The Morning Call--The US is far from recession and inflation is far from over

The Morning Call

 

6/6/23

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/stocks-sink-appulus-fails-impress-gold-crypto-down

 

Overbought mania.

https://www.zerohedge.com/the-market-ear/overbought-mania

 

Hot stuff doesn’t care about rates.

https://www.zerohedge.com/the-market-ear/hot-stuff-doesnt-care-about-rates

 

            It is not ‘only five stocks’.

            https://allstarcharts.com/its-only-5-stocks-lol/

 

Stocks are ignoring a laundry list of risks.

https://www.cnbc.com/2023/06/05/stock-markets-are-ignoring-a-laundry-list-of-risks-strategist-says.html?utm_campaign=What%20I%20Am%20Reading&utm_medium=email&_hsmi=261173163&_hsenc=p2ANqtz-9xLJYWlogA85d0oHAau33sMFdse6WMav3uEpde4X7ZiFVkyQ0DG20nJ35peKZcOo4V5-XYKXE6rn1d2EAYPZ15ZseC-g&utm_content=261173163&utm_source=hs_email

 

Wall Street backs off bets of a Fed rate cut.

https://www.wsj.com/articles/wall-street-backs-off-bets-on-fed-rate-cuts-6f1d32b5?mod=hp_lead_pos2&utm_campaign=What%20I%20Am%20Reading&utm_medium=email&_hsmi=261173163&_hsenc=p2ANqtz--2eb6t_HTS9K7qGvl7L1HDHmJ2uWKj4cRdj5k0XSz2tHeFpuuKUNHZAUbqbSBzZx1WdcVnt5pb6vLPBwRzqHmV7KQ1oA&utm_content=261173163&utm_source=hs_email

 

                        Bearish bets against the S&P are surging.

https://www.wsj.com/articles/bearish-bets-against-s-p-500-are-surging-despite-love-for-big-tech-506cacc?mod=markets_lead_pos4&utm_campaign=What%20I%20Am%20Reading&utm_medium=email&_hsmi=261173163&_hsenc=p2ANqtz-8z0UgtfpqeLIzBhoswxIbJIOTXz2FZIlHEwq1EK6M4sEm8RFNQaDmlNKdNcclrcmlL7ITewoRkct5UJFgtoIpHzrSwCQ&utm_content=261173163&utm_source=hs_email

 

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Month to date retail chin store sales grew much slower than in the prior week.

 

April factory orders were up 0.4% versus expectations of +0.8%: ex transportation, they were down 0.2% versus -0.9%.

 

The May services PMI was 54.9 versus projections of 55.1; the May composite PMI was 54.3 versus 54.5.

https://www.advisorperspectives.com/dshort/updates/2023/06/05/s-p-global-services-pmi-strongest-expansion-over-year

 

The May ISM non-manufacturing index was 50.3 versus forecasts of 52.2.

                          https://www.advisorperspectives.com/dshort/updates/2023/06/05/ism-services-expand-fifth-consecutive-month

 

                        International

 

April Japanese household spending fell 1.3% versus estimates of +0.6%; April YoY average earnings were up 1.0% versus +0.9%.

 

April German factory orders were down 0.4% versus predictions of +3.0%; the May construction PMI was 43.9 versus 44.0.

 

April EU retail sales were flat versus consensus of +0.2%; the May construction PMI was 44.6 versus 45.8.

 

The May UK construction PMI was 51.6 versus expectations of 51.1.

 

                        Other

 

The Fed

 

  The new central bank word du jour.

  https://www.ft.com/content/bc997c4d-e6e8-4ff2-9788-ba7e470bf4e7

 

  The inflation fight is far from over.

  https://www.advisorperspectives.com/commentaries/2023/06/05/monetary-inflation-bonds-liquidity-debt-fed-roberts

 

  China tells largest banks to cut deposit rates.

  https://www.zerohedge.com/economics/china-tells-largest-banks-cut-deposit-rates-bid-boost-growth

 

            Fiscal Policy

 

              Another example that no one is serious about reduced government spending.

              https://www.realclearmarkets.com/articles/2023/06/05/with_government_spending_nothing_ever_changes_903428.html

 

              Ending the debt ceiling crisis will unleash a tsunami of debt sales.

  https://www.bloomberg.com/news/articles/2023-06-04/biden-debt-bill-signing-set-to-unleash-tsunami-of-us-debt-sales?srnd=premium&sref=loFkkPMQ#xj4y7vzkg

 

                        Inflation

 

              Home prices increased in April.

              https://www.calculatedriskblog.com/2023/06/black-knight-mortgage-monitor-home.html

 

            Recession

 

              The economy remains far from recession.

              https://www.wsj.com/articles/why-the-u-s-remains-far-from-recession-5d07fe49?mod=economy_lead_pos1

 

              IMF chief sees no slowdown in bank lending.

              https://www.cnbc.com/2023/06/05/the-imf-interview-cnbc.html

 

            The Banking System

 

              Mid and Big banks face increased capital requirements.

              https://www.zerohedge.com/markets/bad-america-big-banks-face-20-jump-capital-requirements

 

     Bottom line

 

            More on valuation.

            https://www.advisorperspectives.com/dshort/updates/2023/06/05/market-valuation-inflation-and-treasury-yields

            https://www.advisorperspectives.com/dshort/updates/2023/06/05/is-the-market-still-overvalued

 

                Morgan Stanley expects a 16% drop in corporate profits.

https://www.bloomberg.com/news/articles/2023-06-05/morgan-stanley-sees-shock-16-us-profit-drop-killing-stock-rally?srnd=premium&sref=loFkkPMQ#xj4y7vzkg

 

    News on Stocks in Our Portfolios

 

What I am reading today

 

            The US has retrieved craft of non-human origin.

            https://www.zerohedge.com/technology/we-are-not-alone-us-has-retrieved-craft-non-human-origin-says-whistleblower-govt-task

 

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