The Morning Call
3/31/21
The
Market
Technical
Tuesday in the
charts.
https://www.zerohedge.com/markets/stocks-sink-feds-kaplan-admits-challenges-due-excess-risk-taking
Bulls run as liquidity
floods the Market.
Oil sells off.
https://www.zerohedge.com/the-market-ear/c3o1wmwfpk
Fundamental
Headlines
The
Economy
US
Weekly mortgage applications
fell 2.2% while purchase applications were down 1.5%.
Month to date
retail chain store sales declined at approximately the same rate as in the
prior week.
The January Case
Shiller home price index increased 0.9%, the same rate as in December.
March consumer
confidence was reported at 109.7 versus expectations of 96.9.
https://www.advisorperspectives.com/dshort/updates/2021/03/30/consumer-confidence-highest-in-a-year
The March ADP
private payroll report shows job increases of 517,000 versus predictions of
550,000.
https://www.zerohedge.com/economics/adp-employment-data-disappoints-march-service-sector-jobs-soar
International
Final
Q4 UK GDP grew 1.3% versus forecasts of +1.0%; business investment grew 5.9%
versus the Q3 report of 13.2%.
February
Japanese industrial production was down 2.1%
versus estimates of -1.2%; February YoY housing starts were down 3.7% versus
-4.8% in January; February YoY construction orders were up 2.5% versus +14.1%
in January.
The
February German unemployment rate was 4.5% versus 4.6% in January.
The
March Chinese manufacturing PMI came in at 51.9 versus consensus of 51.0; the
nonmanufacturing PMI was 56.3 versus 51.4 in February,
The
March flash EU CPI was up 0.9% versus +0.2% in February.
Other
Real house prices
and the price-to-rent ratio.
https://www.calculatedriskblog.com/2021/03/real-house-prices-and-price-to-rent.html
Median household income in February.
The Fed
Time to abandon autopilot monetary policy.
https://www.ft.com/content/835efc35-3688-4795-ada1-ecb566a3aa9d
Fiscal
Policy
Biden readies tax
hikes. Like Biden’s infrastructure spending
program, I am going to defend the
notion of tax hikes at least until we get more details.
https://www.nysun.com/national/now-he-tells-us-biden-readies-radical-tax-hikes/91460/
First of all,
there is no question that there is massive inequality in income. CEOs are earning multiples more than their
average employee---at a vastly wider margin than twenty years ago. I see that as unfair. A major reason is that CEO’s benefit from
stock buyback programs which, as I have pointed out numerous times, was made possible
by easy monetary policy, i.e., the company awards stock to CEO as part of his/her
compensation, company borrows money cheaply, uses the proceeds to buy back
stock (as opposed to investing to increase productivity) which drives the price
of said stock up, CEO sells stock. That
is just one of the many beefs I have with the current irresponsible monetary
policy; and it has contributed to the unbalanced distribution of gross income
in America. I see nothing wrong with raising
the tax rates on these gains---AS LONG AS the funds are used to either pay down
debt or fund productivity enhancing infrastructure projects.
Second, the
universe has known that the social security system was headed for bankruptcy but
no one in our political class had the cojones to address the problem. The math of the solution is pretty simple:
(1) cut benefits, (2) increase the social security tax, (3) raise the age at
which benefits are payable or (4) some combination of all. Whatever the correct mix, at least,
initiating legislation that deals this issue is a necessary first.
To be clear, I have
no idea whether the ultimate enacted solution will be a plus or minus for the
economy. But I like the fact that a
necessary conversation has been started.
More details.
Bottom line.
Who’s
next?
Today’s
Stock Market Lesson
The two most powerful forces in the Market.
https://compoundadvisors.com/2021/the-2-most-powerful-forces-in-markets
News on Stocks in Our Portfolios
What
I am reading today
Misdemeanor prosecution.
https://marginalrevolution.com/marginalrevolution/2021/03/misdemeanor-prosecution.html
More
reasons for optimism.
https://www.adamsmith.org/blog/reasons-for-optimism-population
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