The Morning Call---What are the odds of a recession?

 

The Morning Call

 

3/31/22

 

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/bonds-bullion-black-gold-bid-putin-sparks-stock-skid

 

            A short squeeze in the long Treasury?

            https://www.zerohedge.com/the-market-ear/cvgvvk-5zj

 

            Expectations are for higher rates, but…………(see below).

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

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

February personal income was up 0.5%, in line; February personal spending was up 0.2% versus +0.5%; the February PCE price indicator was up 0.6% versus 0.8%.

https://www.zerohedge.com/economics/feds-favorite-inflation-indicator-surges-40-year-high-feb-real-spending-shrinks

 

Weekly jobless claims totaled 202,000 versus predictions of 197,000.

 

                        International

 

The final Q4 UK GDP growth rate was 1.3% versus forecasts of 1.0%; final Q4 business investment was up 1.0% versus 0.9%.

 

February Japanese industrial production was up 0.1% versus estimates of +0.5%; February YoY construction orders fell 2.3% versus +8.1%; February YoY housing starts were up 6.3% versus +1.1%.

 

The February EU unemployment rate was 6.8% versus projections of 6.7%.

 

February German retail sales were up 0.3% versus consensus of +0.5%; the February unemployment rate was 3.1%, in line.

 

The March Chinese manufacturing PMI was reported at 49.5 versus expectations of 49.9; the nonmanufacturing PMI was 48.4 versus 50.2; the composite PMI was 48.8 versus 49.9.

 

                        Other

 

                          The monetary/fiscal policy dilemma.

    https://www.project-syndicate.org/commentary/stagflationary-environment-putins-war-no-optimal-policy-response-by-nouriel-roubini-and-   brunello-rosa-2022-03

 

                          A look at housing affordability.

                          https://www.calculatedriskblog.com/2022/03/real-house-prices-price-to-rent-ratio.html

 

                The Fed

 

              The BOJ is trapped; will the Bank of China be forced to follow suit (must read).

              https://www.zerohedge.com/markets/yen-risk-explosive-downward-spiral-kuroda-trapped-and-why-china-may-soon-devalue

 

                Inflation

 

              The release of oil reserves will do nothing to solve the structural supply problems.

              https://www.zerohedge.com/political/oil-slides-biden-admin-mulls-huge-spr-release-again

 

            Recession

 

              An argument for no recession.

              https://scottgrannis.blogspot.com/2022/03/bond-market-says-no-recession-in-cards.html

           

              More on the probability of recession.

              https://econbrowser.com/archives/2022/03/plain-vanilla-term-spread-forecasts-of-recession

 

              Still more.

              https://www.zerohedge.com/the-market-ear/cpabbki7mx

 

              Still more---from Pimco and Jeffrey Gundlach.

               https://www.bloomberg.com/news/articles/2022-03-30/pimco-says-curve-inversion-may-be-unreliable-recession-signal?sref=loFkkPMQ

 

              Allocators are investing like recession is on the way.

https://www.institutionalinvestor.com/article/b1xchxpx59st90/Allocators-Are-Investing-Like-a-Recession-Is-on-the-Way-Despite-the-Fed-s-Promise-of-a-Soft- Landing

 

           

            The coronavirus

 

              An update on the new strain now reaching the US.

              https://www.cnn.com/2022/03/29/health/ba-2-dominant-us/index.html

 

    Bottom line.

 

            This kind of doom and gloom article makes me want to nibble at bonds.

            https://www.bloomberg.com/news/articles/2022-03-30/corporate-bonds-lost-1-trillion-and-there-s-more-trouble-ahead?sref=loFkkPMQ

 

            If you are worried about bonds, you are not focusing.

            https://www.zerohedge.com/markets/blain-why-you-shouldnt-panic-about-bonds

 

    Buyer Alert

 

Accordingly, the ETF Portfolio is increasing its positions in the Van Kampen municipal opportunity ETF (VMO) and the Yieldshares high income ETF (YYY) by roughly 10%.

