The Morning Call--The inflation debate

 

The Morning Call

 

5/26/21

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/bonds-bullion-bid-stocks-skid-stimmy-less-sentiment-slumps

 

            Watching long duration stocks for a sign of Market direction.

            https://www.zerohedge.com/the-market-ear/c7dby7ys4

 

            The golden chase.

            https://www.zerohedge.com/the-market-ear/cqcvdu17gv

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

                       

              Weekly mortgage applications fell 4.2% while purchase applications rose     

              1.7%.

 

The March Case Shiller home price index was up 13.3% versus +12.3% in February.

https://www.advisorperspectives.com/dshort/updates/2021/05/25/march-s-p-case-shiller-home-price-index-national-index-up-13-yoy

 

April new home sales declined 5.9% versus estimates of +5.6%.

https://www.advisorperspectives.com/dshort/updates/2021/05/25/new-home-sales-down-6-mom

 

May consumer confidence came in at 117.2 versus expectations of 119.2.

 

The May Richmond Fed manufacturing index was reported at 18 versus 17 in April.

 

                        International

           

March Japanese leading economic indicators came in at 102.5 versus 98.9 reported in February.

 

                        Other

 

      The Fed

 

            Update on the reverse repo market.

            https://www.zerohedge.com/markets/rrp-explosion-fed-reverse-repo-soars-third-highest-incredible-amount-cash

 

     Inflation

 

Inflation is shortages.  This is a decent argument for ‘transitory’ inflation.  However, the key premise that supports his case is  ‘People and corporations seek to lower prices in order to maximize profits and prosperity.’  That is not how it works.  Corporations seek to maximize profits by finding the right balance of volume (demand) and price.  If there is excess money around for (borrowing or from government largess) spending, the right balance will lead to higher prices.

            https://integratinginvestor.com/inflation-is-shortages-and-thankfully-transitory/

 

            Counterpoint.

            https://reason.com/2021/05/24/politicians-play-with-fire-by-risking-inflation/

           

            As an example:

            https://politicalcalculations.blogspot.com/2021/05/the-pandemic-price-escalation-of.html#.YK0ttqhKiUk

 

On the other hand, as the above author points out, the cure for higher prices is higher prices.

            https://www.zerohedge.com/economics/here-comes-hangover-soaring-prices-result-record-crash-home-appliance-buying-plans

                       

                        Inflation, money and supply bottlenecks.

            https://www.zerohedge.com/economics/inflation-money-and-supply-bottlenecks

 

 

     Bottom line.

 

            Confusing market crashes with bear markets.

            https://www.advisorperspectives.com/commentaries/2021/05/24/confusing-market-crashes-bear-markets-part-1

 

            Why investing feels like astrology (must read).

            https://moontowermeta.com/why-investing-feels-like-astrology/

 

            Here is one money manager’s attempt to put the preceding model to work.

            https://www.zerohedge.com/markets/picking-pennies-front-steamroller

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

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