The Morning Call--Is a steeper yield curve coming?

 

 

The Morning Call

 

7/26/24

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/mega-cap-meltdown-continues-good-news-sends-rate-cut-hopes-reeling

 

Note: with the S&P closing lower (1) its very short term uptrend has been voided and (2) its 50 DMA is now being challenged; if the index remains there through the close today, the 50 DMA will revert from support to resistance.

 

            NASDAQ on the edge.

            https://www.zerohedge.com/the-market-ear/make-or-break

 

            Surging tech fear.

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

           

            Little cash on other sidelines.

            https://www.zerohedge.com/markets/little-cash-sidelines-suggests-firepower-sustain-equity-rally-diminishes

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

June personal income was up 0.2% versus expectations of +0.4%; June personal spending was up 0.3%, in line.

 

The June PCE price index was up 0.3%, in line; the June YoY core PCE price index was up 2.6% versus +2.5%.

 

The July Kansas City Fed manufacturing index came in at -12 versus forecasts of -8.

                          https://www.advisorperspectives.com/dshort/updates/2024/07/25/kansas-city-fed-manufacturing-activity-july-2024

 

                        International

 

The May Japanese leading economic indicators were 111.2 versus predictions of 111.1; the July YoY CPI was up 2.2%, in line; ex food and energy, it was +2.2% versus +2.3%; YoY core CPI was +1.5% versus +1.6%.

 

                        Other

 

            Monetary Policy

 

             China unexpectedly cuts one year policy rate.

              https://www.bloomberg.com/news/articles/2024-07-25/china-s-central-bank-cuts-one-year-policy-loan-rate?srnd=homepage-americas&sref=loFkkPMQ

 

 

            Recession

 

              Inside yesterday’s GDP data.

  https://wolfstreet.com/2024/07/25/economy-re-accelerates-in-q2-our-drunken-sailors-splurge-on-durable-goods-private-investment-jumps-federal-gov-undoes-blip/

 

                        The Financial System

 

              The commercial real estate problem is not going away.

                             https://www.zerohedge.com/markets/bank-failures-are-almost-certain-follow-cre-crisis-has-gone-nowhere

                         

Geopolitics

 

  The will of the people.

  https://www.zerohedge.com/geopolitical/hell-will-people

 

    Bottom line

 

            Is the latest surge in volatility noise or a signal?

            https://www.capitalspectator.com/is-the-latest-surge-in-stock-market-volatility-noise-or-signal/

 

            Buy some gold and get on with your life.

https://www.riskhedge.com/outplacement/buy-some-and-get-on-with-your-life1?utm_campaign=RH-144&utm_content=RH144OP526&utm_medium=ED&utm_source=rcm

                       

            What drives the price of gold?

            https://politicalcalculations.blogspot.com/2024/07/the-glitter-of-gold-and-what-drives-its.html

 

Death of the dollar?

            https://disciplinefunds.com/2024/07/23/the-death-of-the-dollar-in-perspective/

 

Is a steeper yield curve coming? Remember that historically, equity markets tend to decline following the uninversion of the yield curve.

https://www.apolloacademy.com/steeper-curve-coming/

 

    News on Stocks in Our Portfolios

 

T. Rowe Price press release (NASDAQ:TROW): Q2 Non-GAAP EPS of $2.26 misses by $0.02.

Revenue of $1.73B (+7.5% Y/Y) misses by $50M.

 

McDonald (NYSE:MCD) declares $1.67/share quarterly dividend, in line with previous.

 

 

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--Bill Dudley changes his mind

 

The Morning Call

 

7/25/24

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/bonds-big-tech-bloodbath-mag7-meltdown-accelerates-yield-curve-dis-inverts-2-year-high

 

Note: the S&P closed below the lower boundary of its very short uptrend; if it remains there through the close today, that trend will be negated. It also finished right on its 50 DMA. Follow through.

 

            The gold breakout failed but…………

            https://allstarcharts.com/gold-one-good-trend-pays-for-em-all/

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly initial jobless claims totaled 235,000 versus consensus of 238,000.

