Investing for Survival: stock valuation

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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Wednesday, February 4, 2026

The Morning Call---I give up.

The Morning Call

2/4/26

The Market

Technical

Tuesday in the charts.

https://www.zerohedge.com/markets/tech-wrecks-crypto-crashes-bullion-bond-yields-bounce

Note: how often do I note ‘follow through’? Yesterday’s pin action put a cloud over the S&P’s slightly positive performance last week. The bad news is that it closed below the ever present former all-time high; the good news is that it bounced off its 50 DMA. Bottom line, with all the back and forth around that former all-time high, I am going to give up trying to call a breakout or a failed breakout. Buyers and sellers are in a pitched battle. I am in my foxhole until it’s over. As always, follow through.

Tuesday 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

As goes January, so goes the year.

https://www.carsongroup.com/insights/blog/so-goes-january-so-goes-the-year/

In the meantime, downside convexity builds.

https://www.zerohedge.com/the-market-ear/software-cracks-credit-blinks-spx-still-pretends-downside-convexity-builds

Why do equities tend to correct in February?

https://www.zerohedge.com/markets/why-does-equity-market-tend-correct-february

Fundamental

Headlines

The Economy

Weekly mortgage applications fell 8.9% while purchase applications were down 14.0%.

The January ADP private payrolls report showed job increases of 22,000 versus expectations of 35,000.

The February economic optimism index was reported at 48.8 versus forecasts of 47.0.

International

January EU flash CPI came in at -0.5% versus projections of -0.4%; January PPI was down 0.3% versus +0.2%.

The January Japanese services PMI was 53.7 versus estimates of 53.4; the composite PMI was 53.1 versus 52.8; the January Chinese services PMI was 52.3 versus 51.5; the composite PMI was 51.5 versus 50.9; the January German services PMI was 52.4 versus 53.2; the composite PMI was 52.1 versus 52.5; the January EU services PMI was 51.6 versus 51.9; the composite PMI was 51.3 versus 51.5; the January UK services PMI was 53.7 versus 53.9; the composite PMI was 54.0 versus 54.3.

Other

Update on the state of freight.

https://bonddad.blogspot.com/2026/02/the-state-of-freight-is-mainly.html

The consumer sentiment puzzle.

https://www.ft.com/content/f3edc83f-1fd0-4d65-b773-89bec9043987

Fiscal Policy

On the national debt, the left and right have become one.

https://www.realclearmarkets.com/articles/2026/02/03/on_the_national_debt_left_and_right_have_become_one_1162306.html

Crony socialism.

https://www.wsj.com/opinion/usa-rare-earth-commerce-department-trump-administration-china-cd010507?mod=opinion_lead_pos3

Kevin Warsh

What Warsh learned from Druckenmiller.

https://www.wsj.com/economy/central-banking/what-kevin-warsh-learned-working-for-stanley-druckenmiller-7fc07efe?mod=economy_lead_pos2

Will Warsh fix the Fed?

https://www.advisorperspectives.com/commentaries/2026/02/03/will-kevin-warsh-fix-fed

Investing

What is your risk tolerance?

https://alhambrapartners.com/weekly-market-pulse-whats-your-risk-tolerance/?src=news

Why the selloff in gold likely isn’t over.

https://www.marketwatch.com/story/heres-the-real-reason-gold-prices-plunged-and-why-the-selloff-likely-isnt-over-yet-d6141fd1?st=NieUVE

January dividends by the numbers.

https://politicalcalculations.blogspot.com/2026/02/dividends-by-numbers-in-january-2026.html

Update on valuations.

https://www.advisorperspectives.com/dshort/updates/2026/02/03/market-valuation-is-the-market-still-overvalued

A warning to gold investors.

https://www.zerohedge.com/precious-metals/gold-investors-remember-1933

News on Stocks in Our Portfolios

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.

