The Morning Call
12/4/25
The
Market
Technical
Wednesday in the
charts.
https://www.zerohedge.com/markets/stocks-bonds-bitcoin-bid-bad-jobs-data-lifts-rate-cut-odds
Wednesday in the
technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/signals/new-recommendations
How big is the AI bubble and is it really a
bubble?
https://politicalcalculations.blogspot.com/2025/12/how-big-is-ai-bubble-and-is-it-really.html
Fundamental
Headlines
The
Economy
US
Weekly initial
jobless claims totaled 191,000 versus projections of 220,000.
September industrial
production was up 0.1%, in line; capacity utilization was 75.9% versus 77.4%.
The November
services PMI was 54.1 versus estimates of 55.0; the composite PMI was 54.2
versus 54.8.
https://www.advisorperspectives.com/dshort/updates/2025/12/03/sp-global-services-pmi-november-2025
The November ISM services
index was 52.6 versus expectations of 52.3.
https://www.advisorperspectives.com/dshort/updates/2025/12/03/ism-services-pmi-november-2025
International
October EU retail sales were flat versus
consensus of up 0.3%.
The November EU
construction PMI was 45.4 versus predictions of 45.1; the November German
construction PMI was 45.2 versus 44.0; the November UK construction PMI was
39.4 versus 45.0.
Other
Heavy truck sales collapsed in October/November.
https://www.calculatedriskblog.com/2025/12/heavy-truck-sales-collapsed-in-october.html
On the other hand, light vehicle sales
increased.
https://www.calculatedriskblog.com/2025/12/light-vehicle-sales-increased-to-156.html
Overnight
News
Vladimir Putin
said Russia didn’t agree with some points of the US peace proposal for Ukraine,
Tass reported, citing his interview with a local media outlet. Earlier, Trump
called the meeting between Steve Witkoff and Putin “reasonably good” but next
steps remain unclear.
US President Trump
said they will either let the USMCA expire or maybe work out another deal with
Mexico and Canada.
US halted plans to
sanction the Chinese spy agency to maintain the trade truce, and the Trump
administration will also not enact any major new export controls against China,
while the Trump admin is preparing to hold a high-level meeting to decide
whether to provide licenses to allow NVIDIA (NVDA) to export the H200 to China.
Chinese Commerce
Ministry, on rare earth export controls, said as long are export license
applications are for civilian use, they will be approved.
Monetary
Policy
The central bank
cannot create jobs or growth (a little extreme; they can do it, but it is
probably not worth the cost in inflation).
https://talkmarkets.com/content/us-markets/central-banks-cannot-create-jobs-or-growth?post=542373
Inflation
Services’ inflation role in the EU CPI.
Electricity rates surge.
Tariffs
Some companies are
lining up for refunds if Supreme Court rules against Trump (what this article
fails to mention is the many alternative laws already passed by congress that
could be used to justify the tariffs).
https://www.nytimes.com/2025/12/03/business/supreme-court-tariff-ruling-refunds.html
The
Financial System
Four myths about private
credit. (Keep in mind that this article was written by the CEO of a private credit
lender. While I agree that a disaster in the private credit market would be
less disruptive than if the lender were a bank, he fails to mention that
insurance companies are big private credit buyers. So if there was a disaster,
the solvency, i.e., ability to meet their contractual obligations, of that
industry could be put in question. I also can’t help wondering why a company would
go the private credit route when [a] the interest cost is higher and [b] the
due diligence process for private credit is more onerous {per the author} than for
public credit.)
Morgan
Stanley considering selling a portion of its AI exposed debt.
Investing
Quality stocks are mispriced.
https://www.advisorperspectives.com/commentaries/2025/12/03/quality-stocks-mispriced
High beta stocks
remain the best performers in 2025.
https://www.capitalspectator.com/high-beta-risk-remains-top-performing-equity-factor-in-2025/
The wall of worry?
https://www.zerohedge.com/markets/deckchairs-titanic
Plus, charts
keeping us awake at night.
https://www.zerohedge.com/the-market-ear/charts-keeping-us-awake-night
More
on the perils of rising Japanese bond yields. This is the fourth
article I have posted regarding this development. The important point is that investors/speculators
borrow cheap money (low Japanese rates) and use the money to invest in other
assets (read: US stocks/bonds). At some point (higher Japanese rates) the
economics of this traded don’t make sense and those investors/speculators sell
(read: US stocks/bonds), creating downward pressure on US security prices. At
the moment, this doesn’t seem to be a problem; but investors need to be aware
of the potential consequences, i.e., be careful chasing stock prices up and
have a strategy for selling any trading positions.
News on Stocks in Our Portfolios
General Dynamics
(GD) declared $1.50/share quarterly dividend, in line with previous.
What
I am reading today
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