The Morning Call---QE by any other name........

 

The Morning Call

 

8/20/26

 

The Market

         

    Technical

 

            Wednesday in the charts.

https://www.zerohedge.com/markets/bitcoin-bullion-explode-after-bessent-bailout-yield-curve-dollar-crushed-tech-tepid-momo?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIyMTEwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4NzE3MDc0NiwiZXhwIjoxNzg5NzYyNzQ2LCJhdWQiOiJ6aC1naWZ0In0.VB-qM-H-uoIaT0n6rrGuI910CeEfAdhONLyWfdZQ1Hg

 

            Wednesday in the technical stats.

            https://www.barchart.com/stocks/momentum

            https://www.barchart.com/stocks/market-performance

            https://www.barchart.com/stocks/sectors/rankings

            https://www.barchart.com/stocks/signals/new-recommendations

 

            Silver is sitting on a powder keg.

https://www.zerohedge.com/the-market-ear/silver-sitting-powder-keg?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIyMTA2Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4NzE1Nzk4OCwiZXhwIjoxNzg5NzQ5OTg4LCJhdWQiOiJ6aC1naWZ0In0.pu7XtD1Em0ILvlNOZNhHxlmB7KmbhR_Slrd5pPyDFDE

 

Thursday morning setup: US futures slide and are trading at session lows, as bond yields surge after yesterday’s Treasury announcement, having now erased the entire post buyback-boost move; yields are 4-5bps higher as the curve bear steepens sharply with the 10Y yield now at 4.69%, above where it was before the Treasury's press release yesterday, driven by a surge in Brent above $94 after Trump vowed to unleash an "Economic D-Day" on Iran's economy.  As of 8:00am ET, S&P futures are down 0.2% and Nasdaq futures slide 0.3%. Pre-mkt, Memory / Semis are leading the Tech tape after a stronger APAC Tech session; Mag7 / Software are lagging. Cyclicals are seeing broad-based strength. Defensives are lagging with HC seeing profit-taking. Momentum continuing to unwind has triggered reversals lower from pre-mkt strength, over the past few sessions. This appears to be quant / systematic rather than discretionary players with Goldman pointing to the biggest systematic one-day loss since 2023. Retail activity remains muted. USD is mixed, erasing much of its earlier weakness as yields surge. Commodities are led by Energy as Brent moves towards $95/bbl, base metals outperform precious, with Ags are mixed. US economic data calendar includes weekly jobless claims, the Philadelphia Fed business outlook and leading index. Fed speakers scheduled for the session include San Francisco Fed President Mary Daly and St. Louis Fed President Alberto Musalem.

 

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly initial jobless claims totaled 206,000 versus consensus 210,000.

 

The August Philadelphia Fed manufacturing index came in at 47.4 versus predictions of 25.

 

                        International

 

The June YoY UK industrial trends orders index was -25 versus estimates of -40.

 

The July Japanese trade balance was -Y634.5 billion versus expectations of -Y680 billion.

 

July German PPI was up 1.1% versus forecasts of +0.7%.

 

 

                        Other

           

                          The view from 30,000 feet.

                              https://bonddad.blogspot.com/2026/08/the-mini-recession-of-2025-vs-ai-wealth.html

 

            Iran

 

              Overnight news.

              https://www.zerohedge.com/geopolitical/uae-cuts-ties-iran-warns-gulf-states-against-helping-washington-kpler-says-us-navy

 

            Monetary Policy

 

              Time for the real Kevin Warsh to stand up.

              https://stayathomemacro.substack.com/p/go-to-the-mountains-come-down-from

 

              FOMC minutes tilted hawkish.

              https://www.zerohedge.com/markets/fomc-40

 

            Fiscal Policy

 

              QE by any other name….

              https://www.zerohedge.com/markets/here-comes-qe-lite-yields-dollar-tumble-gold-spikes-after-treasury-unespectedly-doubles

 

              The Wall Street experts opinion (notwithstanding the investor reaction).

