The Morning Call---What percentage of current profit margins are mean reverting?

 

The Morning Call

 

9/25/26

 

The Market

         

    Technical

 

            Thursday in the charts.

https://www.zerohedge.com/markets/higher-oil-rates-finally-hit-stocks-hawks-circle-hormuz-hope-fades-hyperscalers-hiccup?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI2MTc0Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MDI4MjM0MSwiZXhwIjoxNzkyODc0MzQxLCJhdWQiOiJ6aC1naWZ0In0.5oq1-4qBEkzkkjZg302gBW42f4o0jA865MzZSy7NnlA

 

            Thursday 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

 

            Deteriorating breadth.

            https://www.marketwatch.com/story/fewer-stocks-are-carrying-the-market-than-at-any-time-since-the-dot-com-peak-4033c4bb?st=p9c2GV

 

            Never short a dull market.

            https://www.carsongroup.com/insights/blog/never-short-a-dull-market/

 

Friday morning set up: US futures erased earlier losses and are trading at session highs led by tech, as bonds steadied (with the 10Y at multi-decade highs of 5.17%) after oil’s latest rally lost steam, helping US stocks to extend gains for the week. As of 8:00am ET, S&P futures are up 0.4% setting up the benchmark to post its first weekly advance in three; Nasdaq futures gain 0.7% with chipmakers and memory storage names bouncing and Mag 7 stocks mostly higher, led by NVDA (+0.7%) and TSLA (+0.8%). Overnight, focus remains on the improved US-Iran rhetoric since noon yesterday: Iran proposed a 7-day plan to end the war (NYT), and the president says Tehran wants a deal with the US before the midterm elections (NBS). However, the reactions from the oil market were fairly modest, suggesting the market is still pricing a meaningful geopolitical premium; WTI fell 1.8% to $92.98. Bond yields fell 2-3bp at the front end; precious metals are higher, and ags are lower. US economic data slate includes August durable goods orders (8:30 a.m.), and the September University of Michigan sentiment (10 a.m.).

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

August durable goods orders were flat versus expectations of down 0.4%; ex transportation, they were up 0.3% versus up 0.6%.

                          https://www.zerohedge.com/markets/us-core-durable-goods-orders-rise-17th-straight-month-august

 

                          August new home sales rose 6.4% versus estimates of +3.2%.

                          https://bonddad.blogspot.com/2026/09/august-new-home-sales-consistent-with.html

 

The September Kansas City Fed manufacturing index was reported at 20 versus projections of 9.

 

                        International

 

The September UK consumer confidence index was -13 versus consensus of -16.

 

The October German consumer confidence index was -30.6 versus predictions of -27.4.

 

                        Other

 

                          Median new home prices per square foot.

                          https://politicalcalculations.blogspot.com/2026/09/median-new-home-sale-prices-per-square.html

                       

                          The consumer is in great shape.

                          The Consumer Is Clearly in Good Shape - Wealth Management - Carson Group

 

                          Despite a lousy housing market.

  https://www.bloomberg.com/news/articles/2026-09-24/mortgage-rates-at-7-push-sellers-to-cut-home-sale-prices?utm_source=website&utm_medium=share&utm_campaign=copy

           

                          The Trump Reversal Index.

  https://www.zerohedge.com/markets/trump-reversal-index-hits-highest-level-march?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI2MjYyIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MDM0MTI3NywiZXhwIjoxNzkyOTMzMjc3LCJhdWQiOiJ6aC1naWZ0In0.tporGqtjlFcrygYDr5w285CKAG267YLfz8oYgtzowaw

                       

            Iran

 

              Overnight news.

              https://www.zerohedge.com/geopolitical/iran-proposes-7-day-roadmap-end-war-which-mimics-june-mou

 

            China

 

              Overnight news.

              https://www.zerohedge.com/geopolitical/more-signaling-less-substance-barclays-pours-cold-water-trump-xi-summit

 

            Monetary Policy

 

