The Morning Call---Profligacy in lockstep

 

The Morning Call

 

11/30/22

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/stocks-bonds-sink-global-yield-curve-inverts-first-time-decades

 

            JP Morgan’s trading desk sees lower equity prices.

            https://www.zerohedge.com/the-market-ear/cadlfkd8ri

 

            Margin debt down in October.

            https://www.advisorperspectives.com/dshort/updates/2022/11/28/margin-debt-down-2-2-in-october

 

            Global yield curve inverts.

            https://www.bloomberg.com/news/articles/2022-11-29/global-yield-curve-inverts-in-signal-a-recession-is-brewing?srnd=premium&sref=loFkkPMQ

 

            Who is buying all that gold?

            https://www.marketplace.org/2022/11/22/somebodys-been-on-a-gold-buying-bender-its-not-clear-who-or-why/

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications fell 0.8% while purchase applications were up 3.8%.

 

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

 

The September Case Shiller home price index fell 1.5% versus consensus of -0.9%.

                          https://www.calculatedriskblog.com/2022/11/case-shiller-national-house-price-index.html

 

The second estimate of Q3 GDP growth was +2.9% versus forecasts of +2.7%; corporate profits were down 0.2% versus +3.1%; the PCE price index was +4.3% versus +4.2%; core PCE index was +4.6% versus +4.5%; real consumer spending was +1.7% versus +1.4%

 

November consumer confidence came in at 100.2 versus  projections of 100.0.

                          

The November ADP private payroll report showed job increases of   127,000 versus estimates of 200,000.

 

                        International

 

Preliminary October Japanese industrial production was -2.6% versus expectations of -1.5%.

 

October German unemployment  was 5.6% versus predictions of 5.5%.

 

The November Chinese manufacturing PMI was 48 versus consensus of 49; the nonmanufacturing PMI was 46.7 versus 49.0.

 

The flash November EU CPI was -0.1% versus forecasts of +0.2%.

 

                        Other

 

            The Fed

 

              Profligacy in lockstep.

              https://lawliberty.org/profligacy-in-lockstep/

 

              Fed Williams says inflation fight could last until 2024.

              https://www.wsj.com/articles/fed-officials-discuss-outlook-for-inflation-interest-rates-11669654763?mod=economy_lead_story

 

 

             Fiscal Policy

 

               What happened to all the Ukrainian aid?

               https://www.zerohedge.com/political/rand-paul-calls-out-complete-lack-oversight-ukraine-aid

 

     Bottom line

 

            Beware of the bear.

            https://www.zerohedge.com/markets/next-secular-bear-market-may-be-upon-us

 

            Time to look overseas?

            https://alhambrapartners.com/2022/11/28/weekly-market-pulse-currency-illusion/

 

            An interview with three well known money managers.

            https://fortune.com/longform/best-investments-for-2023-inflation-investing-advice-esg-philanthropy/?2n6jw9

 

    News on Stocks in Our Portfolios

 

 

What I am reading today

 

           

                        For you music lovers.

            https://www.zerohedge.com/technology/heres-every-song-over-1-billion-spotify-streams

 

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The Morning Call--More 'fine tuning' bulls**t

 

The Morning Call

 

11/29/22

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/fed-hawk-quadruple-whammy-sends-stocks-bonds-gold-lower

 

            The level to watch in the S&P.

            https://www.zerohedge.com/the-market-ear/ckbdesiu6c

 

            Stocks are not pricing in recession.

            https://www.zerohedge.com/markets/us-recession-when-not-if

 

            Term spreads.

            https://econbrowser.com/archives/2022/11/maximum-auroc-term-spreads-as-of-11-25

 

            Oil needs to hold the 75/80 price level.

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

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

The November Dallas Fed manufacturing index came in at -14.4 versus expectations of -20.9.

                            https://www.advisorperspectives.com/dshort/updates/2022/11/28/dallas-fed-manufacturing-growth-declines-in-november

 

                        International

 

The October Japanese unemployment rate was 2.6% versus predictions of 2.5%; October retail sales rose 4.3% versus +5.0%.

 

November EU economic sentiment was 93.7 versus estimates of 93.5; industrial sentiment was -2.0 versus -0.5; services sentiment was 2.3 versus 2.0; consumer confidence was -23.9, in line.

