The charts above really look bullish.
But Bespoke Investment provides a longer term perspective suggesting that it doesn’t get much better than that…
…Especially with that coming in the way:
Daily Shot: Hard Times Hit High-End Housing Rising demand for luxury apartments has spurred an epic building boom and a new threat to the U.S. housing market
Excellent analysis by the WSJ’s Daily Shot. A quick summary:
- A massive inventory of new apartments has or is about to hit the market.
- As are result, vacancy rates are no longer declining and could begin climbing.
- With competition in the space heating up, banks are becoming more cautious in lending—on both new construction and existing apartment purchases.
- Rental inflation remains high but it could be peaking as renter competition heats up.
Soft data getting softer:
The Empire State Manufacturing Index of General Business Conditions for May fell to -1.0 from 5.2 in April, down from February’s peak reading of 18.7. (…)
The new orders component fell into negative territory for the first time since October, and the unfilled orders and inventories series also turned negative. The shipments, delivery times series also weakened. The employment index reversed just a piece of its recent strength. (…)
The prices paid series declined m/m but remained up y/y. Twenty-five percent of respondents reported paying higher prices, while five percent reported them lower. The prices received index similarly declined sharply to the lowest level since December. (…)
Ford Aims to Cut Global Workforce by Roughly 10% Ford Motor Co. aims to cut about 10% of its global workforce amid Chief Executive Officer Mark Fields’s drive to boost profits and the auto maker’s sliding stock price.
(…) Ford has 200,000 employees globally, half of which work in North America. (…)
Now, Ford has said it expects its profits to fall in 2017 and has flagged slowing sales in the U.S. and China—two of the world’s largest auto markets. (…)
Employment in North American, responsible for the bulk of the auto maker’s profits, has grown 25% over the past five years and the auto maker has also been expanding in China. (…)
- TRUCKING WOES
Trucking companies have a new worry beyond the tepid demand that’s bogged down their business. Operators trying to trade in their vehicles are taking financial hits following one of the steepest plunges in used-truck prices since the recession. WSJ Logistics Report’s Jennifer Smith writes the truckers are being sideswiped from two directions: Many are trying to downsize their fleets to combat the excess capacity that’s kept freight rates low, but that’s flooded the used-truck market. Many carriers are “upside down” on their trucks, says one expert, owing more on vehicles than the rigs are worth. That’s dented the bottom lines at Swift Transportation Co. , Knight Transportation Inc. and Werner Enterprises Inc. Prices for the average used Class 8 sleeper have fallen 22% in two years. Although prices seemed to have bottomed out, analysts expect excess supply of used rigs to loom over the industry into 2020.
Extending Production Cuts May Not Reduce Global Oil Stocks, Says IEA OPEC and its oil-producing partners may have to do more than merely extend their petroleum-output cuts to achieve their goal of rebalancing global supply and demand, the International Energy Agency said.
(…) In the run up to the cuts, OPEC pumped so much oil that storage levels rose, delaying the rebalancing.
Even if the OPEC and non-OPEC cuts are extended into the second half of 2017, the IEA said, “stocks at the end of 2017 might not have fallen to the five-year average, suggesting that much work remains to be done in the second half of 2017 to drain them further.”
Still, the IEA said that stockpiles in the most industrialized nations fell by about 1 million barrels a day in March. “Rebalancing is essentially here and, in the short term at least, is accelerating.” (…)
The IEA said it has increased its expectations for U.S. shale producers in 2017. It now expects total crude production in the country to be 790,000 barrels a day higher by the end of this year compared with the end of 2016.
The IEA said it expected its projections for U.S. shale to continue to change this year. “Such is the diversity of dynamism of the U.S. shale sector,” the agency’s monthly report said.
There were also warning signs for supply outside the U.S., the IEA said.
The overall outlook for the non-OPEC countries, 11 of which are voluntarily cutting production to support OPEC, shows growth in 2017 of nearly 600,000 barrels a day, up from last month’s forecast of 490,000 barrels a day.
