Each week we read dozens of transcripts from earnings calls and presentations as part of our investment process. Below is a weekly post which contains some of the most important quotes about the economy and industry trends from those transcripts. Click here to receive these posts weekly via email.

Editor’s Note: This week’s Digest was compiled by Erick Mokaya @ProbingInvestor

Consumption was weak in Q1 but the global economic recovery is expected to continue in Q2. Some signs indicate that we may be in a bubble but rest assured nobody knows when it will burst. All in all, companies and customers alike are positive.

The Macro Outlook:

Although the first quarter was weak, signs still suggest that the industrial economy is improving

“While first quarter economic data has been relatively soft, we continue to believe a gradual recovery of our markets is underway, driven by improvements in the global economic activity…all indications are that this unprecedented contraction in the capital spending of our customers is coming to a close and optimism is there. Our industry has always been a late cycle industry and this cycle is no different.” —Fluor Corp. CEO David Thomas Seaton

Inventories are low, lead times are extending and capacity is narrowing

“inventories at Microchip as well as at our distributors are towards the low-end of the normal range, therefore we are starting to see some lengthening of our lead times. We’re starting to see challenges in fab, foundry, probe, assembly and test capacity. We have increased wafer starts in our three internal fabs and we’re adding capacity in our three back-end facilities. Despite all this, we are seeing significant business that we’re not able to support by the customer requested dates.” —Microchip CEO Steve Sanghi

This recovery is long in the tooth, but most see it continuing

“we’re comfortable with US growth and European growth and even though it does – even though this recovery is long in the tooth, we see it continuing for the time being.” – Third Point LLC CEO Daniel Loeb

Still, it’s not a good sign that the consumer appears to be a laggard around the world

“Aggregate demand slowed markedly in 2017 Q1…The slowdown appears to be concentrated in consumer-facing sectors….consumption growth will be slower in the near term than previously anticipated before recovering in the latter part of the forecast period as real income picks up.” Bank of England

“Private consumption, the main growth driver in recent years, expanded at its fastest pace in 10 years in 2016 but is set to moderate this year as inflation partly erodes gains in the purchasing power of households.” European Commission

“One reason is that much of the weakness in the first quarter was related to consumption, yet personal income and wealth have continued to rise, and consumer confidence indices remain quite positive. So my expectation is that consumption will re-emerge in the second quarter and we will continue to have a consumption-led recovery.” – Federal Reserve Bank of Boston President Eric Rosengren

And there are some signs we are in a bubble

“The enthusiasm for Tesla and other bubble basket stocks is reminiscent of the March 2000 dot-com bubble as of the case then, the bulls have rejected conventional valuation methods for a handful of stocks that seemingly can only go up. While we don’t know exactly when the bubble will pop, it eventually will.” David Einhorn – Chairman Greenlight Capital Re

Low volatility periods like this historically precede a shake up

“The low volatility itself might be a kind of bubble of confidence, but we won’t know until we know…Every time I get accustomed to low volatility like we were towards the end of the Greenspan era, and we think we have all the levers under the control and there’s low risk in the world and the world is awash with liquidity that pounces on every aberration in the market so things go in. Something erupts to remind us of our – that that idea that anybody is in control of anything is hubris and the world doesn’t perform like that for long periods of time….this is not a normal resting state.” Goldman Sachs Chairman and CEO Lloyd Blankfein

Valuations should be at a discount, not a premium

“The Fed has borrowed more from future consumption than ever before. If we have borrowed more from our future than any time in history and markets value the future, we should be selling at a discount, not a premium to historic valuations.” – Stan Druckenmiller of Duquese Family Office

International:

Japan is no longer in deflation

“We are not in a deflationary situation anymore….two factors – output gap, inflation expectations – both of them would converge and contribute to raising wages and prices.” Haruhiko Kuroda, Governor, Bank of Japan on CNBC

And business is good in China and India

“We were obviously very, very happy with our business in China and India….our activities in China are really, really strong, people are upbeat. And the same applies to India.” Christian Ulbrich – Jones Lang LaSalle, Inc.

Uncertainties are expected to persist as elections are held

“there is going to be a level of anxiety around each of these elections throughout the year and they are spaced out throughout the year…we’re going to be having periods of relative optimism and then periods where market participants pull back, awaiting the outcome of these various elections.” Mark E. Almeida – Moody’s Corp

The French president-elect has a pro-globalization agenda though

“I’ll work to rebuild the link between Europe and the people it is made up of, between Europe and citizens.” Emmanuel Macron – French president-elect

Some see potential in emerging markets.

“The valuation of emerging markets is half the valuation of the S&P 500…I just think EM has more potential upside than ever.” Jeffrey Gundlach Doubleline Capital

Financials:

Loan origination is up

“Another sign of good commercial activities is, of course, the loan origination…The production is up by 28% compared with last year. Production on housing loan also is very variant. The production turned that volume up of €5.9 million, an increase of 63% on a year-on-year basis…” Philippe Heim – Chief Financial Officer Societe Generale

It is a good time to issue and refinance debt

“it is a good opportunity for issuers to be in the market, whether it’s refinancing or new money or upping their outstanding debt. These are attractive conditions and looking ahead to potential interest rate increases going forward.” Raymond W. McDaniel, Jr. – Moody’s Corp.

Even Valeant was able to refinance

“By refinancing the debt, we now have a very manageable debt paydown schedule for the next several years. We shifted to about 75% fixed versus floating rate debt and, finally, we substantially improved our covenant position” Paul S. Herendeen – Valeant Pharmaceuticals International, Inc.

GSE reform could have a big impact on real estate markets

“A potential and significant shock to this sector of the commercial real estate market could occur if proposals require the GSEs to reduce their holdings of multi-family loans.” Eric Rosengren, president and CEO of the Federal Reserve Bank of Boston

Technology:

AI may represent a radical shift in software

“AI is going to infuse all of software. AI is going to eat software. Whereas Marc [Andreessen] said that software is going to eat the world, AI is going to eat software, and it’s going to be in every aspect of software. Every single software developer has to learn deep learning. Every single software developer has to apply machine learning. Every software developer will have to learn AI. Every single company will use AI. AI is the automation of automation” Jen-Hsun Huang – NVIDIA Corp.

Mobile continues to take market share in media consumption

“Almost 80% of the people who connect with ESPN each month access the content on mobile devices. In Q2, ESPN’s suite of mobile apps reached a monthly audience of almost 23 million unique users who collectively spent more than 5.2 billion minutes engaging with ESPN on those platforms during the quarter. Mobile is clearly going to play a major role in the future of media Robert A. Iger – The Walt Disney Co.

Snapchat’s core users can’t be reached by television

“…Nielsen found that 45% of 18- to 34-year-olds in the U.S. are reached by Snapchat on any given day. This is nine times more than the average daily reach of the top 15 TV networks and nearly 5 times more than the top TV network. 87% of our U.S. daily active users between the ages of 18 and 34 cannot be reached by any top 15 TV network.” Imran Khan – Chief Strategy Officer Snap

Miscellaneous Nuggets of Wisdom

There’s a difference between forecasting and risk management

“I always differentiate forecasting what do you think will happen from the exercise of risk management. In risk management, I don’t care what anybody thinks. I don’t care what I think. I’m just preparing for contingencies. On the other hand, in our trading businesses and trying to anticipate flows and what clients want to accomplish, there I have to try to guess the future and where thing are going. So those are two different exercises.” Goldman Sachs Chairman and CEO Lloyd Blankfein