The Morning Call---Inflation risk has not suddenly gone away

 

The Morning Call

 

5/16/24

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/soft-cpi-sloppy-sales-spark-run-record-highs-stocks-bonds-bullion-bitcoin-all-bid

 

Note: the S&P blasted through its all-time high on decent volume. The only problem is that it did it with a gap up open. Presumably, the pin action was on a better than anticipated CPI number suggesting a potentially easier Fed---which has already eased when it slowed its Quantitative Tightening. Meanwhile, the government continues to spend like a drunken sailor and the Fed now has an excuse to be even more supportive. And there is always the election. In short, the inflation risk has not gone away.

            https://www.zerohedge.com/markets/welcome-lala-land-market-jettisons-tail-risks

 

            Commodity index highest in a year.

            https://www.zerohedge.com/commodities/commodity-index-hits-highest-year-sticky-inflation-becomes-nightmare-fed

 

            Signs of risk seeking behavior.

            https://allstarcharts.com/investors-sideline-a-defiant-dollar/

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly jobless claims totaled 222,000 versus estimates of 220,000.

 

April housing starts were up 5.7% versus projections of +3.8%; building permits fell 3.0% versus -0.2%.

 

                          The May housing index came in at 45 versus forecasts of 51.

                          https://www.advisorperspectives.com/dshort/updates/2024/05/15/nahb-housing-market-index-builder-confidence-retreats-in-may

 

 

The May Philadelphia Fed manufacturing index was 4.5 versus expectations of 8.0.

 

                        International

 

Q1 preliminary Japanese GDP growth was -0.5% versus consensus of -0.4%; Q1 preliminary private consumption was down 0.7% versus -0.2%; the Q1 YoY price index was +3.6% versus +3.2%; March industrial production was up 4.4% versus +3.8%.

 

                        Other

 

                          Parsing the data (must read).

                          https://stayathomemacro.substack.com/p/confidence-is-the-name-of-the-fed

 

                          Parsing the CPI.

                          https://www.calculatedriskblog.com/2024/05/yoy-measures-of-inflation-services.html

           

            The Fed

 

              Powell running the risk of higher inflation.

              https://www.cnbc.com/video/2024/05/15/feds-powell-is-running-a-risk-of-inflation-rising-again-economist.html

 

            Fiscal Policy

 

              Stimulus today costs dearly tomorrow.

              https://www.zerohedge.com/economics/stimulus-today-costs-dearly-tomorrow

 

              More on tariffs.

              https://reason.com/2024/05/14/bidens-tariffs-are-a-bad-idea/

 

              Protectionism is topsy turvy nonsense.

              https://cafehayek.com/2024/05/protectionism-is-topsy-turvy.html

 

            Recession

 

How concerned should we be over the magnitude of household debt? (spoiler alert: not much)

https://wolfstreet.com/2024/05/14/household-debt-delinquencies-collections-and-bankruptcies-the-free-money-era-is-over-for-our-not-so-drunken-sailors/

 

    Bottom line.

 

            Thoughts on valuation.

            https://www.capitalspectator.com/guesstimating-the-level-of-froth-in-us-stocks/

 

            The secret to Jum Simons’ success.

            https://alchemy.substack.com/p/the-algorithm-behind-jim-simonss

 

    News on Stocks in Our Portfolios

 

Cisco press release (NASDAQ:CSCO): Q3 Non-GAAP EPS of $0.88 beats by $0.06.

Revenue of $12.7B (-12.8% Y/Y) beats by $70M.

 

Cisco (NASDAQ:CSCO) declares $0.40/share quarterly dividend, in line with previous.

 

BlackRock (NYSE:BLK) declares $5.10/share quarterly dividend, in line with previous.

 

 

What I am reading today

 

           

 

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