The Morning Call--What was behind yesterdays staggering intraday reversal?

 

The Morning Call

 

10/14/22

 

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/stocks-bonds-purgensurge-after-hot-cpi-rate-hike-odds-soar

 

Note: it was quite a day. The S&P dove initially, then bounced off its Fibonacci 50% retracement level, closing above the 6/13/ low. But since it had only voided that support on Wednesday, I am maintaining it as a viable support level. I said yesterday that the news on CPI could set the Market’s direction through election; and while I didn’t expect the results we got, it probably is a good sign of further advances into the election. After that we move into the most positive seasonal time of the year for stocks, i.e., the Holidays. So, this bounce will likely have legs. To confirm that, the S&P needs to get through the downtrend off its 8/16 high which currently is ~3732. As I note below, I did nibble at stocks yesterday after the bounce off the 50% Fibonacci level; but I am not going to chase prices higher

 

            What was behind yesterday’s staggering intraday reversal

            https://www.zerohedge.com/markets/what-was-behind-markets-staggering-intraday-reversal

 

            As bond bets blow up, financial instability increases.

            https://www.wsj.com/articles/as-bond-investors-bets-blow-up-they-might-usher-in-era-of-higher-rates-11665658801

 

            King dollar’s uncertain throne.

            https://www.aier.org/article/king-dollars-uncertain-throne/

 

            The strong dollar is a risk to corporate profits.

            https://www.advisorperspectives.com/commentaries/2022/10/13/the-strong-dollar-is-a-risk-to-corporate-profits

 

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

September retail sales were flat with August versus forecasts of +0.2%; ex autos, they were up 0.1% versus -0.1%.

                          https://www.zerohedge.com/personal-finance/real-us-retail-sales-tumble-again-september

 

                        International

 

The August EU trade balance was E-50.9 billion versus projections of E-37.0 billion.

 

September Chinese CPI was +0.3% versus estimates of +0.4%; September YoY PPI was +0.9% versus +1.0%.

 

                        Other

 

            The Fed

 

              Monetary wisdom from Milton Friedman.

              https://gregmankiw.blogspot.com/2022/10/monetary-wisdom-from-milton-friedman.html

 

              The financial system is in better shape than some think.

              https://scottgrannis.blogspot.com/2022/10/charts-you-probably-havent-seen.html

 

            Fiscal Policy

 

              UK does U turn on tax cuts.

              https://www.zerohedge.com/markets/uks-truss-announce-major-u-turn-ditch-tax-cut

 

            Recession

 

              IEA says OPEC+ production cut could tip world into recession.

              https://www.wsj.com/articles/opec-supply-cut-could-tip-global-economy-into-recession-iea-says-11665650917

 

              Bad policies are greasing the wheels for recession.

              https://www.bloomberg.com/news/articles/2022-10-13/podcast-bad-policies-are-greasing-the-wheels-for-a-global-recession?sref=loFkkPMQ

 

 

     Bottom line

 

            These factors outperform during a recession.

            https://www.institutionalinvestor.com/article/b205mghdmv4y45/These-Factors-Outperform-During-Recessions

 

     Investor Alert

 

Yesterday the High Yield Portfolio Added to its positions in Walgreen (WBA) and Intel (INTC). The Dividend Growth Portfolio Added new one quarter positions in Comcast (CMCSA), Costco (COST) and Intuit (INTU).

 

    News on Stocks in Our Portfolios

 

            Kroger to buy Albertson’s.

            https://www.zerohedge.com/markets/kroger-combine-albertsons-246-billion-grocery-mega-merger

 

What I am reading today

 

           

 

 

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The Morning Call---What are the odds of a recession?

 

The Morning Call

 

3/31/22

 

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/bonds-bullion-black-gold-bid-putin-sparks-stock-skid

 

            A short squeeze in the long Treasury?

            https://www.zerohedge.com/the-market-ear/cvgvvk-5zj

 

            Expectations are for higher rates, but…………(see below).

            https://www.zerohedge.com/the-market-ear/unstoppable

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

February personal income was up 0.5%, in line; February personal spending was up 0.2% versus +0.5%; the February PCE price indicator was up 0.6% versus 0.8%.

https://www.zerohedge.com/economics/feds-favorite-inflation-indicator-surges-40-year-high-feb-real-spending-shrinks

 

Weekly jobless claims totaled 202,000 versus predictions of 197,000.

 

                        International

 

The final Q4 UK GDP growth rate was 1.3% versus forecasts of 1.0%; final Q4 business investment was up 1.0% versus 0.9%.

 

February Japanese industrial production was up 0.1% versus estimates of +0.5%; February YoY construction orders fell 2.3% versus +8.1%; February YoY housing starts were up 6.3% versus +1.1%.

 

The February EU unemployment rate was 6.8% versus projections of 6.7%.

 

February German retail sales were up 0.3% versus consensus of +0.5%; the February unemployment rate was 3.1%, in line.

