The Morning Call--Reflation frustration

 

The Morning Call

 

11/20/24

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/market-recaps/bonds-bitcoin-bullion-bid-markets-mull-moscow-mullahs-musk-macro

 

            Momentum is the most overbought since 2007.

            https://www.zerohedge.com/the-market-ear/most-overbought-2007-and-bodes-well-year-end-melt

 

            To hold or not to hold?

            https://www.zerohedge.com/the-market-ear/hold-or-not-hold-0

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications rose 1.7% while purchase applications were flat.

 

                        International

 

September EU YoY constructions output declined 1.6% versus forecasts of -1.0%.

 

The October Japanese trade balance was -Y461.2 billion versus projections of -Y360.4 billion.

 

October German PPI was up 0.2%, in line.

 

October UK CPI was up 0.6% versus estimates of +0.5%; core CPI was up 0.4% versus +0.3%.

 

                        Other

 

                          A closer look at yesterday’s housing numbers.

                          https://bonddad.blogspot.com/2024/11/leading-housing-construction-data.html

 

                          Economic uncertainty is rising.

                          https://econbrowser.com/archives/2024/11/the-return-of-economic-policy-uncertainty

 

                          For the moment, there are few problems in the consumer credit market.

                          https://www.wsj.com/economy/consumers/things-are-quiet-in-consumer-credit-too-quiet-42f22610?mod=economy_lead_story

 

                          October LA port traffic surges.

                          https://www.calculatedriskblog.com/2024/11/long-beach-port-traffic-surges-to.html

 

            Fiscal Policy

 

              Pentagon fails its seventh consecutive audit.

              https://notthebee.com/article/john-stewart-grilling-a-dod-official-about-their-failed-audit-is-one-of-the-best-things-on-the-internet-right-now

 

            Inflation

 

              Reflation frustration.

              https://www.zerohedge.com/the-market-ear/hawkish-tua

 

            Tariffs

 

              There is no economic case for tariffs.

              https://www.cato.org/blog/trump-teams-case-new-tariffs-remains-daunting

 

              Are the worst case fears over Trump’s tariffs justified?

              https://www.bloomberg.com/news/newsletters/2024-11-19/supply-chain-latest-economic-analysis-of-trump-tariffs?srnd=homepage-americas

 

              Maybe so.

              https://www.zerohedge.com/political/trump-pick-lutnick-commerce-secretary-reports

 

            Geopolitics

 

              What’s next for Ukraine?

  https://www.nakedcapitalism.com/2024/11/as-biden-uses-long-range-strikes-into-russia-to-create-problems-for-trump-what-else-might-happen-with-ukraine-when-trump-takes-over.html

 

 

    Bottom line.

 

            The case for Bitcoin.

            https://www.riskhedge.com/outplacement/btc-250000/rcm?utm_campaign=RH-144&utm_content=RH144OP708&utm_medium=ED&utm_source=rcm

 

            2025 S&P earnings forecast.

            https://politicalcalculations.blogspot.com/2024/11/fall-2024-snapshot-of-expected-future-s.html

 

            An earnings led meltup.

            An Earnings-Led Meltup For Stocks?

 

            How to deal with noisy markets.

            https://www.ft.com/content/1d2158a5-2f16-4998-a643-96eb2897f5cb

 

            Ravenous foreign appetite for US Treasuries.

            https://wolfstreet.com/2024/11/18/us-treasury-debt-held-by-foreign-investors-ravenous-appetite-for-juicy-treasury-yields-juicy-compared-to-their-stuff-at-home/

 

            Higher rates are coming.

            https://www.advisorperspectives.com/commentaries/2024/11/19/economic-strength-drives-long-term-rates

 

                Where does the price of gold go from here?

            https://www.bloomberg.com/opinion/articles/2024-11-19/gold-is-at-the-mercy-of-trump-china-and-king-dollar?srnd=homepage-americas

 

                Which asset has the best ‘bubble potential’?

            https://behaviouralinvestment.com/2024/11/19/which-asset-has-the-best-bubble-potential/

 

    News on Stocks in Our Portfolios

 

Genuine Parts (NYSE:GPC) declares $1.00/share quarterly dividend, in line with previous.

 

Williams-Sonoma press release (NYSE:WSM): Q3 Non-GAAP EPS of $1.96 beats by $0.19.

Revenue of $1.8B (-2.7% Y/Y) beats by $20M.

 

 

What I am reading today

 

            The case of Ireland’s missing crown jewels.

