The Morning Call
12/1/22
The
Market
Technical
Wednesday in the
charts.
Note: the S&P finished
above its 200 DMA; if it remains there through the close next Monday, it will
revert from resistance to support.
The VIX isn’t
following suit.
https://www.zerohedge.com/the-market-ear/c4pxedzike
Chasing stocks is
a late trade.
https://www.zerohedge.com/the-market-ear/ckjriogzbw
Treasury yields
are suggesting the labor market is breaking.
https://www.zerohedge.com/markets/fear-gauge-suggests-us-labor-market-may-break-soon
Fundamental
Headlines
The
Economy
US
Weekly initial jobless
claims totaled 225,000 versus projections of 235,000.
October pending home sales fell 4.5% versus
estimates of -5.0%.
October personal spending
rose 0.8%, in line; personal income was up 0.7% versus +0.3%; the PCE price
index was up 0.3%, in line; the core PCE price index was up 0.2% versus +0.3%.
International
October German retail sales fell 2.8% versus
predictions of -0.6%.
The October EU unemployment rate was 6.5%
versus consensus of 6.6%.
The November
Japanese manufacturing PMI was 49 versus expectations of 48; the November
Chinese Caixin manufacturing PMI was 49.4 versus 48.9; the November German manufacturing
PMI was 46.2 versus 46.7; the November EU manufacturing PMI was 47.1 versus
47.3; the November UK manufacturing PMI was 46.5 versus 46.2.
November Japanese
consumer confidence was 28.6 versus forecasts of 29.1.
Other
The
Fed
As you know,
Powell delivered his latest thoughts on monetary policy yesterday.
There were two
main points that came out of his comments:
https://www.zerohedge.com/markets/wall-street-reacts-powells-dovish-speech-markets-explode-higher
(1)
he suggested that the magnitude of interest rate
hikes is likely to slow [but also reiterated that rates will stay higher for
longer and the warned of the risk of easing too early]. At best this dovish tilt seemed to walk back
the recent hawkish rhetoric of most of the other FOMC members regarding the
upcoming rate decision. But why is it a
plus that rates are going to say higher for longer? At worst, it simply shows
that neither he nor the rest of the FOMC have a clue what to do [which they
repeatedly demonstrate that they don’t]. Nevertheless, investors chose to
interpret his remarks dovishly [bullishly].
Perhaps this was the spark that will ignite a Santa Claus rally [which
many have been waiting for]. Color me skeptical.
(2) he offered the
‘possibility’ of a ‘soft landing’. Yeh,
right. Dream on. I have a bridge in New York for sale. Clearly, it is ‘possible’; but what is the
probability and how much money does one bet on that outcome? My answer is slim to none to both
questions. You are free to disagree.
IMF chief says Fed must ‘stay the course’.
The Fed also
released its latest Beige Book yesterday---which played second fiddle to Powell. Here is a summary.
https://www.calculatedriskblog.com/2022/11/feds-beige-book-apartment-leasing.html
The Fed, through its hubris, has caused a lot
of pain. There is likely more to come.
https://www.ft.com/content/c93f3660-821f-458b-ae0f-23ac05b8f03f?shareType=nongift
Fiscal
Policy
An unprecedented spending spree.
https://reason.com/2022/11/29/bidens-spending-spree-is-unprecedented/
Global debt costs are soaring.
The
coronavirus
Let the investigations begin.
https://brownstone.org/articles/let-the-real-investigations-begin/
Bottom line
Junk bonds are
rallying on possibility of lower rates.
News on Stocks in Our Portfolios
Kroger press release (NYSE:KR): Q3 Non-GAAP EPS of $0.88 beats by $0.06.
Revenue
of $34.2B (+7.2% Y/Y) beats by $280M.
What
I am reading today
Thursday morning
humor.
https://variety.com/2022/awards/news/adam-sandler-gotham-awards-acceptance-speech-hustle-1235443853/
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