The Morning Call--Follow through

The Morning Call

 

2/26/21

 

The Market

         

    Technical

 

Several things worth mentioning on the technical front.  First, the S&P ended below the lower boundary of its short term uptrend (now support; if it remains there through the close on Monday, it will revert to a trading range).  Clearly, this is a potentially negative development; but it is too soon to get beared up. 

 

Second, the long bond finished below the lower boundary of its very short term trading range.  If it remains there through the close today, that trend will be negated.  As I have tried to cover the last couple of weeks, if the trend in lower bond prices (higher interest rates/inflation) continues that would not be particularly helpful to stocks---especially with valuations as stretched as they are.

 

As always, follow through.

 

Thursday in the charts.

https://www.zerohedge.com/markets/redditors-revenge-hammer-hedgies-again-bond-bloodbath-blows-stocks

 

10 year yield now back in line with S&P yield.

https://www.zerohedge.com/markets/what-happens-next-0

 

            Failed 7 year auction.

            https://www.zerohedge.com/markets/treasury-yields-soar-after-catastrophic-tailing-7y-auction

 

            Four bond metrics to watch.

            http://www.capitalspectator.com/interest-rates-are-rising-will-it-last-four-key-metrics-to-watch/

 

            The relentless selling of bonds.

            https://www.zerohedge.com/markets/cta-selling-bonds-has-gotten-so-relentless-it-looks-little-unnatural

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          January pending home sales declined 2.8% versus forecasts of 0.00%.

                           https://www.advisorperspectives.com/dshort/updates/2021/02/25/pending-home-sales-retreat-in-january

 

January personal income was up 10.0% versus predictions of +9.5%;  spending was up 2.4% versus 2.5%; the PCE price index was up 0.3% versus +0.4% in December; core PCE was +0.3% versus +0.2%; wholesale inventories rose 1.3% versus +0.5% in December; the trade balance was -$83.7 billion versus -$83.1 billion in December.

                                    https://www.zerohedge.com/personal-finance/government-handouts-spark-january-surge-personal-income

 

The February Kansas City Fed manufacturing index was reported at 26 versus the January reading of 22.

                          https://www.advisorperspectives.com/dshort/updates/2021/02/25/kansas-city-fed-survey-manufacturing-climbed-higher-in-february

 

                        International

 

January Japanese retail sales declined 0.5% versus -0.7% recorded in December; construction orders were up 14.1% versus -1.3% in  December; industrial production was +4.2% versus estimates of +4.0%; YoY housing starts fell 3.1% versus +2.5%.

 

February Japanese CPI was -0.4% versus expectations of -0.3%; core CPI  was -0.3% versus +0.4%.

 

                        Other

 

            The Fed

 

              The Fed’s third great mistake (must read).

              https://www.advisorperspectives.com/commentaries/2021/02/25/this-era-may-come-to-be-remembered-as-the-federal-reserves-third-great-mistake

 

            Inflation

 

              Reflation update.

              http://scottgrannis.blogspot.com/2021/02/reflation-update-it-continues.html

 

              Globalization of inflation risks.

              http://econbrowser.com/archives/2021/02/globalization-and-inflation-risks

 

            Speculation

 

              Keeping an open mind: What if this doesn’t end badly?

              https://theirrelevantinvestor.com/2021/02/25/what-if-it-doesnt-end-badly/

 

              On the other hand: We are at the breaking point.

              https://www.zerohedge.com/markets/albert-edwards-we-are-breaking-point

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            A history of the South Sea Bubble.

            https://www.aier.org/article/when-financial-markets-bubble-theres-something-for-everyone/

 

The 25 greatest art heists of all time.

https://www.artnews.com/list/art-news/artists/greatest-art-heists-of-all-time-1234583441/

 

A plan for bad retirement savers.                   https://www.usatoday.com/story/money/personalfinance/retirement/2021/02/24/if-i-were-behind-on-retirement-savings-this-would-be-my-game-plan/115490192/

 

 

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The Morning Call--You can't keep a Fed fueled Market down

 

The Morning Call

 

2/25/21

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/stocks-bonds-dumped-n-pumped-powell-promises-moar

 

The long bond penetrated the lower boundary of its very short term trading range intraday but recovered to close above that level.  The question is will this support level continue to hold?

 

            Winners and losers in the bond market.

            http://www.capitalspectator.com/reflation-trades-winners-and-losers-in-the-bond-market-in-2021/#more-15596

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

The second estimate Q4 GDP growth was 4.1% versus forecasts of 4.2%; the price index was +1.8% versus +2.0%.

                              https://www.zerohedge.com/economics/q4-gdp-revised-41-missing-expectations

 

                          Weekly jobless claims rose 730,000 versus predictions of 838,000.

                          https://www.zerohedge.com/personal-finance/first-time-jobless-benefits-seekers-plunge-covid-crisis-lows-amid-collapse-caoh

 

January durable goods orders were up 3.4% versus expectations of +1.1%; ex transportation, they were up 1.4% versus +0.7%.