 

    News on Stocks in Our Portfolios

 

Paychex press release (NASDAQ:PAYX): Q3 Non-GAAP EPS of $1.15 beats by $0.10.

 

Revenue of $1.28B (+15.3% Y/Y) beats by $60M.

 

What I am reading today

 

           

                        Working with our body clock.

            https://www.axios.com/night-owl-early-bird-sleep-internal-clock-6d732c94-f4e7-4992-8f0a-ca5a14a80415.html

 

            Use a measuring tape to assess your health.

            https://politicalcalculations.blogspot.com/2022/03/how-to-use-measuring-tape-to-assess.html#.YkSOUerMKUk

 

 

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---The Fed is on the path to failure

 

The Morning Call

 

3/30/22

 

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/russia-reversal-report-routs-oil-gold-bonds-signal-recession-inevitable

 

            Breadth.

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

 

            The latest from BofA.

            https://www.zerohedge.com/markets/one-bank-spots-imminent-selloff-trigger-hidden-within-historic-market-divergence

 

            2s10s curve inverts.

            https://www.zerohedge.com/economics/hard-landing-virtually-inevitable-countdown-recession-begins-2s10s-curve-inverts

 

            The Fed owned the bond market; now it is breaking it.

            https://www.zerohedge.com/markets/fed-owned-bond-market-now-its-breaking-it

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications declined 6.8% while purchase applications were up 0.6%.

 

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

 

(Final) Q4 GDP growth was 6.9% versus predictions of 7.1%; corporate profits were +0.2% versus +3.0%; the PCE price deflator was +6.4% versus +6.3%

 

The January Case Shiller home price index rose 1.4% versus estimates of 1.0%.

https://www.calculatedriskblog.com/2022/03/comments-on-january-case-shiller-and.html

 

February job opening (JOLTS) totaled 11.2 million versus projections of 11.0 million.

https://www.advisorperspectives.com/dshort/updates/2022/03/29/february-job-openings-labor-turnover-little-changed

 

March consumer confidence came in at 107.2 versus forecasts of 107.0.

                          https://www.advisorperspectives.com/dshort/updates/2022/03/29/consumer-confidence-rebounds-in-march

 

The March ADP private payroll report showed an increase in employment of 455,000 versus expectations of 450,000.

                                  https://www.zerohedge.com/personal-finance/adp-shows-broad-based-job-gains-march-services-jobs-soaring

 

                        International

 

                          February Japanese retail sales fell 0.8% versus consensus of -1.0%.

 

The preliminary March German CPI was reported at +2.5% versus predictions of +1.6%.

 

March EU economic sentiment was 108.5 versus expectations of 109.0; industrial sentiment was 10.4 versus 9.0; services sentiment was 14.4 versus 10.0; consumer confidence was -18.7, in line.

                                     

 

                        Other

 

                          The cure for high prices.

                          https://alhambrapartners.com/2022/03/27/weekly-market-pulse-the-cure-for-high-prices/

 

                          Odds of a recession (from one analyst).

                          https://econbrowser.com/archives/2022/03/recession-talk

 

                          Interesting housing statistics.

                          https://politicalcalculations.blogspot.com/2022/03/market-cap-of-us-new-home-sales-flat-in.html#.YkNCd-rMKUk

 

                          Global supply chains brace for more problems.

                          https://www.bloomberg.com/news/articles/2022-03-29/fed-pivots-toward-jumbo-hikes-after-being-slammed-as-too-slow?sref=loFkkPMQ

 

                          The data still suggest a low probability of recession.

