The Morning Call---It's not all wine and roses

 

The Morning Call

 

11/7/24

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/market-recaps/trump-quake-sparks-market-euphoria-gold-dips-dollar-rips

 

Note: as positive as yesterday’s pin action was, the moonshot was done on a huge gap up open which it almost surely be closed. The only question is timing. While I have my eye on a couple of stocks that will benefit from a Trump presidency, I am electing to be patient and await a pullback.

 

            Yearend rally starts today.

            https://www.zerohedge.com/markets/year-end-rally-starts-today-goldman-flows-guru-sees-institutional-fomo-feedback-loop

 

            The great gold puke?

            https://www.zerohedge.com/the-market-ear/great-gold-puke

 

            Long dollar the shakiest of Trump trades.

            https://www.zerohedge.com/markets/long-dollar-looks-shakiest-trump-trades

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications fell 10.8% while purchase applications were down 5.0%.

 

                        International

 

                          September EU PPI was down 0.6%, in line.

 

The October German services PMI came in at 51.6 versus forecasts of 51.4; the October composite PMI was 48.6 versus 48.4; the October EU services PMI was 51.6 versus 51.2; the October composite PMI was 50.0 versus 49.7.

 

                        Other

 

            Monetary Policy

 

              Four questions the Fed faces.

              https://www.wsj.com/economy/central-banking/fed-readies-a-rate-cut-and-faces-these-four-questions-d32c9e20?mod=economy_lead_story

 

            Inflation

 

              A look a multiple inflation indices.

              https://econbrowser.com/archives/2024/11/everyday-price-inflation-at-0-3-y-y

 

            Recession

 

              Update on the probability of recession

              https://politicalcalculations.blogspot.com/2024/11/us-recession-odds-fall-with-fed-rate.html

 

            The Election

 

              The aftermath.

              https://www.zerohedge.com/political/watch-live-election-night-results-roll

 

              Inflation risks are now even more underpriced.

              https://www.zerohedge.com/markets/inflation-risks-are-now-even-more-woefully-underpriced

 

       Bottom line

 

So far so good. At least at this point, my concerns regarding potential civil disruption are not being realized. Clearly a plus. That doesn't mean that there won’t be; but the hope now has to be that (1) all that rhetoric about the existential threat to democracy was just that---rhetoric---‘full of sound and fury, signifying nothing’ and (2) that the dems recognize their agenda is at least partially flawed.

 

That said, it is not all wine and roses. The US still faces a spending/deficit/debt problem that won’t be solved by Trump’s stated campaign promises. Indeed, it will only be exacerbated. That said, I am clinging to the hope that the recent Musk/Paulson comments are a sign that Trump may be prepared to do some serious budget cutting---‘clinging to the hope’ being the operative phrase. If that hope is misplaced then we are likely looking at a period of rising inflation, higher interest rates and slowing economic growth.

https://www.wsj.com/economy/what-a-trump-win-means-for-the-economy-50de4670?mod=economy_lead_pos1

 

More.

https://www.capitalspectator.com/how-will-trumps-election-win-change-the-macro-outlook/

 

Still more.

https://www.zerohedge.com/markets/trump-wins-here-are-economic-market-tax-tariff-immigration-and-regulation-implications

 

            And more.

            https://www.zerohedge.com/markets/next-stage-western-cilivization-dawns

 

    News on Stocks in Our Portfolios

 

Automatic Data Processing (NASDAQ:ADP) declares $1.54/share quarterly dividend, 10% increase from prior dividend of $1.40.

 

 

What I am reading today

 

            Quote of the day.

            https://cafehayek.com/2024/11/quotation-of-the-day-4820.html

 

 

 

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The Morning Call---The coming fiscal storm

 

The Morning Call

 

11/6/24

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/market-recaps/election-day-exuberance-sparks-buy-all-things-theme

 

            What is driving the price of gold?

            https://www.capitalspectator.com/whats-driving-gold-central-banks-and-hedging-are-key-factors/

 

            Traders brace for volatility and volume.

            https://www.ft.com/content/8fce4fc5-c2e7-474a-9053-55c749aca88a

 

            Goldman’s hedge fund trader: buckle up.

            https://www.zerohedge.com/markets/buckle-goldmans-hedge-fund-honcho-risk-taking-election

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

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

 

The September trade balance was -$84.4 billion versus predictions of -$81.1 billion.

                          https://www.calculatedriskblog.com/2024/11/trade-deficit-increased-to-844-billion.html

 

The October services PMI was 55.0 versus estimates of 55.3; the October composite PMI was 54.1 versus 54.3.

