The Morning Call--The Treasury market faces liquidity risks as Fed pares its balance sheet

 

The Morning Call

 

6/1/22

 

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/stocks-go-nowhere-may-usd-sinks-amid-worst-macro-meltdown-lehman

 

            Breadth improved.

            https://www.zerohedge.com/the-market-ear/cy61bgfz5d

 

            2010 all over again?

            https://allstarcharts.com/2010-in-2022/

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications fell 2.3% while purchase applications were down 0.6%.

 

The March Case Shiller home price index was reported at +3.1% versus estimates of +2.3%.

 

The May Chicago PMI was 60.3 versus projections of 55.0.

 

The May Dallas Fed manufacturing index was -7.3 versus forecasts of +0.3.

https://www.advisorperspectives.com/dshort/updates/2022/05/31/may-dallas-fed-manufacturing-growth-increase-but-with-weakness

 

May consumer confidence came in at 106.4 versus expectations of 103.9.

https://www.advisorperspectives.com/dshort/updates/2022/05/31/may-dallas-fed-manufacturing-growth-increase-but-with-weakness

 

                        International

 

Q1 Japanese YoY capital spending rose 3.0% versus predictions of +5.1%; the May final manufacturing PMI was 53.3 versus 53.2.

 

April German retail sales declined 5.4% versus consensus of -0.2%; the May final manufacturing PMI was 54.8 versus 54.7.

 

The April EU unemployment rate was .8%, in line; the May final manufacturing PMI was 54.6 versus 54.4.

 

The May final Chinese manufacturing PMI was 48.1 versus estimates of 48.0.

 

The May final UK manufacturing PMI was 54.6, in line.

 

                        Other

 

                          Competitive currency appreciation.

                          https://econbrowser.com/archives/2022/05/guest-contribution-get-ready-for-reverse-currency-wars

 

            The Fed

 

              The Treasury market faces liquidity risks as Fed pares its balance sheet.

             https://www.reuters.com/markets/us/treasury-market-faces-liquidity-risks-fed-pares-balance-sheet-2022-05-31/

 

              Where is the Fed put?

  https://realinvestmentadvice.com/fed-pause-markets-hope-so-but-likely-not-yet/?utm_medium=email&utm_campaign=Technically%20Speaking%20Fed%20Pause%20Markets%20Hope%20So%20But%20Likely%20Not%20Yet&utm_content=Technically%20Speaking%20Fed%20Pause%20Markets%20Hope%20So%20But%20Likely%20Not%20Yet+CID_c19e05b5c4f360ee22fe1fca97eca01d&utm_source=RIA%20Email%20Marketing%20Software&utm_term=READ%20MORE

 

 

            Fiscal Policy

 

              CBO numbers remind us just how irresponsible congress is.

              https://www.realclearmarkets.com/articles/2022/05/31/cbo_numbers_remind_us_of_just_how_irresponsible_congress_is_834832.html

 

            Inflation

 

              Framing lumber prices down 50% YoY

              https://www.calculatedriskblog.com/2022/05/update-framing-lumber-prices-down-50.html

 

              Current energy crisis worse than 1970’s oil crunch.

              https://www.zerohedge.com/commodities/iea-current-energy-crisis-much-bigger-1970s-oil-crunch

 

            China

 

              China’s slowdown shows signs of easing.

              https://www.wsj.com/articles/chinas-economic-downturn-shows-signs-of-easing-11653991228

 

            Geopolitics

 

How the experts got Russia/Ukraine so wrong. Be sure to click on the thread at the bottom on the article.

https://marginalrevolution.com/marginalrevolution/2022/05/how-did-the-ir-community-get-russia-ukraine-so-wrong.html

 

  The EU continues to try to hurt Russia by shooting itself in the foot.

  https://www.nakedcapitalism.com/2022/05/eu-continues-to-try-to-hurt-russia-by-shooting-itself-in-the-foot.html

 

            Bottom line.

 

              Managing risk when credit spreads rise.

              https://mailchi.mp/verdadcap/managing-risk-when-credit-spreads-rise?e=b838bc224f

 

              Managing rallies.

              https://ofdollarsanddata.com/rallies-to-the-bottom/

 

              Endless uncertainty.

              https://www.collaborativefund.com/blog/endless-uncertainty/

 

              The difference between trading and investing.

              https://traderfeed.blogspot.com/2022/05/the-difference-between-trading-and.html

 

              Companies may struggle to improve profitability this year.

              https://www.nytimes.com/2022/05/31/business/stock-market-company-profits.html

 

              Morgan Stanley still bearish.

              https://www.zerohedge.com/markets/just-another-bear-market-rally-mike-wilson-spoils-bulls-party-sees-just-5-more-upside

 

              More food for the bears.

              https://www.zerohedge.com/markets/bear-stearns-lesson-bear-market-bounces

 

    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.