Wednesday, January 31, 2024

The Morning Call---The economy is improving in spite of the Fed

 

The Morning Call

 

1/31/24

 

The Market

         

    Technical

 

Tuesday in the charts.

https://www.zerohedge.com/markets/yields-jolted-higher-stocks-lower-ahead-fedtreasury

 

Are we nearing a correction?

https://allstarcharts.com/when-does-this-bull-market-end/

 

Overshoots.

https://www.zerohedge.com/the-market-ear/overshoots-front-running-and-decoupling

 

JP Morgan warns today’s market similar to Dot com peak.

https://www.zerohedge.com/markets/jpmorgan-warns-todays-market-far-more-similar-one-may-think-dotcom-bubble-peak

 

Counterpoint: It is not just tech that is driving this market.

https://allstarcharts.com/only-tech-driving-this-market/

 

Inverse panic?

https://www.zerohedge.com/the-market-ear/are-we-skipping-fomo-and-going-straight-inverse-panic

 

Despite geopolitical threats, stocks still lean toward risk-on.

https://www.capitalspectator.com/despite-geopolitical-threats-markets-still-lean-into-risk-on/

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

  Weekly mortgage applications fell 7.2% while purchase applications were down 11.4%.

 

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

 

The November Case Shiller home price index fell 0.2% versus expectations of +0.2%.

https://www.advisorperspectives.com/dshort/updates/2024/01/30/sp-case-shiller-home-price-index-upward-trend-decelerates-november-2023

 

December job openings (JOLTS) totaled 9.03 million versus predictions of 8.87 million.

https://www.advisorperspectives.com/dshort/updates/2024/01/30/job-openings-jolts-december-2023

 

The January consumer confidence index came in at 114.8 versus consensus of 115.0.

                          https://www.advisorperspectives.com/dshort/updates/2024/01/30/consumer-confidence-hits-two-year-high

 

The January ADP private payroll report showed a total of 107,000 new jobs versus estimates of 145,000.           

                                  https://www.zerohedge.com/personal-finance/adp-employment-report-job-gains-slowing

 

                       International

 

December Japanese preliminary industrial production was up 1.8% versus forecasts of +2.5%; December retail sales declined 2.9% versus +0.5%; the January consumer confidence index was 38.0 versus 37.7; January YoY housing starts were -4.0% versus -6.2%; the January YoY construction orders were up 0.4% versus +1.1%.

 

December German retail sales were down 1.6% versus projections of up 0.7%; the January unemployment rate was 5.8% versus 5.9%; January CPI was -0.2% versus -0.1%.

 

The January Chinese manufacturing PMI was 49.2, in line; the January nonmanufacturing PMI was 50.7 versus 50.6; the January composite PMI was 50.9 versus 50.1.

 

            The Fed

 

              The economy is improving not because of the Fed but in spite of it.

              https://alhambrapartners.com/2024/01/28/weekly-market-pulse-surprises/

 

  Why cut rates in an economy this strong?

  https://www.nytimes.com/2024/01/30/business/economy/fed-interest-rates.html

       

  The Fed is pushing banks to utilize the discount window for liquidity needs.

  https://www.zerohedge.com/markets/fed-prepares-bank-crisis-while-telling-americans-economy-strong

 

            Fiscal Policy

 

              The usurpation of resources.

              https://www.realclearmarkets.com/articles/2024/01/30/the_crisis_is_not_the_debt_reckoning_its_the_extraction_that_leads_to_it_1007447.html

 

              Want more production (Mr. Trump), support free trade.

              https://cafehayek.com/2024/01/want-more-production-support-free-trade.html

 

              Senate republicans cut deal with Biden over immigration/Ukraine funding.

              https://www.zerohedge.com/political/bidens-trojan-horse-immigration-deal-would-allow-another-18-million-migrants

 

            Recession

 

              By this measure, the probability of a recession has increased.

              https://politicalcalculations.blogspot.com/2024/01/probability-of-us-recession-resurges-to.html

 

                  IMF lifts global growth outlook for 2024.

              https://www.bloomberg.com/news/articles/2024-01-30/imf-lifts-world-gdp-outlook-on-us-strength-china-fiscal-support?srnd=premium&sref=loFkkPMQ

 

  Eurozone economy flatlines.

  https://www.nytimes.com/2024/01/30/business/eurozone-economy-gdp.html

 

            War in the Middle East

 

              Will Israel attack Lebanon?

              https://www.nakedcapitalism.com/2024/01/israel-plans-to-attack-lebanon-because-it-is-not-winning-against-hamas.html

 

            Geopolitics

 

The argument for aiding Ukraine: I disagree (1) the well documented wide spread corruption, i.e. stealing US funds, belies the assertion that the Ukrainians are helping themselves [yes, to our money] and (2) part of the deal Gorbachev made with Bush was that in exchange for dismantling the Soviet empire, the US/NATO would not push its borders further east, which it clearly reneged on.  Russia is attempting to put a stop to it. However, I include this for perspective.

              https://econbrowser.com/archives/2024/01/guest-contribution-helping-ukraine-is-a-national-security-no-brainer

 

China

 

  Chinas’ real-estate problems have not touched bottom.

  https://www.nytimes.com/2024/01/30/business/china-evergrande-real-estate.html

 

    News on Stocks in Our Portfolios

 

T. Rowe Price (NASDAQ:TROW) declares $1.24/share quarterly dividend1.6% increase from prior dividend of $1.22.

 

Microsoft press release (NASDAQ:MSFT): Q2 GAAP EPS of $2.93 beats by $0.16.

Revenue of $62.02B (+17.7% Y/Y) beats by $890M.

 

Mastercard press release (NYSE:MA): Q4 Non-GAAP EPS of $3.18 beats by $0.10.

Revenue of $6.5B (+13% Y/Y) beats by $20M.

 

 

What I am reading today

 

            Public school bloat.

            https://www.powerlineblog.com/archives/2024/01/the-daily-chart-public-school-bloat-3.php

 

                        Wednesday morning humor.

            https://babylonbee.com/news/10-signs-youre-poor-in-a-capitalist-country

 

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