 

The March Chinese manufacturing PMI was reported at 49.5 versus expectations of 49.9; the nonmanufacturing PMI was 48.4 versus 50.2; the composite PMI was 48.8 versus 49.9.

 

                        Other

 

                          The monetary/fiscal policy dilemma.

    https://www.project-syndicate.org/commentary/stagflationary-environment-putins-war-no-optimal-policy-response-by-nouriel-roubini-and-   brunello-rosa-2022-03

 

                          A look at housing affordability.

                          https://www.calculatedriskblog.com/2022/03/real-house-prices-price-to-rent-ratio.html

 

                The Fed

 

              The BOJ is trapped; will the Bank of China be forced to follow suit (must read).

              https://www.zerohedge.com/markets/yen-risk-explosive-downward-spiral-kuroda-trapped-and-why-china-may-soon-devalue

 

                Inflation

 

              The release of oil reserves will do nothing to solve the structural supply problems.

              https://www.zerohedge.com/political/oil-slides-biden-admin-mulls-huge-spr-release-again

 

            Recession

 

              An argument for no recession.

              https://scottgrannis.blogspot.com/2022/03/bond-market-says-no-recession-in-cards.html

           

              More on the probability of recession.

              https://econbrowser.com/archives/2022/03/plain-vanilla-term-spread-forecasts-of-recession

 

              Still more.

              https://www.zerohedge.com/the-market-ear/cpabbki7mx

 

              Still more---from Pimco and Jeffrey Gundlach.

               https://www.bloomberg.com/news/articles/2022-03-30/pimco-says-curve-inversion-may-be-unreliable-recession-signal?sref=loFkkPMQ

 

              Allocators are investing like recession is on the way.

https://www.institutionalinvestor.com/article/b1xchxpx59st90/Allocators-Are-Investing-Like-a-Recession-Is-on-the-Way-Despite-the-Fed-s-Promise-of-a-Soft- Landing

 

           

            The coronavirus

 

              An update on the new strain now reaching the US.

              https://www.cnn.com/2022/03/29/health/ba-2-dominant-us/index.html

 

    Bottom line.

 

            This kind of doom and gloom article makes me want to nibble at bonds.

            https://www.bloomberg.com/news/articles/2022-03-30/corporate-bonds-lost-1-trillion-and-there-s-more-trouble-ahead?sref=loFkkPMQ

 

            If you are worried about bonds, you are not focusing.

            https://www.zerohedge.com/markets/blain-why-you-shouldnt-panic-about-bonds

 

    Buyer Alert

 

Accordingly, the ETF Portfolio is increasing its positions in the Van Kampen municipal opportunity ETF (VMO) and the Yieldshares high income ETF (YYY) by roughly 10%.

 

    News on Stocks in Our Portfolios

 

Paychex press release (NASDAQ:PAYX): Q3 Non-GAAP EPS of $1.15 beats by $0.10.

 

Revenue of $1.28B (+15.3% Y/Y) beats by $60M.

 

What I am reading today

 

           

                        Working with our body clock.

            https://www.axios.com/night-owl-early-bird-sleep-internal-clock-6d732c94-f4e7-4992-8f0a-ca5a14a80415.html

 

            Use a measuring tape to assess your health.

            https://politicalcalculations.blogspot.com/2022/03/how-to-use-measuring-tape-to-assess.html#.YkSOUerMKUk

 

 

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The Morning Call--What the invasion means for the US economy (& Buyer Alert)

 

The Morning Call

 

2/25/22

 

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/massive-roundtrips-across-global-markets-russia-sanctions-fears-abate

 

            Nomura explains who BTFD.

            https://www.zerohedge.com/markets/nasdaq-soars-back-green-europe-closes

 

            What happens next?

            https://www.zerohedge.com/markets/ukraine-war-what-happens-over-next-few-hours-rest-week-and-beyond

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          January new home sales declined 4.5% versus forecasts of -3.9%.

                          https://www.advisorperspectives.com/dshort/updates/2022/02/24/new-home-sales-down-4-5-in-january

 

January durable goods orders rose 1.6% versus consensus of +0.8%; January personal income was flat versus -0.3%; January personal spending was up 2.1% versus +1.5%; January PCE price index was up 0.6% versus +0.2%; the core PCE price index was +0.5%, in line.

                                   https://www.zerohedge.com/personal-finance/feds-favorite-inflation-indicator-hotter-expected-40-year-highs

 

The February Kansas City Fed manufacturing index was reported at 31 versus projections of 17.

 

                        International

 

                          Q4 German GDP growth was -0.3% versus expectations of -0.7%.

 

December Japanese leading economic indicators came in at 104.8 versus projections of 104.3; February CPI was 1.0% versus +0.4%; core CPI was +0.5% versus +0.3%.

 

February UK consumer confidence was -26 versus estimates of -18.

