The Morning Call---The S&P must hold this level

 

The Morning Call

 

3/2/23

 

The Market

 

    Technical

                        

            Wednesday in the charts.

            https://www.zerohedge.com/markets/bitcoin-bullion-jump-bonds-big-tech-dump-stagflation-signs-soar

 

Note: the S&P again challenged its 200 DMA but failed.  Until it can push through that DMA, I am in neutral.

 

            The S&P must hold this level.

            https://www.zerohedge.com/the-market-ear/testing-must-hold

 

            Corporate insiders buying strike.

            https://www.zerohedge.com/markets/corporate-insider-buyers-strike-accelerates-february

 

            Rates matter.

            https://www.zerohedge.com/the-market-ear/rates-matter-5

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

           

                          Weekly initial jobless claims totaled 190,000 versus estimates of 195,000.

 

Q4 nonfarm productivity was up 1.7% versus an anticipated reading of +2.6%; unit labor costs were up 3.2% versus +1.6%.

           

                          January construction spending fell 0.1% versus forecasts of +0.2%.

                          https://www.calculatedriskblog.com/2023/03/construction-spending-decreased-01-in.html

 

                          The February manufacturing PMI was 47.3 versus expectations of 47.8.

                          https://www.advisorperspectives.com/dshort/updates/2023/03/01/february-s-p-global-us-manufacturing-pmitm-softest-decline-in-3-months

 

The February ISM manufacturing index was 47.7 versus predictions of 48.0.

                          https://www.advisorperspectives.com/dshort/updates/2023/03/01/ism-manufacturing-index-contracts-for-fourth-straight-month

 

                        International

 

Q4 Japanese YoY capital spending rose 7.7% versus consensus of +3.0%; February consumer confidence was 31.1 versus 32.0.

 

The February EU flash CPI was +0.8% versus projections of +0.7%.

                          https://www.zerohedge.com/markets/core-eu-inflation-unexpectedly-surges-new-record-high

 

 

                        Other

 

                          January median household income.

                          https://politicalcalculations.blogspot.com/2023/03/median-household-income-in-january-2023.html#.Y_-WeHbMKUk

 

                          February regional Fed manufacturing overview.

                          https://www.advisorperspectives.com/dshort/updates/2023/02/28/february-regional-fed-manufacturing-overview

 

                          Mortgage rates continue to rise.

                          https://www.reuters.com/markets/us/us-mortgage-interest-rates-remain-highest-level-since-november-mba-2023-03-01/

 

            The Fed

 

Putting all the accounting gimmickry aside, the economic point is that the Fed is running a deficit and somebody has to cover it.  And the answer is the US taxpayer.

              https://www.realclearmarkets.com/articles/2023/03/01/the_feds_capital_is_rapidly_heading_to_zero_and_below_884455.html

 

            Fiscal Policy

 

              Government led industrial policy doesn’t work.

              https://www.aier.org/article/bidens-industrial-policy-flop/

 

            Recession

 

              Auto debt continues to pile up.

https://www.bloomberg.com/news/articles/2023-03-01/car-debt-is-piling-up-as-more-americans-owe-thousands-more-than-vehicles-     worth?srnd=premium&sref=loFkkPMQ#xj4y7vzkg

 

              Another article highlighting economists’ confusion.

              https://fivethirtyeight.com/features/are-we-headed-for-a-recession-or-not/

 

            China

 

I have no problem trying to correct Chinese theft of US technology or exposing its culpability in the coronavirus crisis.  What worries me is that (1) we are pushing the Russians (who have a long history of hating the Chinese) into Chinese arms.  We are kidding ourselves if we think that we can take on a Chinese/Russian alliance, and (2) the Chinese are not going to sit idly by while the US pursues an aggressive economic/military strategy---which concerns me for US companies with heavy exposure to the Chinese economy, Starbucks and Nike (which we own) to name a few.

https://www.wsj.com/articles/house-committee-lays-out-case-for-china-threat-ad62c611?mod=politics_lead_pos2&utm_campaign=What%20I%20Am%20Reading&utm_medium=email&_hsmi=248219272&_hsenc=p2ANqtz-9IGEdPeSDsaLGE_b6HU2iRUN6YEPZ_ElfhdD1vzmrs0O7TNDaQH3qCKA6HHyj5Al7lB6dltyD5oOjfEcXJrSY_cJnzQg&utm_content=248219272&utm_source=hs_email

 

     Bottom line.

 

            There is an alternative.

            https://www.zerohedge.com/markets/nomura-says-there-alternative-stocks-now-macro-valuation-tension-remains

 

            Update on valuations.

            https://www.advisorperspectives.com/dshort/updates/2023/03/01/the-q-ratio-and-market-valuation-february-update

 

 

     Investor Alert

 

            In my quarterly review of American Tower Co. (AMT), it failed to meet the minimum quality criteria for inclusion in the Dividend Growth Universe.  Hence, this morning the Dividend Growth Portfolio will Sell its position in AMT

 

    News on Stocks in Our Portfolios

Altria (NYSE:MO) declares $0.94/share quarterly dividend, in line with previous.

What I am reading today

 

           

            The wild world inside your gut.

            https://www.nytimes.com/interactive/2023/02/22/well/eat/gut-microbiome-health.html

 

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