Investing for Survival

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Monday, November 4, 2024

The Morning Call--America's free lunch economy is over

The Morning Call

11/5/24

The Market

Technical

Monday in the charts.

https://www.zerohedge.com/market-recaps/bonds-bid-bitcoin-skids-traders-take-profits-trump-bets

Trend spotting.

Market Call: Trend Spotting

Hedge funds pushing limits.

https://www.zerohedge.com/the-market-ear/all-hedge-funds-push-limits

Goldman adjusts its position on gold.

https://www.zerohedge.com/markets/goldman-makes-big-change-its-bullish-gold-trade-ahead-election

Traders are shifting their bets.

https://www.zerohedge.com/markets/traders-capitulate-long-rates-short-vix-positioning-election

Fundamental

Headlines

The Economy

September factory orders fell 0,5% versus projections of -0.4%; ex transportation orders, they were up 0.1%, in line.

October light vehicle sales totaled 16.2 million versus consensus of 15.6 million.

International

The October German manufacturing PMI was 43.0 versus expectations of 42.6; the October EU manufacturing PMI was 46.0 versus 45.9.

Other

Monetary Policy

What happened to long and variable lags?

https://www.apolloacademy.com/what-happened-to-long-and-variable-lags/

Abundant reserves enabled a soft landing.

https://scottgrannis.blogspot.com/2024/11/abundant-reserves-enabled-soft-landing.html

Two things we need from the Fed.

https://www.bloomberg.com/opinion/articles/2024-11-04/the-federal-reserve-must-deliver-two-things-this-week?srnd=homepage-americas

Fiscal Policy

One way road to crisis.

https://www.advisorperspectives.com/commentaries/2024/11/04/one-way-road-crisis

America’s free lunch economy is over.

https://www.bloomberg.com/opinion/articles/2024-11-04/harris-or-trump-would-both-face-the-end-of-the-free-lunch-economy?srnd=homepage-americas

Recession

Office delinquency rates spike.

https://wolfstreet.com/2024/11/04/office-cmbs-delinquency-rate-spikes-to-9-4-highest-since-worst-months-after-the-financial-crisis/

Bottom line.

The case for a Market melt up. The more I think about it, the more I think the ‘Elon Musk slash-a-thon’ could be the operative scenario. If so, this forecast would be at risk.

https://investorplace.com/2024/10/the-case-for-a-market-melt-up/

Another bullish prediction.

https://www.tker.co/p/stock-market-election-year-seasonality-and-uncertainty

Even more optimism.

https://www.ft.com/content/d594a4a5-b22d-4dcd-8f49-6f8b2e8cdad0

News on Stocks in Our Portfolios

What I am reading today

The eighth wonder of the ancient world.

The eighth wonder of the ancient world may have an untouched tomb

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Sunday, November 3, 2024

Monday Morning Chartology---Brace for a potentially chaotic week

The Morning Call

11/4/24

The Market

Technical

The inevitable happened this week---the S&P ceased ‘rollin’ along, breaking a short term uptrend off last August’s low. It did so on a gap down open which holds a positive in that that gap has to be closed. It also traded down to its 50 DMA and bounced, another plus. Still we are going into an emotionally charged week that could potentially lead to a post-election level of civil strife we have never witnessed in the US.

That said, the Market, which is generally an excellent discounting mechanism, seems unbothered by the likelihood of turmoil. Which strongly suggests to me that my concerns are way overblown. Nonetheless, with the potential for political uncertainty as well as the extraordinarily confusing pin action in bonds, gold, and the dollar, I think that caution is the better part of valor.

The election cometh.

The Presidential Election Cometh - RIA

Trading lessons from US elections.

https://www.ft.com/content/cdeb79b5-3244-4c77-9541-20614818224d

Probably not a good sign.

https://www.ft.com/content/61a7e376-5ad4-4d58-bbbb-1b443ab69591

The latest from BofA.

https://www.zerohedge.com/markets/harnett-most-contrarian-post-election-trade

The long bond continued its losing ways. However, it did bounce off the lower boundary of its very short term trading range, providing a glimmer of hope that the current sell off is coming to an end. On the other hand, it could be that it is the bond investors who are correctly discounting the potential for post-election turbulence---and if that is the case, then expect more downside.

GLD was down for the week. But, at this point, it is nothing more than a minor hiccup. Momentum remains to the upside and my position on gold remains the same: I don’t understand how the price action of gold can be so positive at the same time that interest rates and the dollar are soaring, barring some catastrophic economic/political/military event---which unfortunately seems (in my opinion) all too likely.

My thoughts on the dollar are unchanged:

Despite a minor selloff on Wednesday and Thursday, the dollar continues to shoot the moon---not suggesting but shouting that investors think that either something enormously positive is occurring or about to occur in the US or that something enormously negative is occurring or about to occur internationally. We can all speculate on what those may be but if they don’t happen it seems likely that some retracement is to be expected.

Stocks and the dollar versus bonds and gold.

Friday in the charts.

https://www.zerohedge.com/market-recaps/halloween-hangover-payrolls-pmi-puke-sparks-chaos-across-markets

Fundamental

Headlines

The Economy

Week of review

The economic stats last week were positive as were the primary indicators (three plus, one neutral, two minus). That pretty much fits my ‘muddle through’ scenario. Though I would caution that data over the next month will be distorted by the impact of the two Florida hurricanes.

https://wolfstreet.com/2024/11/01/hurricanes-helene-milton-and-the-boeing-strike-make-mess-of-jobs-report-and-wages-surge/

The US inflation numbers were neutral but overseas (which in total was upbeat) the price data was disappointing---which, as you know, fits my forecast.