            Why the case of Ireland’s missing crown jewels remains unsolved after more than a century

 

            Wednesday morning humor.

            https://babylonbee.com/news/9-things-rfk-jr-plans-to-do-on-day-1-to-make-america-healthy-again

 

            The link between blood type and disease.

            https://www.zerohedge.com/medical/link-between-blood-types-and-risks-covid-19-cancer-and-other-diseases

 

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

 

 

 

The Morning Call--Reasons to be worried

 

The Morning Call

 

11/19/24

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/market-recaps/bitcoin-bullion-black-gold-bonds-bid-trump-trade-builds

 

            Reasons to be worried.

            https://www.zerohedge.com/the-market-ear/warrens-worried-should-you-be-too

 

            Gold suffers worse week in three years.

            https://www.ft.com/content/760ec80b-68ef-471a-b712-23c4cc16d1ed

 

            Whither gold?

 

 

            https://www.zerohedge.com/the-market-ear/gold-post-trump-puke

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Month to date retail chain store sales grew faster than in the prior week.

 

October housing starts fell 3.1% versus expectations of -0.2%; building permits were off 0.6% versus +2.5%.

 

                          The November housing index was reported at 46 versus estimates of 44.

                       

                        International

 

                          October EU CPI was up 0.3%, in line.

 

                        Other

 

                          Consumers have money and they plan to spend it during the holidays.

                          https://www.tker.co/p/household-finances-strong-holiday-shopping-preview

 

                          Prime and subprime auto loan delinquency rates.

  https://wolfstreet.com/2024/11/16/auto-loan-balances-burden-subprime-prime-delinquency-rates-and-subprime-dealer-americas-car-mart-in-q3-2024/

 

                          Interest rates, inflation and housing.

                          https://bonddad.blogspot.com/2024/11/whither-housing-look-at-interest-rate.html

 

            Fiscal Policy

 

              Markets could have the final say of Trump’s tax and tariff policies.

              https://thehill.com/opinion/finance/4990672-trump-election-stock-market/

 

              Cutting spending will be harder than you think.

              https://www.advisorperspectives.com/commentaries/2024/11/18/trump-inflation-problem

 

            Inflation

 

              The battle against inflation has not been won.

              https://www.zerohedge.com/economics/inflation-fire-not-extinguished-yet-far-it

 

            Recession

 

              Big four recession indicators.

              https://www.advisorperspectives.com/dshort/updates/2024/11/15/the-big-four-recession-indicators

 

              New Q4 nowcast---very close to ‘muddle through’.

              https://www.capitalspectator.com/slower-growth-expected-for-the-us-economy-in-q4/

 

            Geopolitics

 

              Ukraine fires US made missiles deep into Russian territory.

              https://www.zerohedge.com/markets/ukraine-launches-first-atacms-strike-russia-sending-markets-reeling-amid-ww3-fears

 

              We are going to get lots more escalation on multiple fronts.

              https://www.zerohedge.com/markets/we-are-going-get-lots-more-escalation-multiple-fronts-ahead-and-it-unclear-how-we-then

 

    Bottom line

 

            Stocks may be rising but don’t get careless.

            https://investorplace.com/market360/2024/11/stocks-may-be-melting-up-but-we-cant-get-careless/

 

                If Buffett is selling, should we be buying?

            https://www.zerohedge.com/markets/if-buffett-selling-should-anyone-be-bullish

 

            Fiscal policy is on an unsustainable path; how will it affect markets?

            https://www.tker.co/p/household-finances-strong-holiday-shopping-preview

 

            The obsession with round numbers.

            https://www.optimisticallie.com/p/the-obsession-with-round-numbers

 

    News on Stocks in Our Portfolios

 

What I am reading today

 

           

                        Quote of the day.

            https://cafehayek.com/2024/11/quotation-of-the-day-4832.html

 

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

 

 

 

Monday Morning Chartology

 

The Morning Call

 

11/18/24

 

The Market

         

    Technical

 

The S&P took back those explosive gains of the prior week, closing below the uptrend off its August low. As you can see, the pin action since the end of October has been highly erratic, including three gap up/down opens. Short term, the index seems to be working off an overbought condition in which it will likely close that huge gap up open following election day and may test its 50 DMA. It has further support lower down at its 100 DMA (~5638) and the lower boundary of its very short term uptrend (~5566). So, it could drop another 300 points and not do any real technical damage.

 

However, it does have a couple of positive things going for it: (1) seasonally, it a positive time of the year, (2) with Trump’s appointments, the long term economic outlook is improving [deregulation and lower spending], (3) there has been little post-election disturbances, (4) the old reliable gap down open on Friday represents some upward magnetic pull. So, my conclusion from last week remains ‘the downside risk to stock prices has been truncated.’

 

That said, it is early to be getting too jiggy with a possible improving economic outlook. So, patience is still in order.

