The Morning Call--S&P tests critical technical level for fifth time

 

The Morning Call

 

 

4/26/22

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/us-big-tech-shrugs-beijing-bloodbath-bond-yields-bullion-black-gold-battered

           

Note: the S&P sold down to the lower boundary of its short term trading range and                     the 23.6% Fibonacci retracement level and bounced for the fifth time. That’s the good news---could it signal an end to the selloff? The bad news is that the more times the sellers hammer a support level, the fewer buyers remain.

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

March durable goods orders rose 0.8% versus estimates of +1.0%; ex transportation, they were up 1.1% versus +0.6%.

 

The April Dallas Fed manufacturing index came in at 1.1 versus expectations of 12.

                          https://www.advisorperspectives.com/dshort/updates/2022/04/25/april-dallas-fed-manufacturing-expansion-continues-weak-outlook

 

                        International

 

The March Japanese unemployment rate was 2.6% versus forecasts of 2.7%.

 

                        Other

 

            Inflation

 

              Some positive signs on the inflation front.

              https://www.abnamro.com/research/en/our-research/us-labour-market-points-to-some-easing-in-inflationary-pressure

 

              Oil prices decline as China lockdown imperils demand.

              https://www.bloomberg.com/news/articles/2022-04-24/oil-extends-losses-as-china-s-outbreak-imperils-demand-outlook?sref=loFkkPMQ

 

              Are home prices peaking?

              https://www.pragcap.com/a-cautionary-note-about-home-prices/

 

            Recession

 

              So far, there is little evidence of an impending recession.

              https://www.tker.co/p/economic-data-growing-no-recession?s=r

 

              Counterpoint.

              https://www.zerohedge.com/markets/recession-warnings-rise-limiting-feds-inflation-fight

 

            Geopolitics

 

              The Moskva riddle.

              https://www.zerohedge.com/geopolitical/escobar-moskva-riddle

 

     Bottom line.

 

            Josh Brown is starting to sound bearish.

            https://thereformedbroker.com/2022/04/22/katy-bar-the-door/

 

            Is a bear market lurking?

            https://www.advisorperspectives.com/commentaries/2022/04/25/is-a-bear-market-lurking

 

            I don’t know.

            https://compoundadvisors.com/2022/i-dont-know

 

    News on Stocks in Our Portfolios

 

Sherwin Williams press release (NYSE:SHW): Q1 Non-GAAP EPS of $1.61 beats by $0.08.

Revenue of $5B (+7.3% Y/Y) beats by $80M.

 

UPS press release (NYSE:UPS): Q1 GAAP EPS of $3.05 beats by $0.16.

Revenue of $24.4B (+6.5% Y/Y) beats by $600M.

UPS is announcing its plans to double the amount of share repurchases for 2022, taking the target to $2 billion for the year.

 

 

What I am reading today

 

           

 

 

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Monday Morning Chartology

 

The Morning Call

 

4/25/22

 

 

The Market

         

    Technical

           

            Talk about serious whackage. Thursday and Friday were waterfall days. The S&P tried unsuccessfully to (1) stay above the upper boundary of that very short term downtrend and (2) challenge its 100 and 200 DMAs but failed on both counts. It now seems sure to challenge the area marked by both the lower boundary of its short term trading range and the 23.6% Fibonacci retracement level. As you can see, it has tested that area four times and bounced. Let’s see if it can do it again.

 

 

 

The long Treasury tried to stabilize last week. However, it remains to be seen if this is just a temporary ceasefire or a true attempt to mark a bottom. As you know, I have been nibbling at some long dated muni and corporate bonds, reflecting my thoughts that the worst may be over or near being over. Of course, that won’t make it so. And as I noted last week: ‘given the hefty distance between TLT’s current price and the lower boundaries of both its newly reset intermediate term trading range and its long term uptrend, prices could go a good deal lower without totally breaking down.’

 

Bullish information from bonds.

https://allstarcharts.com/bullish-info-from-bonds/

 

The technical and fundamental case for buying the 10 year Treasury now.

https://www.zerohedge.com/markets/mish-technical-fundamental-case-buying-10-year-treasuries-now

 

 

Gold made a lower low then proceeded to blow through the lower boundary of the uptrend off its February low---suggesting that gold investors are more worried about higher interest rates than higher inflation. That said, it will have to drop a long way before it challenges either of its DMAs or the lower boundaries of its multiple uptrends. Until something breaks, the assumption is that the long term trend remains to the upside.

 

 

 

 

 

            Nothing has changed. The dollar’s chart continues to be 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/bondstock-bloodbath-leads-worst-start-year-record

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Review of last Week

 

Last week the economic data were sparse and slightly negative although the primary indicators were balanced (one positive, one neutral, one negative). Overseas stats were solidly to the plus side.

