Thursday, February 18, 2021

The Morning Call--FOMC minutes reiterate Powell's reiteration of his reiteration


The Morning Call




The Market




            Wednesday in the charts.



            Three factors that could drive stock prices lower.



            For the bulls.



            A headwind for bonds.







              The Economy




                          Weekly jobless claims came in at 861,000 versus projections of 765,000.



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


                          December business inventories rose 0.6% versus expectations of +0.5%.


January industrial production increased 0.9% versus estimates of +0.5%; capacity utilization was 75.6 versus 74.8; housing starts declined 6% versus -0.1% but building permits were up 10.4% versus -0.2%. January export prices were up 3.3% versus +0.4%, import prices were up 1.3% versus +1.0%.


The February Philadelphia Fed manufacturing index was reported at 23.1 versus forecasts of 20.0; the February housing market index came in at 84 versus 83.






                          It is all about reflation now (must read).






                          Also: Powell should stick to his guns.




                          An alternative measure of slack in the economy.



                          Update on big four economic indicators.



                                                  Total household debt rose in Q4 2020.



                The Fed


The FOMC released the minutes of its January meeting.  Bottom line is that   QEInfinity is alive and well and maintains its near infinite shelf life.  Given the dovish comments from Powell in two earlier and separate speeches, this is hardly a surprise.  Here are the minutes along with some commentary.


              Repo market on verge of a major shock.



            Fiscal Policy


              The risks of ‘acting big’.



            The coronavirus


              A pandemic of ignorance.



              Vaccine math.



            Bottom line.


Yesterday, I confessed that I had no idea at what level interest rates would start to negatively impact stock prices.  Nomura has a thought:



              This bull is starting to get more circumspect.



              Dividend cuts at the Q1 2021 midpoint.



    News on Stocks in Our Portfolios


Hormel Foods (NYSE:HRL): FQ1 GAAP EPS of $0.41 in-line.

Revenue of $2.46B (+3.4% Y/Y) beats by $90M.


Sherwin Williams (NYSE:SHW) declares  $1.65/share quarterly dividend, 23.1% increase from prior dividend of $1.34.


What I am reading today


            Quote of the day.

            Quotation of the Day... - Cafe Hayek


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