Wednesday, December 3, 2025

The Morning Call---DJIA at premium to its dividend discounted value

The Morning Call

12/3/25

The Market

Technical

Tuesday in the charts.

https://www.zerohedge.com/markets/crypto-crashes-stocks-bonds-dollar-chop

Tuesday 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

The latest from Goldman’s desk.

https://www.zerohedge.com/markets/goldman-traders-see-less-panic-retail-buyers-return-market

Fundamental

Headlines

The Economy

Weekly mortgage applications declined 1.4% while purchase applications were up 2.5%.

Month to date retail chain store sales were up 7.6% versus +5.9% in the prior week.

The November ADP private payrolls report showed job losses of 32,000 versus expectations of a 15,000 increase,

The December economic optimism index came in at 47.4 versus consensus of 48.5.

International

The October EU PPI was up 0.1% versus predictions of +0.2%.

The November Japanese services PMI was 53.2 versus forecasts of 53.1; the composite PMI was 52.0, in line; the November German services PMI was 53.1 versus 52.7; the composite PMI was 52.1, in line; the November EU services PMI was 53.6 versus 53.1; the composite PMI was 52.8 versus 52.4; the November UK services PMI was 51.3 versus 50.5; the composite PMI was 51.2 versus 50.5.

Other

Fiscal Policy

Inflation won’t fix the debt problem.

https://www.advisorperspectives.com/commentaries/2025/12/02/inflation-does-not-fix-especially-debt

Inflation

The price tag of America’s great build-a-thon.

https://bondvigilantes.com/blog/2025/12/americas-great-build-a-thon-comes-with-a-price-tag/

Recession

Are we already in a recession?

https://econbrowser.com/archives/2025/12/recession-with-decreasing-employment-and-increasing-gdp

AI driven workforce disruptions are increasing.

https://www.zerohedge.com/ai/earnings-season-chatter-ais-workforce-disruptions-keep-soaring

The K shaped consumer spending breakdown widens.

https://www.zerohedge.com/markets/goldman-spots-intensifying-k-shaped-consumer-bessent-signals-brighter-2026

Outlook for 2026

From Morgan Stanley.

https://www.morganstanley.com/insights/articles/stock-market-investment-outlook-2026

Investing

A lesson from Charlie Munger.

https://www.riskhedge.com/outplacement/the-greatest-investing-lesson-i-learned-from-charlie-munger/rcm?utm_campaign=RH-144&utm_content=RH144OP839&utm_medium=ED&utm_source=rcm

Energy affordability has become a kitchen table issue.

https://www.realclearenergy.org/articles/2025/12/01/energy_affordability_has_become_the_kitchen-table_issue_of_the_2020s_1150526.html

The great equity reset.

https://mrzepczynski.blogspot.com/2025/12/the-great-equity-reset-global-dispersion.html

AI adoption rate starting to flatten out.

https://www.apolloacademy.com/ai-adoption-rates-starting-to-flatten-out/

November dividends by the numbers.

https://politicalcalculations.blogspot.com/2025/12/dividends-by-numbers-in-november-2025.html

Update on valuation.

https://www.advisorperspectives.com/dshort/updates/2025/12/02/market-valuation-is-the-market-still-overvalued

DJIA at a premium to its dividend discount value.

https://talkmarkets.com/content/stocks--equities/djia-at-29-premium-to-its-ddv-caveat-emptor?post=541828

Turmoil in the bond markets.

https://www.bloomberg.com/opinion/newsletters/2025-12-02/the-hard-nosed-sympathy-beating-up-bond-markets?srnd=homepage-americas

The surge in Japanese yields continues to raise concerns.

https://www.zerohedge.com/the-market-ear/japans-yield-surge-no-local-story-remember-what-happened-ndx-last-time

News on Stocks in Our Portfolios

What I am reading today

Being outstanding by standing out.

https://traderfeed.blogspot.com/2025/12/being-outstanding-by-standing-out.html

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Tuesday, August 19, 2025

The Morning Call--The historical muddied pciture of PPI versus CPI

The Morning Call

8/19/25

The Market

Technical

Monday in the charts.