                          https://www.zerohedge.com/economics/us-durable-goods-orders-surge-january-pre-covid-highs

 

                          January new home sales rose 4.3% versus consensus of +2.1%.

                          https://www.advisorperspectives.com/dshort/updates/2021/02/24/new-home-sales-up-4-3-in-january

 

               

                        International

 

The December Japanese leading economic indicators came in at 95.3 versus projections of 94.9.

 

February EU consumer confidence was -14.5 versus projections of -14.8; economic sentiment was 93.4 versus 92.0; services sentiment was -17.1 versus -18.1; industrial sentiment was -3.3 versus -5.0.

 

March German consumer confidence  was -13.9 versus estimates of -14.3.

 

                        Other

 

                          Closer to the breaking point.

                              https://themarket.ch/interview/were-getting-closer-to-a-breaking-point-ld.3681

 

                          Architecture billings continue to contract.

                          https://www.calculatedriskblog.com/2021/02/aia-architecture-billings-continue-to.html

 

                          Mortgage delinquency rate decreased in January.

                          https://www.calculatedriskblog.com/2021/02/black-knight-national-mortgage.html

 

            The Fed

 

              More gasoline on the fire.

              https://www.zerohedge.com/markets/stocks-bonds-suddenly-bid-brainard-powell-double-dove-down

 

            Fiscal Policy

 

              Why not print checks and give money away infinitely?

              https://thereformedbroker.com/2021/02/24/why-not-just-print-and-give-away-money-infinitely/

 

                  More debt doesn’t grow the economy.

              https://thereformedbroker.com/2021/02/24/grantham-more-debt-doesnt-grow-the-economy/

 

 

            Inflation

 

              More positive feedback for the optimists.

              https://www.advisorperspectives.com/commentaries/2021/02/24/fiscal-spending-could-cause-a-u-s-growth-spike-compounding-investors-concerns-on-inflation

 

              Still more: four reasons not to worry about inflation.

              https://www.bloomberg.com/opinion/articles/2021-02-23/four-reasons-not-to-worry-about-u-s-inflation?sref=loFkkPMQ

 

            The coronavirus

 

              Latest stats.

              https://marginalrevolution.com/marginalrevolution/2021/02/a-majority-of-doses-are-now-second-doses.html

 

            Bottom line.

 

              More for the optimists: three reasons why stocks can survive higher rates.

              https://www.marketwatch.com/story/3-reasons-why-the-stock-market-might-be-able-to-survive-rising-bond-yields-in-2021-11614119111?mod=home-page

 

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

                             

            The sorry state of our political class.

            https://www.zerohedge.com/political/chicago-faces-135-increase-carjackings-so-dem-lawmakers-plan-ban-grand-theft-auto

 

            Reasons for optimism.

            https://www.adamsmith.org/blog/reasons-for-optimism-health

 

            New claim that Russia was behind JFK assassination---of course the authors are     CIA, which has also been implicated.

                https://nypost.com/2021/02/22/soviets-ordered-lee-harvey-oswald-to-kill-jfk-ex-cia-chief/

 

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The Morning Call---QEInfinityForever

 

The Morning Call

 

2/24/21

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/momo-dumps-powell-pumps-crypto-slumps

 

            10 year Treasury yields spike above 1.4%.

            https://www.zerohedge.com/markets/stocks-spooked-10y-yield-tops-140

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications fell 11.4% while purchase applications were down 11.1%  (undoubtedly weather related)

 

The February Richmond Fed manufacturing index came in at 14, the same reading as in January.

https://www.advisorperspectives.com/dshort/updates/2021/02/23/richmond-fed-manufacturing-continued-improvement-in-february

 

February consumer confidence was reported at 91.3 versus expectations of 90.0.

https://www.advisorperspectives.com/dshort/updates/2021/02/23/consumer-confidence-up-in-february

 

                        International

 

                          Q4 German GDP grew 0.3% versus estimates of +0.1%.

 

                        Other

                       

                          Global double dip recession.

                          https://politicalcalculations.blogspot.com/2021/02/the-global-double-dip-coronavirus.html#.YDVRtOhKiM8

 

                          More for the optimists.

                          https://www.nytimes.com/2021/02/23/upshot/biden-bonds-market-inflation.html

 

            The Fed

 

              The Fed and Yellen.

              https://www.zerohedge.com/markets/babble-7-fed-and-yellen

 

Powell testified before the senate yesterday (the house today)-------and the bottom line (drum roll, please) is that QEInfinity lives on.  Free money, free money, great God Almighty, free money.  Prepared remarks:

https://www.zerohedge.com/markets/feds-whatever-it-takes-moment-preview-powells-testimony-congress

 

 

            Fiscal Policy

 

              How much pork is in the $1.9 trillion stimulus bill?

              https://www.zerohedge.com/political/heres-how-much-wasteful-spending-new-19-trillion-stimulus-bill

 

            Inflation

 

              Reflation today, inflation tomorrow?

              http://www.capitalspectator.com/reflation-today-inflation-tomorrow/

 

            Speculation

 

              Ray Dalio on how to spot a bubble.

              https://ritholtz.com/2021/02/dalio-how-to-spot-a-bubble/

 

              Blowing up the ‘everything’ bubble.

