The Morning Call--The case for a continuing bull market

 

The Morning Call

 

6/5/24

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/bonds-bitcoin-bid-bad-news-jolts-rate-cut-hopes-back-life

 

            Can the dollar strength last? (It is breaking down technically, suggesting it can’t)

            https://www.wsj.com/economy/the-dollar-is-at-its-strongest-since-the-1980s-canit-last-a1d407b9?mod=economy_lead_story

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications fell 5.2% while purchase applications were off 4.0%.

 

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

 

April job openings (JOLTS report) totaled 8.06 million versus consensus of 8.24 million.

https://www.calculatedriskblog.com/2024/06/bls-job-openings-decreased-to-81.html

 

April factory orders were up 0.7% versus projections of +0.6%; ex transportation, they were up 0.7% versus +0.4%.

 

The April ADP private payrolls report showed a 152,000 increase in jobs versus an anticipated rise of 175,000.

 

The June economic optimism index came in at 40.5 versus estimates of 45.2.

 

                        International

 

April Japanese average earnings were up 2.1% versus predictions of up 1.7%; the May services PMI was 53.8 versus 53.6; the May composite PMI was 52.5 versus 52.4.

 

The May Chinese Caixin services PMI was 54.0 versus forecasts of 52.6; the composite PMI was 54.1 versus 51.5; the May German services PMI was 54.2 versus 53.9; the May composite PMI was 52.4 versus 52.2.

 

April EU PPI was -1.0% versus expectations of -0.5%; the May services PMI was 53.2 versus 53.3; the May composite PMI was 52.8 versus 52.3.

 

May UK YoY auto sales were up 1.7% versus consensus of -2.0%; the May services PMI was 52.0, in line; the May composite PMI was 53.0 versus 52.8.

 

                        Other

 

                          April median household income.

                          https://politicalcalculations.blogspot.com/2024/06/median-household-income-in-april-2024.html

 

                          Heavy truck sales unchanged in May.

                          https://www.calculatedriskblog.com/2024/06/heavy-truck-sales-unchanged-in-may.html

 

            The Fed

 

              The Fed doesn’t know what to do (but what’s new).

              https://alhambrapartners.com/2024/06/03/weekly-market-pulse-the-feds-conundrum/?src=news

 

              Potential revisions in employment could prompt rate cuts sooner than expected.

              https://www.zerohedge.com/markets/here-unexpected-reason-why-fed-will-rush-cut-rates-soon-possible

 

            Inflation

 

              Inflation is cooling.

              https://investorplace.com/market360/2024/05/inflation-is-cooling-heres-what-this-means-for-the-fed-and-investors/

 

                Recession

 

              Latest nowcasts.

              https://econbrowser.com/archives/2024/06/nowcasts-down

 

              Eyepopping factory construction.

              https://wolfstreet.com/2024/06/03/eyepopping-factory-construction-boom-in-the-us-semiconductors-auto-industry-and-everyone-else/

 

                  Big four recession indicators.

              https://www.advisorperspectives.com/dshort/updates/2024/06/04/the-big-four-recession-indicators

 

                  Global manufacturing improved in May.

                  https://www.pmi.spglobal.com/Public/Home/PressRelease/f44f2dbe4a23430aad13cd8105306ea9

 

 

Civil Strife

 

              Government overreach.

              https://www.nakedcapitalism.com/2024/06/scott-ritter-removed-from-plane-to-russia-and-had-passport-seized-with-no-explanation.html

 

     Bottom line

 

            Buffett valuation indicator.

            https://www.advisorperspectives.com/dshort/updates/2024/06/04/buffett-valuation-indicator-may-2024

 

            Deviations from long term growth trends are back to extremes.

            Deviations From Long-Term Growth Trends Back To Extremes - RIA (realinvestmentadvice.com)

 

The case for a continuing bull market. This may be a valid argument; but bear in mind that the lower boundary of the uptrend off the 2009 low as well as the October 2022 low is at the S&P ~4400 level.

            https://www.tker.co/p/bull-market-historical-returns-duration

 

Here is another bullish forecast. What is a bit surprising about this article is that the author argues that Market rise will be driven by increasing consumer optimism (which has bottomed but is still well below levels to reflect real optimism) and faster money supply growth (which [1] is happening only because QT is shrinking and [2] he fails to mention that higher money supply growth also creates inflationary pressures).

https://paulsenperspectives.substack.com/p/the-three-horned-bull

           

            Something has got to give.

            https://www.advisorperspectives.com/commentaries/2024/06/04/somethings-gotta-give-richard-bernstein

 

            High margins should continue to support stock prices.

            https://www.ft.com/content/00b6d980-a21a-4497-9a72-6eafe9d54b95

 

            Goldman on why long rates are about to spike again.

            https://www.zerohedge.com/markets/goldman-why-long-term-yields-are-about-spike-again

 

    News on Stocks in Our Portfolios

 

What I am reading today

 

            The ten deadliest animals to humans.

            https://www.zerohedge.com/medical/these-are-10-deadliest-animals-humans

           

                        The wickedest city on earth.

            How the 'wickedest city on Earth' was sunk by an earthquake (nationalgeographic.com)

 

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