              https://www.zerohedge.com/markets/only-works-so-long-wall-street-reacts-treasurys-shocking-buyback-boost

 

            Inflation

           

              One of the historically major sources of inflation is benign.

              https://giftarticle.ft.com/giftarticle/actions/redeem/d114d838-ae41-4321-9ddc-7d11a218e301

 

            AI

 

              The limitations of large language models.

              https://arnoldkling.substack.com/p/beyond-language-models

 

     Investing

 

            A cheap way to protect yourself from a Market selloff.

            https://www.marketwatch.com/story/heres-a-ridiculously-cheap-way-to-protect-yourself-against-a-stock-market-selloff-67d3b312?st=Bjnssm

 

Summary: As major U.S. equity indexes continue to seesaw, this could represent an opportunity for anxious investors looking to pick up some portfolio protection on the cheap. Investors might consider buying put options on the S&P 500 index  to help protect their portfolios from a sharp selloff. They also could purchase call options on the Cboe Volatility Index (VIX), which tends to rise when markets turn rocky.

 

            In praise of a price (or any other investment) discipline.

            https://www.safalniveshak.com/freedom-is-not-an-open-field/

 

            Forget the bond rout, investors are in a party mode.

            https://giftarticle.ft.com/giftarticle/actions/redeem/25cbc2fc-3136-4189-a8fd-c49eda4717f3

 

            What BDC markets are signaling about private credit valuations.

            https://www.advisorperspectives.com/commentaries/2026/08/19/bdc-markets-signaling-private-credit-valuations

           

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

 

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--The decoupling of price and breadth

 

The Morning Call

 

8/19/26

 

The Market

         

    Technical

 

            Tuesday in the charts.

https://www.zerohedge.com/markets/bonds-bid-bad-data-hormuz-open-tech-credit-sinks-stocks-goldman-reveals-one-rate-matters?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIyMDAwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4NzA4Mzk3NCwiZXhwIjoxNzg5Njc1OTc0LCJhdWQiOiJ6aC1naWZ0In0.NaqcmCCTLd3usJbX-RrnSd91tjpOFZ13qFOb9sTbU44

 

            Tuesday in the technical stats.

            https://www.barchart.com/stocks/momentum

            https://www.barchart.com/stocks/market-performance

            https://www.barchart.com/stocks/sectors/rankings

            https://www.barchart.com/stocks/signals/new-recommendations

 

            The latest from Goldman.

https://www.zerohedge.com/markets/amid-global-bond-bloodbath-goldman-delta-one-desk-warns-fed-may-be-forced-hike?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIxOTUwIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4NzA4Mjc2MiwiZXhwIjoxNzg5Njc0NzYyLCJhdWQiOiJ6aC1naWZ0In0.X6eJLxEdRNOKxtaVVLP7v2vOJwpdSFexo4hsFGEq1As

 

The decoupling of price and breadth.

https://www.zerohedge.com/markets/factor-musical-chairs-we-have-never-seen-such-decoupling-between-price-and-breadth?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIyMDMzIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4NzE0NDQyMCwiZXhwIjoxNzg5NzM2NDIwLCJhdWQiOiJ6aC1naWZ0In0.fBqgHVH3DuEDNy1jpa3Qw5EjZcVOYIfObofjt0zYy0s

 

Wednesday morning setup. Futures are flat but off their lows as Tech gets a boost from a huge Hynix buyback, which erased ~8% decline to trade up as much as 2% and reversed a 5.8% drop in the Nikkei; the ADRs are +5.6% pre-mkt boosting both Memory and Korea ETFs. As of 8:15am ET, S&P futures are fractionally in the green, with Nasdaq futures down 0.1% even as momentum looks to retrace some of yesterday’s losses. In premarket trading, Semis, Memory, and Mag7 are higher with Software and Low Profitable Tech weaker. Cyclicals and Defensives are both mixed as the market has not yet decided on direction. Bond yields are flat to down 1bp, following from yesterday with USD weaker. Commodities are bid with all 3 complexes moving higher. Brent crude rose 0.8% and briefly topped $92 barrel for the first time since July with little evidence of progress toward a resolution of the US-Iran war. Today’s macro focus is on the 20Y bond auction, which is likely to need a concession, and on the Fed Minutes where investors seek clarity on the Fed’s reaction function in a tape that lacks significant catalysts. NVDA and Jackson Hole loom large.