              Technically Speaking: Blowing Up The "Everything Bubble" - RIA (realinvestmentadvice.com)

 

              What to do with all that cash.

              https://www.zerohedge.com/the-market-ear/cydne9ywni

 

              If this isn’t a blow off top……….

              https://www.zerohedge.com/markets/if-isnt-blow-top

 

            Bottom line.  According to Mr. Powell the monetary firehose will continue to spew forth billions and billions.  Short term, that will provide support for higher stock prices.  That said, the sounds of alarm over valuations are getting louder.  As I have said repeatedly, I do not know how or when this condition will be corrected.  But something that can’t go on forever, won’t.  Enjoy the ride but I do not think it wise to get sucked into chasing stocks ever higher---and taking some profits is not a bad idea.

 

              The riskiest stock market in over a century.

              https://americanconsequences.com/the-riskiest-stock-market-in-over-a-century-dan-ferris/

 

              Early innings of a move to commodities.

              https://www.zerohedge.com/markets/dam-going-break-we-are-early-innings-colossal-migration-commodities

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

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The Morning Call--Beware the speculative frenzy

 

The Morning Call

 

2/23/21

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/big-tech-bitcoin-buck-battered-commodities-soar

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Month to date retail chain store sales fell slightly less than in the prior week.

 

The December Case Shiller home price index was up 0.8% versus +1.1% reported in November.

 

The February Dallas Fed manufacturing index came in at 17.2 versus 7.0 reported in December.

                          https://www.advisorperspectives.com/dshort/updates/2021/02/22/february-dallas-fed-manufacturing

 

                        International

                           

                            December UK unemployment was 5.1%, in line.

 

                            January EU CPI was +0.2%, in line.

 

                        Other

 

                          Update on seven high frequency indicators.

                          https://www.calculatedriskblog.com/2021/02/seven-high-frequency-indicators-for_22.html

 

                          For the optimists.

                          https://www.nytimes.com/2021/02/21/business/economy/pandemic-economic-boom.html

 

Yellen sets stage for higher corporate taxes, yield curve control and  a digital dollar.

https://www.zerohedge.com/markets/yellen-sets-stage-higher-corporate-taxes-yield-curve-control-and-digital-dollar

 

 

            Inflation

 

              Investor inflation fears are rising.

              https://www.marketwatch.com/story/inflation-is-rising-and-so-are-investors-fears-about-stocks-11613703814?mod=home-page

 

                           Inflation here, there and everywhere.

              https://www.knowledgeleaderscapital.com/2021/02/19/inflation-here-there-and-everywhere/

 

                          What is inflation exactly?

              https://www.forbes.com/sites/johntamny/2021/02/21/the-true-challenge-with-inflation-is-that-so-few-know-what-it-is/?sh=722a17ea18df

 

            Bottom line.  Pay attention to the first two articles below.  They address the growing level of speculation in the Market.  Most bull markets end when investor greed becomes a dominant driver of securities prices.  Both authors are suggesting that the equities markets have reached that stage.  That doesn’t mean the feeding frenzy can’t go on; and as long as the Fed keeps pumping and government spending keeps jumping, it seems likely that it will.  But their warnings are there.  Be mindful of the exogenous event.

 

              Beware the mania.

              https://thereformedbroker.com/2021/02/22/substack-vertigo/

 

              The frenzy of speculative excess.

              https://www.zerohedge.com/markets/frenzy-speculative-excess

 

              A ‘V’ shaped recovery in earnings.

              http://blog.yardeni.com/2021/02/s-500-earnings-v-shaped-recovery.html

 

              Rising rates do not necessarily spell doom for the stock market.

              https://awealthofcommonsense.com/2021/02/how-does-the-stock-market-perform-when-interest-rates-rise/

 

    News on Stocks in Our Portfolios

 

Medtronic (NYSE:MDT): Q3 Non-GAAP EPS of $1.29 beats by $0.14; GAAP EPS of $0.94 beats by $0.22.

Revenue of $7.8B (+1.0% Y/Y) beats by $30M.

 

Bank of Nova Scotia (NYSE:BNS): Q1 Non-GAAP EPS of C$1.88 beats by C$0.32; GAAP EPS of C$1.86 beats by C$0.30.

Revenue of C$8.07B (-0.9% Y/Y) beats by C$490M.

 

Bank of Nova Scotia (NYSE:BNS) declares CAD 0.90/share quarterly dividend, in line with previous.

 

Home Depot (NYSE:HD): Q4 GAAP EPS of $2.65 beats by $0.03.

Revenue of $32.26B (+25.1% Y/Y) beats by $1.69B.

 

Home Depot (NYSE:HD) declares $1.65/share quarterly dividend, 10% increase from prior dividend of $1.50.

 

What I am reading today

 

            Life is too precious to be lived mechanically.

            http://traderfeed.blogspot.com/2021/02/how-we-tranceform-mindscape.html

 

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