The headlines say consumer credit rate of annual growth grew from last month. Our analysis disagrees – and we see a moderately lower growth rate. Analyst Opinion of the Consumer Credit Situation Not only does this data set suffer from backward revision (moderate to significant enough to change trends), but the use of compounding (projecting monthly change as annual change) by the Federal Reserve to determine consumer credit growth rates exaggerates the volatility in this data. The total consumer credit unadjusted growth in 2017 has been hovering around 6% year-over-year – and has been fairly stable. the default rate of consumer lo...
The latest inflation figures out of China weren’t much to talk about on the face of it, with CPI at 1.5% yoy in June and PPI at 5.5% – both unchanged from June and more or less in line with expectations. But what is notable, besides the persistent underlying inflation pressures we’re seeing, is the way producer prices have been rocked around by commodities. The following two charts help put it in context. The first shows how the surge in China’s inflation surprise index had a big helping hand from commodities (although I would also note that most had been too negative on China last year – at a time when we were o...
PDL BioPharma (NASDAQ:PDLI) acquires and manages products, royalty agreements and debt facilities in the biotech space. It is in the process of changing its business into a specialty pharma holding company, similar to Valeant Pharmaceuticals (NYSE:VRX), Perrigo (NASDAQ:PRGO), Horizon (NASDAQ:HZNP), and Depomed (NASDAQ:DEPO). Most of these types of companies, including PDLI, have taken hits recently. Specialty pharma companies have overextended themselves with debt from drug acquisitions, and due to public outcry and controversy in Washington, they aren’t able to raise drug prices substantially anymore. This has resulted in the prices an...
Back in April, we brought you something called “CitiWide Change Bank Is Back: Emerging Markets ETF Edition.” In that post, we lampooned (for the umpteenth time) the ridiculous notion that you can explain away an absurd underlying business model by citing “volume.” That argument is popular among those who defend the liquidity mismatch inherent in HY and EM bond ETFs and the best way to illustrate why it’s silly is to refer readers back to a classic 1988 SNL skit about a fictional bank called “CitiWide Change Bank.” The bank’s business model was simple: you bring them one denomination and they’ll give you any kind of change y...
While Price-to-Earnings is the first thing to cross one’s mind while using valuation metrics, Price-to-Sales has emerged as a convenient tool to determine the value of stocks that are incurring losses or are in an early cycle of development, generating meager or no profits. Though a loss-making company with a negative Price-to-Earnings ratio falls out of investors’ favor, its Price-to-Sales could indicate the hidden strength of its business. This underrated ratio is also used to identify recovery situation or ensure that a company’s growth is not overvalued. Price-to-Sales is often preferred over Price-to-Earnings as companies can m...
A new poll conducted on behalf of accountants MNP offers more sobering insight on the financial fragility of Canadian households. 27% of Canadians already ‘in over their head’ with mortgage payments: MNP. Here are some highlights: 30% say any drop in the value of their home will cause them financial difficulties. Even with no price drop or increase in interest rates, 27% say they are already ‘in over their head’ in terms of funding their current mortgage payments and expenses. Over 70% rate their ability to cope with a 1% interest rate increase as less than optimal and 77% say they would have difficulty managing an increase of just $...
AUD/USD Daily Technical Outlook: AUD/USD reversed off trendline resistance extending off the 2016 highs last month with the decline testing the lower parallel of this ascending pitchfork formation as support for the past few days now. The focus now turns against this region heading into the start of the week. Note that daily momentum is also at support and highlights the risk for a rebound off this level. AUD/USD 120min Notes: A closer look at the 120min chart highlights an embedded descending channel and a breach above this formation (7631) would be needed to validate the reversal. For now, I’ll favor fading weakness while with...
What are the long-term trends for multiple jobholders in the US? The Bureau of Labor Statistics has two decades of historical data to enlighten us on that topic, courtesy of Table A-16 in the monthly Current Population Survey of households. At present, multiple jobholders account for just 4.8 percent of civilian employment. The survey captures data for four subcategories of the multi-job workforce, the current relative sizes of which are illustrated in a pie chart. The distinction between “primary” and “secondary” jobs is a subjective one determined by the survey participants. Note: Not included in the statistics ar...
This morning’s announcement of Abercrombie’s failed sale process served as a startling reminder of just how toxic mall-based retailers have become to investors in the post-Amazon era. News that not a single suitor was willing to touch the once high-flying, teenage-catering, cologne-infused, mall-based wonderland has wreaked havoc, yet again, today on retail apparel chains, with Abercrombie down over 20% and several others plunging to new all-time lows. Of course, it’s not just the specialty apparel stores that are getting crushed. As we’ve noted several times in the past, the beloved anchor tenants of mall REITs hav...
The shares of PayPal (PYPL) are climbing after research firm Bernstein upgraded the stock to Outperform from Market Perform, saying that the company is poised to outperform over the next several years. LONG-TERM OUTPERFORMER: PayPal is probably at the beginning of a multiple year stretch of outperformance, contended Bernstein analyst Lisa Ellis. The company’s long-term outlook has improved because of its focus on “three critical drivers,” Ellis stated. Specifically, the company has improved its “Pay with PayPal” checkout button, while it has built partnerships with major companies including the credit card networ...