The Morning Call--Crisis not calibration drives rate cuts

 

The Morning Call

 

6/28/24

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/bonds-bullion-bitcoin-big-tech-ex-nvda-bid-despite-macro-meltdown

 

            For the past twenty years, July has been the best month for the Market.

            https://www.carsongroup.com/insights/blog/here-comes-the-best-month-according-to-the-past-20-years/

 

            The stock market’s concentration.

            https://www.axios.com/2024/06/27/the-stock-markets-concentration-in-one-chart

 

            Mathematically, volatility can’t go much lower.

            https://www.zerohedge.com/markets/last-time-happened-volmageddon-struck

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

May personal income rose 0.5% versus predictions of +0.4%; May personal spending was up 0.2% versus +0.3%; the May PCE price index was flat, in line.

                          https://www.zerohedge.com/markets/suprecore-prices-rise-49th-straight-month-spending-disappoints

 

                          May pending home sales fell 2.1% versus forecasts of +2.5%.

                          https://www.advisorperspectives.com/dshort/updates/2024/06/27/pending-home-sales-fall-may-2024

 

The June Kansas City Fed manufacturing index was -11 versus projections of +2.

                          https://www.advisorperspectives.com/dshort/updates/2024/06/27/kansas-city-fed-manufacturing-activity-june-2024

 

                        International

 

The May Japanese unemployment rate was 2.6%, in line; May preliminary industrial production was up 2.8% versus +2.0%; May YoY housing starts fell 5.3% versus -6.1%; May YoY construction orders were up 2.1% versus +23.0%; June YoY CPI was up 2.3%, in line; June YoY core CPI was up 2.1% versus 2.0%.

 

Q1 UK GDP growth a +0.7% versus estimates of +0.6%; Q1 business investment was up 0.5% versus +0.9%.

 

The June German unemployment rate was 6.0% versus expectations of 5.9%.

 

                        Other

 

            Monetary Policy

 

History shows that crisis not calibration drive deep rate cuts (like the five projected   in 2025).

  https://www.bloomberg.com/news/newsletters/2024-06-27/world-economy-latest-fed-history-shows-crises-not-calibration-drive-deep-cuts?srnd=homepage-americas&sref=loFkkPMQ

 

            Recession

 

              Americans’ pandemic savings are gone and the economy is bracing for impact.

              https://www.bloomberg.com/news/articles/2024-06-27/us-economy-feels-impact-of-dried-up-pandemic-savings?srnd=homepage-americas&sref=loFkkPMQ

 

              Eleven signs that the US consumer is in worse shape than most people think.

              https://www.zerohedge.com/personal-finance/11-signs-us-economy-far-worse-shape-most-people-think

 

            Geopolitics

 

              Russia tepid response (at least so far).

              https://www.zerohedge.com/geopolitical/russias-response-ukraines-us-backed-bombing-beachgoers-wasnt-what-many-expected

           

    Bottom line

 

            The case for broadening of participation in the rising market.

            https://investorplace.com/hypergrowthinvesting/2024/06/how-to-prepare-for-the-great-stock-market-broadening-of-2024/

 

            Goldman’s initial stab at positioning for potential election outcomes.

            https://www.zerohedge.com/markets/goldman-election-risk-starting-creep-markets-here-are-main-scenarios

 

    News on Stocks in Our Portfolios

 

Nike press release (NYSE:NKE): Q4 Non-GAAP EPS of $1.01 beats by $0.17.

Revenue of $12.61B (-1.7% Y/Y) misses by $250M.

           

Kroger (NYSE:KR) declared $0.32/share quarterly dividend, 10.3% increase from prior dividend of $0.29.

 

What I am reading today

 

           

                        The medicine for wayward youth (must read).

            https://lawliberty.org/molieres-medicine-for-wayward-youth/

 

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

 

 

 

The Morning Call---The tariff house of horrors

 

The Morning Call

 

6/27/24

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/yen-sanity-blows-jensenity-slows-bonds-bullion-dumped-big-tech-ex-nvda-jumps

 

            Hedge funds dump record amounts of tech stocks to retail.

            https://www.zerohedge.com/markets/party-almost-over-hedge-funds-dumping-record-amounts-tech-stocks-retail-investors

 

            High dispersion and low correlation.

            https://sherwood.news/markets/us-stocks-sp500-setting-new-records-even-as-they-do-nothing/

 

            Liquidity deteriorating in Treasury market.

            https://www.apolloacademy.com/liquidity-deteriorating-in-treasury-markets/

 

    Fundamental

 

 

              The Economy

 

                        US

 

Weekly intimal jobless claims totaled 233,000 versus projections of 236,000.