 

June durable goods orders fell 6.6% versus predictions of +0.3%; ex transportation, they were up 0.5% versus up 0.2%.

 

June new home sales fell 0.6% versus estimates of an increase of 3.4%; June building permits were up 3.9% versus +3.4%.

https://www.advisorperspectives.com/dshort/updates/2024/07/24/new-home-sales-fall-june-2024

 

More data on the faltering housing market.

https://wolfstreet.com/2024/07/23/here-comes-the-inventory-of-vacant-homes-with-buyers-on-strike-despite-lower-mortgage-rates-supply-spikes-to-highest-in-4-years-sales-drop-except-at-high-end/

 

Q2 advanced GDP growth was +2.3% versus expectations of +2.6%; the Q2 advanced price index was +2.9% versus +2.7%; Q2 advanced QoQ sales growth was +2.0% versus +2.8%; Q2 advanced QoQ real consumer spending was +2.3% versus +2.2%

 

The July flash manufacturing PMI was 49.5 versus forecasts of 51.7; the flash services PMI was 56.0 versus 55.0; the flash composite PMI was 55.0 versus 54.7.

                          https://www.zerohedge.com/markets/services-soar-manufacturing-slumps-preliminary-july-pmis

 

                        International

 

The July German business climate index came in at 87.0 versus projections of 88.9; the June current conditions index was 87.1 versus 88.5.

 

The July UK industrial trends orders index was -32 versus consensus of -19; the Q3 business optimism index was -9 versus -15.

 

                        Other

 

                          June architecture billings declined.

                          https://www.calculatedriskblog.com/2024/07/aia-architecture-billings-declined-in.html

 

            Monetary Policy

 

              Bill Dudley changes his mind. This is getting a lot of attention in the press.

              https://www.bloomberg.com/opinion/articles/2024-07-24/the-fed-needs-to-cut-interest-rates-now?srnd=homepage-americas&sref=loFkkPMQ

 

              Bank of Canada cuts rates for a second month in a row.

              https://www.zerohedge.com/markets/bank-canada-cuts-rates-second-consecutive-month-says-reasonable-expect-more

 

            Recession

 

              Why would long and variable lags be asymmetric?

              https://www.apolloacademy.com/why-would-long-and-variable-lags-be-asymmetric/

 

              The ‘climbing limo’ Q2 GDP forecast.

              https://politicalcalculations.blogspot.com/2024/07/climbing-limo-gdp-forecast-for-2024-q2.html

 

Some formerly reliable recession indicators aren’t working.

https://www.axios.com/2024/07/23/recession-indicators-signals-not-working-employment-trends

 

But that has always been the case.

              https://www.capitalspectator.com/the-case-against-lone-recession-indicators-is-stronger-than-ever/

 

              For the optimists.

              https://www.ft.com/content/6687578b-40b1-4026-b9bc-2c5ee4ef81a8

 

            Tariffs

 

As you know, I am no advocate of tariffs; but this study suggesting that tariffs on the semiconductor industry have negatively impacted the growth of the labor force serving that industry is a bit short of logic. What is bothersome about this article is that it offers no cause and effect analysis. In other words, it assumes that higher tariffs cause lower unemployment without offering any proof of the causal relationship. That doesn’t mean that we don’t have a shortage of talent in the semiconductor industry; but this is hardly a convincing argument that high tariffs are the cause. Indeed, it seems far more logical to me that we have shortage of skilled engineers in multiple fields because of the woke/social justice orientation of our education system which churns out thousands of unneeded social engineers that wind up waiting tables and living with their parents because our capitalist economy has only a marginal need for them.

https://www.nakedcapitalism.com/2024/07/the-global-semiconductor-talent-crunch-how-protectionism-backfired.html

 

    News on Stocks in Our Portfolios

 

BlackRock (NYSE:BLK) declares $5.10/share quarterly dividend, in line with previous.

 

AbbVie press release (NYSE:ABBV): Q2 Non-GAAP EPS of $2.65 misses by $0.01.

Revenue of $14.46B (+4.3% Y/Y) beats by $430M.

 

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---Trump 2.0 won't play outlike Trump1.0.

