The Morning Call---Debunking the delta variant

 

The Morning Call

 

6/30/21

 

The Market

         

    Technical

 

Tuesday in the charts.

https://www.zerohedge.com/markets/bitcoin-black-gold-buck-bounce-england-beat-germany

 

Technically speaking.

https://www.zerohedge.com/markets/warnings-behind-curtain

 

Why fragility is the new reality for the stock market.

https://www.wellington.com/en/insights/market-liquidity-concerns-causing-fragility-us/

 

The tech sector is getting overbought.

https://www.zerohedge.com/the-market-ear/cib7xtr8nh

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications dropped 6.9% while purchase applications were down 4.8%.

 

The April Case Shiller home price index rose 2.1% versus +2.2% in March.

https://politicalcalculations.blogspot.com/2021/06/us-new-home-sale-prices-reach-new-highs.html#.YNtGRuhKiUk

 

June consumer confidence came in at 127.3 versus expectations of 119.0.

                          https://www.advisorperspectives.com/dshort/updates/2021/06/29/consumer-confidence-increased-in-june

 

The June 30, 2021 ADP private payroll report showed job increases of 692,000 versus consensus of 600,000.

 

                        International

                           

Q1 final UK GDP growth was -1.6% versus forecasts of -1.5%; Q1 final business investment was -10.7% versus +5.9% recorded in Q4.

 

May Japanese (preliminary) industrial production declined 5.9% versus estimates of -2.4%; May YoY housing starts rose 9.9% versus +8.3%; June consumer confidence came in at 37.4 versus 34.1 in May.

 

The June Chinese manufacturing PMI was 50.9 versus projections of 50.8; the nonmanufacturing PMI was 53.5 versus 55.2 reported in May.

 

The June German unemployment rate was 5.9%, in line.

 

The June EU flash CPI was +0.3%, the same as in May.

 

                        Other

 

                          The wisdom of the Markets.

                          https://alhambrapartners.com/2021/06/27/weekly-market-pulse-1984/

 

                          The coming wave of loan defaults.

                          https://thehill.com/opinion/finance/560495-regulators-must-get-ahead-of-the-coming-wave-of-loan-defaults

 

                The Fed

 

              Tighter policy isn’t tight policy.

                          https://www.bloomberg.com/opinion/articles/2021-06-28/don-t-let-the-hawkish-talk-fool-you-fed-ecb-boj-will-stay-relatively-loose?sref=loFkkPMQ

                       

              China’s central bank strikes positive tone.

              https://www.bloomberg.com/news/articles/2021-06-28/china-s-economy-is-stabilizing-and-improving-central-bank-says?sref=loFkkPMQ

 

                  How central banks murdered markets.

              https://www.zerohedge.com/markets/Michael-pento-how-central-banks-murdered-markets

               

 

                Fiscal Policy

 

              Our muddled industrial policy.

              https://www.project-syndicate.org/commentary/us-innovation-competition-act-misguided-industrial-policy-by-anne-o-krueger-2021-06

 

              The problem with executing Biden’s infrastructure plan.

              https://townhall.com/tipsheet/katiepavlich/2021/06/29/there-is-a-massive-roadblock-to-bidens-infrastructure-plan-and-it-isnt-republican-n2591714

 

            Inflation

 

              The drought in the west has major implications for our food supply and prices.

              https://www.nytimes.com/2021/06/28/climate/california-drought-farming.html?action=click&module=Top%20Stories&pgtype=Homepage

 

              Rents are soaring.

              https://www.zerohedge.com/markets/and-now-prices-are-really-soaring-june-rent-jump-biggest-record

 

            The coronavirus

 

              Debunking the scaremongering over the ‘delta’ variant.

              https://www.americanthinker.com/blog/2021/06/debunking_the_scaremongering_over_the_delta_variant_of_covid.html

 

              More---panic porn dressed up as science.

              https://www.zerohedge.com/covid-19/panic-porn-dressed-science-exposing-truth-about-delta-variant

 

     Bottom line.

 

For all the talk about speculation in equities, investor balance sheets are sound.

https://www.morningstar.com/articles/1044865/investing-during-an-era-of-speculation

           

            What BofA thinks that means.

            https://www.zerohedge.com/markets/why-fed-dead-wrong-inflation-americans-have-35-trillion-savings-sunny-day

 

    News on Stocks in Our Portfolios

 

MSC Industrial Direct (NYSE:MSM) declares $0.75/share quarterly dividend, in line with previous.

 

General Mills (NYSE:GIS): FQ4 Non-GAAP EPS of $0.91 beats by $0.06; GAAP EPS of $0.68 misses by $0.17.

