The Morning Call--Bonds are a warning sign

 

The Morning Call

 

4/30/21

The Market

         

            Thursday in the charts.

            https://www.zerohedge.com/markets/stocks-panic-bid-eu-close-after-biden-induced-breakdown

 

            Bonds in retreat after FOMC meeting.

            https://www.ft.com/content/2dc29002-a101-4ecc-a5d3-bd438bf511bb

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

                         

                          March pending home sales rose 1.9% versus estimates of +5.0%.

                          https://www.advisorperspectives.com/dshort/updates/2021/04/29/pending-home-sales-up-1-9-in-march

 

March personal income was up 21.1% versus expectations of +20.3%; personal spending was up 4.2% versus up 4.1%; the PCE price deflator  was +0.5% versus +0.2% in February; the core PCE price deflator was +0.4% versus +0.3%.

 

                        International

 

The March Japanese unemployment rate was 2.6% versus predictions of 2.9%; March industrial production was +2.2% versus -2.0%; March YoY housing starts were up 1.5% versus -7.4%; March construction orders were +12.5% versus 2.5% in February; April consumer confidence was 34.7 versus 36.1 in March; the April manufacturing PMI was 53.6 versus 53.3.

 

The March EU unemployment rate was 8.1% versus consensus of 8.3%; April CPI was 0,6% versus 0.9% in March; Q1 flash GDP growth was -0.6% versus -0.8%

 

The April Chinese manufacturing PMI was 51.1 versus forecasts of 51.7; the nonmanufacturing PMI was 54.9 versus 56.3 in March; the Caixin manufacturing PMI was 51.9 versus 50.8.

 

Q1 German flash GDP growth was -1.7% versus projections of -1.5%.

 

                        Other

 

                          Some detail on yesterday’s initial Q1 GDP report.

                          https://www.advisorperspectives.com/dshort/updates/2021/04/29/an-inside-look-at-the-gdp-q1-advance-estimate

 

 

            Inflation

 

              Inflation, the steamroller.

             https://www.epsilontheory.com/manheim-steamroller/

 

              Consumer goods prices are going up.

              https://www.nytimes.com/2021/04/29/business/consumer-goods-prices.html

 

              Signs to watch for increasing inflationary pressures.

              http://www.capitalspectator.com/waiting-for-the-inflation-canary-to-sing-or-not/

 

            Biden’s Plan

 

Private equity/hedge funds having a hissy fit over the proposed elimination of ‘carried interest’ favorable tax treatment.

https://www.nakedcapitalism.com/2021/04/private-equity-and-hedge-fund-barons-having-a-hissy-over-carried-interest-grift-because-biden-isnt-staying-bought.html

 

            The coronavirus

 

              Just how bad were all those doomsday projections?

              https://politicalcalculations.blogspot.com/2021/04/visualizing-icls-pandemic-models.html#.YIr3mpBKiUk

 

     Bottom line.  Bonds aren’t overvalued; they are a warning sign.

            https://www.zerohedge.com/markets/no-bonds-arent-overvalued-theyre-warning-sign

 

 

    News on Stocks in Our Portfolios

 

Genuine Parts (NYSE:GPC) declares $0.815/share quarterly dividend, in line with previous.

 

Exxon Mobil (NYSE:XOM): Q1 Non-GAAP EPS of $0.65 beats by $0.05; GAAP EPS of $0.64 beats by $0.07.

Revenue of $59.15B (+5.3% Y/Y) beats by $2.61B.

 

Illinois Tool Works (NYSE:ITW): Q1 GAAP EPS of $2.11 beats by $0.21.

Revenue of $3.5B (+8.4% Y/Y) beats by $60M.

 

AbbVie (NYSE:ABBV): Q1 Non-GAAP EPS of $2.95 beats by $0.12; GAAP EPS of $1.99 beats by $0.52.

Revenue of $13.01B (+50.9% Y/Y) beats by $230M.

 

What I am reading today

 

            Quote of the day.

            https://cafehayek.com/2021/04/quotation-of-the-day-3511.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CafeHayek+%28Cafe+Hayek%29

 

 

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The Morning Call--The cornucopia of money and spending

 

The Morning Call

 

4/29/21

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/dollar-dumps-2-month-lows-ether-record-highs-after-powell-promises-moar

 

            Yields are back.

            https://www.zerohedge.com/the-market-ear/yields-1

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

The initial Q1 GDP growth estimate was +6.4% versus forecasts of +6.1%; the PCE price index was +3.5%.

 

Weekly mortgage applications fell 2.5% while purchase applications were down 4.8%.

 

Weekly jobless claims came in at 553,000 versus expectations of 549,000.

 

The March trade balance was -$90.6 billion versus -$87.1 billion in February.

 

                        International

 

                          March Japanese retail sales rose 1.2% versus +3.1% in February.

 

March German unemployment was 4.5%, in line with February’s report;  April CPI was +0.7% versus consensus of +0.5%; May consumer confidence declined 8.8% versus down 3.5%.