 

The preliminary  November German CPI was -0.5% versus consensus of -0.2%.

 

                        Other

 

                          Update on four high frequency economic indicators.

                          https://www.calculatedriskblog.com/2022/11/four-high-frequency-indicators-for_28.html

 

            The Fed

 

              What to expect from the upcoming Powell speech/FOMC meeting.

              https://www.bloomberg.com/news/articles/2022-11-28/powell-to-set-stage-for-slowing-fed-rate-hikes-amid-hawkish-tone?srnd=premium&sref=loFkkPMQ

 

              On the other hand, still more ‘fine tuning’ bulls**t.

              https://www.zerohedge.com/markets/stocks-slammed-after-bullard-says-market-too-dovish

 

 

            Inflation

 

              Why inflation is good for stocks.

              https://thereformedbroker.com/2022/11/25/past-performance/

 

            Recession

 

              Another sign of a weakening economy.

              https://www.zerohedge.com/personal-finance/us-bank-deposite-flight-not-sign-higher-rates-come

 

            The coronavirus

 

              What we know from Fauci’s seven hour deposition.

              https://brownstone.org/articles/faucis-7-hour-deposition-what-we-know-so-far/

 

     Bottom line

 

            Thoughts on investing.

            https://collabfund.com/blog/some-thoughts-on-investing-borrowed-and-not/

 

            Too soon to get bullish.

            https://www.advisorperspectives.com/commentaries/2022/11/28/more-bearish-market-action-before-the-bull-can-run

 

            Counterpoint.

            https://www.yardeniquicktakes.com/yield-spread-signaling-rate-peak/

 

    News on Stocks in Our Portfolios

 

• Bank of Nova Scotia press release (NYSE:BNS): Q4 Non-GAAP EPS of C$2.06 beats by C$0.09.
• Revenue of C$7.63B (-0.8% Y/Y) misses by C$380M.

             Bank of Nova Scotia (NYSE:BNS) declares CAD 1.03/share quarterly dividend, in line with previous.

 

 What I am reading today

 

            Best travel photos of 2022.

https://www.nationalgeographic.com/magazine/article/best-travel-photos-2022?rid=7912D7310BBCEE9B958D4BEDCFEC5AE5&cmpid=org%3Dngp%3A%3Amc%3Dcrm-email%3A%3Asrc%3Dngp%3A%3Acmp%3Deditorial%3A%3Aadd%3DDaily_NL_Monday_Travel_20221128&loggedin=true&rnd=1669669722667

                       

 

 

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Monday Morning Chartology

 

The Morning Call

 

11/28/22

 

 

The Market

         

    Technical

 

The S&P was up for the week; but not much has changed in the technical picture  The minor uptrend off its 10/13 remains intact and with it the likelihood of a Santa Claus rally.  My attention is on resistance not support.  Specifically, (1) its 200 DMA [~4053], (2) the upper boundary of its short term downtrend [~4136] and (3) the initial 23.6% Fibonacci retracement level [4200]. 

 

Stay patient.

 

 

 

 

 

The long bond continued its rally, in the process, making yet another (third) gap up open. So, at this point, TLT has a lot to overcome to maintain its upward momentum: (1) the magnetic pull of those gap up opens and (2) resistance from both DMA’s as well as the upper boundary of a very short term downtrend.  My assumption had been that  ‘if he (Powell) means what he says, I can’t think of a reason for bonds to trade higher, at least until/if higher rates tank the economy. Further, there continues to be signs of extreme stress in the credit markets’.   But, of course, if you believe last week’s Fed narrative, then he appears ready to (again) fold like a cheap umbrella.  If so, more upside is likely---and those bond guys who have buying the long bond will be proven correct.

            https://www.zerohedge.com/markets/treasury-curve-inversion-has-even-more-come-feared

 

            On the other hand, this analyst thinks that it is time to short TLT.

            https://www.zerohedge.com/markets/russell-clark-it-time-short-30y-treasuries

 

 

 

Gold retreated a bit last week, but that is likely nothing more than digesting the big gains from the prior two weeks.  Probably more of that is need, given that those two gap up opens still need to be filled.  So, if you want to own GLD, then buy it while this backing and filling process in going on.

