The Morning Call
5/21/26
The
Market
Technical
Wednesday in the
charts.
Summary: Forgive our cynicism, but we
have seen this kind of messaging before - regarding 'finishing touches'
to a peace deal being imminent - but this time the market really bit,
sending crude prices tumbling bigly. That triggered a plunge
in bond yields (and the dollar) and bid for stocks, gold and crypto.
Hawkish FOMC Mins had little to no impact.
Wednesday in the
technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/market-performance
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/signals/new-recommendations
Option premiums reminiscent of 2021 meme
stock frenzy.
All highs are not created equal.
https://trendlabs.com/the-greatest-fundamental-analyst-on-wall-street/
Margin debt up to
record highs.
Ten year
yields---up, up and away.
https://econbrowser.com/archives/2026/05/the-change-in-10-year-yields-up-up-and-away
Markets still
refuse to believe King Dollar.
https://www.zerohedge.com/the-market-ear/markets-still-refuse-believe-king-dollar
Thursday morning
setup: A steady rebound in US equities driven by peak insanity in Korea (where
the two chip stocks that account for most of the market surged and sent the
Kospi soaring more than 8% overnight) faded after a report that Iran’s
Supreme Leader issued a directive that the country’s near-weapons-grade uranium
must remain in the country, rejecting Trump's key ceasefire demand,
while oil and bond yields jumped as traders waited in mounting futility to see
whether hopes of a peace deal in the Middle East would translate into tangible
progress. As of 7:15am ET, S&P 500 futures fell 0.4% and Nasdaq
futures slid 0.3% after otherwise very strong Nvidia’s earnings failed to
ignite further strong gains in the artificial intelligence
trade. Treasuries fell as Brent reversed earlier losses to climb 2%
above $107 after Tehran's response disappointed those hoping for
de-escalation. JPMorgan CEO Jamie Dimon did not help, warning that
interest rates may climb much further from current levels. Long-dated bonds
around the world have tested multiyear highs in recent days on concern about an
oil-driven spike in inflation and amid worries over government spending.
Fundamental
Headlines
The
Economy
US
Weekly jobless claims totaled 202,500 versus
consensus of 203,500.
https://www.zerohedge.com/personal-finance/jobless-claims-refuse-show-any-signs-ai-jobpocalypse
April housing
starts dropped 2.8% versus predictions of -3.5%;
building permits increased 5.8% versus +0.5%.
The
May Philadelphia Fed manufacturing index was -.4 versus estimates of +18.
International
March Japanese
machine tool orders fell 9.4% versus expectations of -8.1%; the April trade balance was Y301.9 billion versus -29.7
billion; the May flash manufacturing PMI was 54.4, in line; the May
flash services PMI was 50.0 versus 50.7; the May flash composite PMI was 51.1
versus 51.8.
March EU
construction output declined 1.2% versus forecasts of -2.6%; the May flash
manufacturing PMI was 51.4 versus 51.8; the May flash services PMI was 46.4
versus 47.7; the May flash composite PMI was 47.5 versus 48.8.
The May UK
industrial trends orders index was -41 versus projections of -40; the May flash
manufacturing PMI was 53.7 versus 53.0; the May flash services PMI was 47.9
versus 51.7; the May flash composite PMI was 48.5 versus 51.6.
The May German
flash manufacturing PMI was 49.9 versus consensus of 47.0; the May flash
services PMI was 47.5 versus 47.0; the May flash composite PMI was 48.6 versus 48.4.
Other
The economic charts of the week.
https://www.carsongroup.com/wp-content/uploads/2026/05/ChartsoftheWeekMay11-15.pdf
A word of caution in defining ‘inflation’ and
‘economic growth’.
https://thedailyeconomy.org/article/cpi-meets-goodharts-law-can-economic-metrics-become-fallacies/
Mortgage rates surge to the highest level
since July.
https://www.cnbc.com/2026/05/19/mortgage-rates-closing-in-on-7percent.html?
Iran
Overnight news---another false flag.
And why wouldn’t Iran stall when---Senate
enacts measure to end war with Iran.
https://www.zerohedge.com/political/senate-advances-measure-withdraw-us-involvement-iran-conflict
Monetary
Policy
The minutes from
the April FOMC meeting were released yesterday. The main takeaway (not
surprisingly) is that the FOMC is deeply divided on the direction of rates and,
hence, the odds of a rate cut anytime soon is low.
https://www.zerohedge.com/markets/fomc-38
Fiscal
Policy
The problem with government ‘investors’ isn’t
just that they are bad at it.
https://www.theunseenandtheunsaid.com/p/the-problem-with-government-investors
Uncontrollable spending and debt.
(3) Causes of
Uncontrollable US Public Spending and Debt
Inflation
Blind to the real cause of inflation.
The current inflationary impulse does not
appear to be abating.
https://bonddad.blogspot.com/2026/05/the-current-inflationary-impulse-does.html
The
Financial System
Oaktree Capital on the private credit market.
https://www.advisorperspectives.com/commentaries/2026/05/20/dispersion
Investing
Bonds are
performing like…….bonds.
https://behaviouralinvestment.com/2026/05/19/bonds-are-behaving-just-like-bonds/
What is behind the bond market rout?
https://www.carsongroup.com/insights/blog/whats-behind-the-bond-market-rout/
The bond bloodbath worsens.
Is the bond market
signaling danger or opportunity or both?
Foreign treasury selling is getting serious.
https://www.zerohedge.com/markets/foreign-treasury-selling-getting-serious
Time for some
portfolio reallocation.
https://www.morningstar.com/markets/us-stock-market-outlook-its-time-reallocate-growth-value
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