              Fed on track for another rate hike in October.

              https://www.capitalspectator.com/fed-on-track-for-second-rate-hike-just-ahead-of-elections/

 

            Fiscal Policy

 

              The federal debt chartbook.

              https://talkmarkets.com/article/a-us-federal-budget-chartbook

 

            AI

 

              The AI buildout is the biggest economic bet in US history.

              https://www.wsj.com/economy/the-ai-build-out-is-becoming-the-biggest-economic-bet-in-u-s-history-c60716dd?mod=economy_lead_pos1

           

              Oracle’s ‘Project Jupiter’ declares force majeure.

  https://www.zerohedge.com/markets/oracles-massive-project-jupiter-data-center-declares-force-majeure-jeopardizing-entire-us?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI2MTY4Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MDI4MzAxMCwiZXhwIjoxNzkyODc1MDEwLCJhdWQiOiJ6aC1naWZ0In0.smedrewpUPdU2B8K9N7q8n6NdOxpTWhF9p9mQamTzx0

 

 

            Tariffs

 

              Unfathomable economic ignorance.

              https://reason.com/2026/09/18/no-cutting-off-trade-with-europe-would-not-make-america-wealthier/

 

            The Financial System

 

              Rich people fleeing private credit haven’t learned their lesson.

  https://www.bloomberg.com/opinion/articles/2026-09-24/rich-investors-fleeing-private-credit-pile-into-infrastructure-finance?utm_source=website&utm_medium=share&utm_campaign=copy

 

 

     Investing

 

            Math eventually wins.

                        https://quoththeraven.substack.com/p/bonds-are-about-to-crash-the-stock?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

 

Speaking of math, what percentage of current profit margins are mean reverting?

            https://www.advisorperspectives.com/commentaries/2026/09/24/whats-holding-record-margins

 

            Who are the best Market forecasters?

            https://klementoninvesting.substack.com/p/who-forecasts-how

 

            The bonkers ETF market.

            https://www.etf.com/sections/etf-basics/bonkers-etf-market-zine-edition

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            American hubris.

                        https://arnoldkling.substack.com/p/american-hubris-1990s-style?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

 

                        US using lasers to down drones.

                https://nypost.com/2026/09/24/us-news/us-military-spending-500m-on-war-ready-laser-weapons-experts/

 

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---Private credits soft defaults

 

The Morning Call

 

9/24/26

 

The Market

         

    Technical

 

            Wednesday in the charts.

https://www.zerohedge.com/markets/better-data-energy-angst-spark-bond-bloodbath-dollar-jumps-stocks-dump?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI2MDYxIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MDIxMjI1NCwiZXhwIjoxNzkyODA0MjU0LCJhdWQiOiJ6aC1naWZ0In0.MFKC-hUAJlowNxLOB1wgjb24J6EOG2PhHaRWejsswqY

 

                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

 

            Support for the bulls.

                        https://www.marketwatch.com/story/the-nasdaqs-rapid-rise-to-a-record-is-sending-a-message-to-investors-dont-wait-for-a-pullback-to-buy-5f533ed8?st=5FSyuM

 

            Even more support.

            https://giftarticle.ft.com/giftarticle/actions/redeem/38ec1a08-2dbd-451c-9eda-a605fd157d79

 

            Counterpoint.

            https://www.zerohedge.com/markets/market-warning-signs-and-perfect-hedge

 

            King dollar explodes higher.

https://www.zerohedge.com/the-market-ear/king-dollar-explodes-higher-amid-bond-carnage?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI2MDkzIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MDIxMjUzNywiZXhwIjoxNzkyODA0NTM3LCJhdWQiOiJ6aC1naWZ0In0.p3W6QDbq9lAGa7_KXJN7ZxutC7oeQgf9hUlcJk1TuFA

 

 

