Wednesday, May 12, 2021

The Morning Call--Oooops, part 2: the Fed is now failing on both its primary mandates

 

The Morning Call

 

5/12/21

 

The Market

         

    Technical

 

            Yesterday was a tough trading day.  However, (1) neither the DJIA nor the S&P  challenged any support level and (2) they both experienced gap down opens---which will need to be filled before any lengthy decline can begin.  In short, it was one day.  Follow through.

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/big-tech-bloodbath-continues-after-biggest-sell-program-history

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications rose 2.1% while purchase applications were up 0.8%

 

Month to date retail chains store sales grew less rapidly than the  prior week.

 

The March JOLTS report showed job openings totaled 8.1 million versus estimates of 7.5 million.

 

April CPI came in at +0.8% versus forecasts of +0.2%; core CPI was up   0.9% versus 0.3%.  This means that the Fed is now failing on both its primary tasks: employment high, inflation low.  I tol’ you.

                          https://www.zerohedge.com/economics/us-core-consumer-prices-explode-higher-fastest-pace-1981

 

                        International

 

March Japanese flash leading economic indicators were 103.2 versus 98.9 recorded in February.

 

March EU industrial production was up 0.1% versus consensus of +0.7%.

 

The March UK trade balance was L-2.0 billion versus L-0.9 billion in February; March industrial production was +1.8% versus +1.0%; March GDP was up 2.1% versus +1.3%; Q1 GDP was -1.5% versus -1.6%; Q1 business investment was down 11.9% versus up 5.9% in the prior quarter.

 

April German CPI was +0.7%, in line.

 

                        Other

 

              The Fed

 

               The Fed abandons long held inflation policy.

                https://thehill.com/opinion/finance/552668-the-fed-does-a-quiet-about-face-on-inflation

 

                Jim Grant: the Fed can’t control inflation.

                https://www.zerohedge.com/economics/jim-grant-fed-cant-control-inflation

 

              Biden’s Plan

                       

                Weak jobs report shows limits of stimulus.

                https://www.nationalreview.com/2021/05/weak-jobs-report-shows-limits-of-stimulus/

 

              Inflation

 

                It is just starting.

                https://www.advisorperspectives.com/commentaries/2021/05/11/inflation-its-just-the-start

 

                  The coronavirus

 

This is a great seven minute video excerpt from a TEDx presentation on the negative psychological impact of the virus on our decision making process.  (must watch).     

                    Https://nalert.blogspot.com/2021/05/talk-on-viral-issue-realities-short.html

 

     Bottom line.          

 

            What can you do about high valuations?

            https://compoundadvisors.com/2021/what-can-you-do-about-high-valuations

  

            For those who missed Stan Druckenmiller’s Squawk Box appearance.

            https://www.zerohedge.com/markets/were-raging-mania-druckenmiller-warns-fed-endangering-dollar-reserve-status

 

            The psychology of QE.

                https://www.zerohedge.com/markets/psychology-qe-far-more-important-amount-it

 

    News on Stocks in Our Portfolios

 

T. Rowe Price (NASDAQ:TROW) declares $1.08/share quarterly dividend, in line with previous.

Cummins (NYSE:CMI) declares $1.35/share quarterly dividend, in line with previous.

3M (NYSE:MMM) declares $1.48/share quarterly dividend, in line with previous.

ADP (NASDAQ:ADP) has priced public offering of $1B of its 1.70% senior notes due 2028.

What I am reading today

 

            Three social security myths.

            https://www.usatoday.com/story/money/personalfinance/retirement/2021/05/09/social-security-myths-retirement/43778549/

 

            The next natural disaster is on the way and we are not prepared.

            https://www.bloomberg.com/opinion/articles/2021-05-09/niall-ferguson-the-next-global-disaster-is-already-on-its-way?srnd=opinion&sref=loFkkPMQ

 

            The world’s largest emitters of carbon dioxide.

            https://politicalcalculations.blogspot.com/2021/05/the-worlds-largest-emitter-of-carbon.html#.YJrDxbVKiUk

 

            It has never been harder to be an MLB hitter.

            https://bleacherreport.com/articles/2942589-all-the-reasons-why-it-has-never-been-harder-to-be-an-mlb-hitter

 

            Quote of the day.

            https://cafehayek.com/2021/05/quotation-of-the-day-3523.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CafeHayek+%28Cafe+Hayek%29

 

 

            Mediterranean diet may protect brain from Alzheimer’s.

            https://www.zerohedge.com/medical/mediterranean-diet-may-protect-brain-alzheimers-disease-study-says

 

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