The Morning Call--Stanley Druckenmiller on the Fed and fiscal policy

 

The Morning Call

 

5/9/24

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/bond-yields-black-gold-bounce-hawkish-fedspeak-hits-stocks

 

            More charts.

            https://www.zerohedge.com/the-market-ear/vix-rollercoaster-surging-utilities-and-exhausted-sellers

 

            Small caps don’t matter.

            https://allstarcharts.com/small-caps-do-not-matter/

 

            The economics of gold investment.

            https://marginalrevolution.com/marginalrevolution/2024/05/the-new-economics-of-gold-investment.html

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly jobless claims totaled 231,000 versus expectations of 210,000.

 

                        International

 

March Japanese average earnings rose 0.6% versus consensus of up 1.5%; the March leading economic indicators came in at 111.4 versus 111.0.

 

The April Chinese balance of trade was $72.4 billion versus predictions of $76.7 billion.

 

                        Other

 

                          Lumber prices unchanged YoY.

                          https://www.calculatedriskblog.com/2024/05/update-lumber-prices-mostly-unchanged.html

 

            The Fed

 

              Europe moves ahead of the Fed.

              https://www.wsj.com/economy/central-banking/swedens-central-bank-cuts-key-rate-as-europe-moves-ahead-of-the-fed-57af0b19?mod=economy_lead_pos1

 

              Stanley Druckenmiller on the Fed.

              https://www.zerohedge.com/economics/forward-guidance-fed-sounds-wizard-reading-chicken-bones

 

              Bank of England leaves rates unchanged but edges closer to a cut.

              https://www.zerohedge.com/markets/boe-keeps-rates-unchanged-edges-closer-cutting-deputy-governor-calls-easing

 

            Fiscal Policy

 

              Stanley Druckenmiller on Biden/Trump fiscal policy.

              https://www.zerohedge.com/markets/druckenmiller-dropped-biggest-f-bomb

 

            Inflation

 

              Interest rates and prices making new homes less affordable.

              https://politicalcalculations.blogspot.com/2024/05/rising-interest-rates-and-prices-making.html

 

This is a very interesting article (study) that deals with the lack of consistency between the ‘misery index’ (the unemployment rate plus the inflation rate) and consumer sentiment.

https://www.nakedcapitalism.com/2024/05/consumers-regard-the-cost-of-money-as-part-of-the-cost-of-living.html

 

Many of the economists arguing that inflation is headed down base their case on an expected decline in the housing segment of CPI (i.e., owners equivalent rent). This article suggests that thesis either may occur but reverse shortly or not occur at all. It is also a reason for ‘higher for longer.’

              https://www.capitalspectator.com/will-housing-inflation-keep-interest-rates-higher-for-longer/#more-22154

 

            Recession

 

I linked to an article yesterday that addressed a major decline in the growth of consumer credit card debt. This at least partially explains it.

https://www.zerohedge.com/markets/missing-puzzle-piece-revealed-behind-inexplicable-strength-us-consumers-700-billion-phanton

 

              Corporate profits are booming.

              https://www.wsj.com/finance/corporate-profits-economy-recession-jobs-growth-069e2090?mod=economy_lead_pos3

 

     Bottom line

 

            The latest from John Hussman.

            https://www.advisorperspectives.com/commentaries/2024/05/08/where-you-start-bear-markets-from-john-hussman

 

Six reasons why the bull market is alive and well. I would question two of these reasons: (1) a president is up for re-election: based on the polls, it could be argued that Biden is a lame duck and (2) lower inflation: you know my take on this issue.

https://www.carsongroup.com/insights/blog/six-reasons-this-bull-market-is-alive-and-well/

 

            Goldman trader thinks that it is as good as it is going to get for cyclicals.

            https://www.zerohedge.com/markets/good-it-gets-goldman-traders-warns-breakdown-cyclicals

 

    News on Stocks in Our Portfolios

 

 

What I am reading today

 

            Quote of the day.

            https://cafehayek.com/2024/05/bonus-quotation-of-the-day-1029.html

 

 

Freedom of thought and discourse (not to mention hypocrisy) at our ‘elite’ universities.

            https://www.powerlineblog.com/archives/2024/05/the-campus-seen-a-footnote.php

 

                        Happy birthday, Friedrich Hayek.

            https://www.adamsmith.org/blog/happy-125th-birthday-friedrich-hayek

 

 

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