Thursday morning set up: Futures are lower with Tech underperforming as part of a global risk-off tone with few areas of safety, driven by a global bond rout that has sent yields across the globe to levels not seen in a generation. As of 8:00am ET, S&P futures are 0.6% lower with Nasdaq futures sliding 1.0% and reflecting the fallout from Wednesday’s barrage of inflationary signals, which sent stocks in Asia and Europe lower. In premarket trading, semis and memory are lagging the broader tech tape for the 2nd day, with software seeing slight outperformance, but still lower. Defensives and energy are leading cyclicals. The yield curve is bear steepening with the back-end yields making multi-year highs; pushing the 10Y yield to 5.14% and the 30Y yield to the highest since 2004. This follows Wednesday’s US data and auction-led selling in US paper with an ascent in energy prices today driving the moves further. The rout in bonds swept into Asia, with yields in Japan, Australia and New Zealand climbing by more than 10 basis points on Thursday. The USD remains bid and DXY is less than 40bp from its 52-wk high. In commodities, energy and ags resume their leadership as the market reduces its optimism for an imminent solution in the MidEast; metals are weaker with precious lagging. The Trump-Xi meeting will be one to watch on today's calendar, following US Treasury Secretary Bessent's announcement of a two-month extension to the trade truce which appears to have disappointed markets as it was less than what China expected. US economic data slate includes 2Q current account balance and weekly jobless claims (8:30 a.m.), August new home sales (10 a.m.) and September Kansas City Fed manufacturing activity (11 a.m.) 

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly initial jobless claims totaled 197,000 versus consensus of 201,000.

 

                          August building permits fell 2.1% versus expectations of -2.7%.

 

The September flash manufacturing PMI was 57.0 versus forecasts of 56.0; the flash services PMI was 58.7 versus 56.0; the flash composite PMI was 58.3 versus 55.2.

 

                        International

 

The September Japanese flash manufacturing PMI was 54.1 versus predictions of 55.0; the flash services PMI was 51.6 versus 52.7; the flash composite PMI was 52.5 versus 54.0.

 

The September German business climate index came in at 89.9 versus estimates of 89.0; the September current conditions index was 89.5 versus 89.0.

 

                        Other

 

                          ADP data shows manufacturing employment continues to decline.

                          https://econbrowser.com/archives/2026/09/manufacturing-employment-recovery-delayed

 

                          Counterpoint.

                          https://bonddad.blogspot.com/2026/09/the-rebound-in-manufacturing-employment.html

 

                          OECD says global growth stronger than expected but threats mount.

  https://www.wsj.com/economy/global/global-economy-stronger-than-expected-but-threats-mount-oecd-says-7472619b?st=HpePwX&reflink=desktopwebshare_permalink

 

  Don’t believe the hype about China buying oil.

  https://www.bloomberg.com/opinion/articles/2026-09-23/china-isn-t-buying-more-oil-it-s-buying-from-different-markets?utm_source=website&utm_medium=share&utm_campaign=copy

 

                        Iran

 

              Overnight news.

              https://www.zerohedge.com/geopolitical/war-could-expand-indian-ocean-if-us-attacks-resume-iran-warns

 

 

                        Inflation

 

              The path to lower inflation runs through Iran.

              https://www.capitalspectator.com/the-path-to-lower-inflation-still-runs-through-iran/

 

 

                        Tariffs

 

The US is badly losing its trade war with China. As you know, I believe that imposing tariffs based on the US trade deficit is a losing game. However, using them as part of a program to stop Chinese theft of US intellectual property and exporting fentanyl to the US (and other nations assuming more responsibility for their own defense) is fair game. So, in my opinion, this analysis is only fair if progress marked in the satisfaction of those other goals is also included.

  https://www.bloomberg.com/opinion/articles/2026-09-23/us-trade-policy-on-china-has-failed-by-its-own-standards?utm_source=website&utm_medium=share&utm_campaign=copy

 

 

     Investing

 

            Dividend demand revives.

            https://www.advisorperspectives.com/commentaries/2026/09/23/dividend-demand-revives-market-leadership-shifts

 

            Private credit’s soft defaults.