 

So, the numbers continued to validate my outlook:  the economy is struggling to grow (but no recession), hampered by irresponsible monetary and fiscal policies, getting no support from the global economy (last week notwithstanding) and threatened by (1) inflationary forces and (2) continued supply chain disruptions because of the conflict in Ukraine.

 

The Fed remains in the spotlight as investors contemplate just how serious the Fed is about tightening. Certainly, it (its officials) is talking a good game. But if it was as determined to slash inflation as it was about bailing out the economy (QEForever at the slightest economic hiccup), it wouldn’t just be sitting around jawing about how tough it is going to be. To date, this (lack of) action falls woefully short of what is necessary to return the economy to a stable, equitable growth rate and the Market to the arbiter of the price of risk---which means inflation will likely be higher for longer, but the economy will avoid recession.

 

Will a strong labor market prevent a recession?

https://www.capitalspectator.com/will-the-strong-labor-market-prevent-a-us-recession/

 

                        US

 

 

  The March Chicago national activity index was reported at .44 versus  forecasts of .40.

 

                        International

 

February EU YoY construction  output rose 9.4% versus estimates of +5.0%.

 

The April German business climate index came in at 91.8 versus predictions of 89.1

 

The April UK business optimism index was -34 versus consensus of -23.

 

 

                        Other

 

            The Fed

 

              The biggest story on one is talking about (must read).

              https://www.zerohedge.com/markets/biggest-story-no-one-talking-about-why-albert-edwards-expects-something-market-about-snap

 

            Inflation

 

              Indonesia bans export of edible oils.

              https://www.zerohedge.com/commodities/indonesia-bans-edible-oil-export-sparks-mayhem-global-food-crisis-ahead

 

            Geopolitics

 

              Thoughts on the Ukraine/Russian conflict from Nassim Taleb.

              https://medium.com/incerto/a-clash-of-two-systems-47009e9715e2

 

              Two words: Minsk II.

              https://www.zerohedge.com/geopolitical/minsk-ii-two-words-youll-never-hear-mainstream-news

 

     Bottom line

 

            When cash is king.

            https://compoundadvisors.com/2022/when-cash-is-king

 

            High yield bonds in times of stress.

            https://www.advisorperspectives.com/commentaries/2022/04/22/the-one-metric-all-high-yield-investors-should-know

 

            Steve Cohen on keeping things simple.

            https://www.zerohedge.com/markets/steve-cohen-making-trading-harder-it-has-be

 

    News on Stocks in Our Portfolios

 

          

What I am reading today

 

           

 

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The Morning Call--Technical problems for the NASDAQ and the S&P

 

The Morning Call

 

4/22/22

 

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/stocks-bonds-bloodbath-fed-drops-hawkish-hammer

           

Still a bear market rally or is the bull back?

            https://www.advisorperspectives.com/commentaries/2022/04/20/still-a-bear-market-rally-or-is-the-bull-back

 

            Technical problems for the NASDAQ.

            https://www.zerohedge.com/the-market-ear/c2xoxofmkr

 

            Ditto for the S&P.

            https://www.zerohedge.com/markets/beneath-surface-its-mess-sp-500-rejects-key-technical-level

 

            Bonds and the Fed are still behind the curve.

            http://scottgrannis.blogspot.com/2022/04/bonds-and-fed-are-still-way-behind-curve.html

 

            Some think bonds are attractive at these levels.

            https://www.ft.com/content/dfc6bb72-7995-4feb-a5b5-0ee1d14433ca

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          The March leading economic indicators were up 0.3%, in line.

 

                        International

 

March Japanese CPI was +0.4% versus projections of +0.6%; the April flash manufacturing PMI was 53.4 versus 53.0; the flash services PMI was 50.5 versus 49.0; the flash composite PMI was 50.9 versus 48.6.

 

March UK retail sales fell 1.4% versus expectations of -0.3%; ex fuel, they were down 1.1% versus +0.4%. April consumer confidence was -38 versus expectations of -33; the April flash manufacturing PMI was 55.3 versus 54.7; the flash services PMI was 58.3 versus 60.0; the flash composite PMI was 55.8 versus 53.0.

 

The April German flash manufacturing PMI was 54.1 versus consensus of 54.5; the flash services PMI was 57.9 versus 55.5; the flash composite PMI was 54.5 versus 54.1.

 

April EU flash consumer confidence came in at -16.9 versus estimates of -20; the April flash manufacturing PMI was 55.3 versus 54.7; the flash services PMI was 57.5 versus 55.0; the flash composite was 55.8 versus 53.9.

