Investing for Survival: interest rates

Showing posts with label interest rates. Show all posts

Thursday, May 26, 2022

The Morning Call---Recession now appears of more concern then inflation

The Morning Call

5/26/22

The Market

Technical

Wednesday in the charts.

https://www.zerohedge.com/markets/stocks-soar-hawkish-fed-minutes-dismal-data

Note: the rally yesterday carried the S&P above that downtrend off its April high (1) marking a higher low and (2) closing above the prior lower high. That is the first technical positive in over a month. Follow through.

Another analyst that thinks that interest rates may be peaking.

https://www.capitalspectator.com/is-the-recent-rise-in-us-interest-rates-peaking/#more-18059

And one more.

https://alephblog.com/2022/05/25/changing-direction-slightly/

Fundamental

Headlines

The Economy

Weekly jobless claims totaled 210,000 versus estimates of 215,000.

The second estimate of Q1 GDP growth was -1.5% versus predictions of -1.3%; the second estimate of the price index was +8.1% versus +8.0%; the preliminary corporate profit growth was -4.3% versus +0.5%.

International

Other

Watch what consumers do, not what they say.

https://www.ft.com/content/9e52ad0c-db50-4eef-a945-50f978b9937d

The Fed

The FOMC released the minutes from its latest meeting. I am not going to go through them because a lot has changed since then that make the discussion somewhat obsolete. That said, here they are for those who care.

https://www.zerohedge.com/economics/fomc-minutes-4

Inflation

Employment related inflation has peaked.

https://thereformedbroker.com/2022/05/25/employment-related-inflation-has-peaked/

Recession

The housing bubble is getting ready to pop.

https://www.nakedcapitalism.com/2022/05/housing-bubble-getting-ready-to-pop-unsold-inventory-of-new-houses-spikes-by-most-ever-to-highest-since-2008- with-9-months-supply-sales-collapse-at-prices-below-400k.html

Ed Yardini raised the odds of recession.

https://www.linkedin.com/feed/hashtag/?keywords=economy

Geopolitics

A different view of what is occurring in Ukraine.

https://www.zerohedge.com/geopolitical/escobar-nato-vs-russia-what-happens-next

Bottom line.

What we should remember about bear markets.

https://behaviouralinvestment.com/2022/05/24/what-we-should-remember-about-bear-markets/

Hedge funds brace for $20 billion in redemptions.

https://www.bloomberg.com/news/articles/2022-05-25/hedge-funds-brace-for-20-billion-of-redemptions-citco-says?srnd=premium&sref=loFkkPMQ

Among investors, recession now appears more of a concern than inflation.

https://www.bloomberg.com/news/articles/2022-05-24/rupture-in-the-stock-bond-bolt-shows-recession-angst-rising-fast?srnd=premium&sref=loFkkPMQ

Earnings math catches up to tech highflyers.

https://www.bloomberg.com/opinion/articles/2022-05-24/earnings-math-catches-up-with-the-tech-highflyers?sref=loFkkPMQ

News on Stocks in Our Portfolios

Bank of Nova Scotia press release (NYSE:BNS): FQ2 Non-GAAP EPS of C$2.18 beats by C$0.22.

Revenue of C$7.94B (+2.6% Y/Y) beats by C$70M.

Bank of Nova Scotia (NYSE:BNS) declares CAD 1.03/share quarterly dividend, 3% increase from prior dividend of CAD 1.00.

BlackRock (NYSE:BLK) declares $4.88/share quarterly dividend, in line with previous

Medtronic press release (NYSE:MDT): FQ4 Non-GAAP EPS of $1.52 misses by $0.04.

Revenue of $8.09B (-1.2% Y/Y) misses by $340M.

Medtronic (NYSE:MDT) declares $0.68/share quarterly dividend, 7.9% increase from prior dividend of $0.63.

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Thursday, December 17, 2020

The Morning Call--QEInfinity but not Forever

The Morning Call

12/17/20

The Market

Technical

Wednesday in the charts.

https://www.zerohedge.com/markets/gold-crypto-jump-dollar-dumps-fed-flop-washington-slop

Technicals are near the breaking point.

https://www.zerohedge.com/markets/breaking-point

What a Santa Claus rally would tell you about the stock market performance in 2021.

https://www.marketwatch.com/story/this-is-what-a-santa-claus-rally-would-tell-you-about-stock-market-performance-in-2021-11607976675?mod=home-page

Fundamental

Headlines

The Economy

Weekly jobless claims were up 885,000 versus expectations of 800,000.

https://www.zerohedge.com/personal-finance/initial-jobless-claims-surge-highest-almost-4-months

October business inventories rose 0.7%, in line.