 

The ISM services index was 56.0 versus expectations of 53.8.

                          https://www.calculatedriskblog.com/2024/11/ism-services-index-increases-to-560-in.html

 

                        International

 

The October UK services PMI came in at 52.0 versus forecasts of 51.8; the October composite PMI was 51.8 versus 51.7.

 

                        Other

 

            Fiscal Policy

 

              The coming fiscal storm.

              https://capx.co/neither-trump-or-harris-is-prepared-for-the-fiscal-storm/

 

              Social security math.

              https://wolfstreet.com/2024/11/04/social-security-update-fiscal-2024-trust-fund-income-outgo-and-deficit/

 

What if Trump/Harris really try to enact their promises? (Spoiler alert---they won’t/can’t)

https://www.bloomberg.com/opinion/articles/2024-11-05/trump-and-harris-have-ignored-looming-fiscal-crisis-election-2024?srnd=homepage-americas

 

            Tariffs

 

              The impact of tariffs.

              https://econbrowser.com/archives/2024/11/some-last-pictures-trade-war-2-0

 

            The Election

 

              Politicians aren’t what make America great.

              https://www.wsj.com/opinion/politicians-arent-what-make-america-great-e05c0083?mod=opinion_recentauth_pos1&mod=WSJ_home_columnists_pos_1

 

    Bottom line.

 

            Don’t bet your portfolio on the election outcome.

            https://alhambrapartners.com/weekly-market-pulse-election-anxiety/?src=news

 

            Ignoring political noise.

            https://disciplinefunds.com/2024/11/04/chart-of-the-day-ignoring-political-noise/

 

            October dividends by the numbers.

            https://politicalcalculations.blogspot.com/2024/11/dividends-by-numbers-in-october-2024.html

 

            Plan for volatility.

            Election Day! Plan For Volatility - RIA

 

    News on Stocks in Our Portfolios

 

Cummins press release (NYSE:CMI): Q3 GAAP EPS of $5.86 beats by $1.02.

Revenue of $8.46B (+0.4% Y/Y) beats by $150M.

 

 

What I am reading today

 

            How Rome was founded.

            How was Rome founded? Not in a day, and not by twins.

 

 

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The Morning Call--America's free lunch economy is over

 

The Morning Call

 

11/5/24

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/market-recaps/bonds-bid-bitcoin-skids-traders-take-profits-trump-bets

 

            Trend spotting.

            Market Call: Trend Spotting

 

            Hedge funds pushing limits.

            https://www.zerohedge.com/the-market-ear/all-hedge-funds-push-limits

 

            Goldman adjusts its position on gold.

            https://www.zerohedge.com/markets/goldman-makes-big-change-its-bullish-gold-trade-ahead-election

 

            Traders are shifting their bets.

            https://www.zerohedge.com/markets/traders-capitulate-long-rates-short-vix-positioning-election

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

September factory orders fell 0,5% versus projections of -0.4%; ex transportation orders, they were up 0.1%, in line.

 

October light vehicle sales totaled 16.2 million versus consensus of 15.6 million.

 

                        International

 

The October German manufacturing PMI was 43.0 versus expectations of 42.6; the October EU manufacturing PMI was 46.0 versus 45.9.

 

                        Other

 

            Monetary Policy

 

              What happened to long and variable lags?

              https://www.apolloacademy.com/what-happened-to-long-and-variable-lags/

 

              Abundant reserves enabled a soft landing.

              https://scottgrannis.blogspot.com/2024/11/abundant-reserves-enabled-soft-landing.html

              Two things we need from the Fed.

              https://www.bloomberg.com/opinion/articles/2024-11-04/the-federal-reserve-must-deliver-two-things-this-week?srnd=homepage-americas

 

Fiscal Policy

 

              One way road to crisis.

              https://www.advisorperspectives.com/commentaries/2024/11/04/one-way-road-crisis

 

              America’s free lunch economy is over.

              https://www.bloomberg.com/opinion/articles/2024-11-04/harris-or-trump-would-both-face-the-end-of-the-free-lunch-economy?srnd=homepage-americas

 

Recession

 

              Office delinquency rates spike.

              https://wolfstreet.com/2024/11/04/office-cmbs-delinquency-rate-spikes-to-9-4-highest-since-worst-months-after-the-financial-crisis/

 

 

    Bottom line.

 

The case for a Market melt up. The more I think about it, the more I think the ‘Elon Musk slash-a-thon’ could be the operative scenario. If so, this forecast would be at risk.

            https://investorplace.com/2024/10/the-case-for-a-market-melt-up/

 

            Another bullish prediction.

            https://www.tker.co/p/stock-market-election-year-seasonality-and-uncertainty

 

            Even more optimism.

            https://www.ft.com/content/d594a4a5-b22d-4dcd-8f49-6f8b2e8cdad0

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

                        The eighth wonder of the ancient world.

