The Morning Call----Even a 50 bp cut in rates is unlikely to improve economic prospects

 

The Morning Call

 

9/10/24

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/stocks-bounce-after-brutal-week-despite-apple-unveiling-dud

 

            Beware of September.

            https://www.advisorperspectives.com/commentaries/2024/09/09/risks-bullish-investors-september-begins

 

            But are those fears overblown?

            https://www.bloomberg.com/opinion/articles/2024-09-09/stock-selloff-fears-for-september-are-overblown?srnd=homepage-americas&sref=loFkkPMQ

 

            What happens when the yield curve uninverts?

            Un-Inversion Suggests A Return To Normalcy? - RIA (realinvestmentadvice.com)

 

            Just be sure that you are looking at the entire yield curve, not just a segment of it.

            https://wolfstreet.com/2024/09/08/the-yield-curves-steep-inversion-now-partial-un-inversion-the-sag-in-the-middle-and-its-predictions-of-recessions/

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

The August small business optimism index came in at 91.2 versus forecasts of 93.6.

 

                        International

 

                          The July UK unemployment rate was 4.1%, in line.

 

The August Chinese trade balance was $91.0 billion versus projections of $83.9 billion.

 

August Japanese YoY machine tool orders fell 3.5% versus estimates of +8.7%.

 

August German CPI was -0.1%, in line.

 

                        Other

 

                          Unemployment data becoming less reliable.

                          https://www.apolloacademy.com/response-rates-declining-2/

 

The benefit of the dollar being the global currency and the pain the US would endure if it weren’t.

                          https://econbrowser.com/archives/2024/09/choi-dang-kirpalani-perez-on-exorbitant-privilege-and-the-sustainability-of-us-public-debt

 

The August NY Fed consumer survey shows rebound in inflation expectations.

                          https://www.zerohedge.com/markets/inflation-expectations-rise-over-medium-term-delinquency-fears-unexpectedly-hit-4-year-high

 

 

            Monetary Policy

 

              The case for a 50 bp cut in the Fed Funds rate.

              https://www.carsongroup.com/insights/blog/lets-not-sugar-coat-it-risks-are-rising/

 

Even if we get a 50 bp cut, it is unlikely to improve the prospects for economic growth.

https://www.advisorperspectives.com/commentaries/2024/09/09/time-has-come

 

            Fiscal Policy

 

This author is right in his analysis of the consequences of continuously running irresponsible budget deficits. But to state that those budget deficits are the fault of the democrats (Harris) is about as far from the truth as you can get. George Bush and Trump spent money like drunken sailors and were major contributors to the fiscal mess in which we now find ourselves. We need to throw all the bums out and start anew.

https://www.zerohedge.com/markets/how-government-debt-killing-us-dollar

 

            Recession

 

              Update on big four recession indicators.

              https://www.advisorperspectives.com/dshort/updates/2024/09/06/the-big-four-recession-indicators

 

              Chinese economy entering dangerous new phase.

  https://www.bloomberg.com/news/articles/2024-09-09/china-s-deflationary-spiral-is-now-entering-dangerous-new-stage?srnd=homepage-americas&sref=loFkkPMQ

 

              Draghi says EU at risk.

  https://www.bloomberg.com/news/articles/2024-09-09/draghi-says-eu-in-danger-without-massive-spending-and-joint-debt?srnd=homepage-americas&sref=loFkkPMQ

 

 

    News on Stocks in Our Portfolios

 

Oracle press release (NYSE:ORCL): Q1 Non-GAAP EPS of $1.39 beats by $0.06.

Revenue of $13.3B (+6.8% Y/Y) beats by $60M.

 

Oracle (NYSE:ORCL) declares $0.40/share quarterly dividend, in line with previous.

 

United Parcel Service (NYSE:UPS) announced on Tuesday that it struck a deal to acquire Frigo-Trans and sister company BPL for an undisclosed amount. The businesses were described as industry-leading, complex healthcare logistics providers based in Germany. Frigo-Trans' network includes temperature-controlled warehousing that covers six temperature zones from cryopreservation to ambient, a Pan-European cold chain transportation solution, and temperature-controlled and time-critical freight forwarding capabilities.

 

What I am reading today

 

            How Joan of Arc turned the tide in the 100 Years War.

            How Joan of Arc Turned the Tide in the Hundred Years’ War (nationalgeographic.com)

 

 

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