…. unless and until somebody in Washington realizes the inflationary implications of the current horrendously irresponsible fiscal policy, I believe that either the Fed will have to finance that policy---meaning that higher inflation is an inevitability---or it won’t---meaning the federal government will suck capital out of the private sector, stagnating economic growth.

My forecast remains: (1) the economy ‘muddles through’ and (2) inflation has likely seen its lows.

Having said all that, this week’s news flow will likely be dominated by the election and its aftermath, particularly the latter. No election in my memory has been as contentious and the threats of violence by the losing side so numerous. We can all hope and pray that constitutional process will work as it’s intended; but I fear the loss of civility and its effect on the Market. Hope for the best, be prepared for the worst.

https://www.zerohedge.com/political/portents-chaos

The election litigation is getting scary.

https://www.zerohedge.com/political/halloween-over-election-litigation-getting-really-scary

International

Other

September median household income.

https://politicalcalculations.blogspot.com/2024/11/median-household-income-in-september.html

News on Stocks in Our Portfolios

T. Rowe Price (NASDAQ:TROW) declares $1.24/share quarterly dividend, in line with previous.

What I am reading today

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Friday, November 1, 2024

The Morning Call--Will there be a peaceful transition of power?

The Morning Call

11/1/24

Next week I will be in California. I am not going to get up at 4AM to deliver this post. So I will be sending it the night before---meaning that the over night and early morning news will appear the following day.

The Market

Technical

Thursday in the charts.

https://www.zerohedge.com/market-recaps/cool-earnings-hot-inflation-kill-goldilocks-narrative-stocks-gold-crypto-dump

Note: In yesterday’s pin action, the S&P broke a minor uptrend, but did so on a gap down open (which needs to be filled) and closed right on its 50 DMA which should provide some support. Absent that we could be looking at a reversal in momentum.

Five charts for Halloween.

https://www.ft.com/content/8fdfd551-34d7-4e6b-8d91-89b404e56fc4

Flashing fear.

https://www.zerohedge.com/the-market-ear/flashing-fear

Fundamental

Headlines

The Economy

The October Chicago PMI came in at 41.6 versus estimates of 47.0.

October nonfarm payrolls grew by 12,000 versus expectations of 113,000; the October unemployment rate was 4.1%, in line.

https://www.zerohedge.com/markets/jobs-shock-october-payrolls-huge-miss-private-payrolls-print-negative-first-time-2020

International

The October Japanese manufacturing PMI was reported at 49.2 versus forecasts of 49.0; the October Chinese Caixin manufacturing PMI was 50.3 versus 49.7; the October UK manufacturing PMI was 49.9 versus 50.3.

Other

Fiscal Policy

Fade the election.

https://www.advisorperspectives.com/commentaries/2024/10/31/part-2-debt-deficits-fade-election

Hallelujah.

https://www.zerohedge.com/political/trumps-potential-treasury-pick-vows-spending-cuts-partnership-musk

Inflation

Inflation doesn’t want to cooperate.

https://wolfstreet.com/2024/10/31/inflation-doesnt-want-to-cooperate-pce-price-indices-for-core-core-services-and-durable-goods-worsen-further-mom/

Recession

Consumer spending driving solid economic growth.

https://www.capitalspectator.com/consumer-spending-drives-solid-us-economic-growth-in-q3/

The Election

Election violence threatens dollar dominance. I think that the risk here is very real. This article implies that any disruptions in the electoral process will likely come from Trump. I disagree. I think it equally probable that the dems could either refuse to acknowledge a Trump win and seek to overturn it through nefarious means. In any case, I believe that the risk is not small. Let’s hope that I am wrong.

https://www.bloomberg.com/news/articles/2024-10-31/election-violence-risk-threatens-us-dollar-dominance?srnd=homepage-americas

The impact of uncertainty on the rest of the globe. Here is another article outlining potential problems arising from an undecided election. I don’t question that problems could arise. But once again the author seems to think that only Trump could precipitate any crisis while I think the risk could just as easily come from either side.

https://www.bloomberg.com/opinion/articles/2024-10-31/us-election-chaos-would-leave-a-vacuum-in-the-world?srnd=homepage-americas

On a more upbeat note, Goldman thinks that we will know the winner of the election fairly quickly which would make the focus of uncertainty on the reaction of the losing side.

https://www.zerohedge.com/political/election-night-what-will-we-know-and-when-will-we-know-it

Civil Strife

Preparing for war. Let’s hope this is just paranoia.

https://www.zerohedge.com/political/left-preparing-war-if-trump-wins

But maybe not.

https://www.zerohedge.com/political/watch-dc-begins-boarding-ahead-election-over-social-unrest-fears

News on Stocks in Our Portfolios

Exxon Mobil (NYSE:XOM) declares $0.99/share quarterly dividend, 4.2% increase from prior dividend of $0.95.

What I am reading today

The difference between the prediction’s market and polling.

https://sherwood.news/business/the-money-is-flooding-in-but-what-are-prediction-markets-truly-telling-us/

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Tuesday, November 5, 2024

The Morning Call---The coming fiscal storm

Monday, November 4, 2024

The Morning Call--America's free lunch economy is over

Sunday, November 3, 2024

Monday Morning Chartology---Brace for a potentially chaotic week

Friday, November 1, 2024

The Morning Call--Will there be a peaceful transition of power?

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