 

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications declined 0.4% while purchase applications were down 2.0%.

 

Month to date retail chain store sales were up 7.6% versus +8.3% in the prior week.

 

July industrial production rose 0.2% versus forecasts of +0.3%; capacity utilization was 76.3%, in line.

https://bonddad.blogspot.com/2026/08/the-positive-trend-in-manufacturing.html

 

July pending home sales fell 2.3% versus projections of +0.3%.

 

                        International

 

                          June Japanese machinery orders were up 9.7% versus estimates of +7.8%.

 

                          July UK CPI came in at +0.3%, in line; core CPI was +0.2% versus +0.1%.

 

                          July EU CPI was up 0.2%, in line.

 

                        Other

 

                          The conundrum in today’s economy.

                          https://allisonschrager.substack.com/p/no-warm-nuts-for-you

 

            Iran

 

              Overnight news.

                          https://www.zerohedge.com/geopolitical/uae-cuts-ties-iran-warns-gulf-states-against-helping-washington-kpler-says-us-navy

 

            Monetary Policy

 

The price of Fed silence. (I am not sure I agree with the author; but include the article for the sake of the argument.)

https://thedailyeconomy.org/article/the-price-of-fed-silence/

 

            Fiscal Policy

 

              The national debt is already a disaster.

              https://www.realclearmarkets.com/articles/2026/08/18/national_debt_disaster_is_the_most_priced_narrative_in_markets_1200400.html

 

            Inflation

 

              Construction cost inflation of nonresidential building soars amid AI mania.

              https://wolfstreet.com/2026/08/17/construction-inflation-for-nonresidential-buildings-soars-amid-ai-investment-mania/

 

                AI

 

              Markets are saying the AI slop has little value.

              https://futurism.com/artificial-intelligence/economy-ai-generated-value

 

 

            Tariffs

 

              Global supply chains and the limits to US decoupling.

              https://www.piie.com/publications/policy-briefs/2026/made-china-global-supply-chains-and-limits-us-decoupling

 

            The Financial System

 

              Lending money to people who don’t have it.

              (4) Buying Bullshit In “4 Easy Payments” - by Quoth the Raven

 

     Investing

 

            Bond hell is breaking loose.

                        https://quoththeraven.substack.com/p/bond-hell-is-breaking-loose-on-or?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

 

            Treasury yields spike as fiscal drift and global risks pile up.

            https://www.capitalspectator.com/treasury-yields-spike-as-fiscal-drift-and-global-risks-pile-up/

           

            Impossible to answer questions about the future.

            https://alhambrapartners.com/weekly-market-pulse-situational-awareness/?src=news

 

            The case for owning TIPS especially if you are a senior.

            https://www.advisorperspectives.com/articles/2026/08/13/long-tips-yield-time-to-buy

 

            August outlook for S&P dividends.

            https://politicalcalculations.blogspot.com/2026/08/the-outlook-for-s-500-dividends-in.html

 

            Think like an investor, not a speculator.

            https://www.advisorperspectives.com/commentaries/2026/08/18/think-like-investor-not-speculator

 

            Passive investing is driving the decline in active fund alpha.

            https://www.morningstar.com/financial-advisors/passive-investing-is-driving-decline-active-fund-alpha-heres-what-that-means-investors

 

            The changing economics of the gold miners.

            https://talkmarkets.com/article/miners-have-quietly-become-the-best-businesses-in-the-market-1787069584

 gol

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

 

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--Caught in a debt trap

 