 

Q1 real consumer spending was up 1.5% versus consensus of +2.0%; the Q1 PCE price index was +3.1%, in line; the Q1 core PCE price index was +3.7% versus +3.6%; Q1 corporate profits were down 2.7% versus -1.7%.

 

                          May new home sales fell 11.3% versus expectations of +2.9%.

                          https://www.advisorperspectives.com/dshort/updates/2024/06/26/new-home-sales-plummet-may-2024

 

May durable goods orders rose 0.1% versus estimates of -0.1%; ex transportation, they were down 0.1% versus +0.2%.

 

                        International

 

Th June EU economic sentiment index came in at 96.4 versus predictions of 96.2; the June consumer confidence index was -14.0, in line; the June industrial sentiment index was -10.1 versus -9.6; the June services sentiment index was +6.5 versus +6.4.

 

                        Other

 

                          Architecture billings declined in May.

                          https://www.calculatedriskblog.com/2024/06/aia-architecture-billings-declined-in.html

 

            Fiscal Policy

 

              Economic history sounds alarm on US debt.

              Economic History—but Not Yet Financial Markets—Sounds an Alarm on American Debt Levels | American Enterprise Institute - AEI

 

            Inflation

 

              The difference between the price level and its rate of change.

              https://www.project-syndicate.org/commentary/elevated-price-levels-defining-economic-problem-us-presidential-election-by-stephen-s-roach-2024-06

 

            Tariffs

 

              The tariff house of horrors.

              https://econbrowser.com/archives/2024/06/truly-tariffying-a-economic-policy-house-of-horrors

 

            The Election

 

              The bond market is about to collide with the election.

  https://www.bloomberg.com/news/articles/2024-06-26/bond-market-in-step-with-fed-is-about-to-slam-into-us-election?srnd=homepage-americas&sref=loFkkPMQ

 

 

            The Financial System

 

              As expected, US banks passed latest stress test.

              https://www.zerohedge.com/markets/usual-all-us-banks-pass-feds-stress-test-goldman-unexpectedly-has-2nd-ugliest-credit-card

 

     Bottom line

 

            In defense of the standard deviation measure of risk.

            https://www.morningstar.com/columns/rekenthaler-report/standard-deviation-is-an-imperfect-measure-not-useless

 

            Why Q2 and Q3 earnings reports are less truthful than yearend results.

            https://klementoninvesting.substack.com/p/beware-of-companies-moving-targets

 

    News on Stocks in Our Portfolios

 

Paychex press release (NASDAQ:PAYX): Q4 Non-GAAP EPS of $1.12 beats by $0.02.

Revenue of $1.3B (+5.7% Y/Y) beats by $10M.

 

 

What I am reading today

 

            Quote of the day.

            https://www.adamsmith.org/blog/a-significant-mistake-by-willy-hague

 

 

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The Morning Call---Congress makes drunken sailors look sober

 

The Morning Call

 

6/26/24

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/big-tech-bitcoin-bid-bonds-blah-amid-mixed-macro

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications were up 0.8% while purchase applications were up 1.0%.

 

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

                       

  The April Case Shiller home price index was up 1.4% versus forecasts of +1.1%.

                          https://www.advisorperspectives.com/dshort/updates/2024/06/25/sp-case-shiller-home-price-index-april-2024

 

                          May building permits fell 2.8% versus consensus of -3.8%.

 

The June consumer confidence index came in at 100.4 versus projections of 100.0.

 

The June Richmond Fed manufacturing index was -10 versus estimates of +2.

https://www.advisorperspectives.com/dshort/updates/2024/06/25/richmond-fed-manufacturing-activity-slowed-june-2024

 

                        International

 

                        Other

 

            Fiscal Policy

 

              Congress makes drunken sailors look sober.

              https://alhambrapartners.com/2024/06/23/weekly-market-pulse-the-sober-spending-of-drunken-sailors/?src=news

 

              Yellen gets it wrong…. again.

              https://www.realclearmarkets.com/articles/2024/06/24/contra_yellen_the_debt_isnt_sustainable_1039743.html

 

            Inflation

 

              The supply chain is under strain again.

              https://www.nytimes.com/2024/06/24/business/global-shipping-rates.html

 

     Bottom line

 

            S&P dividend futures decline.

            https://politicalcalculations.blogspot.com/2024/06/s-500-dividend-futures-retreat-after.html

 

On the other hand, analysts are raising their earnings estimates. Seems a bit inconsistent.

