The Morning Call---Breadth continues to deteriorate

 

The Morning Call

 

12/15/21

 

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/stocks-bond-commodities-crumble-dollar-rips-ahead-fed

 

            Expect a volatile options expiration on Friday.

            https://www.zerohedge.com/markets/43-trillion-reasons-be-nervous-fridays-option-expiration

 

            Breadth continues to deteriorate.

            https://www.zerohedge.com/markets/goldman-rings-alarm-collapsing-market-breadth-51-all-market-gains-april-are-just-5-stocks

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications fell 4.9% while purchase applications were up 0.7%.

                       

  November retail sales increased 0.3% versus expectations of +0.8%; ex  autos, they were up +0.3% versus +0.9%.

 

The December NY Fed manufacturing index came in at 31.9 versus projections of 25.0

 

                        International

 

November Chinese YoY industrial production was up 3.8% versus consensus of +3.6%; November YoY retail sales were up 3.9% versus +4.6%; November YoY fixed asset investments were up 5.2% versus +5.4%; the November unemployment rate was 5.2% versus 4.9%.

 

November UK CPI was +0.7% versus estimates of +0.4%; core CPI was +0.5% versus +0.3%; the retail price index weas +0.7% versus +0.4%; PPI was +0.9% versus +0.8%; core PPI was +0.8% versus +0.3%.

 

                        Other

 

                          There is not enough oil.

                          https://doomberg.substack.com/p/theres-not-enough-oil

 

            The Fed

 

              The ECB’s dilemma.

              https://johnhcochrane.blogspot.com/2021/12/the-ecbs-dilemma.html

 

            Inflation

 

              Has inflation peaked?

              https://alhambrapartners.com/2021/12/12/weekly-market-pulse-has-inflation-peaked/

 

            China

 

              What are the odds of war with China?

              https://americanconsequences.com/the-two-global-hot-spots-most-likely-to-upend-your-portfolio-in-2022/

 

              Update on US/China trade.

              https://politicalcalculations.blogspot.com/2021/12/us-china-trade-spikes-up-on-us-soybean.html#.Ybjjor3MKUk

 

    Bottom line

 

            The increasing frequency of bubbles.

            https://www.ft.com/content/e1c1fcf7-9bd9-47ac-abce-d3c1c9159a3e

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

 

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The Morning Call--The Market is disconnected from everything

 

The Morning Call

 

12/14/21

 

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/bonds-dollar-jump-stocks-crypto-dump

 

            Wipe out below the calm surface of the Market.

            https://www.zerohedge.com/markets/wipe-out-below-calm-surface-bull-market

 

            Using the VIX to your advantage.

            https://americanconsequences.com/using-market-fear-to-your-investing-advantage/

 

            Liquidity crunch coming.

            https://www.zerohedge.com/markets/liquidity-crunch-volatility-surge-coming-2022

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

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

 

The November small business optimism index was reported at 98.4 versus forecasts of 98.0.

 

November PPI was 0.8% versus consensus of 0.5%; core PPI was 0.7% versus 0.4%.

 

                          November consumer inflation expectations were +6.0%, in line.

                          https://www.zerohedge.com/markets/fed-loses-control-consumers-now-expect-10-inflation-key-staple

 

                  International

 

October Japanese industrial production rose 1.8% versus estimates of 1.1%; October EU industrial production was up 1.1% versus +1.2%.

 

The October UK unemployment rate was 4.2%, in line; October average earnings were up 4.9% versus +4.6%.

 

                        Other

                   

                          Record setting gains in wealth threatened by rising inflation.

                          https://scottgrannis.blogspot.com/2021/12/record-setting-gains-in-wealth.html

 

                    The Fed

 

                           Real interest rates are in deeply negative territory.

                          https://www.wsj.com/articles/inflation-surge-pushes-u-s-real-interest-rates-into-more-deeply-negative-territory-11639321204

 

                                                  The Fed’s dilemma.

  https://finance.yahoo.com/news/massive-u-debts-could-trap-150000058.html?guccounter=1&guce_referrer=aHR0cDovL3d3dy5jYXBpdGFsc3BlY3RhdG9yLmNvbS8&guce_referrer_sig=AQAAAMx4dvEeStpyA-9ASMF68wgDRyS91TcwyRJ1jaNvpMuyuFWAZQM4m4yJac0NiC31TnP8wpBG2_gpGVMMaUWrjr6mxrUKoXb2qYJ5FMGN1ShVPPxecnUraRQixTgegRYNdRh05L7Nl-hWvEfhdDvGyuKu-PknYX0kB7Qnr7OKQK5a

 

                    Inflation

 

                      Update on inflation expectations.

                      https://econbrowser.com/archives/2021/12/inflation-expectations

 

                      The next catalyst for inflation.

                      https://www.zerohedge.com/economics/next-catalyst-inflation-significant-and-persistent-increases-labor-costs

 

     Bottom line

 

            The Market is disconnected from everything.

            https://www.advisorperspectives.com/commentaries/2021/12/13/the-market-is-disconnected-from-everything

 

            The latest from Morgan Stanley.

            https://www.zerohedge.com/markets/morgan-stanley-warns-feds-taper-will-trigger-market-chaos-over-next-3-4-months

 

            Growth versus value stocks.

            https://blog.evergreengavekal.com/growth-stock-relative-performance/

 

