Thursday, July 27, 2023

The Morning Call---The Market believes that tightening is over

The Morning Call

 

7/27/23

 

The Market

         

    Technical

 

Wednesday in the charts.

https://www.zerohedge.com/markets/dow-matches-record-winning-streak-powell-keeps-party-going

 

Here is another indicator that suggests a new bull market has just started.

https://investorplace.com/hypergrowthinvesting/2023/07/powerful-macd-indicator-suggests-this-rally-has-legs/

 

Most confident consumers in two years.

https://www.bespokepremium.com/think-big-blog/most-confident-consumers-in-two-years/

 

The dollar is recovering; but is it just a countertrend rally?

https://allstarcharts.com/ol-king-dollar-bounces-back/

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

                                       

Weekly initial jobless claims totaled 221,000 versus consensus of 235,000.

                            https://www.zerohedge.com/personal-finance/initial-continuing-jobless-claims-plunge-lowest-5-months

                                    

Preliminary Q2 real GDP growth was 2.45 versus predictions of 1.8%; preliminary Q2 real consumer spending was up 1.6% versus +4.1%; Preliminary Q2 PCE prices were up 3.8% versus 4.0%.

                            https://www.zerohedge.com/markets/us-gdp-grew-unexpectedly-hot-24-q2-despite-feds-aggressive-tightening-campaign

                                                      

June new home sales were down 2.5% versus forecasts of -4.0%; June building permits were down 3.7%, in line.

                            https://www.advisorperspectives.com/dshort/updates/2023/07/26/new-home-sales-fall-first-time-since-february

                       

   June durable goods orders were up 4.7% versus expectations of +1.0%; ex transportation, they were up 0.6% versus 0.0%.

                           https://www.zerohedge.com/economics/durable-goods-orders-june-saw-biggest-monthly-spike-3-years

 

                        International

 

                          June Chinese YoY industrial profits fell 16.8% versus estimates of -15.0%.

 

The August German consumer confidence index came in at -24.4 versus projections of -24.7.

 

                        Other

 

The Fed

 

The FOMC wrapped up its July meeting, raising rates another 25 bp (as expected) and leaving its policy statement virtually unchanged (as expected if you believe that rates hikes are in the rear-view mirror).

https://www.zerohedge.com/markets/fed-hikes-rates-25bps-expected-stays-data-dependent

       

And the tone of Powell’s subsequent presser didn’t change much either---though investors are interpreting his comments as dovish.

https://www.zerohedge.com/markets/watch-live-powell-tries-convince-market-please-stop-fighting-fed-which-may-hike-one-more

 

M2 update from my favorite optimist. Here he maintains that optimism (i.e.; the Fed will continue to shrink M2 and no recession), wrongly I believe.

http://scottgrannis.blogspot.com/2023/07/m2-update-inflation-still-headed-to-zero.html

 

  ECB hikes key interest rates 25 bp.

  https://www.zerohedge.com/markets/ecb-hikes-25bps-expected-will-ensure-future-rates-are-sufficiently-restrictive

 

Inflation

 

This author thinks targeting inflation at 2% is silly, implying that 4% may be OK. I agree 2% may be arbitrary but why wouldn’t the logical number be 0%.

  https://ritholtz.com/2023/07/2-inflation-target-dumb/

      

  The tomato soup indicator.

  https://politicalcalculations.blogspot.com/2023/07/inflation-slows-for-campbells-tomato.html

 

Recession

 

  A closer look at the commercial real estate market.

  https://www.morningstar.com/alternative-investments/commercial-real-estate-is-trouble-not-reason-you-think

                    

             IMF raises 2023 global growth forecast.

             https://www.cnbc.com/2023/07/25/imf-raises-global-growth-forecast-despite-chinas-recovery-losing-steam.html

 

    Bottom line

 

            Bond valuations suggest equity-like returns but with less risk.

            https://www.advisorperspectives.com/commentaries/2023/07/26/bond-market-outlook-suggest-potential-for-equity-returns

 

    News on Stocks in Our Portfolios

 

AbbVie press release (NYSE:ABBV): Q2 Non-GAAP EPS of $2.91 beats by $0.10.

These Results Include an Unfavorable Impact of $0.15 Per Share Related to Acquired IPR&D and Milestones Expense

Revenue of $13.87B (-4.9% Y/Y) beats by $350M.

 

McDonald's press release (NYSE:MCD): Q2 Non-GAAP EPS of $3.17 beats by $0.38.

Revenue of $6.5B (+13.6% Y/Y) beats by $210M.

 

Mastercard press release (NYSE:MA): Q2 Non-GAAP EPS of $2.89 beats by $0.06.

Revenue of $6.3B (+14% Y/Y) beats by $130M.

 

What I am reading today

 

           

                        Quote of the day.

            https://cafehayek.com/2023/07/quotation-of-the-day-4338.html

 

            Bipartisan bill to shake up college sports.

            https://www.foxnews.com/politics/manchin-tuberville-bipartisan-introduce-bill-shake-college-sports?intcmp=tw_pols

 

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