                          https://www.capitalspectator.com/will-low-us-recession-risk-rise-in-the-months-ahead/

 

            The Fed

 

              The Fed pivots towards jumbo rate hikes.

              https://www.bloomberg.com/news/articles/2022-03-29/fed-pivots-toward-jumbo-hikes-after-being-slammed-as-too-slow?sref=loFkkPMQ

 

              But already on the path to failure.

              https://www.zerohedge.com/markets/trouble-ahead-fed-policy-preset-course-fail

 

              The Fed admits that fiscal stimulus is the culprit behind soaring inflation.

              https://www.zerohedge.com/economics/fed-finally-admits-covid-stimulus-responsible-hottest-inflation-generation

 

            Fiscal Policy

 

              More (or less) details on Biden’s 2023 budget proposal.

              https://www.nytimes.com/2022/03/28/upshot/budget-biden-policy-agenda.html

 

              Club for Growth’s response.

              https://www.clubforgrowth.org/club-for-growth-statement-on-bidens-bankrupt-budget/

 

            Inflation

 

              The perils of inflation.

              https://www.adamsmith.org/blog/the-perils-of-inflation

 

     Bottom line.

 

            The latest from John Hussman (must read).

            https://www.advisorperspectives.com/commentaries/2022/03/28/quit-while-youre-ahead

 

            Ed Yardini’s thoughts on stock performance in 2022.

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

 

            Bear squeeze or return of the Bull?

            https://www.zerohedge.com/markets/bear-squeeze-or-return-bull

 

    News on Stocks in Our Portfolios

 

 

What I am reading today

 

New clues on the extent of the devastation from a six mile wide meteor that hit the earth 66 million years ago.

https://www.nationalgeographic.com/science/article/new-clues-reveal-the-devastation-the-day-the-dinosaurs-died

 

 

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---Bailouts and the demise of capitalism

 

The Morning Call

 

 

3/29/22

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/oil-gold-slapped-lower-ruble-crypto-growthy-stocks-rocket-higher

 

            Tuesday preview.

            https://www.zerohedge.com/geopolitical/stocks-jump-oil-dumps-over-russia-ukraine-peace-talks-optimism

 

            Bond rout deepens.

            https://www.bloomberg.com/news/articles/2022-03-27/global-bond-rout-sends-australian-yields-to-highest-since-2014?srnd=premium&sref=loFkkPMQ

 

            US government debt selloff worsens.

            https://www.ft.com/content/51941a25-fb53-472b-84ef-42595f465b8e

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

The March Dallas Fed manufacturing index was reported at 8.7 versus expectations of 17.

                          https://www.advisorperspectives.com/dshort/updates/2022/03/28/march-dallas-fed-manufacturing-expansion-continues

 

                        International

 

The February Japanese unemployment rate was 2.7% versus estimates of 2.8%.

 

April German consumer confidence was -15.5 versus projections of -14.0.

 

                        Other

 

                          Europe’s economy slows.

                          https://www.wsj.com/articles/europes-economy-slows-as-russian-invasion-sends-costs-soaring-11648126271

 

            Fiscal Policy

 

              Bailouts and demise of capitalism (must read).

              https://www.advisorperspectives.com/commentaries/2022/03/28/bailouts-and-the-demise-of-capitalism-and-free-markets

 

     Bottom line.

 

            Bad tidings from the bond market.

            https://www.nytimes.com/2022/03/25/business/bond-market-inflation-recession.html

 

            The salience bias.

            https://www.riaintel.com/article/b1x9pbwff8p1vz/themes-memes-and-shiny-things

 

    News on Stocks in Our Portfolios

 

Hormel Foods (HRL) declares $0.26/share quarterly dividend, in line with previous.

