The Morning Call---The Fed can't and won't taper

 

The Morning Call

 

7/30/21

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/robinhood-suffers-worst-big-ipo-debut-ever-dollar-dumps-1-month-lows

 

            NASDAQ at important technical level.

            https://www.zerohedge.com/the-market-ear/cwmtiz3ian

 

            Seasonality reminder.

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

 

            The growing day to day volatility in stock prices.

            https://politicalcalculations.blogspot.com/2021/07/growing-day-to-day-volatility-in-stock.html#.YQLZtY5KiUk

 

            US ETF inflows surge.

            https://www.ft.com/content/c6210b52-6381-4bbb-8433-cf4f8691e577

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          June pending home sales fell 1.9% versus consensus of +0.3%.

                          https://www.advisorperspectives.com/dshort/updates/2021/07/29/pending-home-sales-down-marginally-in-june

 

June personal income grew 0.1% versus projections of -0.3%; personal spending was up 1.0% versus +0.7%.

 

The June PCE price index was +0.5%, in line with the May reading; core PCE was +0.4% versus +0.6%.                                                

 

                        International

 

Q2 EU flash GDP growth was 1.5% versus forecasts of 2.0%; Q2 German flash GDP growth was 1.2% versus 2%.

 

June Japanese YoY housing starts rose 7.3% versus expectations of   +7.2%.

 

The June EU unemployment rate was 7.7% versus estimates 7.9%; July EU CPI was -0.1% versus +0.6% in  June.

                         

                        Other

 

                          Growth is strong but the obstacles to recovery are big.

                         https://www.nytimes.com/2021/07/29/upshot/economy-gdp-analysis.html

 

            The Fed

 

              The Fed can’t and won’t taper.

              https://www.zerohedge.com/markets/game-over-0

 

            Inflation

 

             Shrinkflation continues to rise.

                  https://www.zerohedge.com/economics/shrinkflation-inflations-sneaky-cousin-rise

 

            The coronavirus

 

              Covid deaths are the lowest since March 2020.

              https://fee.org/articles/despite-delta-alarmism-us-covid-deaths-are-at-lowest-level-since-march-2020-harvard-and-stanford-professors-explain/

 

              From the street.

              https://www.zerohedge.com/covid-19/watch-psychic-bro-predicted-all-last-year

 

     Bottom line

 

            Speculation versus a margin of safety.

            https://www.advisorperspectives.com/commentaries/2021/07/28/speculation-margin-of-safety-value-investing

 

    News on Stocks in Our Portfolios

 

Mastercard (NYSE:MA): Q2 Non-GAAP EPS of $1.95 beats by $0.20; GAAP EPS of $2.08 beats by $0.33.

Revenue of $4.5B (+36.4% Y/Y) beats by $130M.

 

Altria (NYSE:MO): Q2 Non-GAAP EPS of $1.23 beats by $0.06; GAAP EPS of $1.16 misses by $0.01.

Revenue of $5.6B (-12.1% Y/Y) beats by $240M.

 

Procter & Gamble (NYSE:PG): Q2 Non-GAAP EPS of $1.13 beats by $0.04; GAAP EPS of $1.13 beats by $0.06.

Revenue of $18.96B (+3.9% Y/Y) beats by $580M.

 

Illinois Tool Works (NYSE:ITW): Q2 GAAP EPS of $2.45 beats by $0.36.

Revenue of $3.68B (+43.8% Y/Y) beats by $120M.

 

Exxon Mobil (NYSE:XOM): Q2 GAAP EPS of $1.10 beats by $0.12.

Earnings increased $5.8 billion over the second quarter of 2020, driven by oil and natural gas demand and best-ever quarterly chemical and lubricants contributions

Revenue of $67.74B (+107.7% Y/Y) beats by $3.78B.

 

What I am reading today

 

           

 

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The Morning Call--The Fed confuses----again

 

The Morning Call

 

7/29/21

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/powell-pumps-stocks-dumps-dollar-dovish-doublespeak

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly jobless claims totaled 400,000 versus expectations of 380,000.

