Wednesday, July 17, 2024

The Morning Call---Does a Fed rate cut signal lower equity prices?

 

The Morning Call

 

7/17/24

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/gold-soars-record-high-stocks-do-something-not-seen-oct-1987

 

            Beware of the ‘broadening out’ narrative.

            https://www.zerohedge.com/markets/beware-broadening-out-rally-narrative-nomura-warns-there-isnt-lot-room-vol-reset-lower

 

            This is what a bull market looks like.

            https://allstarcharts.com/bull-market-2024/

 

            Small caps. For the record books.

            https://www.zerohedge.com/the-market-ear/small-caps-record-books

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications were up 3.9% while purchase applications were down 3.0%.

 

 June housing starts were up 3.0%, in line; June building permits were up   3.4% versus +0.5%.

 

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

 

The July housing index came in at 42 versus consensus of 44.

                          https://www.calculatedriskblog.com/2024/07/nahb-builder-confidence-declined-in-july.html

 

                        International

 

June EU CPI came in at +0.2%, in line; June UK CPI was up 0.1%, also in line.

 

 

                        Other

 

            Monetary Policy

 

              Pay attention to money flows.

              https://www.ft.com/content/c122f9ab-4f38-4163-9278-65e6e3cfac2f

 

            Fiscal Policy

 

Interest payments now the second largest spending category in federal budget. Keep in mind that this article notwithstanding, this couldn’t have happened without the complicity of the republicans.

https://issuesinsights.com/2024/07/15/another-biden-achievement-interest-payments-now-second-largest-federal-spending-category/

 

              Here is a more realistic assessment of the problem.

              https://reason.com/2024/07/13/the-debt-lies-we-tell-ourselves/

 

              And this from my favorite optimist.

              https://scottgrannis.blogspot.com/2024/07/how-bad-is-fiscal-policy.html

 

              How Wall Street keeps absorbing the Treasury’s borrowing binge.

              https://www.wsj.com/finance/how-wall-street-keeps-absorbing-americas-borrowing-binge-5e1262e7?st=0czc1jai4uhnid8&reflink=desktopwebshare_permalink

 

On the other hand, the buildup of the regulatory regime is solely on the administration.

https://cei.org/blog/how-major-rules-are-surging-under-the-biden-administration/

 

            Inflation

 

              New homes seriously unaffordable.

              https://politicalcalculations.blogspot.com/2024/07/new-homes-seriously-unaffordable-in-us.html

 

              The other yield curve flashes Trump trade warning.

              https://www.zerohedge.com/markets/other-yield-curve-flashes-trump-trade-warning

 

              Powell says inflation on the path to 2%.

  https://www.bloomberg.com/news/articles/2024-07-15/powell-says-recent-data-raise-confidence-inflation-on-path-to-2?srnd=homepage-americas&sref=loFkkPMQ

                       

            Recession

 

              Soft landing?

              https://alhambrapartners.com/weekly-market-pulse-the-soft-landing-zone/?src=news

 

 Five charts on the soft landing.

            https://www.zerohedge.com/the-market-ear/5-charts-soft-landing

 

              Supply chain stresses coming back.

              https://www.apolloacademy.com/supply-chain-stresses-coming-back/

 

              Global economic growth projections for 2024/2025.

              https://econbrowser.com/archives/2024/07/july-2025-weo-update-released

 

              Big four recession indicators.

              https://www.advisorperspectives.com/dshort/updates/2024/07/16/the-big-four-recession-indicators-real-retail-sales-flat-in-june

           

     Bottom line

 

            Analysts getting more bullish.

            https://finance.yahoo.com/news/the-true-bull-market-may-finally-wake-up-as-investors-eye-rate-cuts-080027716.html

 

            Will a goldilocks economy keep the bull market humming?

            https://www.capitalspectator.com/will-a-goldilocks-economy-keep-the-stock-market-humming/

 

On the other hand, does a Fed rate cut signal lower equity prices? This thesis was proposed a year ago by BofA (who incidentally has made several prescient market calls in the recent past).

            https://www.zerohedge.com/markets/fed-rate-cuts-signal-sell-stocks-and-buy-bonds

 

    News on Stocks in Our Portfolios

 

Johnson & Johnson press release (NYSE:JNJ): Q2 Non-GAAP EPS of $2.82 beats by $0.12.

Revenue of $22.4B (+4.3% Y/Y) beats by $60M.

 

Johnson & Johnson (NYSE:JNJ) declares $1.24/share quarterly dividend, in line with previous.

 

What I am reading today

 

            Quote of the day.

            https://www.adamsmith.org/blog/if-people-dont-grasp-the-basics-then

 

 

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

 

 

 

No comments:

Post a Comment