The Morning Call---You can't raise rates and not expect a reaction

 

The Morning Call

 

10/29/21

 

The Market

         

    Technical

 

Thursday in the charts.  Note: yesterday, the S&P reset is short term trend from a trading range to an uptrend---again.

            https://www.zerohedge.com/markets/dollar-dives-amid-crypto-chaos-biden-unveils-big-spending-bill

 

            What has been driving the recent rise in stock prices.

            https://www.linkedin.com/in/edward-yardeni/detail/recent-activity/

 

            NASDAQ melt up.

            https://www.zerohedge.com/the-market-ear/cvnn18fplg

 

Pandemonium in the bond markets.  As the article suggests, the bond guys appear to be embracing the economic slowdown/recession scenario.  Typically, this is not good for equities.  See above---confused?

            https://www.zerohedge.com/markets/96-billion-reasons-why-treasury-var-shock-about-get-worse

 

                More.

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

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

September pending home sales fell 2.3% versus expectations of being unchanged.

https://www.calculatedriskblog.com/2021/10/nar-pending-home-sales-decreased-23-in.html

 

September personal income declined 1.0% versus forecasts of -0.2%; September personal spending was up 0.6% versus up 0.5%; the September PCE price index was +0.2%, in line.

https://www.zerohedge.com/economics/feds-favorite-inflation-indicator-30-year-high-savings-rate-plunges

 

The October Kansas City Fed manufacturing index came in at 25 versus 10 recorded in September.

 

                        International

 

September Japanese unemployment rate was 2.8%, in line; September preliminary industrial production fell 5.4% versus -3.2%; September YoY housing starts up 4.3% versus +7.5%; September YoY construction orders up 27.3% versus -2.0% in August.

 

Q3 EU flash GDP growth was +2.2% versus estimates of +2.0%; October flash CPI was +0.8% versus +0.5% in September.

 

                        Other

 

                          Updating some important economic indicators.

                          https://scottgrannis.blogspot.com/2021/10/miscellaneous-chart-updates.html

 

                          Will services offset weakness in manufacturing?

                          https://www.advisorperspectives.com/commentaries/2021/10/27/will-services-offset-weakness-in-manufacturing

 

                          Another winner from the bureaucrats.

                          https://www.zerohedge.com/markets/shippers-fear-catastrophic-fallout-crazy-california-port-fees

 

The Fed

 

  You can’t raise rates and not expect a reaction.

  https://www.zerohedge.com/markets/rabo-you-cant-raise-rates-and-prop-our-current-idiotic-system

 

Biden’s Plan

 

  Another gem from our ruling class.

  https://www.zerohedge.com/political/biden-wants-give-separated-illegals-450000-person

 

    News on Stocks in Our Portfolios

 

AbbVie (NYSE:ABBV): Q3 Non-GAAP EPS of $3.33 beats by $0.11; GAAP EPS of $1.78 misses by $0.22.

Revenue of $14.34B (+11.2% Y/Y) beats by $40M.

 

AbbVie (NYSE:ABBV) declares $1.41/share quarterly dividend, 8.5% increase from prior dividend of $1.30.

 

Exxon Mobil (NYSE:XOM): Q3 Non-GAAP EPS of $1.58 beats by $0.06; GAAP EPS of $1.57 beats by $0.07.

Revenue of $73.79B (+59.7% Y/Y) beats by $1.74B.

 

W.W. Grainger (NYSE:GWW): Q3 GAAP EPS of $5.65 beats by $0.33.

Revenue of $3.37B (+11.6% Y/Y) beats by $50M.

 

What I am reading today

 

            The value of disagreeing respectfully.

            https://thereformedbroker.com/2021/10/28/the-disrespect/

 

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The Morning Call--Our irresponsible national deficit/debt problem

The Morning Call

 

 

10/28/21

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/huge-value-growth-rotation-stocks-bond-market-screams-fed-policy-error

 

            The inflow of net new money into the stock market is not likely to be repeated.

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

           

            I am not the only one confused by the recent pin action in stock and bond markets

            https://www.zerohedge.com/markets/bond-market-paradox

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly jobless claims totaled 281,000 versus consensus of 290,000.

