S&P 500 and Margin Debt

S&P 500 and Margin Debt Margin debt has still not recovered from last December’s lows. Usually, it is mostly bullish for stocks, because investors are still fearful. Picture source: Merk Investments

Earnings, Margins and Valuation

Earnings, Margins and Valuation Considering earnings growth, operating margin and valuation, the S&P 500 should remain under pressure until Q3 earnings season. Picture source: Fidelity Investments

U.S. Corporate Profit Margin and Recession

U.S. Corporate Profit Margin and Recession The chart shows a U.S. corporate profit margin proxy. If it declines below 10% in this business cycle (red line), it could suggest a coming recession.

Margin Debt and S&P 500

Margin Debt and S&P 500 This chart shows that margin debt has not recovered from last December’s lows, while the stock market has risen sharply.Usually, it is mostly bullish for stocks, because investors are still fearful. Picture source: Yardeni Research, Inc.

Increased Productivity Boosts Profits Margins

Increased Productivity Boosts Profits Margins When a company increases productivity, it makes more products without increasing costs. Higher productivity can improve the company’s profit margin and total profits. During this business cycle, productivity has increased at an average rate of 1.3% year-over-year. But productivity has been cut in half since the previous business cycle. You…

Expected Fed Funds Rate

Expected Fed Funds Rate as of October 19, 2019 Fed funds futures for January 2021 imply an expected rate of only 1.22%. Click the Picture to Enlarge

U.S. ISM Manufacturing Index vs. U.S. Core CPI (Leading Indicator)

U.S. ISM Manufacturing Index vs. U.S. Core CPI (Leading Indicator) Annual core CPI in September remained steady at 2.4% . This chart suggests that the U.S. ISM Manufacturing Index leads U.S. Core CPI by 24 months. You may also like “ISM Manufacturing Index vs. S&P 500 Index” and “U.S. Core Inflation Expected Over the Next 21 Months.“…

Global Nominal GDP and Corporate Profits

Global Nominal GDP and Corporate Profits This chart shows the correlation and the slowdown in global growth and corporate profits. Historically, margin pressures have preceded the start of recessions. Picture source: J.P. Morgan

U.S. Core Inflation Expected Over the Next 21 Months (Leading Indicator)

U.S. Core Inflation Expected Over the Next 21 Months (Leading Indicator) This chart shows the U.S. core CPI expected over the next 21 months. It has been quite accurate for more than 20 years. The chart suggests that M2 velocity year-over-year leads U.S. core CPI by 21 months (R² = 0.61 since 1996). You may also…