November housing starts were up 1.2% versus consensus of unchanged; building permits were up 6.2% versus unchanged.

https://www.zerohedge.com/personal-finance/despite-homebuilder-sentiment-slip-permits-soar-14-year-highs-renter-nation

The December housing market index came in at 86 versus estimates of 88.

https://www.advisorperspectives.com/dshort/updates/2020/12/16/nahb-housing-market-index-second-highest-reading-despite-decline

The December flash manufacturing PMI was 56.5 versus predictions of 55.7; the services PMI was 55.3 versus 55.9; the composite PMI was 55.7 versus 57.0.

https://www.zerohedge.com/economics/us-pmis-slow-early-december-data-services-slump-prices-soar

The December Philadelphia Fed manufacturing index was reported at 11.1 versus forecasts of 20.0.

International

November EU CPI came in at -0.3%, in line.

Other

The Treasury yield curve continues to steepen.

http://www.capitalspectator.com/us-treasury-yield-curve-steepens-to-3-year-high/

Architecture billings were down in November.

https://www.calculatedriskblog.com/2020/12/aia-architecture-billings-lose-ground.html

The Fed

The FOMC wrapped up its December meeting yesterday. In its official statement, it (1) sounded slightly more upbeat about the economy, (2) left rates unchanged, (3) left the current magnitude of QE bond purchases unchanged, (4) along with its liquidity swap and repurchase agreements with other central banks. However, it did make one alteration in its language---adding the caveat that QE would continue until there is substantial improvement in the economy. In other words, it is now QEInfinity but not Forever.

https://www.zerohedge.com/economics/fomc-3

The Bank of England left rates and bond buying program unchanged.

https://www.zerohedge.com/markets/bank-england-leaves-rates-asset-purchases-hold-ahead-brexit-conlcusion

The coronavirus

Did the coronavirus safety measures kill the flu season?

https://www.bloomberg.com/opinion/articles/2020-12-15/what-if-covid-19-measures-killed-flu-season?sref=loFkkPMQ

Pfizer closely monitoring worker after severe adverse reaction to vaccine.

https://www.zerohedge.com/medical/pfizer-closely-monitoring-alaska-health-worker-after-serious-adverse-reaction-vaccine

China

China retrenches ‘belt and road’ initiative.

https://www.nakedcapitalism.com/2020/12/china-retrenches-on-belt-and-road-initiative-as-defaults-rise.html

Bottom line. How one investor is managing the ‘bubble’.

https://www.upslopecapital.com/blog/moon2020

There is no shame in losing money in a stock.

https://www.safalniveshak.com/lost-money-on-stocks-have-no-shame/

News on Stocks in Our Portfolios

General Mills (NYSE:GIS): FQ2 Non-GAAP EPS of $1.06 beats by $0.09; GAAP EPS of $1.11 beats by $0.13.

Revenue of $4.72B (+6.8% Y/Y) beats by $70M.

Accenture (NYSE:ACN): FQ1 Non-GAAP EPS of $2.17 beats by $0.12; GAAP EPS of $2.32 beats by $0.26.

Revenue of $11.76B (+3.5% Y/Y) beats by $400M.

Accenture (NYSE:ACN) declares $0.88/share quarterly dividend, in line with previous.

Altria (NYSE:MO) declares $0.86/share quarterly dividend, in line with previous.

MSC Industrial Direct (NYSE:MSM) declares $0.75/share quarterly dividend, in line with previous.

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Tuesday, December 15, 2020

The Morning Call--Upgrade the quality of your portfolio

The Morning Call

12/15/20

The Market

Technical

Monday in the charts.

https://www.zerohedge.com/markets/americas-v-day-sparks-safe-haven-protection-buying-stocks-sell-news

Low interest rates do not justify higher stock prices.

https://www.zerohedge.com/markets/shiller-ecy-justification-sky-high-stock-prices

Fundamental

Headlines

The Economy

The December NY Fed manufacturing index was reported at 4.9 versus estimates of 5.9.

International

October UK average earnings rose 2.7% versus consensus of +2.2%; unemployment was 4.9% versus 5.1%.

November YoY Chinese fixed asset investments were up 2.6%, in line; industrial production was up 7%, also in line; retail sales were up 5.0% versus 5.2%; November unemployment was 5.2% versus 5.5%

Other

Update on seven high frequency indicators on the economy.

https://www.calculatedriskblog.com/2020/12/seven-high-frequency-indicators-for_14.html

Mass evictions expected at end of January.

https://www.zerohedge.com/personal-finance/expect-most-evictions-history-ban-expires

Ed Yardini on inflation prospects.

http://blog.yardeni.com/2020/12/inflation-was-sooo-1970s-will-it-roar.html

Thursday, December 3, 2020

The Morning Call--Diversify, diversify, diversify

The Morning Call

12/3/20

The Market

Technical

Wednesday in the charts. As stocks continue to rise, the long bond fell (if it closes below the lower boundary of its very short term uptrend today, that trend will be negated) as well as the dollar (if it closes below the lower boundary of its short term trading range today, it will reset to a downtrend; if it closes below the lower boundary of its intermediate term uptrend on Friday, it will reset to a trading range)---all signs that investors believe the economy is improving.

https://www.zerohedge.com/markets/jobs-flop-gold-pops-bonds-dollar-drop

Rising yields (lower bond prices) impact on other markets.

https://www.bloomberg.com/news/articles/2020-12-02/treasury-yield-spike-risks-sparking-domino-effect-across-markets?srnd=premium&sref=loFkkPMQ

Historically, when yields gradually rise off a low, that has been a sign of an improving economy which in turn has been good for equities. However, when the rate of increase begins to accelerate or if the initial move is a spike versus a gradual increase that has been an indication mounting of inflation worries which has not been good for stocks. The point here is to watch the rate of price decline (yield rise) as a harbinger of stock market direction.