            The eighth wonder of the ancient world may have an untouched tomb

 

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Monday Morning Chartology---Brace for a potentially chaotic week

 

The Morning Call

 

11/4/24

 

The Market

         

    Technical

 

The inevitable happened this week---the S&P ceased ‘rollin’ along, breaking a short term uptrend off last August’s low. It did so on a gap down open which holds a positive in that that gap has to be closed. It also traded down to its 50 DMA and bounced, another plus. Still we are going into an emotionally charged week that could potentially lead to a post-election level of civil strife we have never witnessed in the US.

 

That said, the Market, which is generally an excellent discounting mechanism, seems unbothered by the likelihood of turmoil. Which strongly suggests to me that my concerns are way overblown. Nonetheless, with the potential for political uncertainty as well as the extraordinarily confusing pin action in bonds, gold, and the dollar, I think that caution is the better part of valor.

 

The election cometh.

The Presidential Election Cometh - RIA

 

            Trading lessons from US elections.

            https://www.ft.com/content/cdeb79b5-3244-4c77-9541-20614818224d

 

            Probably not a good sign.

            https://www.ft.com/content/61a7e376-5ad4-4d58-bbbb-1b443ab69591

 

            The latest from BofA.

            https://www.zerohedge.com/markets/harnett-most-contrarian-post-election-trade

 

 

 

 

The long bond continued its losing ways. However, it did bounce off the lower boundary of its very short term trading range, providing a glimmer of hope that the current sell off is coming to an end. On the other hand, it could be that it is the bond investors who are correctly discounting the potential for post-election turbulence---and if that is the case, then expect more downside.

 

 

 

 

 

GLD was down for the week. But, at this point, it is nothing more than a minor hiccup. Momentum remains to the upside and my position on gold remains the same: I don’t understand how the price action of gold can be so positive at the same time that interest rates and the dollar are soaring, barring some catastrophic economic/political/military event---which unfortunately seems (in my opinion) all too likely.

 

 

 

 

 

 

My thoughts on the dollar are unchanged:

 

Despite a minor selloff on Wednesday and Thursday, the dollar continues to shoot the moon---not suggesting but shouting that investors think that either something enormously positive is occurring or about to occur in the US or that something enormously negative is occurring or about to occur internationally. We can all speculate on what those may be but if they don’t happen it seems likely that some retracement is to be expected.

 

Stocks and the dollar versus bonds and gold.

 

 

 

 

            Friday in the charts.

            https://www.zerohedge.com/market-recaps/halloween-hangover-payrolls-pmi-puke-sparks-chaos-across-markets

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Week of review

 

The economic stats last week were positive as were the primary indicators (three plus, one neutral, two minus). That pretty much fits my ‘muddle through’ scenario. Though I would caution that data over the next month will be distorted by the impact of the two Florida hurricanes.

https://wolfstreet.com/2024/11/01/hurricanes-helene-milton-and-the-boeing-strike-make-mess-of-jobs-report-and-wages-surge/

 

The US inflation numbers were neutral but overseas (which in total was upbeat) the price data was disappointing---which, as you know, fits my forecast.

 

…. unless and until somebody in Washington realizes the inflationary implications of the current horrendously irresponsible fiscal policy, I believe that either the Fed will have to finance that policy---meaning that higher inflation is an inevitability---or it won’t---meaning the federal government will suck capital out of the private sector, stagnating economic growth.

 

My forecast remains: (1) the economy ‘muddles through’ and (2) inflation has likely seen its lows.

                                   

Having said all that, this week’s news flow will likely be dominated by the election and its aftermath, particularly the latter. No election in my memory has been as contentious and the threats of violence by the losing side so numerous. We can all hope and pray that constitutional process will work as it’s intended; but I fear the loss of civility and its effect on the Market. Hope for the best, be prepared for the worst.

                        https://www.zerohedge.com/political/portents-chaos

 

                        The election litigation is getting scary.

                        https://www.zerohedge.com/political/halloween-over-election-litigation-getting-really-scary

 

                        US

 

 

                        International

 

                        Other

 

                         September median household income.

                         https://politicalcalculations.blogspot.com/2024/11/median-household-income-in-september.html

 

    News on Stocks in Our Portfolios

 

T. Rowe Price (NASDAQ:TROW) declares $1.24/share quarterly dividend, in line with previous.

 

 

What I am reading today

 

 

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