The Morning Call--Expensive markets are more dangerous than you think

The Morning Call

 

12/8/20

 

The Market

         

    Technical

 

            Monday in the charts.  Notable, despite being up on the day, the long bond closed below the lower boundary of its very short term uptrend, negating that trend, meaning higher rates ahead.

            https://www.zerohedge.com/markets/bonds-bullion-bid-stocks-skid-stimulusvaccine-stumble

 

            From bond vigilantes to bond zombies.

            http://blog.yardeni.com/2020/12/the-carrie-trade-from-bond-vigilantes.html

 

            The puzzle of low interest rates.

            https://www.nytimes.com/2020/12/04/business/low-interest-rates-puzzle.html

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

                            

Month to date retail chain store sales grow fell dramatically from the prior week.

 

October consumer credit grew $7.2 billion versus estimates of +$16 billion.

https://www.zerohedge.com/economics/consumer-credit-misses-badly-americans-unexpectedly-pay-down-credit-card-debt-october

 

Q3 nonfarm productivity increased 4.6% versus consensus of up 4.9%; unit labor costs fell 6.6% versus -8.9%.

 

                        International

 

The October Japanese leading economic indicators came in at 93.8 versus expectations of 93.2; household spending was up 2.1% versus +1.0%; cash earnings declined 0.8% versus -0.6%; Q3 final GDP growth was 5.3% versus 5.0% with capital spending down 2.4% versus -3.2%.

 

October German industrial production was up 3.2% versus projections of up 1.6%; December economic sentiment came in at 55.0 versus 45.5.

Q3 EU employment rose 1.0% versus forecasts of +0.9%; GDP growth was 12.5% versus +12.6%; December economic sentiment was reported at 54.4 versus 32.0

 

                        Other

 

                          Bracing for Brexit’s financial shock.

                          https://www.zerohedge.com/markets/london-braces-brexits-financial-shockwave

 

            The Fed

 

              BIS issues warning solvency issues are growing.

              https://www.zerohedge.com/markets/bis-issues-dire-warning-we-are-moving-liquidity-solvency-phase-crisis

 

            Fiscal Policy

 

              Indiscriminate stimulus is absurd (must read).

                          https://www.nationalreview.com/2020/12/indiscriminate-stimulus-in-a-pandemic-is-absurd/?itm_campaign=headline-testing-indiscriminate-stimulus-in-a-pandemic-is-absurd&itm_medium=headline&itm_source=nationalreview&itm_content=Indiscriminate%20Stimulus%20in%20a%20Pandemic%20Is%20Absurd&itm_term=Indiscriminate%20Stimulus%20in%20a%20Pandemic%20Is%20Absurd

 

 

            Bottom line.  Expensive markets are more dangerous than you think.

                        https://www.zerohedge.com/markets/expensive-markets-are-more-dangerous-you-think

 

              The fundamental problem with the bullish view.

               https://www.zerohedge.com/markets/roaring-20s-fundamental-problem-bullish-view

 

              Are you a permabear?

              https://allstarcharts.com/permabear/

 

    News on Stocks in Our Portfolios

 

Brown-Forman (NYSE:BF.B): FQ2 GAAP EPS of $0.50 misses by $0.02.

Revenue of $985M (-0.4% Y/Y) beats by $17.24M.

 

What I am reading today

 

            As usual with Traderfeed, his trading advice has applicability to all of our life experiences.

            http://traderfeed.blogspot.com/2020/12/how-to-overcome-self-critical-thinking.html

 

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