 

The initial Q2 GDP growth reading was 6.5% versus forecasts of 8.5%; the price index was 6.1% versus 5.4%. 

                          https://www.zerohedge.com/markets/gdp-huge-miss-us-economy-grew-just-65-q2-far-below-85-expected

 

                        International

 

July German unemployment came in at 5.7% versus estimates of 5.8%; the preliminary July inflation rate was 0.9% versus 0.5%.

 

July EU consumer confidence was reported at -4.4, in line; economic sentiment was 119 versus 118.5; industrial sentiment was 14.6 versus 13.0; services sentiment was 19.3 versus 19.9.

 

                        Other

 

                          Regional Fed manufacturing overview.

                          https://www.advisorperspectives.com/dshort/updates/2021/07/28/july-regional-fed-manufacturing-overview

                       

            The Fed

 

As you know the Fed met this week.  Yesterday it released the official statement from that meeting.  In sum, the Fed says that the economy has made progress but there was no change in policy and no hint of when it will change.  Viva la QE!

https://www.zerohedge.com/markets/fomc

 

In the subsequent presser, Powell gave us all his very best version of the green apple two step by confusing everyone, including guys a lot smarter than me.  But in essence, viva la QE!

              https://www.zerohedge.com/markets/5-takeaways-powells-conference

 

              What happens when rates rise and QE is over?

              https://www.19fortyfive.com/2021/07/what-happens-when-the-days-of-low-interest-rates-and-strong-global-liquidity-end/

 

            Fiscal Policy

 

$550 billion infrastructure bill advances in senate.  Note: this is the kind of spending that ends up paying for itself.  In fact, almost everyone agrees that that it is necessary; forget the state of the economy.  So, I think it a positive.  Also, at least a decent part of the spending is offset by cuts elsewhere.

              https://www.zerohedge.com/political/bipartisan-coalition-reach-agreement-12-trillion-infrastructure-bill

 

            Inflation

 

              Hyperinflation tipping point.

              https://econbrowser.com/archives/2021/07/still-crazy-after-all-these-years

 

              IMF warns that inflation may not be transitory.

              https://www.cnbc.com/2021/07/27/imf-warns-that-inflation-could-prove-to-be-persistent.html

 

              How transitory is inflation?

              https://www.zerohedge.com/economics/just-how-transitory-inflation

 

            The coronavirus

 

              The CDC gets it wrong again.

              https://politicalcalculations.blogspot.com/2021/07/how-did-covid-19-change-us-life.html#.YQGdao5KiUk

 

    News on Stocks in Our Portfolios

 

Qualcomm (NASDAQ:QCOM): Q3 Non-GAAP EPS of $1.92 beats by $0.24; GAAP EPS of $1.77 beats by $0.40.

Revenue of $8.06B (+64.5% Y/Y) beats by $500M.

 

T. Rowe Price (NASDAQ:TROW): Q2 Non-GAAP EPS of $3.31 beats by $0.11; GAAP EPS of $3.46 beats by $0.23.

Revenue of $1.93B (+35.9% Y/Y) beats by $20M.

 

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

 

What I am reading today

 

            What happened to patronage?

            https://www.strangeloopcanon.com/p/on-medici-and-thiel

 

            The Simone Biles moment.

            https://townhall.com/columnists/markdavis/2021/07/28/the-simone-biles-moment-reveals-our-softened-world-n2593215

 

                        New technologies and the sorting process of the Market.

            https://www.adamsmith.org/blog/new-technologies-and-the-sorting-process-of-the-market

 

            The ‘follow the science’ clown show.

            https://www.powerlineblog.com/archives/2021/07/the-follow-the-science-clown-show.php

 

 

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The Morning Call--Still buying the dip

 

The Morning Call

 

7/28/21

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/stocks-dollar-bond-yields-tumble-china-chunder-mask-mandate-miasma

 

            Real yields hit record low.

            https://www.ft.com/content/71d6661d-7a62-4a5f-959b-4cb2f1e94d68

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications were up 5.7% but purchase applications were down 1.6%.