            https://www.marketwatch.com/story/something-unusual-is-happening-on-wall-street-and-it-likely-bodes-well-for-stocks-b3f9779c?mod=livecoverage_web

 

Sometimes markets go down; so live with it. That is the thesis of this article. I take a different view. When I buy a stock, I have two Sell prices: (1) a Stop Loss and (2) a Sell Half. I won’t get into the math, but the latter is usually at least double the Buy price and often more. And it moves up periodically as earnings and dividends grow. When a stock that I own hits the Sell Half price, I Sell Half---which does two things: (1) it creates a cash cushion that will be a source of funds for new purchases and (2) recognizes that as long as the fundamentals hold for that particular stock, my Sell Half price could be too low (i.e., I could be wrong). However, I will have my original investment in the stock back and anything left is a free ride. (You can learn more by going to http://investingforsurvival.com/home)

            https://behaviouralinvestment.com/2024/06/25/investors-should-expect-the-worst-in-the-short-run/

 

                        How did Goldman get to their year end S&P target of 6300?

            S&P 6300? Is That Outside The Realm Of Possibility? - RIA (realinvestmentadvice.com)

                       

    News on Stocks in Our Portfolios

 

FedEx press release (NYSE:FDX): Q4 Non-GAAP EPS of $5.41 beats by $0.04.

Revenue of $22.1B (+0.9% Y/Y) beats by $40M.

 

 

What I am reading today

 

           

                        Q1 car and truck bestseller rankings

            https://wolfstreet.com/2024/06/24/ford-f-150-falls-off-cliff-in-q1-registrations-toyota-rav4-leaps-to-1-tesla-model-y-gains-share-still-2-bestseller-in-the-us/

 

            New discoveries about Stonehenge.

            Stonehenge was just one triumph in a surprising prehistoric building boom (nationalgeographic.com)

 

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

 

 

 

The Morning Call---This time is not different

 

The Morning Call

 

6/25/24

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/sell-big-tech-bitcoin-buy-everything-else

 

The stock market is in the longest stretch without a 2% correction since the financial crisis.

            https://www.cnbc.com/2024/06/21/stocks-are-in-their-longest-stretch-without-a-2percent-sell-off-since-the-financial-crisis.html

 

            Record S&P 500 concentration.

            https://bilello.blog/2024/record-sp-500-concentration-chart-of-the-day-6-24-24

 

            Quarter end pension selling on deck.

            https://www.zerohedge.com/markets/50-billion-quarter-end-pension-selling-deck-jpm

 

            Bond market points to stock market correction.

            https://allstarcharts.com/the-bond-market-points-to-a-stock-market-correction/

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

The May Chicago national activity index was reported at .18 versus predictions of -.4.

 

The June Dallas Fed manufacturing index came in at -15.1 versus consensus of -13.0.

                          https://www.advisorperspectives.com/dshort/updates/2024/06/24/dallas-fed-manufacturing-manufacturing-activity-stabilizes-in-june

 

                        International

           

April Japanese leading economic indicators were 110.9 versus expectations of 111.6.

 

                        Other

 

            Monetary Policy

 

              How much lower can rates really go?

  https://www.bloomberg.com/news/articles/2024-06-23/how-long-will-high-rates-last-bond-markets-say-maybe-forever?srnd=homepage-americas&sref=loFkkPMQ

 

 

              There is no good reason to raise the inflation target.

              https://www.zerohedge.com/economics/theres-no-good-reason-raise-inflation-target

 

              Who needs the Fed?

              https://www.zerohedge.com/markets/who-needs-fed

 

            Fiscal Policy

 

              Who holds Treasury debt?

              https://wolfstreet.com/2024/06/23/who-holds-the-recklessly-ballooning-us-national-debt-of-34-7-trillion/

 

              This time is not different (must read).

              https://www.advisorperspectives.com/commentaries/2024/06/24/time-not-different-john-mauldin

 

              US borrowing binge risks market strains.

              https://www.ft.com/content/404d2277-e6d3-4f56-93bb-c40e1ab22e68

 

            Recession

 

              Recession alert weekly leading economic index.

              https://www.advisorperspectives.com/dshort/updates/2024/06/24/recession-weekly-leading-economic-index

 

            Tariffs

 

              Trump’s tariff trap.

              https://www.city-journal.org/article/trumps-tariff-trap

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            Your life is an organization and you are the CEO.

            https://traderfeed.blogspot.com/2024/06/great-trading-requires-leadership.html

 

            57 sandwiches that define New York City.

            https://www.nytimes.com/interactive/2024/dining/best-nyc-sandwiches.html

 

 

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.