The Morning Call
8/26/26
The
Market
Technical
Tuesday in the
charts.
Tuesday 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
Credit is asking
questions that equity has ignored.
Wednesday morning
setup: Stock futures are flat and Treasuries slipped while oil stumbled heading
into today's PCE report and NVDA earnings. As of 8:00am ET, S&P Futures are
unchanged and Nasdaq futures drop 0.2% as NVDA and MRVL both rise 0.2%
with Semis flat, Memory down 80bp, Korea down 46bp, Software down 1.3%, but
Unprofitable Tech +83bp which point to continued de-risking into NVDA /
MRVL where expectations are positive, but a stronger print may mean
more for the ecosystem than for the individual stocks. Elsewhere, both
Cyclicals and Defensives are mixed with Healthcare standing out to the upside
and Energy to the downside. Bond yields are +1-3bp as the curve bear flattens,
giving back some of yesterday’s gains. Confirming out report from Monday
about Bessent's plan, JPM reports this morning that "There is
chatter of CTAs accelerating buying as 10Y yield approaches / breaches
4.60%." USD is higher, crude is lower on US / Iran deal optimism,
but WTI may have support at $80/bbl until a deal is announced. Base Metals are
stronger, precious metals are weaker, and Ags are mixed but net
higher. Today’s macro data focus is on PCE where consensus expects a
headline PCE +0.1% MoM / +3.6% YoY and Core PCE +0.3% MoM / +3.3% YoY. Nvidia
reports earnings after the close.
Fundamental
Headlines
The
Economy
US
Weekly mortgage
applications declined 1.0% while purchase applications were down 2.0%.
Month to date
retail chain store sales rose 9.1% versus +7.6% in the prior week.
The June Case
Shiller home price index was up 0.4%, in line.
https://bonddad.blogspot.com/2026/08/yoy-repeat-home-sales-prices-continue.html
Q2 GDP
(2nd est) grew 1.5%, in line.
July personal
income was up 0.4% versus predictions of +0.3%; July personal spending was up
0.2%, in line; July real personal spending was up 0.0% versus +0.2%.
July durable goods
orders increased 1.1% versus consensus of +0.7%; ex transportation, they were
up 0.4% versus +0.5%.
July PCE was up
0.2% versus projections of +0.1%; core PCE was up 0.2%, in line.
July
new home sales fell 10.5% versus estimates of -1.3% while building permits were
down 2.6% versus +5.0%.
https://mishtalk.com/economics/new-home-sales-decline-10-5-percent-housing-remains-stagnant/
The August
consumer confidence index came in at 89.4 versus expectations of 90.2.
The August
Richmond Fed manufacturing index was 4 versus forecasts of 7.
International
Other
Iran
Overnight news.
China’s ties with Iran are not as strong as many
think.
Summary:
The relationship between China and Iran is far more lopsided and less strategic
than commonly assumed. Beijing’s investment in Iran has fallen dramatically
short of headline agreements, its military ties are limited and its broader
Middle East strategy depends on balancing relations with Iran’s regional
rivals. China is Iran’s dominant trade partner, but the relationship is
asymmetric. China absorbs roughly a third of Iran’s trade, while the Islamic
Republic accounts for less than 1% of commerce for the world’s second-largest
economy, according to the Center for Strategic and International Studies. China’s
official data show its foreign direct investment stock in Iran totaled $4.5
billion by the end of 2024, compared with $9.5 billion in the UAE. The American
Enterprise Institute’s China Global
Investment Tracker, which monitors transactions of at least $100 million
since 2005, puts cumulative Chinese investment in Iran at about $4.7 billion,
concentrated primarily in energy and metals. By contrast, it places Chinese
investment in Saudi Arabia at about $16 billion across energy, technology,
metals and entertainment. “Chinese companies have a very limited footprint in
Iran relative to other countries in the region,” said Esfandyar Batmanghelidj,
chief executive of the Bourse & Bazaar Foundation, a London think tank.
“Major Chinese firms have steered clear of Iran due to secondary sanctions
risks.”
Monetary
Policy
Warsh’s Jackson Hole opportunity.
Summary: Kevin Warsh’s
first major speech as chairman of the Federal Reserve is a test of his
communications style, which has been criticized for not being forthright with
his views on the economy. Warsh faces pressure from Wall Street to provide more
transparency and communication on the Fed's policy moves, after a shaky press
conference last month triggered a bond market rebuke. Warsh’s defenders argue
that the market reaction to his July press conference was overdone, and that he
is aiming to rein in explicit guidance on where policy is headed as part of a
communications overhaul.
Fiscal
Policy
Let the bond market speak.
The real $40
trillion debt crisis.
The Treasury raises the stakes in the battle
to control interest rates.
AI
The
off balance sheet time bomb.
Investing
This is how
overvalued the stock market really is.
https://www.marketwatch.com/story/heres-how-overvalued-the-stock-market-really-is-f26540c5?st=Ao6GMQ
Have
we really learned the lessons of the great financial crisis?
https://bondvigilantes.com/blog/2026/08/have-we-really-learnt-the-lessons-of-the-gfc/
The
danger in the S&P 500 ETF.
The five levels of
wealth.
https://dariusforoux.com/the-5-levels-of-wealth/
Sabotaging your returns.
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