The Morning Call

 

8/18/26

 

The Market

         

    Technical

 

            Monday in the charts.

https://www.zerohedge.com/markets/crude-crypto-rip-stocks-dip-yield-curve-gold-scream-policy-error?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIxODQ5Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4Njk5ODI3NywiZXhwIjoxNzg5NTkwMjc3LCJhdWQiOiJ6aC1naWZ0In0.ahHBB0-X2YebDLRO2d87UHHQqT4nqUe1xWAQODmn8k8

 

            Monday in the technical stats.

            https://www.barchart.com/stocks/momentum

            https://www.barchart.com/stocks/market-performance

            https://www.barchart.com/stocks/sectors/rankings

            https://www.barchart.com/stocks/signals/new-recommendations

 

            Dispersion is collapsing.

https://www.zerohedge.com/markets/dispersion-collapsing-market-loses-its-zeal-semis?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIxODI0Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4Njk5NjAzOSwiZXhwIjoxNzg5NTg4MDM5LCJhdWQiOiJ6aC1naWZ0In0.wpd6Z1VhLJNA39B5uQSxvUaGZpl4_qJ0eGTsgl1Y8y0

 

            Gold squeeze is entering phase 2.

https://www.zerohedge.com/the-market-ear/gold-squeeze-entering-phase-two?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTIxODM4Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc4Njk5NTc0NSwiZXhwIjoxNzg5NTg3NzQ1LCJhdWQiOiJ6aC1naWZ0In0.cOpFVYoAd3uFtGZd_kVIKyNDcw7aVeV327zU9UVs-_Q

 

Tuesday morning setup: US futures are a "sea of red" (as Bloomberg describes it) in early trading as thin summer volumes persist, with the wrong kind of inflation coming to the fore and Monday’s tech selloff weighing on sentiment despite bullish AI news. The recent stock-bonds disconnect is finally being reappraised with US futures lower across the board. As of 8:00am ET, S&P 500 futures fell 0.4% with Nasdaq 100 contracts down 1.1% with Semis, Mag7, and Memory all under pressure, while Software is bid. Nvidia dropped 1.8% as the cost of protecting its debt against default closed in on a high reached last month. Defensives and Energy are leading as investors continue to de-gross / de-lever. Tech stocks drove declines across global markets equities as long-dated bond yields pushed further into multidecade highs and oil prices extended their climb, draining traders’ appetite for risky assets.  Yields on 30-year Treasuries rose 2bps to 5.33%, the highest since 2007 as "yields seem to be reacting to a combination of energy prices, the deteriorating US fiscal situation, elevated credit issuance, and BOJ/JPY dynamics which are all driving term premia higher", per JPM.  US crude neared $85 a barrel with Brent trading above $91, while the Diesel crack spread rose above $100 for the first time ever, as tensions in the Middle East showed no sign of easing. The dollar was little changed while gold declined. Price pressure concerns are hardly new. But with long-term yields around the globe hitting multi-decade highs, the debate may be shifting toward whether the set-up reflects persistent “sticky” inflation or an AI-driven “growth” dynamic. For the former, the signals are clear to see: persistently elevated oil prices, soaring diesel costs, “Dr. Copper” dynamics and the effects of El Niño. Today’s macro data focus is weekly ADP, Import / Export prices, Housing Starts, Mfg measures, and Pending Home Sales. Tomorrow’s Fed Minutes are likely more impactful as he bond market focuses on next week’s Jackson Hole mtg / Warsh speech

 

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

July housing starts fell 12.4% versus expectations -4.7%; July building permits were up 5.0% versus +1.2%.

                          https://www.zerohedge.com/markets/us-housing-starts-plummet-july-near-covid-lows

 

                          The August housing market index came in at 35 versus estimates of 33.

 

                        International

 

Q2 preliminary Japanese GDP grew 0.3 versus projections of +0.5%; the Q2 preliminary YoY price index was up 2.6% versus +2.4%; Q2 preliminary capital expenditures fell 1.2% versus +0.3%; Q2 preliminary personal consumption was flat versus +0.5%.

