearly 20% ytd, and the MegaCap-8 hasn’t been spared. Indeed, Netflix and Meta are down 67% and 46% ytd. … And a look at virtual power plants, making electricity demand as adjustable as solar/wind supply is intermittent.
(subscribers’ link)

YRI
Daily Markets Overview
Replay of Dr. Ed’s webinar on April 25.

Markets
Dow tumbles 900 points and Nasdaq drops 4% to close out a brutal month | C
Tech Rout Drags Nasdaq to Worst Month Since 2008 | W
Amazon, Google close out their worst months on Wall Street since 2008 | C
Exxon and Chevron, Buoyed by High Oil Prices, Shower Investors With Cash | W

Central banks
Big Fed rate hikes ahead, amid early signs hot inflation is peaking | R
Trio of Former Fed Officials Lament Central Bank’s Actions, See Good Odds of Recession | W

US
U.S. consumers shrug off high inflation, lean on savings to boost spending | R
U.S. Consumers Boosted Spending in March | W
Inflation Rises to Four-Decade High, According to the Fed’s Preferred Measure | W
Worker Pay and Benefits Grow at Record Pace, Pressuring Inflation | W
College-Educated Workers Help Unionize Places Like Starbucks | N

Europe
Eurozone Economy Keeps Growing but Recession Risk Looms | W

Japan
Japan’s consumer prices rise in January, but at slower pace | R

China
China signals easing of tech squeeze in bid to lift economy | R
China Plans Reprieve for Tech Giants, Including Delaying New Rules, as Economy Slows | W
 
Industries & companies
Pharma: Pfizer’s Covid-19 Pill Failed Study Testing Its Preventive Use | W

Corporate finance
Elon Musk sold more than $8 billion in Tesla stock in recent days | C
Breakingviews: Elon Musk probably won’t buy Twitter | R