Revenue of $4.52B (-10.0% Y/Y) beats by $160M.

 

General Mills (NYSE:GIS) declares $0.51/share quarterly dividend, in line with previous.

 

 

What I am reading today

 

            Bifurcation, in black and white.

            https://www.adamsmith.org/blog/bifurcation-in-black-and-white

 

            Another interesting article from Morgan Housel.

            https://www.collaborativefund.com/blog/little/

 

 

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--Peak central bank support

 

The Morning Call

 

6/29/21

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/dow-dumps-nasdaq-jumps-bonds-bitcoin-bounce-back

 

            Market breadth is weakening.

            https://sentimentrader.com/blog/this-led-to-declines-every-time-in-the-past-93-years/

 

            Buybacks soar.

            https://www.zerohedge.com/the-market-ear/colpf4xcwt

 

            Why the yield curve is likely to re-steepen and what the means for stocks.

            https://www.knowledgeleaderscapital.com/2021/06/25/heres-why-the-yield-curve-is-likely-to-re-steepen-and-what-that-means-for-stocks/

 

            Is a short squeeze coming in the dollar?

            https://www.zerohedge.com/the-market-ear/cuspr6phao

 

            Basel III regulations (for gold) finally kick in.

            https://www.zerohedge.com/commodities/basel-iii-regulations-finally-kick-what-means-gold

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Month the date retail chain store sales grew faster than in the prior week.

 

The June Dallas Fed manufacturing index was reported at 31.1 versus 34.9 recorded in May.

                          https://www.advisorperspectives.com/dshort/updates/2021/06/28/june-dallas-fed-manufacturing

 

                        International

 

May Japanese unemployment came in at 3.0% versus estimates of 2.9%; May retail sales fell 0.4% versus -4.6% in April.

 

June EU consumer confidence was -3.3, in line; June economic sentiment was 117.5 versus 116.5; industrial sentiment was 12.7 versus 12.3; services sentiment was 17.9 versus 14.8.

 

June German CPI was +0.4%, in line.

 

                        Other

 

                          Update on business cycle indicators.

                          https://econbrowser.com/archives/2021/06/business-cycle-indicators-as-of-june-27

 

                          The June regional Fed bank manufacturing overview.

                          https://www.advisorperspectives.com/dshort/updates/2021/06/28/june-regional-fed-manufacturing-overview

    

                          Update on seven high frequency economic indicators.

                          https://www.calculatedriskblog.com/2021/06/seven-high-frequency-indicators-for_28.html

 

            The Fed

 

              Peak central bank support (until the next selloff).

              https://www.bloomberg.com/news/articles/2021-06-26/peak-central-bank-support-marks-new-phase-for-global-recovery?srnd=economics-vp&sref=loFkkPMQ

 

              Will the Fed get burned again?

              https://www.zerohedge.com/economics/john-taylor-fed-getting-burned-again

 

     Bottom line.

 

            Summary of Strategic Investment conference.

            https://www.advisorperspectives.com/commentaries/2021/06/25/long-humanity

 

            Thoughts on speculation.

            https://alephblog.com/2021/06/25/welcome-to-our-country-club/

 

            More thoughts.

            https://read.lukeburgis.com/p/mimetic-stocks-not-meme-stocks

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            Quote of the day.

            https://cafehayek.com/2021/06/quotation-of-the-day-3555.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CafeHayek+%28Cafe+Hayek%29

 

            A look at Iran’s new president.

            https://www.washingtonpost.com/opinions/2021/06/25/ebrahim-raisi-khamenei-iran-president-supreme-leader/

 

            Focused goal setting.

            http://traderfeed.blogspot.com/2021/06/figs-focused-intensive-goal-setting.html

 

            An interview with one of crypto’s top VCs.

            https://www.nytimes.com/2021/06/26/business/dealbook/katie-haun-crypto.html

 

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

 

 

 

Monday Morning Chartology

 

The Morning Call

 

6/28/21

 

The Market

 

    Technical

 

For the third time in this short term cycle, the S&P successfully challenged its short term trading range and reset back to the uptrend.  To repeat myself: as long as the S&P’s rate of ascent is slower than that of its short term uptrend, it will likely follow a pattern of violating its short term uptrend, reset to a trading range, then make a new high and reset the trend to up.   For the moment, I am sticking with my premise: ‘I can’t see an end to this uptrend as long as the money keeps flowing with abundance and in the absence of any major negative exogenous event.’---with the caveat that even though the updated ‘dot plot’ still has any tightening moves more than a year away, if investors decide that the tapering process has really begun, so has the end.

https://www.zerohedge.com/markets/market-rallies-all-time-highs-bulls-dismiss-fed

 

How traders are positioned after the FOMC meeting.

https://www.zerohedge.com/markets/how-has-trader-positioning-changed-fomc-meeting

 

 

In the prior week, the long bond challenged its very short term downtrend.  It then spent last week trying to confirm that break---see sawing back and for the around the upper boundary of the downtrend unable to make that confirmation.  As of trading today, if it closes below the upper boundary of the very short term downtrend, the challenge will have been unsuccessful. If it ends back above that boundary, then the challenge will continue.

