The Morning Call---The national debt is making us poorer

 

The Morning Call

 

6/7/24

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/market-pancakes-nvidia-gamma-squeeze-fizzles

 

            Too early to be worried about a Market top.

            https://x.com/jaykaeppel/status/1798707612176748678

           

            Goldman sees a melt up into the summer.

            https://www.zerohedge.com/markets/bar-being-short-very-high-10-reasons-why-goldmans-flows-guru-sees-stocks-melting-summer

 

            Gold overtakes euro in global financial reserves.

            https://www.zerohedge.com/markets/gold-overtakes-euro-global-international-reserves

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly initial jobless claims totaled 229,000 versus forecasts of 220,000.

                           https://www.advisorperspectives.com/dshort/updates/2024/06/06/unemployment-claims-up-8k-worse-than-expected

 

  Q1 nonfarm productivity rose 0.2%, in line; unit labor costs were up 4.0% versus +4.9%.

 

  The April trade deficit was $74.6 billion versus projections of $76.1 billion.

                          https://www.advisorperspectives.com/dshort/updates/2024/06/06/trade-deficit-widens-april-2024

 

May nonfarm payrolls were up 272,000 versus an anticipated increase of 185,000 (oooops); the unemployment rate was 4.0% versus 3.9%.

                          https://www.zerohedge.com/markets/may-payrolls-soar-272k-above-highest-estimate-wages-come-red-hot

 

                        International

 

Q1 EU (3^rd est.) GDP growth was +0.3%, in line; the Q1 (3^rd est.) employment change was +0.3%, also in line.

 

April Japanese household spending fell 1.2% versus estimates of +0.2%; the April leading economic indicators were 111.6 versus 111.8.

 

The April German trade balance was E22.1 billion versus expectations of E22.6 billion.

 

The May Chinese trade balance was $82.6 billion versus consensus of $73.0 billion.

 

The May UK home price index declined 0.1% versus predictions of +0.2%.

 

                        Other

 

                          April economic indicators.

                          https://econbrowser.com/archives/2024/06/monthly-gdp-for-april-and-other-indicators

 

Individual consumption and GDP per capita. Note that the US is #10 in GDP per capita and #1 in consumption per capita.

                          https://marginalrevolution.com/marginalrevolution/2024/06/gdp-vs-individual-consumption.html

 

            Fiscal Policy

 

              The national debt is making us poorer.

              https://reason.com/2024/06/05/the-national-debt-is-making-us-poorer/

 

            Inflation

 

              New home affordability---not.

              https://politicalcalculations.blogspot.com/2024/06/new-homes-remain-out-of-reach-for-most.html

 

              More.

  https://wolfstreet.com/2024/06/05/mortgage-rates-rise-further-over-7-since-early-april-buyers-remain-on-strike-housing-market-still-frozen-as-prices-are-too-high/

 

                           Housing inventory up 35% YoY.

              https://www.calculatedriskblog.com/2024/06/realtorcom-reports-active-inventory-up.html

 

            Recession

 

A very optimistic view of the consumer. I would note that investment income is up because interest rates are up because inflation is up.

https://www.wsj.com/economy/americans-have-more-investment-income-than-ever-before-84b7a6c6?mod=economy_lead_pos3

 

             Expect more pain in commercial real estate.

             https://www.nytimes.com/2024/06/06/business/office-building-foreclosures-losses.html

 

              US payroll gains may be overstating labor market strength.

              https://www.bloomberg.com/news/newsletters/2024-06-06/world-economy-latest-payroll-doubts?srnd=homepage-americas&sref=loFkkPMQ

 

                        Geopolitics

 

              NATO kicks off Baltic drills.

              https://www.zerohedge.com/geopolitical/nato-kicks-massive-baltic-drills-biden-affirms-us-weapons-now-being-used-inside-russia

 

              Russia sending warships into the Caribbean.

              https://www.zerohedge.com/geopolitical/russian-warships-steam-caribbean-ukraine-tensions-go-global

 

 

    Bottom line.

 

The argument for lower long rates. The one factor the author leaves out is supply/demand, that is, bond (yields) prices may be lower (higher) than normal because the supply of debt (especially Treasury debt) is soaring and the rest of the world is growing leery (demand) of owning it.

            https://paulsenperspectives.substack.com/p/10-year-treasury-yield-is-too-high

 

            The recipe for winning.

            https://allstarcharts.com/no-i-will-not-add-to-this-loser/

 

    News on Stocks in Our Portfolios

 

 

What I am reading today

 

            Our crisis of competence.

            https://www.zerohedge.com/personal-finance/our-crisis-competence

 

            The Watch: On the 80^th anniversary of D Day.

            https://nalert.blogspot.com/2024/06/the-80th-anniversary-of-d-day.html

 

 

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