Friday, June 21, 2024

The Morning Call--The case for rebalancing looks compelling

 

The Morning Call

 

6/21/24

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/bullion-black-gold-bid-bad-news-was-bad-news-big-tech

 

            Goldman guru sees explosive Friday session.

            https://www.zerohedge.com/markets/goldmans-flow-funds-guru-sees-explosive-trading-session-tomorrow-market-faces-event

 

            Beyond the magnificent seven.

            https://mrzepczynski.blogspot.com/2024/06/looking-beyond-magnificent-6-or-7.html

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                        International

 

Note: all the flash PMI numbers (save one) are below forecasts. This is the first time that has occurred in a very long time and is an early warning that the EU and Japan may be headed for recession.

 

May Japanese CPI was up 0.5% versus consensus of +0.1%; the June flash manufacturing PMI was 50.1 versus 50.6; the flash services PMI was 49.3 versus 53.7; the flash composite PMI was 50.0 versus 52.5.

 

May UK retail sales grew 2.9% versus expectations of +1.5%; ex fuel, they were up 2.9% versus +1.3%; the June flash manufacturing PMI was 51.4 versus 51.3; the flash service PMI was 51.2 versus 53.0; the flash composite PMI was 51.7 versus 53.1.

 

The June EU flash consumer confidence index was -14 versus estimates of -13.6; the June flash manufacturing PMI was 45.6 versus 47.9; the flash services PMI was 52.1 versus 53.5; the flash composite PMI was 50.8 versus 52.5.

 

The June German flash manufacturing PMI was 43.4 versus predictions of 46.4; the flash services PMI 53.5 versus 54.4; the flash composite PMI was 50.6 versus 52.5.

 

                        Other

 

                          The US drops out of global competitiveness top ten.

                          https://www.zerohedge.com/economics/us-drops-out-global-competitiveness-top-10-first-time-ever

 

            The Fed

 

              The Swiss National Bank cuts rates.

              https://www.cnbc.com/2024/06/20/switzerland-trims-key-interest-rate-to-1point25percent-in-second-cut-of-the-year.html

 

              China’s central bank hints at a major change in policy.

              https://www.wsj.com/economy/central-banking/chinas-central-bank-hints-at-major-policy-shift-1b175730?mod=economy_lead_pos1

 

            Fiscal Policy

 

              Meddling in mergers.

              https://www.city-journal.org/article/the-justice-departments-meddlesome-merger-policies

 

            Inflation

 

              Weakening shelter inflation.

              https://www.advisorperspectives.com/commentaries/2024/06/20/listed-real-estate-weaker-nflation-signal-needed-fed-rate-cuts

 

            Recession

 

              The latest CBO nowcast.

              https://econbrowser.com/archives/2024/06/june-cbo-economic-outlook-positive-output-gap-through-2025

 

              More signs of slowing.

              https://www.zerohedge.com/economics/after-year-recovery-economy-once-again-contracting

 

This is a great history lesson on all the times the Fed stayed too tight for too long. What the author fails to recite is all the times that the Fed stayed too loose for too long (latest example: ‘transitory inflation’). The real lesson is that an activist Fed almost always gets it wrong. This time around, given (1) the election and (2) the necessity of financing a horrendous budget deficit, I can’t imagine the Fed staying too tight for too long.

https://thehill.com/opinion/4729977-history-tells-us-the-danger-the-economy-faces-is-recession-not-inflation/

 

            Civil Strife

 

              Should the mainstream media be discussing the odds of a civil war?

              https://www.ft.com/content/a1c839c8-cc0b-4c33-af4d-840544307d89

 

            Geopolitics

 

              A new Baltic flashpoint in the NATO/Ukraine/Russia conflict.

  https://www.bloomberg.com/news/articles/2024-06-20/putin-s-hybrid-war-opens-second-front-on-russia-s-border-with-nato?srnd=homepage-americas&sref=loFkkPMQ

 

 

    Bottom line.

 

            The case for portfolio rebalancing looks compelling.

            https://www.capitalspectator.com/the-case-for-portfolio-rebalancing-looks-compelling/

 

            Foreign holdings of ballooning US debt.

            https://wolfstreet.com/2024/06/19/the-foreign-holders-of-the-ballooning-us-debt/

 

    News on Stocks in Our Portfolios

 

FactSet Research Systems press release (NYSE:FDS): Q3 Non-GAAP EPS of $4.37 beats by $0.47.

Revenue of $552.7M (+4.3% Y/Y) in-line.

 

What I am reading today

 

           

 

 

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