 

The Morning Call

 

7/24/24

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/small-caps-soar-short-squeeze-sloppy-surveys-crypto-crude-crack

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications fell 2.2% while purchase applications were down 4.0%,

 

                          June existing home sales declined 5.4% versus forecasts of up 3.0%.

                          https://www.advisorperspectives.com/dshort/updates/2024/07/23/existing-home-sales-fall-further-as-median-price-reaches-record-high

 

The July Richmond Fed manufacturing index came in at -17 versus expectations of -7.

 

                        International

 

The July EU flash consumer confidence index was -13.0 versus consensus of -13.4.

                          https://www.advisorperspectives.com/dshort/updates/2024/07/23/richmond-fed-manufacturing-activity-worsened-july-2024

 

The July Japanese flash manufacturing PMI was 47.4 versus predictions of 47.0; the flash services PMI was 50.8 versus 50.9; the flash composite PMI was 50.2 versus 50.4; the July German flash manufacturing PMI was 42.6 versus 44.0; the flash services PMI was 52.0 versus 53.1; the flash composite PMI was 48.7 versus 50.7; the July EU flash manufacturing PMI was 45.6 versus 46.1; the flash services PMI was 51.9 versus 53.0; the flash composite PMI was 50.1 versus 51.1; the July UK flash manufacturing PMI was 51.8 versus 51.1; the flash services PMI was 52.4 versus 52.5; the flash composite PMI was 52.7 versus 52.6.

 

The August German consumer confidence index was -18.4 versus estimates of -21.0.

 

                        Other

 

                          Update on Recession Alert weekly leading economic index.

                          https://www.advisorperspectives.com/dshort/updates/2024/07/22/recession-weekly-leading-economic-index

 

                          The percentage of mortgages in forbearance increased in June.

                          https://www.calculatedriskblog.com/2024/07/mba-survey-share-of-mortgage-loans-in.html

 

            Fiscal Policy

 

              Why is the deficit so big?

https://www.bloomberg.com/news/articles/2024-07-23/trump-s-tax-cuts-vs-biden-s-spending-who-is-responsible-for-big-us-deficit?srnd=homepage-americas&sref=loFkkPMQ

 

 

              Trump 2.0 will likely not play out like Trump 1.0.

              https://www.ft.com/content/0aca4515-757c-42d4-9e08-a7087d70133f

 

            Recession

 

Is this Goldilocks? I have lived through several periods in which the economy was characterized as Goldilocks. None of them turned out well. That doesn't mean that it won’t happen this time; but I am not letting my expectations get too high.

https://alhambrapartners.com/weekly-market-pulse-is-that-goldilocks-i-see/?src=news

 

              Counterpoint.

              https://www.apolloacademy.com/small-cap-vs-large-cap-earnings-expectations/

 

              Mayhem within the junk debt markets.

  https://wolfstreet.com/2024/07/22/financial-conditions-in-la-la-land-loosest-since-nov-2021-but-cre-gets-strangled-and-corporate-bankruptcies-highest-since-2010/

 

Things fall apart---how can you have a recession when the demand for labor is outpacing the supply?

https://www.advisorperspectives.com/commentaries/2024/07/23/things-do-fall-apart

 

The latest nowcast suggests a pickup in Q2 GDP growth.

https://www.capitalspectator.com/us-q2-gdp-growth-set-for-modest-pickup-in-thursdays-report/#more-22533

 

Signs of credit card and auto loan stress.

https://www.zerohedge.com/personal-finance/signs-severe-credit-card-and-auto-loan-stress-generation-z

 

    News on Stocks in Our Portfolios

 

Canadian National Railway press release (NYSE:CNI): Q2 Non-GAAP EPS of C$1.84.

Revenue of C$4.33B (+6.7% Y/Y).

 Canadian National Railway (NYSE:CNI) declares CAD 0.845/share quarterly dividend, in line with previous.

General Dynamics press release (NYSE:GD): Q2 GAAP EPS of $3.26 misses by $0.07.

Revenue of $12B (+18% Y/Y) beats by $500M.

 

 

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.