            https://giftarticle.ft.com/giftarticle/actions/redeem/9098a3f9-5585-4f6a-9ecc-7f953fc2696c

 

    News on Stocks in Our Portfolios

 

What I am reading today

 

            Tips on how not to die in the great outdoors.

https://www.nakedcapitalism.com/2026/09/could-you-survive-the-oregon-trail-an-emergency-medicine-doctor-offers-tips-on-how-to-not-die-in-the-great-outdoors.html

 

                        When you can’t do one thing, do something else.

            https://www.yearofmentalhealth.com/p/when-you-cant-do-one-thing-do-something

 

            The messy drama over Jimmy Buffett’s $275 million trust.

                        https://www.wsj.com/style/lost-in-margaritaville-drama-jimmy-buffett-275-million-dollar-trust-65710c8d?st=ZwzT4Y&reflink=desktopwebshare_permalink

 

            Trump’s landmark deal with Greenland.

            https://www.zerohedge.com/geopolitical/us-establish-two-new-military-bases-greenland

 

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---Earnings mean reversion

 

The Morning Call

 

9/23/26

 

The Market

         

    Technical

 

            Tuesday in the charts.

https://www.zerohedge.com/markets/big-tech-bid-banks-battered-agentic-anxiety-spreads-everything-else-hits-snooze?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI1OTMzIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MDExMTgzNiwiZXhwIjoxNzkyNzAzODM2LCJhdWQiOiJ6aC1naWZ0In0.zaK8qhTxSJSvsi1iVFL-0BUi9n2TT_vBWcUB9vdqP2w

 

            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/yesterday-felt-proper-fomo-goldman-one-delta-desk-took-some-chips-table-sees-inference?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI1ODkzIiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MDEwMzUzMSwiZXhwIjoxNzkyNjk1NTMxLCJhdWQiOiJ6aC1naWZ0In0.M_g2fGntAscO833XS-AAK64VvsPe2L7DMsNxEXqjUAI

                       

            Gamma squeeze the world.

            https://quoththeraven.substack.com/p/gamma-squeeze-the-world?r=1ng8jx&utm_campaign=post-expanded-share&utm_medium=web

                       

            The crypto bear market is over.

            https://www.riskhedge.com/the-jolt/the-crypto-bear-market-is-over

 

Wednesday morning setup: US equity futures are down modestly, but at session lows, as oil reverses earlier losses (crude was on pace for a sixth straight day of declines, its longest losing run in a year) sending Brent back over $100 and pushing 10Y yields back to 4.99%. As of 8:30am, S&P 500 futures were 0.1% lower with Nasdaq 100 futures sliding 0.3%, and also at session lows after hitting a record on Tuesday. In premarket trading, memory and semis are lower as Mag7/software are higher. Within SPX sectors, all of the majors have pockets of strength ex-Materials which are set to lag given the selloff in metals. Rising oil prices have also weighed on European equities, which have pared opening gains and left the Stoxx 600 down 0.5%, also at session lows. In Asia, Chinese and Hong Kong shares declined, trailing regional peers including South Korean and Taiwanese benchmarks. Oil remains the wildcard for stocks and bonds, while Meta’s Muse AI agent is reshaping sector rotation. Yields are notably higher, with 2Y yields rising to a 2 year high of 4.79% as the curve flattens aggressively, as the tactical market narrative seeks more color from UN meetings (US/China; US/Iran; NATO+UKR/Russia) before deciding direction. The USD rally continues with the DXY 75bp away from YTD highs set June 24. Commodities are lower ex-Energy which is seeing a bid within fuels / natgas and Brent is outperforming WTI. Base over Precious and Ags uniformly sold. The US economic calendar includes September S&P Global US manufacturing and services PMIs at 9:45 a.m. Fed speaker slate includes Governor Barr (10:05 a.m.) and Chicago’s Goolsbee (12 p.m.)

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications fell 1.5% while purchase applications were down 0.8%.

