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