 

                        Other

 

              How severe is China’s economic slowdown?

              https://www.capitalspectator.com/how-severe-is-chinas-economic-slowdown/#more-17848

 

The Fed

 

  Zero to neutral in nine months is a major pivot for the Fed.

  https://www.reuters.com/business/finance/zero-neutral-9-months-marks-defining-pivot-fed-powell-2022-04-21/

 

Inflation

 

  Why inflation will get worse from here.

  https://americanconsequences.com/dr-david-eifrig-why-inflation-will-get-worse-from-here/

 

  Interest rates and inflation are set to go higher.

  https://www.advisorperspectives.com/commentaries/2022/04/21/hear-me-out

 

Geopolitics

 

  More analysis of the Russia/Ukraine conflict.

  https://www.nakedcapitalism.com/2022/04/russias-campaign-in-ukraine-and-the-wests-response-the-end-of-the-beginning.html

 

 

    News on Stocks in Our Portfolios

 

Genuine Parts press release (NYSE:GPC): Q1 Non-GAAP EPS of $1.86 beats by $0.18.

Revenue of $5.3B (+18.6% Y/Y) beats by $220M.

 

What I am reading today

 

           

 

 

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The Morning Call--Commodity trading risks soar

 

The Morning Call

 

4/21/22

 

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/tech-wrecks-bond-bid-sparks-major-curve-flattening

 

            More analysis on an inverted yield curve.

            https://politicalcalculations.blogspot.com/2022/04/better-ways-to-sort-out-what-us.html#.YmApYejMKUk

 

            Positive US real yields rip up global markets’ playbook.

            https://www.bloomberg.com/news/articles/2022-04-20/how-positive-u-s-real-yields-can-rip-through-global-markets?srnd=premium&sref=loFkkPMQ

 

            Commodity trading risks soar (must read).

            https://www.zerohedge.com/commodities/wall-streets-commodity-trading-risk-soars-confirms-volatility-trap-doom-loop

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly jobless claims totaled 184,000 versus estimates of 180,000.

 

                          March existing home sales fell 2.7% versus forecast of -2.0%.

                          https://www.advisorperspectives.com/dshort/updates/2022/04/20/existing-home-sales-down-2-7-in-march

                    

  The April Philadelphia Fed manufacturing index was reported at 17.6   versus projections of 21.0.

 

The Fed released its latest Beige Book which showed moderate economic growth, rising inflation but some early signs of demand destruction.

                                  https://www.zerohedge.com/markets/beige-book-finds-economy-growing-moderate-pace-spots-first-instances-demand-destruction

 

                        International

 

                          March EU CPI came in at +2.4% versus expectations of +2.5%.

 

                        Other

 

                          Latest IMF global economic forecasts.

                          https://econbrowser.com/archives/2022/04/imf-weo-forecasts

 

            Inflation

 

              Corn prices hit new highs.

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

 

              US mortgage rates hit 12 year high.

              https://www.reuters.com/business/finance/us-mortgage-interest-rates-reach-12-year-high-demand-falters-2022-04-20/

 

            Recession

 

              When will demand destruction overpower growth?

              https://www.capitalspectator.com/when-will-demand-destruction-overpower-growth/#more-17841

 

              Speaking of which.

              https://think.ing.com/snaps/the-commodities-feed-growth-concerns-weigh-on-oil

 

     Bottom line

 

            Deutsche Bank joins the bears.

            https://www.zerohedge.com/markets/first-bank-forecast-us-recession-now-warns-prepare-hard-landing

 

            The value of holding (or not) commodities during a period of stagflation.

            https://www.morningstar.com/articles/1088688/what-if-stagflation-arrives

 

            A low unemployment rate is bearish for stocks.

            https://compoundadvisors.com/2022/is-a-low-unemployment-rate-bullish-for-stocks

 

    News on Stocks in Our Portfolios

 

AT&T press release (NYSE:T): Q1 Non-GAAP EPS of $0.77 beats by $0.08.

Revenue of $38.1B (-13.2% Y/Y) misses by $190M.

 

What I am reading today

 

            Capitalism and climate.

            https://www.adamsmith.org/blog/capitalism-and-climate

 

            Booze and fat.

            https://www.nakedcapitalism.com/2022/04/beer-and-spirits-have-more-detrimental-effects-on-the-waistline-and-on-cardiovascular-disease-risk-than-red-or-white-wine.html

 

            How we make, remember and forget memories.

            https://www.nationalgeographic.com/science/article/human-memory?loggedin=true

               

                How everyone got so lonely.

            https://www.newyorker.com/magazine/2022/04/11/how-everyone-got-so-lonely-laura-kipnis-noreena-hertz

 

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