 

 

 

 

 

Nothing new: The bad news is that UUP (1) voided its very short term up trend and (2) reset its 100 DMA from support to resistance.  The good news is that it remains (1) above its 200 DMA, (2) within short, intermediate and long term uptrends and has  (3) made three huge gap down opens which need to be filled.  So, while the strong upward momentum in the dollar has clearly been broken, I don’t think that it is clear that it has made a trend reversal.

 

 

 

 

            Friday in the charts.

            https://www.zerohedge.com/markets/dovish-fed-sparks-bond-stock-surge-during-holiday-week

 

            Monday morning charts.

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

 

    Fundamental

 

       Headlines

 

              The Economy

                         

                        Review last week

 

 Last week the US stats slightly negative though the primary indicators (two) were upbeat. Overseas, the data was overwhelmingly positive.  On the one hand, this would intimate that the Fed (and other central banks) will remain on a path of tightening.  On the other hand, it continues to look like inflation has peaked. So, everybody (including Fed members) is anticipating the next move in the Fed’s habitual volatile rate hike narrative (action).

 

Given the headlines last week, it appears that the ‘pivot’ is upon us.

https://scottgrannis.blogspot.com/2022/11/the-fed-pivotsfinally.html

 

But frankly, I don’t think that it matters in the long run.  The economy is too deep in the doo doo for all to end well.  Years of fiscal profligacy have left us with a debt to GDP ratio far in excess of the boundary marked by Rogoff and Reinhart as the level at which the servicing of too much debt negatively impacts the growth rate of the economy.  And years of irresponsible monetary expansion have led to the misallocation of resources and the mispricing of risk. 

 

Correcting those self-inflicted wounds won’t be determined by whether the Fed Funds rate is lifted by 50 or 75 basis points.  It will take years of fiscal and monetary restraint to do so.  And that means less fiscal stimulus and  interest rates staying higher for longer than many now expect. 

 

The question is, does our ruling class have the courage to do that?  As it currently exists, I believe that the answer is a resounding NO.  That means more years of below average economic growth and more of same ‘fine tuning’ bulls**t from the Fed, i.e.., staying too loose for too long then remaining too tight for too long.  

 

Bottom line: the Fed may pivot quicker than expected but that won’t lead to any kind of new era of noninflationary (below 2%) economic growth; or it may stay tighter for as long as necessary but that likely means a prolonged period of economic stagnation which may not be politically feasible with the ruling comprised as it now is. 

 

Bottom line: inflation may have peaked, but Fed rate hikes likely have not.  We are still faced with the twin risks of the Fed staying too tight for too long (recession) and/or the Fed halting rate hikes before inflation has returned to the 2% level (i.e., higher inflation for longer).

                         

 

                        US

 

 

                        International

 

                         

                       

                        Other

                               

                                 

    News on Stocks in Our Portfolios

 

 

What I am reading today

 

 

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The Morning Call

 

The Morning Call

 

11/22/22

 

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/stocks-drop-dollar-pops-despite-dovish-daly

 

            Fund managers are turning more pessimistic on the dollar.

            https://www.bloomberg.com/news/articles/2022-11-21/fund-managers-are-piling-on-dollar-shorts-on-peak-fed-hike-bets?sref=loFkkPMQ

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

The October Chicago Fed national activity index came in at -0.05 versus expectations of +0.1%.

                          https://www.advisorperspectives.com/dshort/updates/2022/11/21/chicago-fed-index-suggests-slower-economic-growth-in-october

 

                        International

 

                        Other

 

                          Update on four high frequency indicators.

                          https://www.calculatedriskblog.com/2022/11/four-high-frequency-indicators-for_21.html

 

     Bottom line

 

            Goldman believes the bear market will last into 2023.

https://www.bloomberg.com/news/articles/2022-11-21/goldman-sachs-strategists-say-bear-market-will-last-through-2023?srnd=premium&leadSource=uverify%20wall&sref=loFkkPMQ

 

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            Relapse prevention.

            https://traderfeed.blogspot.com/2022/11/relapse-prevention-neglected-topic-in.html

 

 

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.