 

Hedge funds again shorting stocks.

https://www.zerohedge.com/markets/hedge-funds-are-again-aggressively-shorting-stocks-goldman-prime

 

 

 

The long bond (1) successfully re-tested and negated the lower boundary of its very short term trading range and (2) remained below all three DMA’s. That is not what I would have expected given the aforementioned political news. Although bond investors may be more focused on Trump’s tariff threats than the newly appointed department of government efficiency. That said, the next support level is the lower boundary of its intermediate term downtrend. Let’s see how it handles that.

 

 

 

 

GLD experienced another steep drop last week which included another big gap down open. In the process, it reset (1) its very short term trend from up to a trading range and (2) its 50 DMA from support to resistance, meaning it has now gone from a hiccup to a stomachache. Clearly, the ‘gold up, interest rates up, dollar up’ scenario is breaking down with gold being the odd man out---which makes sense: rates up and the dollar up usually means lower gold prices.

 

 

 

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.’

 

It appears that the former is the more likely of the two. As I noted above, the initial news (cutting spending) out of the new administration is a pleasant surprise, made more so given the horrendous shape of the country’s fiscal position. As a result, UUP has reset its short term trend from down to a trading range and appears ready to challenge the new upper boundary of that range. Were that to happen it would not only reset the short term trading to up but would confirm an intermediate term uptrend and completely reverse the downward moment that has existed since October 2022.

 

 

 

 

 

Bottom line.  While the seasonal factor will likely determine Market direction (up) in the short term, as yet to be announced Trump policies will be the critical element in deciding the longer term equity performance.  Hence, if you want to trade the Market move through year end, go for it but I believe that it is too soon to go all in.

 

            Friday in the charts.

            https://www.zerohedge.com/market-recaps/big-tech-bullion-battered-bitcoin-bid-goldilocks-narrative-collapses

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Week of review

 

Last week’s US economic stats were upbeat though the primary indicators all came in neutral (zero plus, four neutral, zero minus)---in line with my ‘muddle through’ scenario.

https://bonddad.blogspot.com/2024/11/real-retail-sales-jump-nicely-but-were.html

 

Among those neutral readings were both CPI and PPI; so nothing to support ‘inflation has seen its lows’ prediction. However, the trend remains grim:

https://wolfstreet.com/2024/11/14/after-more-up-revisions-core-ppi-core-services-ppi-inflation-get-much-worse-accelerating-all-year/

 

 

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

 

Still, the big news remains on the political front with Trump appointments/nominations for a bevy of posts---all of which suggest deregulation and cost cutting (!!!!!), the latter of which addresses one of my primary concerns about the economy: the out of control irresponsible profligate budget spending. If it really occurs (remember every budget item has its supporters in congress; so assume pushback), my long term outlook for our economy improves significantly (increased productivity, lower government usurpation of existing resources) though initially growth could be subpar---unemployment will rise and certain segments of production will decline.

"Trump Trade" Sends Investors Into Overdrive - RIA

 

That is the good news. And it adds to my relief that the transition of power is occurring without disruption. The bad news remains Trump’s across the board tariff proposals, the negatives of which I have thoroughly documented in these pages (inflation and misallocation of resources).

 

Of course, this all just speculation at this point. We really won’t know the policies and their implications until next year. The bottom line though is that I am more positive on the economic outlook than I have been even though at this point I have no way to quantify it.

                        https://disciplinefunds.com/2024/11/13/could-trump-be-deflationary/

 

                        US

 

                        International

 

The September EU trade balance was E12.6 billion versus consensus of E7.9 billion.

 

                        Other

 

                          Mid November business cycle indicators.

                          https://econbrowser.com/archives/2024/11/business-cycle-indicators-mid-november-4

 

The US banking industry’s hottest new trade (and one that will ultimately be abused).

https://www.bloomberg.com/news/articles/2024-11-14/us-banks-hot-new-investment-shifts-billions-in-risk-to-investors?srnd=homepage-americas

 

            Monetary Policy

 

              Powell’s latest pirouette.

              MARKET CALL: Powell's Latest Pirouette

 

    Bottom line

 

            The latest from BofA.

            https://www.zerohedge.com/markets/hartnett-trump-20-unleashed-us-tina-and-how-it-ends

 

            Too late to jump on the Trump trade?

            https://www.zerohedge.com/markets/it-too-late-jump-trump-trade

 

            What Trump means to crypto.

https://www.riskhedge.com/outplacement/what-trumps-win-means-for-crypto/rcm?utm_campaign=RH-144&utm_content=RH144OP706&utm_medium=ED&utm_source=rcm

 

                The argument for lower rates.

            Paul Tudor Jones: I Won't Own Fixed Income - RIA

               

                Goldman’s 2025 outlook.

            https://www.zerohedge.com/markets/goldmans-complete-2025-forecast-markets-macro-and-everything-else

 

 

    News on Stocks in Our Portfolios

 

FedEx (NYSE:FDX) declares $1.38/share quarterly dividend, in line with previous.

 

What I am reading today

 

 

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