The market’s reaction to the dismal jobs data was uniform in its disappointment – while June rate-hike odds remain near 100%, September dipped a little (at just 30%), the dollar dropped, stocks fell, and bond yields tumbled. ‘Hard’ data is collapsing again to 13 month lows as soft data catches down. And September rate hike odds are stuck around 30%. 10Y Yields tumbled to 2.15 intraday – the lowest level since November 10th 2016… and broke below the key 200-day moving average. The Dollar Index tumbled, testing the 2017 lows. Gold jumped to 6-week highs, bouncing off its 50dma. And stocks double-dipped ba...
Employment at US companies increased 147,000 in May (in seasonally adjusted terms), according to this morning’s update from the Labor Department. The rise is below expectations, based on Econoday.com’s consensus forecast for a 173,500 jump in payrolls. The advance also represents a downshift from April’s 173,000 increase. But the softer monthly comparison was offset by a slightly stronger year-over-year change. On balance, today’s release suggests that the labor market remains on track for moderate if unspectacular growth in the near term. The weaker monthly increase is a bit disappointing, but monthly data is noisy. On several occa...
The US dollar was on the back burner throughout most of the week as data remained mixed and speculation about the Fed decision mounts. A rate decision in Australia, the ECB’s critical decision and the UK elections stand out in the first full week of June. Here are the highlights for the upcoming week. Fed members sent mixed messages. It seems that they are trapped in the expectations they created for a June hike, but they may make it a “dovish hike”. Their favorite inflation figure continued falling. In the UK, some opinion polls showed a tightening of the race, causing the pound to slide. But not all polls are equal and the only one ...
The US dollar was on the back burner throughout most of the week as data remained mixed and speculation about the Fed decision mounts. A rate decision in Australia, the ECB’s critical decision and the UK elections stand out in the first full week of June. Here are the highlights for the upcoming week. Fed members sent mixed messages. It seems that they are trapped in the expectations they created for a June hike, but they may make it a “dovish hike”. Their favorite inflation figure continued falling. In the UK, some opinion polls showed a tightening of the race, causing the pound to slide. But not all polls are equal and the only one ...
Sabine Royalty Trust (SBR) fared relatively well in 2016. It suffered right alongside the other royalty trusts, but Sabine maintained a high dividend payout thanks to the resilience of its quality assets. Sabine is on the high dividend stocks list thanks to its substantial dividend yield. You can see the full list of established 5%+ yielding stocks by clicking here. Sabine pays dividends on a monthly schedule, which gives investors the ability to compound their dividends more frequently than the traditional quarterly schedule. There are only 21 stocks that pay monthly dividends. You can see the entire list of monthly dividend payers here. ...
As we noted earlier this week, a Fed rate hike in less than two weeks’ time was basically a “done deal” heading into today’s Non-Farm Payrolls report (see “Sector showcase: The utility of utilities for handicapping the Fed” for more). When the jobs figures were released, at least a few traders had to reevaluate that outlook. On a headline basis, the US economy added “only” 138k jobs in May, below expectations of about a 180k gain. Adding insult to injury, 66k jobs were revised away from the previous two months’ reports, meaning that the US economy has generated 100k fewer jobs over the ...
Unemployment is LOW! As noted in the Fed’s Beige Book (which we discussed in Wednesday’s Live Trading Webinar), low unemployment is restraining growth due to a lack of qualified applicants. Low immigration isn’t helping either – to the point of crops rotting in the fields due to lack of laborers. The Fed is becoming very concerned about rising wage pressure, which can quickly eat into Corporate Profit Margins – especially when they are still having trouble pushing price increases through to the consumers. The ever-weakening Dollar means the workers have less buying power with the Dollar falling 6% since Trump to...
Return on invested capital (ROIC) is not only the most intuitive measure of corporate performance, but it is also the best. It measures how much profit a company generates for every dollar invested in the company. Return on gross invested capital (ROGIC) (seen in Figure 1) provides additional insights into the profitability of highly-capital intensive businesses. Depreciation policies may differ from firm to firm and can have a significant impact on both NOPAT and invested capital. ROGIC helps to minimize the impact of different depreciation policies and asset write-down policies. Properly calculating ROIC, the primary driver of stock pri...
I am out of commission today following a small surgery, so I want to thank my new friends at Morningside Hill Capital Management for standing in for me with today’s posting. The question over the strength of today’s job market is key to understanding the durability of the economy and the markets going forward. Pavel Velkov, CFA, and the entire team at Morningside Hill, take a deep dive into the statistics to get down to the startling conclusion. “The US jobs market has been described as the backbone of the recovery – 82 months of continuous jobs growth with unemployment hitting 4.5% – the lowest since 2007.However, the perceived st...