 

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

 

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

https://www.advisorperspectives.com/dshort/updates/2021/07/27/may-s-p-case-shiller-home-price-index-national-index-up-16-6-yoy-continues-record-highs

 

July consumer confidence came in at 129.1 versus consensus of 123.9.

https://www.advisorperspectives.com/dshort/updates/2021/07/27/consumer-confidence-mostly-unchanged-in-july

 

The July Richmond Fed manufacturing index was reported at 27 versus 26 in June.

                          https://www.advisorperspectives.com/dshort/updates/2021/07/27/richmond-fed-manufacturing-continued-strength-in-july

 

                        International

                         

The May Japanese leading economic indicators were reported at 102.6 versus 103.8 in April.

 

August German consumer confidence fell 0.3% versus estimates of +1.0%.

                       

                        Other

 

                          Washington is ignoring our productivity problem.

                          https://thehill.com/opinion/finance/564810-as-inflation-and-government-debt-surge-washington-is-ignoring-our-most

 

                          Speaking of which.

                          https://marginalrevolution.com/marginalrevolution/2021/07/the-1991-project.html

 

                          Economic growth is slowing.

                          http://www.capitalspectator.com/introducing-the-us-macro-trend-index/#more-16420

 

            The Fed

 

              The Fed’s blind spot.

              https://blogs.cfainstitute.org/investor/2021/07/20/the-feds-blindspot-on-global-inflation-drivers/

 

An open letter to the Fed.  The author accurately outlines the problems the Fed has created but then excuses them from correcting the problems.

https://www.zerohedge.com/markets/creator-bond-vix-pens-open-letter-fed

 

            Inflation

 

              Is inflation merely catching up?  This author says no. (must read).

              https://www.aier.org/article/is-inflation-merely-catching-up/

 

            China

 

              What is behind China’s regulatory crackdown?

              https://www.bloomberg.com/news/articles/2021-07-26/stock-market-china-doesn-t-care-how-much-money-investors-lose?sref=loFkkPMQ

 

              More.

              https://www.bloomberg.com/news/articles/2021-07-27/china-s-crackdown-stocks-extend-declines-into-a-third-day?sref=loFkkPMQ

 

            The coronavirus

 

              A tale of two narratives.

              https://www.zerohedge.com/covid-19/tale-two-narratives

 

              The costs of the lockdown.

              https://www.zerohedge.com/covid-19/zero-covid-experts-put-grandkids-risk

 

     Bottom line

 

            Buy the dip?

            https://alhambrapartners.com/2021/07/25/weekly-market-pulse-buy-the-dip-if-you-can/

 

    News on Stocks in Our Portfolios

 

Microsoft (NASDAQ:MSFT): Q4 Non-GAAP EPS of $2.17 beats by $0.25.

Revenue of $46.2B (+21.5% Y/Y) beats by $1.9B.

Automatic Data Processing (NASDAQ:ADP): Q4 Non-GAAP EPS of $1.20 beats by $0.06; GAAP EPS of $1.26 beats by $0.13.

Revenue of $3.7B (+9.5% Y/Y) beats by $20M.

 

General Dynamics (NYSE:GD): Q2 GAAP EPS of $2.61 beats by $0.07.

Revenue of $9.22B (-0.4% Y/Y) misses by $100M.

 

McDonald's (NYSE:MCD): Q2 Non-GAAP EPS of $2.37 beats by $0.25; GAAP EPS of $2.95 beats by $0.84.

Revenue of $5.89B (+56.6% Y/Y) beats by $320M.

 

Apple (NASDAQ:AAPL): Q3 GAAP EPS of $1.30 beats by $0.29.

Revenue of $81.4B (+36.4% Y/Y) beats by $7.93B.

 

Apple (NASDAQ:AAPL) declares $0.22/share quarterly dividend, in line with previous.

 

Becton, Dickinson (NYSE:BDX) declares $0.83/share quarterly dividend, in line with previous.