 

February EU economic sentiment was 114.0 versus forecasts of 113.4; industrial sentiment was 14.0 versus 14.2; services sentiment was 13.0 versus 10.3.

           

                        Other

 

            Geopolitics

 

              What does the Russian invasion of Ukraine mean for the US economy?

              https://www.nytimes.com/2022/02/23/business/economy/russia-ukraine-global-us-economy.html

 

              More trouble for a troubled market.

              https://www.nytimes.com/2022/02/23/business/stock-market-correction.html

 

As you know, I try to avoid political commentary. But this piece by Ann Coulter   which is directed at republicans applies equally to the market.

              https://townhall.com/columnists/anncoulter/2022/02/23/stop-talking-about-ukraine-republicans-n2603708

 

Here are the companies most exposed to the negative consequences of the incursion/sanctions.

https://www.zerohedge.com/markets/these-are-companies-most-exposed-russia-and-ukraine

 

     Bottom line.

 

            Focus on what you can control.

            https://thereformedbroker.com/2022/02/24/focus-on-what-you-can-control/

           

    Buyer Alert

 

            Yesterday:

 

            The Dividend Growth Portfolio initiated a one half position in Intel ($45).

 

            The Aggressive Growth Portfolio Added to its Universal Display Corp ($159)

 

    News on Stocks in Our Portfolios

 

EOG Resources press release (NYSE:EOG): Q4 Non-GAAP EPS of $3.09 misses by $0.08.

Revenue of $6.04B (+103.4% Y/Y) beats by $480M.

 

EOG Resources (NYSE:EOG) declares $0.75/share quarterly dividend, in line with previous.  The board declared a special dividend of $1.00 per share payable March 29, 2022, to stockholders of record as of March 15, 2022

 

What I am reading today

 

            Curbing Mickey Mouse degrees.

            https://www.adamsmith.org/blog/curbing-the-mickey-mouse-degrees

 

            The discovery of a pterosaur is the biggest fossil of its kind.

            https://www.nationalgeographic.com/science/article/stunning-scottish-pterosaur-is-biggest-fossil-of-its-kind

 

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The Morning Call---Buyer Alert

 

The Morning Call

 

 

2/18/22

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/bonds-bullion-bid-bullard-blinken-bloviation-batters-big-tech-bitcoin

 

            High yield bond stress.

            https://www.zerohedge.com/the-market-ear/crwwl8hcp

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                        International

 

                          January  Japanese CPI was up 0.1% versus estimates of 0.0%

 

January UK retail sales grew 1.9% versus projections of +1.0%; ex fuel, they were up 1.7% versus +1.2%.

 

                        Other

 

                          When is too much debt too much debt?

                          https://www.tker.co/p/weekly-consumer-corporate-debt-levels

 

                          Wells Fargo’s gauge for supply chain pressures.

                          https://econbrowser.com/archives/2022/02/wells-fargo-pressure-gauge-for-supply-chain-pressures

 

                          Goldman changes its tune.

                          https://www.zerohedge.com/markets/goldmans-startling-admission-economy-may-be-slowing-more-expected

 

            The Fed

 

              An interesting interpretation of the Powell Put (must read).

              https://www.advisorperspectives.com/commentaries/2022/02/16/the-feds-put-is-not-what-you-think-it-is

 

              And supported by an ex Fed staffer.

              https://www.zerohedge.com/markets/fed-repo-oracle-zoltan-poszar-explains-why-powell-must-crash-market

           

            Fiscal Policy

 

              Inflation is a problem of our own making.

              https://www.nationalreview.com/2022/02/building-back-stagflation/

 

            Geopolitics

 

David Stockman provides a tutorial on Ukrainian history---or lack thereof (another must read).

https://www.zerohedge.com/markets/stockman-were-not-useful-idiots

 

    Bottom line.

 

            When will we enter a bear market?

            https://allstarcharts.com/will-we-enter-into-a-bear-market/

 

            How to protect your portfolio in a down market.

            https://www.bloomberg.com/news/articles/2022-02-17/investing-ideas-how-to-protect-your-portfolio-from-a-volatile-market?sref=loFkkPMQ

 

    Buyer Alert

 

Yesterday:

 

The Dividend Growth Portfolio Added to its position in Health Services Group (HCSG-$16)

 

The High Yield Portfolio Added to its position in PetMed Express Inc (PETS-$26) and originated a position in Medifast Inc (MED-$184).

 

The Aggressive Growth Portfolio initiated a position in Universal Display Corp (OLED-$140).

 

    News on Stocks in Our Portfolios

 

 

What I am reading today

 

            Red flags that could trigger a tax audit.

            https://money.usnews.com/money/personal-finance/slideshows/9-red-flags-that-could-trigger-a-tax-audit

 

            The perils of micromanaging.

            https://www.adamsmith.org/blog/micromanaging

 

            Quote of the day.

                https://cafehayek.com/2022/02/quotation-of-the-day-3806.html?utm_source=feedburner&utm_medium=email

 

 

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