 

Preliminary Q3 GDP growth was 2.0% versus predictions of 2.7%; the price index was 5.7% versus 5.5%; the core price index was 4.5%, in line.

 

                        International

 

September Japanese retail sales rose 2.7% versus a 4.0% decline in August.

 

October German unemployment was 5.4%, in line; October CPI was +0.5%, also in line.

 

October EU consumer confidence was -4.8%, in line; October economic sentiment was 118.6 versus 117.8 in September; October industrial sentiment was 14.2 versus 14.1 in September; October services sentiment was 18.2 versus 15.3 in September; October inflation expectations were 40.0 versus 33.1 in September.

 

                        Other

 

                        Stagnation in the new home market.

                        https://politicalcalculations.blogspot.com/2021/10/stagnation-settling-in-new-home-market.html#.YXmRGhrMKUk

 

$100 oil or yet another example of the stupidity of our political class (by the way, this post is from my favorite liberal, ooops, progressive economist).

                        https://www.nakedcapitalism.com/2021/10/a-global-oil-shortage-is-inevitable.html

 

                                Another lowering of GDP nowcast.

                        https://econbrowser.com/archives/2021/10/updating-nowcasts

 

                        Germany cuts 2021 GDP growth forecast.

                        https://www.zerohedge.com/markets/germany-cuts-2021-gdp-forecast-25-due-soaring-energy-costs

 

            The Fed

 

              The Fed’s challenges.

              https://www.reuters.com/business/fed-faces-showdown-supply-demand-patience-collide-2021-10-27/

 

              Why the Fed continues to implement an irresponsible monetary policy.

              https://www.zerohedge.com/markets/what-federal-reserve-hiding-us

 

              Bank of Canada turns more hawkish.

              https://www.zerohedge.com/markets/loonie-soars-after-bank-canada-ends-qe-early-accelerates-potential-timing-rate-hikes

 

              The Royal Band of Australia just ended its QE.

              https://www.zerohedge.com/markets/australias-2y-bond-just-blew-after-central-bank-unexpectedly-refused-buy-it

 

              But ECB leaves policy unchanged.

              https://www.zerohedge.com/markets/ecb-leaves-policy-unchanged-expected-will-keep-buying-bonds-until-least-march-2022

 

            Fiscal Policy

 

              The growing (irresponsible) national deficit/debt problem.

              https://global-macro-monitor.com/2021/10/25/the-u-s-budget-deficit/

 

              The true cost of government spending (Biden’s plan).

              https://www.project-syndicate.org/commentary/biden-spending-bill-does-not-cost-zero-dollars-by-michael-boskin-2021-10

           

Inflation

 

              Goldman sees light at the end of the supply chain disruption tunnel.

              https://www.zerohedge.com/markets/what-will-it-take-supply-chains-finally-normalize-three-things-watch

 

              Fed governor discusses inflation calculations.

              https://www.zerohedge.com/economics/central-banker-comes-clean-discusses-data-manipulation

 

                  The impact of higher oil prices on other industries.

              https://www.zerohedge.com/markets/global-food-prices-set-soar-oil-and-gas-crunch-continues

 

            China

 

              Taiwanese president confirms US troops in Taiwan.

              https://www.zerohedge.com/geopolitical/president-tsai-confirms-us-boots-ground-taiwan

 

    News on Stocks in Our Portfolios

 

T. Rowe Price (NASDAQ:TROW): Q3 Non-GAAP EPS of $3.27 misses by $0.04; GAAP EPS of $3.31 beats by $0.02.

Revenue of $1.95B (+21.9% Y/Y) misses by $20M.

 

Altria (NYSE:MO): Q3 Non-GAAP EPS of $1.22 misses by $0.04; GAAP EPS of -$1.48 misses by $2.74.

Revenue of $5.53B (-2.5% Y/Y) misses by $200M.

 

Illinois Tool Works (NYSE:ITW): Q3 GAAP EPS of $2.02 beats by $0.01.

Revenue of $3.56B (+7.6% Y/Y) in-line.

 

Mastercard (NYSE:MA): Q3 Non-GAAP EPS of $2.37 beats by $0.18; GAAP EPS of $2.44 beats by $0.25.