                       

April EU economic sentiment was reported at 110.3 versus predictions of 102.2; industrial sentiment was 10.7 versus 4.0; services sentiment was 2.1 versus -8.1; consumer confidence was -8.6, in line.

 

                        Other

 

                          April regional Fed manufacturing overview.

                          https://www.advisorperspectives.com/dshort/updates/2021/04/27/april-regional-fed-manufacturing-overview

 

The Fed

           

Aside from a busy day for earnings reports, the lead headline was the results of the latest FOMC meeting.  Of course, there was no real news since nothing  changed.  Interest rates remain low, QE running full blast and Powell et al heads are still in the clouds.  Here is the language of the statement released after the meeting along with some analysis, if you like repetition.

              https://www.zerohedge.com/economics/optimistic-fed-signals-strengthening-economy-shrugs-inflation-transitory

 

            Fiscal Policy

 

And speaking of having their heads in the clouds (which I wish I weren’t), Biden delivered his first address the congress.  The most surprising thing was that he sounded coherent through the entire speech.  Not so surprising was the plan to spend trillions.  Irrespective of whether you agree with the need for these massive social spending programs, without offsetting spending reductions or increased taxes, the end result will be slower economic growth.  That said, like most political speeches, this one was more publicity than anything else.  Let’s see what happens in real life.

           

    News on Stocks in Our Portfolios

 

W.W. Grainger (NYSE:GWW) declares $1.62/share quarterly dividend, 5.9% increase from prior dividend of $1.53.

 

Exxon Mobil (NYSE:XOM) declares $0.87/share quarterly dividend, in line with previous.

 

Automatic Data Processing (NASDAQ:ADP): FQ3 Non-GAAP EPS of $1.89 beats by $0.11; GAAP EPS of $1.90 beats by $0.13.

Revenue of $4.1B (+1.5% Y/Y) beats by $20M.

 

General Dynamics (NYSE:GD): Q1 GAAP EPS of $2.48 beats by $0.18.

Revenue of $9.39B (+7.3% Y/Y) beats by $490M.

 

Qualcomm (NASDAQ:QCOM): Q2 Non-GAAP EPS of $1.90 beats by $0.23; GAAP EPS of $1.53 beats by $0.15.

 

Revenue of $7.94B (+52.7% Y/Y) beats by $320MApple (NASDAQ:AAPL): FQ2 GAAP EPS of $1.40 beats by $0.42.

Revenue of $89.6B (+53.7% Y/Y) beats by $12.31B.

Mastercard (NYSE:MA): Q1 Non-GAAP EPS of $1.74 beats by $0.18; GAAP EPS of $1.83 beats by $0.25.

Revenue of $4.2B (+5.0% Y/Y) beats by $150M.

 

T. Rowe Price (NASDAQ:TROW): Q1 Non-GAAP EPS of $3.01 beats by $0.07; GAAP EPS of $3.17 beats by $0.17.

Revenue of $1.83B (+25.3% Y/Y) beats by $20M.

 

Altria (NYSE:MO): Q1 Non-GAAP EPS of $1.07 beats by $0.02; GAAP EPS of $0.77 misses by $0.23.

Revenue of $4.88B (-3.4% Y/Y) misses by $110M.

 

What I am reading today

 

           

 

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The Morning Call---early

 

The Morning Call

 

4/28/21

 

I am on the road early tomorrow morning. 

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/ether-hits-record-highs-bonds-big-tech-bullion-sink-ahead-fed

 

            Freaky markets (must read).

            https://www.zerohedge.com/markets/freaky-markets

           

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          April consumer confidence came in at 121.7 versus expectations off 113.0.

                          https://www.advisorperspectives.com/dshort/updates/2021/04/27/consumer-confidence-highest-since-february-2020

 

The April Richmond Fed manufacturing index was reported at 17, the same as in March.

                          https://www.advisorperspectives.com/dshort/updates/2021/04/27/richmond-fed-manufacturing-improvement-in-april

 

                        International

 

                        Other

                       

                          Q1 homeownership rate.

                          https://www.advisorperspectives.com/dshort/updates/2021/04/27/home-ownership-rate-65-6-in-q1-2021

 

                              February real home prices and the price to rent ratio.

                          https://www.calculatedriskblog.com/2021/04/real-house-prices-and-price-to-rent.html

 

                The Fed

 

              They’re guessing.

              https://www.zerohedge.com/markets/theyre-guessing-bond-king-gundlach-rejects-feds-inflation-transitory-narrative

                                

            Inflation

 

              More signs of inflation.