Currently, the percentage of stocks outperforming the S&P is the lowest since 1999.

https://www.ft.com/content/1e5c9f52-ffba-4c2c-9bea-4cc415b16feb

And momentum is weakening.

https://www.zerohedge.com/markets/mystery

Fundamental

Headlines

The Economy

Weekly jobless claims rose 712,000 versus predictions of 775,000.

November light vehicle sales came at 15.5 million versus forecasts of 16.2 million.

https://www.calculatedriskblog.com/2020/12/november-vehicles-sales-decreased-to.html

The Fed released its latest Beige Book report which contain no surprises. The slightly good news is that the economy and employment continue to recover. The slightly bad news is that four districts reported a falloff in growth beginning in early November.

https://www.zerohedge.com/economics/beige-book-darkens-4-12-district-sees-little-or-no-growth-optimism-wanes-new-lockdowns

International

October EU retail sales rose 1.5% versus projections of +0.8%.

The November final Japanese services PMI came in at 47.8 versus consensus of 46.7; the Chinese Caixin services PMI was 57.4 versus 56.4; the German services PMI was 46.0 versus 46.2; the EU services PMI was 41.7 versus 41.3; the UK services PMI was47.6 versus 45.8.

The November final Japanese composite PMI was 48.1 versus estimates of 47.0; the Chinese Caixin composite PMI was 57.5 versus 55.4; the German composite PMI was 51.7 versus 52.0; the EU composite was 45.3 versus 45.1; the UK composite was 49.0 versus 47.4.

Other

Global manufacturing in November expanded at a rapid rate.

https://www.markiteconomics.com/Public/Home/PressRelease/8b69fe1b43dc4595912567f3ec437ed0

Cyber Monday spending hit record high.

https://www.zerohedge.com/markets/online-spending-hits-record-cyber-monday

OPEC makes headway on production cut agreement.

https://www.zerohedge.com/energy/wti-holds-gains-despite-big-surge-product-stocks-gasoline-demand-slide

The coronavirus

***overnight update.

https://www.zerohedge.com/geopolitical/us-suffers-record-daily-covid-cases-hospitalizations-pass-100k-global-death-toll-tops

Common sense, science and nonscience.

https://www.adamsmith.org/blog/common-sense-science-and-nonscience

Bottom line. Diversify, diversify, diversify.

https://www.mutualfundobserver.com/2020/12/preparing-for-a-new-world/#more-14850

Updated valuation measures.

https://www.advisorperspectives.com/dshort/updates/2020/12/02/market-cap-to-gdp-an-updated-look-at-the-buffett-valuation-indicator

https://www.advisorperspectives.com/dshort/updates/2020/12/02/the-q-ratio-and-market-valuation-november-update

https://www.advisorperspectives.com/dshort/updates/2020/12/02/is-the-stock-market-cheap

News on Stocks in Our Portfolios

Kroger (NYSE:KR): Q3 Non-GAAP EPS of $0.71 beats by $0.05; GAAP EPS of $0.80 beats by $0.16.

Revenue of $29.72B (+6.3% Y/Y) misses by $310M.

Donaldson (NYSE:DCI): FQ1 GAAP EPS of $0.48 beats by $0.04.

Revenue of $636.6M (-5.4% Y/Y) beats by $21.4M.

General Dynamics (NYSE:GD) declares $1.10/share quarterly dividend, in line with previous.

Microsoft (NASDAQ:MSFT) declares $0.56/share quarterly dividend, in line with previous.

What I am reading today

Are you overinvested in stocks? The problem with this analysis is that if you up your exposure to bonds, in particular long dated maturities, you are also assuming a good deal of capital risk with no commensurate yield advantage. In other words, long bond yields are currently quite low. If stocks decline, one of the contributing causes will likely be rising yields (lower bond prices). So, which would you rather own today if they both go down in price tomorrow? ATT yielding 7% or a long bond yielding 2%

https://www.usatoday.com/story/money/investing/2020/12/01/boomers-retirement-risk-investing/43204057/

This 1000 year old Japanese business knows something about surviving a crisis.

https://www.nytimes.com/2020/12/02/business/japan-old-companies.html

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Thursday, May 26, 2022

The Morning Call---Recession now appears of more concern then inflation

Thursday, December 17, 2020

The Morning Call--QEInfinity but not Forever

Tuesday, December 15, 2020

The Morning Call--Upgrade the quality of your portfolio

Thursday, December 3, 2020

The Morning Call--Diversify, diversify, diversify

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