 

Month to date retail chain store sales were up 7.6% versus up 8.5% in the prior week.

 

The September Richmond Fed manufacturing index came in at -2 versus estimates of +5.

 

                        International

 

 

The September EU flash consumer confidence index was -16.5 versus expectations of -16.0.

 

The September German flash manufacturing PMI was 53.5 versus consensus of 54.0; the flash services PMI was 52.9 versus 50.0; the flash composite PMI was 53.1 versus 51.7; the September EU flash manufacturing PMI was 52.7 versus 52.6; the flash services PMI was 53.0 versus 51.5; the flash composite PMI was 53.1 versus 51.7; the September UK flash manufacturing PMI was 52.0 versus 51.5; the flash services PMI was 51.7 versus 52.0; the flash composite PMI was 51.7 versus 52.0.

 

                        Other

 

The problem with the level of interest rates versus that of economic growth.

https://alhambrapartners.com/weekly-market-pulse-what-now-2/?src=news

                       

                          August real median household income.

                          https://econbrowser.com/archives/2026/09/real-median-household-income-down-relative-to-may

 

            Iran

 

              Overnight news.

              https://www.zerohedge.com/geopolitical/cargo-vessel-struck-unknown-projectile-hormuz-casualties-reported

 

            Inflation

 

              Beware oil’s second strike on inflation.

                          https://www.wsj.com/economy/central-banking/beware-oils-second-strike-on-inflation-a07161d3?st=xvMWoB&reflink=desktopwebshare_permalink

 

              As an example:

              https://mishtalk.com/economics/the-average-supertanker-cost-is-1-2-million-per-day-up-from-29900/

 

            AI

 

              Funding trouble in AI land.

  https://www.zerohedge.com/technology/sb-energy-delays-ipo-funding-worlds-largest-data-center-amid-investor-revolt-public?gift=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuaWQiOiIxMTI1OTc0Iiwic2VuZGVyVWlkIjoiUUhnc3BaZVVFS2E3RHhXM216eFlKbjhaWEFoMiIsImlhdCI6MTc5MDE2Mzk0MiwiZXhwIjoxNzkyNzU1OTQyLCJhdWQiOiJ6aC1naWZ0In0.PxaHtWOB5EDCl7kVBvaeNZbm3htcnGH2ZQDKOT4x2pE

 

 

              Where intelligence and consciousness have to be separated.

              https://www.realclearmarkets.com/articles/2026/09/22/where_intelligence_and_consciousness_have_to_be_separated_1207087.html

 

              Do Covid and AI rhyme?

              https://www.americanthinker.com/articles/2026/09/do-covid-and-ai-rhyme/

 

              AI angst.

              https://www.carsongroup.com/insights/blog/ai-angst/

 

     Investing

 

            Earnings mean reversion.

            https://www.advisorperspectives.com/commentaries/2026/09/22/earnings-mean-reversion-estimates-snap-back

 

            The historic divide between the bulls and the bears signals an earnings slowdown.

https://www.bloomberg.com/opinion/articles/2026-09-22/this-historic-divide-between-bulls-and-bears-signals-a-slowdown?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTc5MDA5OTA1MCwiZXhwIjoxNzkwNzAzODUwLCJhcnRpY2xlSWQiOiJUTFJEMDNLR1pBSjMwMCIsImJjb25uZWN0SWQiOiJCMzFCNTRDQTI3MTE0NjAxOUQxMURCN0IxRUM4NTE2MyJ9.u4eKDr5Fzf1poybp1NbsZXZFyBUXnVIR-nfG-ePejWM

 

            The bond market returns to normal.

            https://mrzepczynski.blogspot.com/2026/09/what-is-fixed-income-market-telling-us.html

 

            The resiliency of the high yield market.

            https://bondvigilantes.com/blog/2026/09/the-honey-badger-market/

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            Another blight on our education system.

            https://www.zerohedge.com/geopolitical/china-ranked-1-world-math-usa-27th

 

 

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