Monday, September 14, 2015

The US Is on the Fast Track (excerpt)

Notwithstanding the slow pace of global economic activity, we expect enough strength in the US to drive earnings higher. While the S&P 500 Transportation index is down 19.3% from its record high on January 22, measures of actual transportation activity are very strong in the US. Railcar loadings of intermodal containers rose to a record high in early September, up 5.3% y/y based on the 26-week moving average of the data.

The ATA Truck Tonnage Index rebounded 2.8% m/m during July, remaining on its solid upward trend with a y/y gain of 3.7%. It’s just shy of its all-time high reached in January of this year.

The plunge in gasoline prices has supercharged gasoline usage, which is up 3.2% y/y through early September. Vehicle miles traveled rose to a record high during June. It’s hard to do all that driving without stopping along the way to do some shopping.

Today's Morning Briefing: Towers of Babel. (1) Kenny Rogers’ advice to investors. (2) Updating the case for a correction in a secular bull market. (3) Valuation is more reasonable and sustainable given low inflation. (4) Revenues and earnings remain on 7% uptrend line. (5) S&P 500 Transportation index is down big, while transportation indicators are up big. (6) Americans are driving more, probably to go shopping. (7) Temporary factors depressing inflation might not be so temporary. (8) Import prices are deflationary. (9) New towers reaching for the sky tend to be bearish. (10) Tower of Basel. (11) Lots of babel about stock market outlook, FOMC vote this week, and oil prices. (12) “Straight Outta Compton” (+ +). (More for subscribers.)

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