Thursday, June 26, 2025

The Morning Call---Washington's fiscal doomsday

 

The Morning Call

 

6/26/25

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/market-recaps/crypto-megacaps-rise-dismal-data-drags-rate-cut-odds-higher

 

            Wednesday in the technical stats.

            https://www.barchart.com/stocks/momentum

            https://www.barchart.com/stocks/sectors/rankings

 

            JP Morgan traders turn tactically bullish.

            https://www.zerohedge.com/markets/jpmorgan-traders-turn-tactically-bullish-us-outperform-row-near-term

 

            While UBS turns tactically bearish.

            https://www.zerohedge.com/markets/ubs-prop-short-squeeze-rally-has-gone-too-far-time-start-selling

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly initial jobless claims totaled 236,000 versus consensus of 245,000.

                          https://www.zerohedge.com/personal-finance/labor-market-creaks-continuing-jobless-claims-highest-nov-2021

 

Final Q1 GDP growth was -0.5% versus projections of -0.2%; real consumer spending rose 0.5% versus +1.2%; PCE prices were up 3.7% versus up 3.6%.

 

May new home sales fell 13.7% versus estimates of down 5.8% (see Update on home affordability below).

https://www.advisorperspectives.com/dshort/updates/2025/06/25/new-home-sales-retreat-to-7-month-low

 

May durable goods orders grew 16.4% versus expectations of +8.5%; ex transportation, they were up 0.5% versus 0.0%.

https://www.zerohedge.com/economics/boeing-binge-buying-spark-biggest-jump-us-durable-goods-orders-11-years

 

The May Chicago national activity index came in at -.28 versus forecasts of -.1.

 

                        International

 

The July German consumer confidence index was -20.3 versus predictions of -19.3.

 

                        Other

 

                          The bedraggled dollar.

  https://wolfstreet.com/2025/06/24/the-somewhat-bedraggled-us-dollar-against-the-euro-yen-canadian-dollar-dollar-indices-and-soft-currencies-like-the-indian-rupee/

 

                          The latest from John Hussman.

                          https://www.advisorperspectives.com/commentaries/2025/06/23/bubble-contains-collapse-containsresurgence

 

            Overnight News

 

The dollar sold off to a 3 year low and treasury yields fell on bets that US rate cuts may come sooner than expected as Trump increases pressure on Powell. The WSJ reported he may name a replacement for the Fed chair as early as September. Among those being considered for the job are former Fed Governor Kevin Warsh, NEC Director Kevin Hassett, and Treasury Secretary Scott Bessent.

 

US Senate Republicans are reportedly considering delaying cuts to Medicaid in a bid to win over more moderate holdouts from the party, who threaten progress of the Reconciliation Bill.

 

Congress is still hashing out Trump’s tax bill, with the SALT deduction a point of tension between the chambers. US Republican Representative Lalota said, in reference to SALT, "We are far from a deal still."  Senator Susan Collins also floated a tax hike on those making more than $100 million a year.

 

US President Trump is set to hold a “One, Big, Beautiful Event” at the White House on Thursday to urge the Senate to pass the reconciliation bill, according to a White House official.

 

US tariffs will probably fall well below the April 2 levels after negotiations with trade partners, Deputy Treasury Secretary Michael Faulkender said. Meanwhile, Japan said it can’t accept 25% tariffs on its cars, a sticking point in talks.

 

China has taken a series of actions in the past week on counter-narcotics, in a sign of cooperation with U.S. demands for stronger action on the synthetic opioid fentanyl, a key irritant in the bilateral relationship.

 

India and US trade talks face roadblocks ahead of the tariff deadline, according to Reuters citing sources; India is resisting tariff cuts without US commitments; delegation is exp. to travel to US before deadline.

 

Monetary policy

 

              No alternative to ‘wait and see.’

  https://www.bloomberg.com/opinion/articles/2025-06-25/fed-forced-to-balance-policy-predicament-with-economic-uncertainty?srnd=homepage-americas&sref=loFkkPMQ

 

 

            Fiscal Policy

 

              Washington’s fiscal doomsday.

              https://www.zerohedge.com/political/stockman-washingtons-fiscal-doomsday

 

              Case in point.

              https://www.zerohedge.com/political/21-states-sue-trump-admin-over-clause-used-cut-federal-funding

 

              The upside to social security’s ‘insolvency.’

              https://www.realclearmarkets.com/articles/2025/06/25/social_securitys_faux_insolvency_is_a_limited_government_feature_1118660.html

 

              Six million student loan borrowers on track to have their wages garnished.

              https://mishtalk.com/economics/six-million-student-loan-borrowers-on-track-to-have-wages-garnished/

 

            Inflation

 

              Update on home affordability.

              https://politicalcalculations.blogspot.com/2025/06/median-income-earning-households-priced.html

 

            Geopolitics

 

              Reverberations are far from over.

              https://www.washingtonpost.com/opinions/2025/06/24/trump-israel-iran-war/

 

              The latest on the extent of damage to Iran’s nuclear program.

              https://www.zerohedge.com/geopolitical/israel-agrees-trump-says-systemic-destruction-irans-nuclear-capability

 

     Investing

 

            A warning.

            https://www.axios.com/2025/06/24/iran-war-tariffs-stock-market

 

    News on Stocks in Our Portfolios

 

Kroger (NYSE:KR) declares $0.35/share quarterly dividend, 9.4% increase from prior dividend of $0.32.

 

 

What I am reading today

 

           

                        An interview with Ken Griffin.

            https://www.bloomberg.com/news/features/2025-06-16/citadel-s-ken-griffin-interview-trump-harvard-immigration-and-miami?sref=loFkkPMQ

 

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