 

 

 

GLD traded sideways last week, leaving (1) a gap down open to be filled and (2) it in uptrends across all timeframes.

 

 

 

 

After resetting both DMAs to support in the prior week, the dollar spent last week unsuccessfully challenging the reset of its 200 DMA.

 

 

 

 

So, the technical theme last week was the indices struggle to confirm the prior week’s break of important trend lines.  It could signify uncertainty but likely it is just consolidation after a sharp move.

 

Friday in the charts.

https://www.zerohedge.com/markets/policy-error-panic-pummels-markets-commodities-yield-curve-small-caps-crushed

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Review of Last Week 

 

Last week was another negative for reported data as well as the primary indicators (one positive, one neutral and four negative).  That is eight weeks in a row now. I interpret this to mean that the stats continue to confirm that the post Covid burst of economic activity is falling well short of expectations.

https://www.zerohedge.com/markets/how-has-trader-positioning-changed-fomc-meeting 

 

The Fed and its ‘transitory’ inflation forecast remains at the center of investors’ attention.  Powell et al spent the week walking back the Bullard hawkish comments from the prior week.  Although I would note that nobody said anything about changes in the ‘dot plot’ which was the initial headline that sent the Market into decline.  In short, I think that the Fed has no clue what it wants  to do or its conviction to do what it wants to do is so weak that it continues to allow the Markets to dictate policy.  In sum, I think that the risk  to the economy is that it continues to slow, inflation continues to rise and the Fed fumbles the ball again.   (Must read)

                                                https://www.zerohedge.com/markets/fed-faces-greatest-risk-its-history-economic-crisis-accompanied-inflation

 

 

Overseas, the data flow turned positive, keeping the dataflow pattern erratic.  So, we continue to get little help on the economic growth front from the rest of globe. 

 

Bottom line. ‘As you know my opinion is that following an initial snapback (which may already be over), the US economy will likely return to its former subpar secular growth rate, stymied by an irresponsible mix of fiscal/monetary policies.’

 

                       

 

                       

                                US

 

                         

                        International

 

                        Other

 

            Inflation

 

              Summers sees inflation at 5%.

              https://www.zerohedge.com/markets/larry-summers-sees-5-inflation-end-2021

           

 

         News on Stocks in Our Portfolios

           

Paychex (NASDAQ:PAYX): Q4 Non-GAAP EPS of $0.72 beats by $0.05; GAAP EPS of $0.73 beats by $0.06.

 

What I am reading today

           

               

                Fiat currency is a fraud.

            https://www.zerohedge.com/crypto/fiat-fraud-mexicos-3rd-richest-man-says-absolutely-right-buy-bitcoin-new-gold

 

 

 

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

 

 

Fiat

 

 

The Morning Call---You knew that the Fed would fold

 

The Morning Call

 

6/22/21

 

We are moving this week; so, I don’t have a lot of time to blog.

 

The Market

         

    Technical

 

            Monday in the charts.  Two things occurred yesterday: (1) the volatility from Friday’s quad witching got unwound and (2) Fed members were all over the newswires walking back Bullard’s hawkish statement on Friday.  Plus, Powell testifies before congress today and his formal remarks which are dovish were released yesterday.  I probably don’t need to remind you that every time the Market panics over monetary tightening, the Fed folds like a cheap umbrella.  So, my premise remains: ‘I can’t see an end to this uptrend as long as the money keeps flowing with abundance and in the absence of any major negative exogenous event.’  It seems like the only thing that will bring this grossly irresponsible monetary policy to an end is when investors realize how detrimental it is to the financial health of the country.

            https://www.zerohedge.com/markets/plunge-protected-boj-buying-fedspeak-bailout-fridays-bullard-bomb

               

                Or the Fed really screws up.  For instance, Morgan Stanley seems to believe that either the Fed puts no credence in the significance of M2 growth or that it is talking out of both sides of its mouth.

            https://www.zerohedge.com/markets/forget-everything-you-know-morgan-stanley-reveals-only-metric-determines-what-market-will

 

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                        International

 

                        Other

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

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