The Morning Call---Why the Fed reinstated QE

The Morning Call

 

12/19/25

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/bonds-bid-markets-pumpndump-ahead-biggest-opex-history

 

                Thursday 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

 

            The latest from Goldman’s funds flow guru.

            https://www.zerohedge.com/markets/year-really-made-investors-work-it-goldmans-flow-funds-gurus-wrap-2025

 

            The latest technical look at gold.

            https://www.zerohedge.com/the-market-ear/gold-under-hood-upside-panic-huge

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

The December Kansas City Fed manufacturing index was -3 versus consensus of +11.

                         

                        International

 

                          November Japanese CPI rose 0.4% versus projections of 0.0.

 

November UK retail sales fell 0.1% versus estimates of +0.4%; the December consumer confidence index came in at -17 versus -18.

 

November German PPI was unchanged versus up 0.3%; the January (?) consumer confidence index was -26.9 versus -23.0.

 

                        Other

 

                          Yesterday’s CPI report was missing numbers and magic.

                          https://talkmarkets.com/content/us-markets/the-cpi-for-november-is-little-but-missing-numbers-and-magic?post=545614

 

                          Counterpoint.

                          https://www.calculatedriskblog.com/2025/12/yoy-measures-of-inflation-services.html

 

            Overnight News

 

BoJ raised rates by 25bps to 0.75%, as expected, with the decision unanimous, while it stated interest rates are expected to remain at significantly low levels and will continue to raise policy rate if the economy and prices move in line with forecasts.

 

            Monetary Policy

 

              The return of QE.

              https://thedailyeconomy.org/article/the-return-of-quantitative-easing/

 

              And why.

              https://www.zerohedge.com/markets/jpmorgan-bank-behind-repo-crisis-and-feds-decision-launch-qe-lite-again

 

 

            Fiscal Policy

 

Americans are forgetting what capitalism is. (I agree in theory with the author and share his concern about the softness of the general population’s support of capitalism. However, I don’t know how we can remain competitive globally if the government isn’t involved in the economy when the governments of all our major competitors---both allies and hostiles---are involved in financially supporting and enacting enabling legislation for their industries.)

https://www.realclearmarkets.com/articles/2025/12/18/america_is_forgetting_what_capitalism_is_1154026.html

 

            Inflation

 

              US fiscal crisis will drive the next inflation shock.

              https://talkmarkets.com/content/economics--politics/americas-fiscal-crisis-will-drive-the-next-inflation-shock-debt-qe--the-fed?post=545571

 

            AI

 

              The great AI hype correction of 2025.

              https://www.technologyreview.com/2025/12/15/1129174/the-great-ai-hype-correction-of-2025/

 

              Not a bubble but the easy money has been made.

              https://www.zerohedge.com/the-market-ear/ai-not-bubble-not-free-lunch-either-0

 

            2026

 

              DeutscheBank’s top risks in 2026.

              https://www.zerohedge.com/markets/what-markets-see-top-10-risks-2026

 

              Citadel’s head of strategy on 2026.

              https://www.zerohedge.com/markets/citadels-equity-strategy-head-outlines-5-main-pillars-shaping-early-2026-market-behavior

 

            Tariffs

 

Are tariffs meeting Trump’s stated economic goals? (remember there a lot of unstated goal, i.e., countries assuming more responsibility for their own defense, halting the flow of illegal drugs, halting theft of intellectual property)

              https://reason.com/2025/12/17/trump-said-his-tariffs-would-reduce-the-trade-deficit-and-bring-back-manufacturing-heres-what-the-data-show/

 

     Investing

 

    News on Stocks in Our Portfolios

 

• Nike press release (NKE): Q2 GAAP EPS of $0.53 beats by $0.16.
• Revenue of $12.4B (+0.4% Y/Y) beats by $190M.

 

• FedEx press release (FDX): Q2 Non-GAAP EPS of $4.82 beats by $0.71.
• Revenue of $23.5B (+6.8% Y/Y) beats by $700M.

 

 

What I am reading today

 

           

 

 

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