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

 

The Morning Call

 

2/18/21

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/bitcoin-roars-record-highs-inflation-soars-bond-rout-stalls

 

            Three factors that could drive stock prices lower.

            https://www.marketwatch.com/story/this-combo-would-be-worst-case-scenario-for-stock-market-investors-11613505230?mod=home-page

 

            For the bulls.

            https://allstarcharts.com/cupcakes-and-pizza/

 

            A headwind for bonds.

            http://www.capitalspectator.com/rising-interest-rates-create-headwinds-for-bonds-in-2021/#more-15552

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

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

                          https://www.zerohedge.com/personal-finance/initial-jobless-claims-unexpectedly-jump-due-surge-il-ca-claimants

 

                          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%.

https://www.zerohedge.com/economics/rentor-nation-returns-multi-family-starts-permits-soared-january

 

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.

https://www.advisorperspectives.com/dshort/updates/2021/02/17/nahb-housing-market-index-high-demand-offsets-higher-costs-for-now

 

                        International

 

                        Other

 

                          It is all about reflation now (must read).

                          http://scottgrannis.blogspot.com/2021/02/its-all-about-reflation-now.html

 

                          Counterpoint.

                          https://www.advisorperspectives.com/commentaries/2021/02/17/why-printing-money-may-not-create-inflation

 

                          Also: Powell should stick to his guns.

                          https://www.ft.com/content/c2c4e68d-f06e-4738-9beb-70d0a1722765

 

 

                          An alternative measure of slack in the economy.

                              http://econbrowser.com/archives/2021/02/an-alternative-proxy-measure-for-slack

 

                          Update on big four economic indicators.

                          https://www.advisorperspectives.com/dshort/updates/2021/02/17/the-big-four-industrial-production-up-0-9-in-january

 

                                                  Total household debt rose in Q4 2020.

                          https://www.calculatedriskblog.com/2021/02/ny-fed-q4-report-total-household-debt.html

 

                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.

https://www.zerohedge.com/economics/fomc-minutes-3

 

              Repo market on verge of a major shock.

              https://www.zerohedge.com/markets/here-we-go-again-zoltan-warns-repo-market-verge-major-shock-key-funding-rate-turns-negative

 

            Fiscal Policy

 

              The risks of ‘acting big’.

              https://www.zerohedge.com/economics/blain-why-acting-big-still-wont-cure-much-real-economy

 

            The coronavirus

 

              A pandemic of ignorance.

              https://www.aier.org/article/a-pandemic-of-ignorance/

 

              Vaccine math.

              https://johnhcochrane.blogspot.com/2021/02/vaccine-math-500-per-shot.html

 

            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:

              https://www.zerohedge.com/markets/nomura-13-yields-are-fine-if-they-hit-15-stocks-will-be-hammered

 

              This bull is starting to get more circumspect.

              https://thereformedbroker.com/2021/02/17/the-big-long/

 

              Dividend cuts at the Q1 2021 midpoint.

              https://politicalcalculations.blogspot.com/2021/02/dividend-cuts-at-midpoint-of-2021-q1.html#.YC1pP-hKiM8

 

    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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