Revenue of $5B (+30.2% Y/Y) beats by $50M.

 

W.W. Grainger (NYSE:GWW) declares $1.62/share quarterly dividend, in line with previous.

 

Exxon Mobil (NYSE:XOM) declares $0.88/share quarterly dividend, 1.1% increase from prior dividend of $0.87.

 

 

What I am reading today

 

            Internal versus external benchmarks.

            https://www.collaborativefund.com/blog/internal-vs-external-benchmarks/

 

 

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The Morning Call--The 'transitory' argument

 

The Morning Call

 

10/27/21

 

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/long-bond-big-caps-black-gold-bid-china-tech-chunders

 

            Epic reset in volatility

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

 

            A list of Market risks.

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

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications were up 0.3% while purchase applications were up 3.5%.

 

Month to date retail chain store sales grew at approximately the same rate as in the prior week.

 

The August Case Shiller home price index was up 0.9% versus estimates of up 1.5%.

https://www.calculatedriskblog.com/2021/10/case-shiller-national-house-price-index.html

 

September new home sales rose 13.9% versus predictions of +8.2%.

https://www.calculatedriskblog.com/2021/10/new-home-sales-increase-to-800000.html

 

September durable goods orders declined 0.4% versus projections of -1.1%; ex transportation, they advanced 0.4%, in line.

https://www.zerohedge.com/economics/us-durables-goods-orders-slide-september

 

October consumer confidence came in at 113.8 versus forecasts of 108.3.

 

The October Richmond Fed manufacturing index was reported at 12 versus -3 in September.

 

                        International

 

September YoY Chinese industrial profits increased 44.7% versus +49.5% in August.

 

November German consumer confidence was reported at +0.9 versus expectations of -0.5.

 

                        Other

 

                          Who owns the national debt?

                          https://politicalcalculations.blogspot.com/2021/10/september-2021-snapshot-of-who-owns-us.html#.YXg9pBrMKUk

 

                          Update on household income.

                          https://www.advisorperspectives.com/dshort/updates/2021/10/25/updated-u-s-household-incomes-a-50-year-perspective

 

            Inflation

 

              More on the ‘transitory’ argument.

              https://alhambrapartners.com/2021/10/24/weekly-market-pulse-inflation-scare-2/

 

              Counterpoint.

              https://www.bloomberg.com/graphics/opinion-authers-inflation-tracker/?srnd=premium

 

                The coronavirus

 

              More on Fauci’s (NIH’s) lie.

              https://www.zerohedge.com/political/nih-director-shredded-over-risky-research-wuhan-after-cnn-interview-goes-sideways

 

 

     Bottom line

 

            Balancing emotion and science in volatile markets.

            https://www.advisorperspectives.com/commentaries/2021/10/26/staying-calm-even-if-markets-arent

 

    News on Stocks in Our Portfolios

 

3M (NYSE:MMM): Q3 Non-GAAP EPS of $2.45 beats by $0.22; GAAP EPS of $2.45 beats by $0.24.

Revenue of $8.94B (+7.1% Y/Y) beats by $270M.

 

UPS (NYSE:UPS): Q3 Non-GAAP EPS of $2.71 beats by $0.16; GAAP EPS of $2.65 beats by $0.10.

Revenue of $23.2B (+9.2% Y/Y) beats by $630M.

 

C.H. Robinson Worldwide (NASDAQ:CHRW): Q3 GAAP EPS of $1.85 beats by $0.42.

Revenue of $6.3B (+49.3% Y/Y) beats by $820M.

 

Microsoft (NASDAQ:MSFT): Q1 Non-GAAP EPS of $2.27 beats by $0.19; GAAP EPS of $2.71 beats by $0.64.

Revenue of $45.3B (+21.8% Y/Y) beats by $1.3B.

 

Automatic Data Processing (NASDAQ:ADP): Q1 GAAP EPS of $1.65 beats by $0.16.

Revenue of $3.83B (+9.4% Y/Y) beats by $80M.

 

General Dynamics (NYSE:GD): Q3 GAAP EPS of $3.07 beats by $0.09.

Revenue of $9.57B (+1.5% Y/Y) misses by $290M.