The IEA also flagged increasing oil supplies coming from OPEC members like Libya and Nigeria, which were exempted from any obligation to cut output because of production issues. Oil output also rose in OPEC’s biggest producer, Saudi Arabia, where supply was up 50,000 barrels a day in April compared with March to 9.98 million barrels a day. (…)
I like charts a lot more than words. Ray Dalio delivers that in this analysis of the world.
Another kind of picture:
The WSJ has generally ben supportive of this Administration. This is from their lead editorial last weekend:
(…) The Trump White House is a mess, but then we knew that. The chaos and self-serving leaks after the Comey firing make the Bill Clinton White House look like a model of discipline and decorum. If Trump aides aren’t trashing each other, they’re trashing the boss, who doesn’t seem to mind humiliating them as he has spokesman Sean Spicer. Then there was this week’s leak—dumped to reporters favored by the Stephen Bannon team—that Mr. Trump is unhappy with General McMaster, who apparently suffers from being too capable.
The historical analogy isn’t Richard Nixon, whose advisers were effective in their abuses until they were finally discovered. This is more like Jimmy Carter —outsiders who arrived to drain the swamp and are swamped by incompetence. The blundering over the Comey decision and aftermath raises serious doubts that this White House has the focus and discipline to manage tax reform.
The main source of dysfunction is the man at the top. The President is his own worst enemy—impulsive, thin-skinned, undisciplined, by now readers know the story. Every time his supporters think he might finally be appreciating the weight of the job, or the gravity of a President’s words, he goes on a Twitter rant.
Rather than focus on his agenda, he keeps the Russia pot boiling by railing against critics. Health care—what’s that? He faults his communications team for mistakes, but they are usually based on incomplete information or an attempt to clean up the boss’s effusions.
Mr. Trump has assembled many able advisers and officials who are trying to serve the country and steer the mercurial President from his own worst instincts. If Mr. Trump won’t heed their counsel, he really will turn into Jimmy Carter.
Today, from The Economist blog:
Did Donald Trump brief the Russians? Another scandal in the Oval Office—and it’s a big one
(…) Perhaps it was that beguiling bonhomie that made Mr Trump, if the Post’s and subsequent reporting of the meeting is accurate, blunder so heinously. Citing serving intelligence officers, among other sources, the Post alleged that Mr Trump boasted to the Russians of his knowledge of an impending terrorist threat from Islamic State. “I get great intel. I have people brief me on great intel every day,” he is alleged to have said.
He is then reported to have divulged details of the threat, which had been provided to America’s spies by an allied intelligence agency, including details of the Middle Eastern city in which it was uncovered. According to the Post’s sources, these “disclosures jeopardised a critical source of intelligence on the Islamic State”. (…)
It must be hoped, for the sake of American and global security, that Mr Trump has indeed been maligned. Yet Mr McMaster’s choice of words sounded oddly legalistic. Denying the veracity of “the story… as reported” suggested he might be leaving himself room, at some later time, to acknowledge that, even if some of its details were false, the Post’s main allegation—that Mr Trump had leaked sensitive intelligence—was accurate. (…)
If Mr Trump really did shoot his mouth off to the friendly Russians, he probably broke no law. The president can choose to “declassifiy” almost whatever intelligence he sees fit.
But that scarcely minimises the gravity of the allegation against him. In the view of Alan Dershowitz, a legal scholar, it is “the most serious charge ever made against a sitting president of the United States”. (…)
Bob Corker, the respected chairman of the Senate foreign relations committee, with whom Mr Trump was until recently on good terms, described the administration as being in a “downward spiral”.
A spokesman for Paul Ryan, the hitherto supplicant Speaker of the House of Representatives, said he was awaiting a “full explanation” of the alleged leak to the Russians from the White House. (…)
The accumulative damage that Mr Trump is doing to America’s governing norms, it appears, has a counterpart in the damage he is doing, day by day, to his standing within the government and on the Hill, including among senior Republicans. The president never had many sincere supporters among elected Republicans. They backed him in fear of a vindictive tweet and the hope that he would sign conservative bills into law. But with the president’s approval rating plummeting and a diminishing prospect of the sorts of health-care and tax reforms they once dreamed of, both fear and hope are giving way to exasperation and contempt. (…)