                            https://www.bloomberg.com/news/articles/2021-04-27/u-s-companies-bump-up-prices-on-supply-squeeze-and-demand-boom?srnd=premium&sref=loFkkPMQ

 

              Biden raises minimum wage for federal contractors.

              https://www.reuters.com/world/us/biden-raises-minimum-wage-federal-contractors-15hr-2021-04-27/

 

              Cheese futures skyrocket.

              https://www.ft.com/content/03f3eb4f-d794-4717-b421-a8f97c04c276

 

              Supply chains implode as price doesn’t matter any more.

              https://www.zerohedge.com/markets/its-about-get-much-worse-supply-chains-implode-price-doesnt-even-matter-anymore

 

            Biden’s Plan

 

              Capital gains nonsense.

              https://www.econlib.org/capital-gains-nonsense/

 

              Barry Ritholtz on the capital gains tax proposal.

              https://ritholtz.com/2021/04/top-1-tax/

 

    News on Stocks in Our Portfolios

 

 

What I am reading today

 

            Quote of the day.

            https://cafehayek.com/2021/04/bonus-quotation-of-the-day-636.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CafeHayek+%28Cafe+Hayek%29

 

 

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

 

 

 

The Morning Call--Are we in a bubble?

 

The Morning Call

 

4/27/21

 

The Market

         

    Technical

                 

                  Monday in the charts.

                  https://www.zerohedge.com/markets/dollar-drop-crypto-pop-reflects-crazy-people-running-system

 

                  Yields setting up for a surge?

                  https://www.zerohedge.com/the-market-ear/c7iswkp5zk

 

            Market Bubble?

 

                  The psychology of a stock market bubble.

                  https://www.marketwatch.com/story/the-psychology-of-a-stock-market-bubble-11619198164

                 

                  The Mother of all Meltups?

                  http://blog.yardeni.com/2021/04/running-of-bulls.html

 

                  Wild ride lifts everything.

                  https://www.wsj.com/articles/wild-market-ride-lifts-everything-from-lumber-to-stocks-to-bitcoin-11619343001?mod=hp_lead_pos3

 

                  Are we in a bubble?

                  https://www.evidenceinvestor.com/are-we-in-a-bubble/

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Month to date retail chain store sales continue to advance at a rapid pace.

 

The February Case Shiller home price index rose 1.2% versus +0.9% in January.

 

The April Dallas Fed manufacturing index came in at 37.3 versus 28.9 in March.

                          https://www.advisorperspectives.com/dshort/updates/2021/04/26/april-dallas-fed-manufacturing

                               

                        International

 

                        Other

 

                          New home prices.

                          https://www.calculatedriskblog.com/2021/04/new-home-prices.html

 

                          Update on seven high frequency indicators.

                          https://www.calculatedriskblog.com/2021/04/seven-high-frequency-indicators-for_26.html

 

            Biden’s Plan

 

              Biden’s tax proposals just keep on coming.

              https://www.realclearmarkets.com/articles/2021/04/26/president_bidens_tax_hike_hits_keep_on_coming_774286.html

               

Inflation

 

              Investors shore up defenses against inflation.

              https://www.ft.com/content/fd30060f-cb7a-43b1-83aa-410b60a7dc1c

 

              The rise in commodity prices.

              https://sentimentrader.com/blog/commodities-havent-done-this-in-50-years/

 

              Sticker shock at the grocery store.

              https://www.zerohedge.com/personal-finance/higher-prices-grocery-store-ag-futures-surge-most-8-years

 

              More of global ag prices.

              https://www.zerohedge.com/economics/why-global-inflation-about-go-overdrive

 

     Bottom line.

 

            The Fed can’t fix this.

            https://www.zerohedge.com/markets/fed-cannot-fix-next-bear-market-will-not-be-last

 

            Forward return expectations continue to fall.

            https://www.zerohedge.com/markets/forward-return-expectations-continue-fall

 

    News on Stocks in Our Portfolios

 

Canadian National Railway (NYSE:CNI): Q1 Non-GAAP EPS of C$1.23 misses by C$0.03; GAAP EPS of C$1.37 beats by C$0.11.

Revenue of C$3.54B (-0.3% Y/Y) misses by C$30M.

 

Sherwin Williams (NYSE:SHW): Q1 Non-GAAP EPS of $2.06 beats by $0.41; GAAP EPS of $1.51 beats by $0.05.

Revenue of $4.66B (+12.3% Y/Y) beats by $150M.

 

UPS (NYSE:UPS): Q1 Non-GAAP EPS of $2.77 beats by $1.05; GAAP EPS of $5.47 beats by $3.79.

Revenue of $22.91B (+27.0% Y/Y) beats by $2.17B.

 

What I am reading today

 

            Eight of the most notorious Ponzi schemes.

            https://www.cnn.com/2021/04/24/business/famous-ponzi-schemes-generation-hustle/index.html

 

                A brief biography of Adam Smith.

            https://www.adamsmith.org/blog/theorising-around-the-theory-of-moral-sentiments

 

            Safe speech versus free speech.

            https://www.nakedcapitalism.com/2021/04/safe-speech-vs-free-speech-higher-educations-false-dilemma.html

 

            When things go too far.

            https://www.zerohedge.com/markets/ucla-students-are-claiming-automatic-soap-dispensers-are-racist

 

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