https://www.zerohedge.com/market-recaps/quant-carnage-continues-rate-cut-odds-leak-lower-j-hole-looms

Monday in the technical stats.

https://www.barchart.com/stocks/momentum

https://www.barchart.com/stocks/sectors/rankings

Calm before the storm?

https://www.zerohedge.com/the-market-ear/calm-storm-vol-bargains-vvix-screams-seasonality-looms

Retail chasing, pros fading.

https://www.zerohedge.com/the-market-ear/retail-chasing-pros-fading-crypto-wobbles-edge-hedge

The latest from Goldman’s trading desk.

https://www.zerohedge.com/markets/risk-consensus-positions-heightened-top-goldman-trader-says-hedge

The latest from JP Morgan’s desk.

https://www.zerohedge.com/markets/jpmorgans-market-intel-desk-remains-tactically-bullish-heres-why

Fundamental

Headlines

The Economy

Month to date retail chain store sales grew faster than in the prior week.

July housing starts rose 5.2% versus expectations of -2.2%; building permits were down 2.8% versus -0.2%.

The August builder confidence index was reported at 32 versus consensus of 34.

https://www.advisorperspectives.com/dshort/updates/2025/08/18/nahb-housing-market-index-builder-confidence-august-2025

International

The June EU trade balance was +E7.0 billion versus projections of +E14.7 billion.

Other

Manufacturing is returning to the US.

https://townhall.com/tipsheet/scott-mcclallen/2025/08/17/stl-federal-reserve-us-manufacturing-is-recovering-n2661965

Slowdown in global trade is coming.

https://www.apolloacademy.com/global-trade-slowdown-coming/

Monetary Policy

Hints of inflation complicate the next FOMC policy decision.

https://www.capitalspectator.com/hints-of-rising-inflation-complicate-feds-next-policy-meeting/

Fiscal Policy

The EU is skating on thin ice.

https://www.zerohedge.com/economics/road-hyperstate-eu-commission-circumvents-financing-rules

Inflation

Is PPI predictive of CPI?

https://econbrowser.com/archives/2025/08/ppi-cpi

The historical muddied picture of PPI versus CPI.

https://talkmarkets.com/content/the-muddied-historical-picture-of-ppi-vs-cpi?post=516079

Inflationary questions.

https://www.advisorperspectives.com/commentaries/2025/08/18/questions-inflationary

Investing

What is the bottom line?

https://www.tker.co/p/what-is-bottom-line-for-stock-market

A much needed sector rotation or an early warning signal?

https://talkmarkets.com/content/etfs/a-much-needed-rotation-or-a-warning-sign?post=516078

Gold as a strategic asset allocation.

https://www.carsongroup.com/insights/blog/gold-is-shiny-enough-for-a-strategic-portfolio-allocation/

The Market is pornographically overvalued.

https://www.zerohedge.com/markets/your-perfunctory-reminder-markets-are-pornographically-overvalued

Insider selling reveals fallacy of stock buyback thesis.

https://www.advisorperspectives.com/commentaries/2025/08/18/selling-reveals-fallacy-buyback-theory

Foreigners aren’t following the dollar is bad script.

Foreign Investors Aren't Following The Dollar-Is-Bad Script

A primer on gold from Goldman Sachs.

https://www.zerohedge.com/precious-metals/you-cant-pump-it-you-can-bid-it-out-someones-hands-goldman-unveils-its-most

News on Stocks in Our Portfolios

Home Depot Non-GAAP EPS of $4.68 misses by $0.01, revenue of $45.28B in-line

What I am reading today

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Thursday, February 12, 2026

The Morning Call---Massive dispersion is a warning

Wednesday, February 4, 2026

The Morning Call---I give up.

Wednesday, December 3, 2025

The Morning Call---DJIA at premium to its dividend discounted value

Tuesday, August 19, 2025

The Morning Call--The historical muddied pciture of PPI versus CPI

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