What I am reading today

 

            Where did this idea come from?

            https://www.pragcap.com/three-things-i-think-i-think-where-did-this-idea-come-from/

 

                        How to get tough on crime.

            https://marginalrevolution.com/marginalrevolution/2022/03/how-to-get-tough-on-crime.html

 

                        Bitcoin’s lockstep march with stocks undermines its usefulness.

            https://www.institutionalinvestor.com/article/b1x9nhtt0h1v9s/Bitcoin-s-Lockstep-March-With-Stocks-Raises-Thorny-Questions-About-Its-Usefulness

 

 

 

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Monday Morning Chartology

 

The Morning Call

 

3/28/22

 

 

The Market

         

    Technical

           

            The S&P had another good week and continues to challenge major resistance levels.  It is now pushing through its 200 DMA; if it remains there through the close on Tuesday, that DMA will revert to support.  It is also near a challenge of its 100 DMA.  Were that to prove successful, then the next stop is its all-time high.  Stay patient.

 

From Wall Street’s biggest bear.

https://www.zerohedge.com/markets/wall-streets-biggest-bear-lays-out-how-invest-new-world-order

 

 

 

 

 

The carnage in the long Treasury continues; however, it is nearing the lower boundary of its intermediate term uptrend which should provide some strong support.  The $64,000 question is, when will long bond investors switch from being concerned about a tightening Fed to worrying about a recession?  Perhaps the technical junction at TLT’s intermediate term uptrend’s lower boundary will cause some reflection on that point.  I am not saying the worst is over.  I am saying that I wouldn’t be selling bonds until I knew the outcome of any challenge of that boundary.

 

 

 

Gold managed an advance on the week, continuing its recovery from that steep selloff in early March.   As I said last week, it is not acting like interest rates are going higher; though I would always put my money of  the bond market versus gold to give directional information (see above).  Still, it is in uptrends across all timeframes and above both DMAs.  So, until something breaks, the assumption is that the trend remains to the upside.

 

 

 

 

 

The dollar recovered from the prior week’s selloff and its chart remains the healthiest of the lot. My assumption remains that irrespective of what happens, investors continue to believe that the dollar is a safe place to be.

 

 

 

 

 

            Friday in the charts.

            https://www.zerohedge.com/markets/stocks-gold-oil-surge-week-yield-curve-carnage-screams-recession

 

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Review of last Week

 

Last week the economic data were weighed very slightly to the upside but the primary indicators were solidly negative.  Overseas stats were positive.

 

None of this alters my outlook:  the economy is struggling to grow, hampered by irresponsible monetary and fiscal policies, getting no support from the global economy and threatened by (1) seemingly mounting inflationary forces and (2) continued supply chain disruptions because of the conflict in Ukraine.

 

 

Worth mentioning is that in a speech, Powell doubled down on the Fed’s new hawkish stance on monetary policy.  That clearly will have a dampening effect on economic activity, supporting my forecast.

 

Rate hike starts countdown to next recession.

https://realinvestmentadvice.com/rate-hike-starts-countdown-to-next-recession/?utm_medium=email&utm_campaign=Real%20Investment%20Report%20Inverted%20Yield%20Curve%20History%20Should%20Worry%20Bulls&utm_content=Real%20Investment%20Report%20Inverted%20Yield%20Curve%20History%20Should%20Worry%20Bulls+CID_dd75c700a72389a1315481f2bf617604&utm_source=RIA%20Email%20Marketing%20Software&utm_term=READ%20MORE

 

 

                        US

 

 

                        International

 

 

                        Other

 

                          Demand destruction has begun.

                          https://www.zerohedge.com/markets/demand-destruction-has-begun

 

                Geopolitics

                   

              Another history lesson from David Stockman.

              https://www.zerohedge.com/geopolitical/stockman-washington-delirious-war-fever-no-reason-do-homeland-security

 

 

     Bottom line.

 

            Bear market squeeze?

            https://www.zerohedge.com/markets/goldman-trader-rally-nothing-huge-bear-market-squeeze-stocks-will-be-lower-over-next-few

 

    News on Stocks in Our Portfolios

 

          

What I am reading today

 

            The pluses and minuses of central bank digital currencies.

            https://www.zerohedge.com/crypto/unbeknown-most-financial-revolution-coming-threatens-change-everything-and-not-better

 

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