 

The June UK unemployment rate was 4.9% versus consensus of 4.8%; June 3 month/year average earnings grew 4.1%, in line.

 

The August EU economic sentiment indicator was reported at 31.4 versus predictions of 25.4; the August German economic sentiment indicator was 34.2 versus 30.0; the August German current conditions index was -61.1 versus -69.5.

 

                        Other

 

                          More on the oddities in last week’s retail sales number.

                          https://wolfstreet.com/2026/08/14/my-thoughts-about-those-july-retail-sales-2/

 

                          Whither real rates?

                          https://econbrowser.com/archives/2026/08/whither-real-rates

 

                          What is true and not true about the yen intervention narrative.

                          https://www.advisorperspectives.com/commentaries/2026/08/17/yen-intervention-narrative-true-not

 

            Overnight News.

 

Long-term borrowing costs across major economies hit multi-decade highs on Tuesday as inflation concerns, deficit fears and surging AI bond issuance put pressure on government debt around the world. FT

 

 

            Iran

 

              Overnight news.

              https://www.zerohedge.com/geopolitical/trump-posts-map-showing-hormuz-new-us-territory-just-after-latest-tanker-attack

 

              Are we safer than we were six months ago?

              https://econbrowser.com/archives/2026/08/are-we-safer-than-we-were-6-months-ago

 

            Fiscal Policy

 

              Caught in a debt trap.

              https://www.advisorperspectives.com/commentaries/2026/08/17/caught-debt-trap

 

            Inflation

 

The Fed can’t deliver price stability (---which is different from lower inflation.  Just ask Paul Volcker)

https://www.forbes.com/sites/johntamny/2026/08/16/there-is-no-such-thing-as-price-stability-nor-is-it-desirable/

 

              Did someone say stagflation?

              https://www.capitalspectator.com/does-the-july-retail-decline-mark-the-start-of-a-growth-downshift/

 

              On inflation and corporate bond spreads.

              https://bonddad.blogspot.com/2026/08/of-inflation-and-corporate-bond-spreads.html

 

              Rising bond yields are a warning to the Treasury and the Fed.

              https://mishtalk.com/economics/rising-bond-yields-are-a-warning-to-the-us-treasury-and-the-fed/

 

            AI

 

              The growing AI off balance sheet liabilities.

              https://www.zerohedge.com/markets/wsj-catches-discovers-ais-balance-sheet-liabilities-are-3-trillion-and-growing-12-trillion

 

 

            Tariffs

 

              Tariff refunds are boosting growth.

              https://www.apollo.com/wealth/insights-news/insights/daily-spark/tariff-refunds-boosting-growth

 

            The Financial System

 

              Private credit firms under strain.

              https://giftarticle.ft.com/giftarticle/actions/redeem/cde22a08-c8a3-4c11-9d8f-6bf5f7948cc8

 

     Investing

 

            The problem with including private equity funds in your 401k.

            https://www.realclearmarkets.com/blog/2026/08/15/the_beatings_will_continue_until_consumer_sentiment_improves_1200577.html

 

            Bonds face a bigger threat as global rates climb.

                        https://www.bloomberg.com/news/articles/2026-08-16/bonds-face-a-bigger-threat-than-the-fed-as-global-rates-climb?srnd=homepage-americas&sref=loFkkPMQ

 

Summary: As investors debate whether and when the Federal Reserve will raise interest rates, market expectations for further tightening are building around the world — and spelling trouble for bonds.Traders see borrowing costs rising faster in Japan, Canada, the euro zone and the UK than in the US over the next year. Of the 32 swap markets tracked by Bloomberg, two-thirds are priced for rate hikes, with South Korea leading the pack at more than 100 basis points.

 

                        More on valuations.

            https://talkmarkets.com/article/valuation-heights-1786965055

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

 

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