 

What I am reading today

 

            Robert Shiller on the future of home prices.

            https://www.project-syndicate.org/commentary/us-housing-market-long-term-price-outlook-by-robert-j-shiller-2021-10

 

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The Morning Call--Thank you, central planners

 

The Morning Call

 

10/26/21

 

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/stocks-bonds-bitcoin-bullion-all-bid-billionaire-tax-threat-builds

 

            Key stock market indicator switches to buy signal.

            https://www.marketwatch.com/story/this-key-stock-market-indicator-has-switched-to-a-buy-signal-01634825706?mod=home-page

 

            The advance/decline line makes a new high.

            https://sentimentrader.com/blog/stocks-internal-momentum-has-turned-up--25-10-2021/

           

            Short interest remains high.

            https://www.zerohedge.com/the-market-ear/ccqbmaxj9

 

            Earnings revision breadth is starting to roll over.

            https://www.zerohedge.com/the-market-ear/cpwn16i4p

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

The October Dallas Fed manufacturing index came in at 14.6 versus 4.6 on September.

 

                        International

 

                        Other

 

                          Update on seven high frequency economic indicators.

                          https://www.calculatedriskblog.com/2021/10/seven-high-frequency-indicators-for_25.html

 

            The Fed

 

              Investors worried about central bank errors.

              https://www.ft.com/content/58579784-5fc6-485a-bc57-2b7a43d4b69c

 

            Fiscal Policy

 

              A thought on the absurdity of an unrealized capital gains tax.

              https://marginalrevolution.com/marginalrevolution/2021/10/the-tax-on-unrealized-capital-gains.html

 

            Inflation

 

              We don’t have a supply shortage problem; we have a lockdown problem.

              https://www.forbes.com/sites/johntamny/2021/10/24/theres-no-supply-chain-shortage-or-inflation-theres-just-central-planning/?sh=2c8e02991479

 

                          Supply side constraints were entirely predictable.

              https://www.project-syndicate.org/commentary/supply-shortages-inflation-result-of-government-policies-by-john-h-cochrane-2021-10

 

Kimberly Clark joins the ranks of those companies suffering margin compression due to inflation.

https://www.zerohedge.com/markets/beyond-what-we-anticipated-kimberly-clark-slashes-forecast-amid-inflation-supply-chain

 

                          The case against prolonged inflation.

              https://www.pragcap.com/is-hyperinflation-coming/

 

                        China

 

The extent and implications of the China slowdown (a bit wonky, but you will get the point).

https://econbrowser.com/archives/2021/10/the-extent-and-implications-of-the-china-slowdown

 

 

                        The coronavirus

 

              Covid didn’t make anybody do anything, central planners did.

              https://www.aier.org/article/the-devil-didnt-make-em-do-it-and-neither-did-the-pandemic/

 

     Bottom line.

 

            An interview with Jim Bianco.

            https://themarket.ch/interview/persistent-inflation-is-going-to-be-more-problematic-than-everybody-thinks-ld.5266

 

            Lance Roberts outlines the bullish and bearish cases.

            https://www.advisorperspectives.com/commentaries/2021/10/25/the-bullish-bearish-market-case-1

 

            An example of the mispricing of risk.

            https://www.knowledgeleaderscapital.com/2021/10/22/the-epitome-of-financial-repression-in-2-charts/

 

    News on Stocks in Our Portfolios

 

Sherwin Williams (NYSE:SHW): Q3 Non-GAAP EPS of $2.09 beats by $0.04; GAAP EPS of $1.88 misses by $0.01.

Revenue of $5.15B (+0.6% Y/Y) beats by $60M.

 

What I am reading today

           

                        Biden blames Covid for delay in releasing JFK assassination files.

            https://legalinsurrection.com/2021/10/biden-blames-covid-for-decision-to-delay-release-of-jfk-assassination-files/

 

            The health benefits of nuts.

            https://www.upi.com/Health_News/2021/10/20/breast-cancer-nuts-survival-study/1631634735622/

 

            Baldwin’s gun didn’t accidentally discharge.

            https://pjmedia.com/news-and-politics/kevindowneyjr/2021/10/23/alec-baldwins-gun-didnt-accidentally-discharge-but-gun-owners-already-know-that-n1526441

           

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