The Morning Call
12/15/22
The
Market
Technical
Wednesday in the
charts.
Note: the S&P
tried again to challenge its 200 DMA and failed. At the moment, it doesn’t look to good for
the Santa Claus rally.
What if Santa
Claus doesn’t show?
https://allstarcharts.com/this-years-santa-claus-rally/
Even if he does,
don’t expect anything big.
https://www.zerohedge.com/the-market-ear/dont-expect-anything-big-even-if-he-shows
Fundamental
Headlines
The
Economy
US
Weekly
initial jobless claims totaled 211,000 versus expectations of
230,000.
November industrial production declined 0.2%
versus estimates of +0.1%.
November retail
sales were down 0.6% versus predictions of +0.1%; ex autos they were down 0.2%, in line.
The December Philadelphia Fed manufacturing
index was -13.8 versus consensus of -10.0.
December New York
Fed manufacturing index was -11.2 versus forecasts of -1.0.
International
The November
Japanese trade balance was Y-2027 billion versus projections of Y-1680.
The November YoY
Chinese industrial production was up 2.2% versus expectations of +3.6%; retail sales
were down 5.9% versus -3.7%; fixed asset investments were +5.3% versus +5.6%;
the unemployment rate was 5.7% versus 5.5%.
November German
PPI was -0.9% versus estimates of -0.8%.
Other
US imports form China continue to plummet.
https://politicalcalculations.blogspot.com/2022/12/us-imports-from-china-continue.html#.Y5obOHbMKUk
On the other hand,
the US just added 30 Chinese companies to its trade backlist.
The
Fed
The FOMC wrapped
up its December meeting yesterday. It
raised the Fed Funds rate another 50 basis points. More importantly, its dot plot suggested further
increases to levels slightly higher than the previous dot plot. It also showed slightly slower economic
growth and slightly higher unemployment.
Here is the summary statement.
https://www.calculatedriskblog.com/2022/12/fomc-statement-raise-rates-50-bp.html
Here is the dot
plot.
https://www.calculatedriskblog.com/2022/12/fomc-projections-and-press-conference.html
In Powell’s press
conference, he emphasized that (1) policy will likely to stay tighter for
longer, but (2) the pace of rate increases is slowing as part of its attempt to
avoid staying too tight for too long, (3) the economy will experience a
sustained period of below average economic growth and (4) [drumroll, please] the
Fed is not backing off its 2% inflation target [though given the pin action in
the fixed income market, apparently the bond boys either believe that he left
the door open for a higher base inflation rate, i.e., 3 or 4% or they just
don’t believe his hawkish narrative].
In sum, a more
hawkish tone than many expected but plenty of skeptics remain. Confused?
Join the crowd.
ECB raises rates
and starts QT.
Earlier this
month, I linked to several articles discussing a BIS study that expressed
concern about the growing global off-balance sheet derivatives volume---which
has reached $80 trillion. This
article attempts to shed some light on
the subject.
https://www.ft.com/content/536eaa84-ef39-4a1a-acad-75fe9179e7ab
Fiscal
policy
More mischief from our ruling class.
Bottom line
Where the returns
have been in 2022.
https://www.capitalspectator.com/dividend-yield-is-2022s-upside-outlier-for-equity-factor-returns/
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