The Morning Call---The Fed's balance sheet is shrinking again

The Morning Call

 

7/11/23

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/bonds-bid-hawkish-higher-longer-fedspeak-spooks-growth-stocks

 

            Unique trading patterns.

            https://traderfeed.blogspot.com/2023/07/developing-your-uniqueness-as-trader.html

 

            More confusion in the yield breakeven curve.

            https://www.zerohedge.com/markets/us-breakeven-curve-well-broken

 

    Fundamental

 

       Headlines

 

              The Economy

                                   

The July small business optimism index came in at 91.0 versus expectations of 89.9.

 

                        International

 

The May UK unemployment rate was 4.0% versus predictions of 3.8%; May average earnings were up 6.9% versus +6.8%.

 

June Japanese YoY machine tool orders fell 21.7% versus estimates of -28.0%.

 

June German CPI was +0.3%, in line; the July economic sentiment index was -14.7 versus -10.5; the July current conditions index was -59.5 versus -60.0.

 

The July EU economic sentiment index was -12.2 versus consensus of -17.0.

 

                        Other

                          

                           Update on big four economic indicators.

                           https://www.advisorperspectives.com/dshort/updates/2023/07/07/the-big-four-economic-indicators-june-employment

 

                          The decline of economic freedom.

                          https://www.aei.org/economics/the-21st-century-decline-of-economic-freedom/

 

The Fed

 

  The Fed’s balance sheet is shrinking again and that could be a problem.

  https://www.bloomberg.com/news/articles/2023-07-09/fed-s-qt-ghosts-are-haunting-powell-bid-to-shrink-balance-sheet?srnd=premium&sref=loFkkPMQ#xj4y7vzkg

 

            Fiscal Policy

 

              Normal is over.

              https://www.zerohedge.com/markets/rubino-normal-over

 

Inflation

 

  Wholesale used car prices down in June.

  https://www.calculatedriskblog.com/2023/07/wholesale-used-car-prices-decreased-42.html

 

            Recession

 

              No boom; no bust.

              http://scottgrannis.blogspot.com/2023/07/no-boom-no-bust.html

 

  Here is another somewhat optimistic take on the economy from John Mauldin.

  https://www.advisorperspectives.com/commentaries/2023/07/09/muddled-optimism-markets-inflation-debt-mauldin

 

              The weakest consumer credit print since 2020.

              https://www.zerohedge.com/economics/shocking-drop-auto-loans-results-weakest-consumer-credit-print-2020

 

              Yellen says too early to rule out recession.

              https://www.bloomberg.com/news/articles/2023-07-09/yellen-says-still-too-early-to-rule-out-risk-of-us-recession?srnd=premium&sref=loFkkPMQ

 

     Bottom line

 

Q2 earnings season is about to start and could pose the next challenge to the stock market.

https://www.wsj.com/articles/a-soft-corporate-earnings-season-poses-next-test-for-stock-market-rally-b44d495b?mod=business_lead_pos7&utm_campaign=What%20I%20Am%20Reading&utm_medium=email&_hsmi=265692646&_hsenc=p2ANqtz--BGN5P00Q8cou95AHhERJI_wNFkIX7UYN7UyuWZV2d4luPkvhunfmk4TA7SzxD_NzoQiY92LPTYPPaDnKjGJ8z0xuARg&utm_content=265692646&utm_source=hs_email

                       

            Bond rout unnerves investors.

https://www.wsj.com/articles/recharged-bond-rout-unnerves-investors-ed2e749d?mod=hp_lead_pos3&utm_campaign=What%20I%20Am%20Reading&utm_medium=email&_hsmi=265692646&_hsenc=p2ANqtz-8epEv69wQEf9d2xUC-J09T-hKKrXoYS5gEy2OKPFDeQB6lIEsEA5Ptyl-gLHP0Sgl-BfbKeohO_d4RkBFSPeKOt9KoqQ&utm_content=265692646&utm_source=hs_email

 

 

    News on Stocks in Our Portfolios

 

 

What I am reading today

 

            Thoughts on easing the regulatory burden.

            https://www.adamsmith.org/blog/how-excellent-about-deep-sea-mining-we-should-do-more-of-this

 

            Tuesday morning humor.

            https://youtu.be/enisdXlVhzE

                        

            Part two: the ‘bonus’ hole.

            https://www.telegraph.co.uk/news/2023/07/09/vagina-named-bonus-hole-cervical-cancer-charity-transgender/

 

            The broker who saved America.

            https://thereformedbroker.com/2023/07/04/the-broker-who-saved-america-11/

 

            The ‘dial of destiny’ discovered in ancient Greek shipwreck.

            The 'Dial of Destiny' is real—and was found in an ancient shipwreck (nationalgeographic.com)

 

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.