 

What I am reading today

 

            A guide to developing a deep reading habit.

            https://forge.medium.com/a-guide-to-developing-a-deep-reading-habit-f439e4eee872

 

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The Morning Call---The coming Minsky moment

 

The Morning Call

 

7/27/21

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/dollar-drops-crypto-pops-bonds-stocks-chop

 

            Real yields fall to record lows.

            https://www.bloomberg.com/news/articles/2021-07-26/u-s-real-yields-fall-to-record-low-amid-growth-concerns?srnd=premium&sref=loFkkPMQ

 

            Bonds and inflation.

            https://theirrelevantinvestor.com/2021/07/26/bonds-and-inflation/

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          June new home sales fell 6.6% versus forecasts of +3.5%.

                          https://www.advisorperspectives.com/dshort/updates/2021/07/26/new-home-sales-down-6-6-in-june

 

June durable goods orders were up 0.8% versus estimates of +2.1%; ex transportation, they were up 0.3% versus +0.8%.

                                  https://www.zerohedge.com/economics/us-durable-goods-orders-unexpectedly-slow-june

 

The July Dallas Fed manufacturing index came in at 27.3 versus the June reading of 31.1.

                                   https://www.advisorperspectives.com/dshort/updates/2021/07/26/july-dallas-fed-manufacturing

               

Note: Above we have two primary indicators that just didn’t fail to meet expectations, they failed miserably.  How many economists do you think are starting to reconsider their rosy growth forecasts?

 

                        International

 

June YoY Chinese industrial profits rose 66.9% versus an +83.4% increase reported in May.

 

                        Other

 

                          Update on seven high frequency economic indicators.

                          https://www.calculatedriskblog.com/2021/07/seven-high-frequency-indicators-for_26.html

 

                          Profit margins are holding up.

                          https://www.axios.com/profit-margins-cost-inflation-rising-wages-c7e8dab9-9dbb-46c2-a0a3-67fc95442b44.html

 

                          Goldman lowers its GDP growth estimates.

                          https://www.zerohedge.com/markets/and-now-hangover-goldman-sees-sharp-deceleration-us-economic-growth-2022

 

            The Fed

 

              Federal Reserve folly.

              https://www.advisorperspectives.com/commentaries/2021/07/23/federal-reserve-folly

 

            Inflation

 

              The stagflation threat is real.

              https://www.zerohedge.com/economics/stagflation-threat-very-real-congress-holds-key

 

            The coronavirus

 

              The French warned the US about Wuhan lab in 2015.

              https://www.zerohedge.com/covid-19/french-intelligence-warned-obama-state-department-about-wuhan-lab-2015-former-official

                       

    Bottom line.

 

            The Market’s next Minsky moment.

            https://www.zerohedge.com/markets/markets-next-minsky-moment

 

    News on Stocks in Our Portfolios

 

3M (NYSE:MMM): Q2 Non-GAAP EPS of $2.59 beats by $0.31; GAAP EPS of $2.59 beats by $0.34.

Revenue of $8.95B (+24.7% Y/Y) beats by $360M.

 

UPS (NYSE:UPS): Q2 Non-GAAP EPS of $3.06 beats by $0.25; GAAP EPS of $3.05 beats by $0.25.

Revenue of $23.4B (+14.4% Y/Y) beats by $230M.

 

Sherwin Williams (NYSE:SHW): Q2 Non-GAAP EPS of $2.65 beats by $0.06; GAAP EPS of $2.42 misses by $0.01.

Revenue of $5.38B (+17.0% Y/Y) misses by $10M.

 

What I am reading today

 

            What if OU and UT join the SEC?

            https://www.forbes.com/sites/johntamny/2021/07/25/the-southeastern-conference-will-no-longer-be-the-sec-if-its-expansion-continues/?sh=4f78653317c7

 

                        What improves the chances of solving a murder?

            https://www.nytimes.com/2021/07/23/upshot/murder-crime-solving.html

 

            Expanding free will.

            http://traderfeed.blogspot.com/2021/07/intentionality-expanding-free-will.html

 

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