The Morning Call
6/16/22
The
Market
Technical
Wednesday in the
charts.
https://www.zerohedge.com/markets/stocks-bonds-bullion-rally-after-perjuring-powells-presser
The VIX not buying
the latest bear move.
https://www.zerohedge.com/the-market-ear/c3blyivs98
Fundamental
Headlines
The
Economy
US
Weekly initial
jobless claims totaled 229,000 versus predictions of 215,000.
May housing starts
fell 14.4% versus forecasts of -1.5%; May building permits were down 7.0%
versus -1.7%.
The June Philadelphia
Fed manufacturing index was -3.3 versus expectations of +5.5.
The June housing market index was reported at
67 versus forecasts of 68.
https://www.calculatedriskblog.com/2022/06/nahb-builder-confidence-decreased-to-67.html
International
The May Japanese
trade balance was Y-2384.7 billion versus consensus of Y-2022.6 billion.
Other
Update on big four economic indicators.
Breaking down the small business optimism
index.
https://www.linkedin.com/feed/hashtag/?keywords=economy
Mortgage rates surge.
The
Fed
The FOMC wrapped up
its June meeting, releasing its formal statement and Powell giving a press
conference. It raised the Fed Funds rate 75 basis points and reiterated its
intent to unwind its balance sheet. Notable points:
(1)
it revised its [economic growth, interest rates,
inflation] forecast [dot plot] dramatically, bringing the Fed roughly in line with
the bond market, e.g., the Fed’s outlook for long rates is up substantially to
3.8% versus the long rates at 4%, [a plus]
(2)
Powell strongly emphasized the Fed’s intent to
break inflation, raising the question, if so, why didn’t the Fed raise rates more
than .75% when it is so far behind the bond market [which leaves the Fed the
flexibility to chicken out---my thesis], [a negative]
(3)
on the other hand, Powell reiterated Fed’s ‘data
dependence’ saying that a 50 basis point rise is still on the table for a July
Fed Funds rate hike, which all the Markets [stocks up, yield curve steepened,
dollar declined] interpreted as dovish, [a negative]
(4)
Powell called the economy strong---which suggests
that he is not reading the Wall Street Journal, because while we may not be in
a recession, the US economy is definitely not strong, [a negative]
(5)
on the other hand, [this is the second time I have
had to say that], Powell sounded less confident that the Fed could manage a
soft landing, further weakening my belief that we can avoid a recession. [a
negative]
Bottom
line, despite the Markets positive response, color me skeptical.
https://www.zerohedge.com/markets/fomc-2
The Swiss National Bank rises rates for the
first time in 15 years.
The Bank of England raises rates but sends
mixed signals on future.
Inflation
Return of a plague.
https://www.city-journal.org/inflation-return-of-a-plague
The cost of a Fourth of July cookout.
Stores have too much stuff.
The International Energy Agency sees record
oil demand in 2023.
https://www.zerohedge.com/energy/iea-sees-oil-demand-record-high-2023
Recession
Here is the official definition of recession.
Investor Alert
In my quarterly review
of the companies in my Universe, ATT (T) and Qualcomm (QCOM) failed to meet the
minimum financial criteria for inclusion. Accordingly, at the Market open, the
High Yield Portfolio will Sell its position in T and the Dividend Growth
Portfolio will Sell its holding of QCOM.
Bottom line
Nobody knows anything.
https://thereformedbroker.com/2022/06/15/remember-what-happened-last-time/
It’s those derivatives,
again (must read).
More on
valuations.
https://www.advisorperspectives.com/commentaries/2022/06/15/not-expensive-but-not-cheap-yet
News on Stocks in Our Portfolios
Kroger press release (NYSE:KR): Q1 Non-GAAP EPS of $1.45 beats by $0.17.
Revenue
of $44.6B (+8.0% Y/Y) beats by $1.55B.
What
I am reading today
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