The Morning Call---Higher rates likely to keep Fed on hold

The Morning Call

 

10/12/23

 

The Market

         

    Technical

                           

                   Wednesday in the charts.

                   https://www.zerohedge.com/markets/gold-gains-yield-curve-crypto-crude-crap-shoes-crumble

                  

                   Welcome to the year-end rally.

                   https://allstarcharts.com/welcome-to-the-year-end-rally/

 

                   Goldman: a bullish set up is emerging.

                   https://www.zerohedge.com/markets/new-these-are-10-market-dynamics-goldmans-traders-are-following-bullish-set-emerges

                  

                   Counterpoint.

                   https://www.zerohedge.com/markets/days-low-vix-numbered-financial-conditions-turn-screw

 

                   Plus, mean reversion remains in play.

                   https://www.capitalspectator.com/us-stock-market-flirting-with-strong-2023-gain-if-it-holds/

                  

                   Plus, the VIX is defying long term logic.

                   https://www.zerohedge.com/the-market-ear/vix-defying-long-term-logic

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

September CPI was up 0.4% versus estimates of +0.3%; core CPI was +0.3%, in line.

 

International

                     

August UK GDP came in at +0.2%, in line; August industrial production was -0.7% versus -0.2%; the August trade balance was L-3.4 billion versus L-3.6 billion; August YoY construction output was +2.3% versus +2.6%.

 

September Japanese PPI was -0.3% versus expectations of +0.1%.

 

                        Other

 

            The Fed

              

The minutes from the last FOMC meeting were released yesterday.  Basically, they sounded the same hawkish narrative that came out of the meeting itself.

               https://www.zerohedge.com/markets/fomc-10

              

              From the Fed whisperer: higher rates likely to keep Fed on hold.

              https://www.wsj.com/economy/central-banking/higher-bond-yields-likely-to-extend-fed-rate-pause-53aa56fc

 

              But one Fed official still thinks higher rates may be needed to curb inflation.

              https://www.bloomberg.com/news/articles/2023-10-11/fed-s-bowman-says-higher-rates-may-be-needed-to-curb-inflation?srnd=premium&sref=loFkkPMQ

 

              The housing industry urges the Fed to stop raising rates.

              https://www.cnbc.com/2023/10/10/housing-industry-urges-powell-and-fed-to-stop-raising-interest-rates.html

 

            Fiscal Policy

 

The big lie about tax rates.  Pardon my cynicism; but doesn’t this narrative allow the progressives to posture on tax rate inequality while at the same time knowing that their big donors won’t have to pay more taxes?

https://www.aier.org/article/joe-biden-shifty-economists-and-the-big-lie/

 

            Recession

 

              The consumer is starting to buckle.

  https://www.cnbc.com/2023/10/09/consumers-buckling-for-first-time-in-decade-former-walmart-us-ceo.html?utm_campaign=What%20I%20Am%20Reading&utm_medium=email&_hsmi=277636767&_hsenc=p2ANqtz-88J-AYdZulWrZth0H3oJijRhU1hTeMjUtWE_QQ_YrU-s5wF2dR1qLKbRUcIg5AGN0cQ4VJMoGRX6Ti83tf5ZjJQLiIDw&utm_content=277636767&utm_source=hs_email

 

 

            Geopolitics

 

              A brief history of the Israeli Palestinian conflict.

  https://www.bloomberg.com/news/articles/2023-10-09/israeli-palestinian-conflict-explained-from-peacemaking-to-war?utm_campaign=What%20I%20Am%20Reading&utm_medium=email&_hsmi=277636767&_hsenc=p2ANqtz-_1KXqqEK07CLX8qStNA5UgZCQsPFWjqvpcJbHIC4g_hAUZHjRh98xKAzPK1p0u94QmZ6y_JNrYlTHf7Apt9Db32x8nBg&utm_content=277636767&utm_source=hs_email&sref=loFkkPMQ

 

              Russia reorienting towards the Arabs.

              https://www.nakedcapitalism.com/2023/10/the-silence-of-the-bears-russia-is-reorienting-towards-the-arabs.html

 

              The potential global impact of a widening Israeli/Arab war.

              https://www.zerohedge.com/markets/global-security-order-crumbling-ukraine-war-middle-east-war

 

            The Bond Market

 

              Bond market meltdown rivals the burst of the dot com bubble.

  https://www.bloomberg.com/news/articles/2023-10-04/long-bonds-historic-46-meltdown-rivals-burst-of-dot-com-bubble?utm_campaign=What%20I%20Am%20Reading&utm_medium=email&_hsmi=277636767&_hsenc=p2ANqtz-_dvT0u6C8qbSOxmDagbendYpIAICrR5Z31xFwZoreaPNdXvmJl_518JOnEeDTD3_lCaxKDGS5R3PmWZJKL0zUpSOGytA&utm_content=277636767&utm_source=hs_email&sref=loFkkPMQ

 

              

               Bulls**t Story of the Day

 

 Nobel prize winner Paul Krugman finally recognizes that deficit spending   is getting out of hand; but poor thing, he can’t think of a way to solve the problem what with the need to keep throwing money down the Ukrainian rathole and the ‘existential’ climate threat.

                 https://www.nytimes.com/2023/10/10/opinion/us-budget-deficit-interest-rates.html

 

    Bottom line

 

            The argument against trying to time the Market.

            https://www.schwab.com/learn/story/does-market-timing-work

 

    News on Stocks in Our Portfolios

 

            Fastenal press release (NASDAQ:FAST): Q3 GAAP EPS of $0.52 beats by $0.02.

Revenue of $1.85B (+2.4% Y/Y) in-line.

 

Fastenal (NASDAQ:FAST) declares $0.35/share quarterly dividend, in line with previous.

 

What I am reading today

 

           

            How Roman gladiators got ready to rumble.

            How Roman gladiators got ready to rumble (nationalgeographic.com)

 

            A centuries old hunt for gold in the heart of New York City.

            https://www.atlasobscura.com/articles/sunken-treasure-hell-gate-new-york-east-river

 

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