The Morning Call--Why profit margins are historically high

 

The Morning Call

 

5/17/23

 

The Market

         

    Technical

 

Tuesday in the charts.

https://www.zerohedge.com/markets/big-tech-bid-banks-skid-bonds-bullion-breakdown

 

Margin debt down 2.1% in April.

https://www.advisorperspectives.com/dshort/updates/2023/05/16/margin-debt-down-2-1-in-april

 

The technical case for a move up in stock prices.

https://allstarcharts.com/tell-me-why-this-doesnt-matter/

 

            A fundamental case for stocks moving higher.

            https://www.zerohedge.com/markets/buy-may-dont-stay-away-fed-eases-brake

               

            And you think that you are confused.

            https://www.zerohedge.com/markets/everyone-apocalpytic-also-everyone-confident-there-will-be-soft-landing-wall-street

 

            You know things are boring when………….

            https://www.zerohedge.com/the-market-ear/range-inside-range

 

            Gold breaks support.

            https://www.zerohedge.com/the-market-ear/gold-breaks-supports-and-ctas-need-sell-size

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications were down 5.7% while purchase applications were down 4.8%.

 

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

 

April industrial production was up 0.5% versus forecasts of flat; capacity utilization was 79.7%, in line.

https://www.advisorperspectives.com/dshort/updates/2023/05/16/the-big-four-industrial-production-rose-0-5-in-april

 

April housing starts rose 2.2% versus consensus of -1.5%; building permits were down 1.5% versus +0.2%.

https://www.zerohedge.com/personal-finance/renter-nation-rout-multi-family-home-permits-plunged-again-april-rates-rose

 

The May housing index came in at 50 versus projections of 45.

                          https://www.advisorperspectives.com/dshort/updates/2023/05/16/nahb-housing-market-index-lack-of-existing-inventory-boosts-builder-confidence

 

                        International

 

Q1 Japanese GDP grew 0.4% versus estimates of up 0.1%; Q1 capital expenditures were up 0.9% versus -0.4%; Q1 private consumption was up 0.6% versus +0.4%; March industrial production was up 1.1% versus +2.0%.

 

April EU CPI was reported at +0.6% versus predictions of +0.7%.

 

                        Other

 

            The Fed

 

              Atlanta Fed chief casts doubt on any rate cuts this year.

              https://www.cnbc.com/2023/05/15/feds-bostic-casts-doubt-on-rate-cuts-this-year-even-if-theres-a-recession.html

 

            Recession

 

              Small business hiring is slowing down.

              https://www.wsj.com/articles/workers-are-still-needed-but-many-small-businesses-have-slowed-hiring-dfa30be6?mod=business_lead_pos5

 

              Unusually terrible freight market may get worse.

              https://www.zerohedge.com/markets/unusually-terrible-freight-market-may-get-lot-worse

 

            The Banking System

 

              More on a potential commercial real estate crisis.

              https://www.npr.org/2023/05/16/1174938708/commercial-real-estate-property-offices-work-from-home-remote-work

 

    Bottom line

 

Why profit margins are historically high and what that means for investment strategy (must read).           

            https://www.advisorperspectives.com/commentaries/2023/05/16/elevated-profit-margins-montier-gmo

               

            It is frustrating.

            https://alhambrapartners.com/2023/05/15/weekly-market-pulse-dont-just-stand-there/

 

            The AI revolution---valuation matters.

https://realinvestmentadvice.com/the-ai-revolution-a-repeat-of-history/?utm_medium=email&utm_campaign=Tuesday%20Takes%20May%2016&utm_content=Tuesday%20Takes%20May%2016+CID_fdc403cbf6139d9d419d92b7e6fca5d6&utm_source=RIA%20Email%20Marketing%20Software&utm_term=See%20full%20newsletter

 

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            The demographics are shifting back to the suburbs.

            https://www.ft.com/content/3a740e84-49ee-40b1-8ee2-53097beb3bae

 

            Quote of the day.

            https://cafehayek.com/2023/05/quotation-of-the-day-4267.html

 

            What the endless American wars have cost in lives.

            https://www.nakedcapitalism.com/2023/05/death-outlives-war-analysis-estimates-post-9-11-%e2%80%8bus-conflicts-killed-over-4-5-million.html

 

 

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