Overnight numbers showed that China’s purchasing managers index for manufacturing fell to 50.3 in February. That was down from 51.3 in January. Economists surveyed by Bloomberg had expected a reading of 51.1 in the index. The services PMI declined to 54.4 for the month from 55.3 in January. Easy to understand why these index figures would make markets nervous. 50.3 is way too close to the level that signals contraction in this index
Share buybacks surged to hit record levels in the fourth quarter of 2017. U.S. companies announced $178 billion in buybacks in the quarter. That’s the largest total announcement of share buybacks in a single quarter on record, according to Birinyi Associations. Wall Street analysts are projecting that 2018 as a whole will set a record for buybacks in a year.
In the short-term, if bond traders and investors flee the euro and European bonds and pile into U.S. Treasuries, Treasury prices will up and yields go down despite any pick up in U.S. inflation. That would confound bond bears betting on falling prices and rising yields. So what are the odds of such a flight to the safety of U.S. Treasuries?
The International Energy Agency today said that “explosive growth” in U.S. oil production from wells in shale geologies is likely to extend beyond 2018. As you might just imagine, an oil market that is struggling to believe that current levels of production cuts from OPEC are enough to balance supply and demand didn’t react well to the “explosive growth” characterization. U.S. benchmark West Texas Intermediate fell 1.58% today
This morning–before the actual testimony by Fed chair Jerome Powell had ended but after Wall Street had read his prepared remarks–stocks moved ahead on Wall Street’s favorite story, Goldilocks. Powell seemed to be saying that economic growth was getting stronger, but that it wasn’t so strong that it would force the Fed to act more quickly. But then as the market actually heard Powell speak, it began to reassess how this story comes out.
Notes You Need for February 26: Internet taxes, EuroZone inflation, new home sales, Apple after iPhone X, Samsung Galaxy S9
In my daily trawling through the market I come upon lots of tidbits of knowledge that I think are important to investors but that don’t justify a full post. I’ve decided to start compiling these notes here each day in a kind of running mini blog that I’m calling Notes You Need. The typical item resembles this from today: “11: 40: Bloomberg is reporting that Apple (AAPL) is planning to release three new smartphones this year as it tries to rebound from disappointing sales of the iPhone X. The new models, tentatively set for a fall introduction, include the largest iPhone even (as Apple tries to grow in the phablet market), an ungraded handset the same size as the current iPhone X, and a less expensive model with some of the key features of the iPhone X.”
This is as good as it gets, says Goldman Sachs: Why that’s important to you in thinking about the next leg in this stock market
On Thursday February 22, Goldman Sachs said in a note to clients that the economic macro data as likely to be “as good as it gets.” This isn’t, in my opinion, a call for an immediate plunge in the markets. But with U.S. stocks trading near all time highs, I think the Goldman note is something all investors need to take seriously. Or at least the question it raises needs to be taken seriously. Here’s the question: If stocks are at all time highs and the economic data on economic growth, inflation, interest rates, etc. are as good as they’re going to get for this cycle, why should stocks move higher?
Ahead of congressional testimony tomorrow by new Federal Reserve Chairman Jerome Powell, Wall Street is buzzing with speculation that the Powell Fed will be willing let inflation run higher than its current target of 2%. Maybe as high as 2.5%.