The Morning Call---Massive dispersion is a warning

 

The Morning Call

 

2/12/26

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/good-jobs-news-bad-news-bonds-big-tech-bitcoin-gold-gains

 

                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

 

            It didn’t feel like a flat day.

            https://www.zerohedge.com/markets/goldman-it-sure-didnt-feel-sp-flat-type-day

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly initial jobless claims totaled 227,000 versus forecasts of 225,000.

                          https://www.zerohedge.com/personal-finance/initial-jobless-claims-refuse-signal-labor-market-stress

 

                        International

 

Q4 UK preliminary QoQ GDP growth was +0.1% versus expectations of +0.2%; Q4 preliminary business investment fell 2.7% versus +0.5%; the December trade balance was -L4.3 billion versus -L6.0 billion; December industrial production declined 0.9% versus -0.2%; December YoY construction output was -0.3% versus -0.8%.

 

January Japanese PPI came in at 0.2%, in line.

 

                        Other

 

The bond market is suddenly flashing an economic slowdown (though not a recession).

https://www.marketwatch.com/story/the-u-s-bond-market-is-suddenly-flashing-a-warning-sign-about-the-economy-c56f307b?st=bc7djL

 

This was written before the release of yesterday’s jobs number but the author’s expectations were spot on.

https://stayathomemacro.substack.com/p/a-year-with-no-jobsbut-no-recession

 

                          More on the jobs report.

                          https://bonddad.blogspot.com/2026/02/january-jobs-report-superb-monthly.html

 

                          Households under stress.

                          https://econbrowser.com/archives/2026/02/households-under-debt-stress-two-pictures

 

The impact of ‘seasonal adjustments’ on December retail sales (remember that they were reported flat).

  https://wolfstreet.com/2026/02/10/not-seasonally-adjusted-retail-sales-spiked-by-80-billion-the-most-for-any-december-ever-by-far-to-817-billion-the-most-ever/

 

 

                          Update on big four recession indicators.

                          https://www.advisorperspectives.com/dshort/updates/2026/02/11/the-big-four-recession-indicators-january-2026-employment

 

            Overnight News

 

Out of the 346 S&P 500 companies that have reported so far in the earnings season, 77% have managed to beat analyst forecasts, while 19% have missed.

 

The House of Representatives has voted to overturn Trump’s tariffs on Canada in a major rebuke of the US president’s signature economic policy.

 

In a closed-door meeting with Senate Republicans Wednesday, Treasury Secretary Scott Bessent agreed with lawmakers who suggested the Senate Banking Committee could investigate Federal Reserve Chair Jerome Powell, instead of the Justice Department. 

 

            Fiscal Policy

 

              Your tax dollars at work: the $30 billion state ‘slush’ fund.

              https://www.wsj.com/politics/policy/how-a-30-billion-welfare-program-became-a-slush-fund-for-states-c39b8311?mod=hp_lista_pos2

 

            China

 

              China is winning.

              https://www.nytimes.com/2026/02/10/opinion/china-ai-ev-trump.html

 

     Investing

 

            Death of software---Nah.

            https://x.com/stevesi/status/2019167552794948020

 

            Massive dispersion is a warning.

            https://www.zerohedge.com/markets/nomura-warns-massive-dispersion-us-stocks-has-not-ended-well-past

 

            The gold/interest rate correlation has broken down.

            https://www.apolloacademy.com/gold-and-rates-correlation-breakdown/

 

The value rotation illusion. (I like the gist of the author’s thesis. However, he fails to consider, what in my mind is, a very important factor---the discounted value of future cash flow. That is cash flow to the investor, i.e., dividends. Many of the companies that would fit into the ‘growth’ mold pay no dividend. I don’t know how anyone can use a model that ignores the return to the investor [clearly, this is one man’s opinion]. As a value investor I ignore companies with no dividend; but for those with one, I combine the dividend yield with the earnings growth rate to calculate a theorical forward rate of return. That makes it easier to compare NVDA with a value stock [WMT is a really bad example because even though it pays a very small dividend, it is classed as a value stock], say Eversource Energy [a utility] e.g. NVDA stock yield [~.0005%] plus earnings growth [~32%] versus ES stock yield [~4.2%] plus earnings growth [~5.5%]. Then run a bastard PEG ratio ES [~15PE/9.7=1.5 versus NVDA [~33PE/32=1]. NVDA still wins as a better value by the author’s definition; but it is much less so and the comparison would be even narrower for other value/nonutility stocks. By the way, the growth, P/E, and yield numbers all come from Value Line)

            https://talkmarkets.com/content/stocks--equities/the-value-rotation-illusion?post=556691

 

            Trying to explain the crypto winter.

            https://www.wsj.com/finance/currencies/a-new-crypto-winter-is-here-and-even-the-biggest-bulls-are-worried-82019de4?mod=itp_wsj

 

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

                        The Golden Thread.

            https://www.powerlineblog.com/archives/2026/02/the-golden-thread.php

 

 

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