            Companies expanding buyback plans while insiders dump stock. This is one of my biggest problems with the way of financial system is now working. Companies are using shareholder funds/borrowing cheap money (courtesy of the Fed) to buy the stock of their corporate executives (via their stock option awards). It is also driving the difference between executive compensation and employee compensation to record highs. This misuse of corporate assets is a bastardization of capitalism and, rightfully so, increases antagonism toward it.

https://www.nakedcapitalism.com/2021/12/share-buybacks-surge-to-record-ahead-of-potential-1-tax-companies-buy-as-insiders-dump-like-theres-no-tomorrow.html

 

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            The world’s deadliest peaks.

            https://www.zerohedge.com/medical/these-are-worlds-deadliest-peaks

 

 

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Monday Morning Chartology

 

The Morning Call

 

12/13/21

 

 

The Market

         

    Technical

 

           

            The S&P bounced off its 100 DMA---as one would expect in a strong market. That likely means an imminent challenge of the upper boundary of its recently reset short term trading range. If successful, the Santa Claus rally will be alive and well.

 

            On the other hand.

            https://www.zerohedge.com/markets/bofa-bubble-speculative-frowth-has-popped-resulting-epic-divergences

 

 

 

TLT traded down last week (rates up), but (1) it is still in very short term uptrends off its March and October lows and (2) remains above both DMA’s. This is supportive of the notion that inflation will not be the problem many think but rather it is that ‘Powell waited too late to get hawkish and now the Fed will be tightening into a weaker economy---thereby making it even weaker.’

 

 

 

            GLD was flat on the week. Like the long bond, it is not really trading like investors are worried about inflation. I have put in the boundaries (red lines) of what looks like a developing pennant/flag formation. That suggests the gold will trade in an ever narrowing price range until it breaks up/down which would then be indicative of future price direction.

 

 

The dollar was also directionless. But longer term, its pin action is more indicative of a deflationary/noninflationary environment versus an inflationary one.

 

 

 

 

 

            Friday in the charts.

            https://www.zerohedge.com/markets/omi-gone-stocks-soar-scariant-cpi-send-bonds-bitcoin-buck-lower-week

 

  

 Fundamental

 

       Headlines

 

              The Economy

 

                        Review of Last Week 

 

The US stats were negative last week as were the primary indicators (two negative, none positive). Overseas, the data were overwhelmingly negative, putting to rest any doubt that a recovery was in sight.

 

My take on the economy remains unchanged---it is struggling to grow, hampered by increasingly irresponsible monetary and fiscal policies, getting no support from the global economy and threatened by seemingly mounting inflationary forces---though the Markets continue to question the latter point.

 

                        US

                       

 

                        International

 

                            November German PPI came in tat 1.3% versus estimates of 1.1%.

 

                        Other

           

           

 

    News on Stocks in Our Portfolios

                 

CVS Health (NYSE:CVS) declares $0.55/share quarterly dividend, 10% increase from prior dividend of $0.50.

 

What I am reading today

 

           

 

 

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The Morning Call--BofA issues warning

 

The Morning Call

 

12/10/21

 

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/inflation-induced-taper-anxiety-wrecks-tech-crushes-crypto-bonds-bounce

 

The spread in sentiment between smart money investors and dumb money investors is at historic highs.

            https://sentimentrader.com/blog/the-spread-in-sentiment-between-smart-and-dumb-money-is-historic/

 

            When the smart money says, ‘sold to you.’

            https://www.zerohedge.com/markets/when-smart-money-says-sold-you

 

            Will bond yields ever rise again (item three in this article)?

            https://www.pragcap.com/three-things-i-think-i-think-nyc-is-alive/

 

            A possible answer. Another terrible 30 year auction.

            https://www.zerohedge.com/markets/another-catastrophic-30y-auction-triggers-alarm-ahead-tomorrows-nosebleeding-cpi-print

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

November CPI came in at +0.8% versus estimates of +0.7%; core CPI was +0.5%, in line.

 

                        International

 

The October UK trade balance was -L2.0 billion versus forecasts of -L3.2 billion; October GDP growth was +0.1% versus +0.4%; October industrial production was -0.6% versus +0.1%; October YoY construction output was +3.2% versus +5.0%.

 

November Japanese PPI rose +0.6% versus consensus of +0.3%.

 

November German CPI fell 0.2%, in line.

 

                        Other

 

                          What some indicators are suggesting about the economic outlook.

                          https://econbrowser.com/archives/2021/12/inflation-breakeven-term-spread-risk-and-uncertainty-a-snapshot

 

                          Household net worth rises $2.4 trillion in Q3.

                          https://www.calculatedriskblog.com/2021/12/feds-flow-of-funds-household-net-worth.html

 

                          And some analysis of the above (must read).

                          https://www.zerohedge.com/economics/household-net-worth-hits-record-145-trillion-34-trillion-covid-there-catch

 

            Inflation

 

              Fertilizer inflation

              https://www.reuters.com/markets/commodities/global-farmers-facing-fertiliser-sticker-shock-may-cut-use-raising-food-security-2021-12-09/

 

              The current inflation defied old models

              https://www.wsj.com/articles/this-inflation-defies-the-old-models-11638978991

 

            The coronavirus

 

              More data on the vaccine.

              https://alephblog.com/2021/12/07/on-the-vaers-database/

 

     Bottom line

 

            Trying to define/quantify a bubble.

            https://politicalcalculations.blogspot.com/2021/12/the-definition-of-bubble.html#.YbIzmNDMKUk

 

            Update on the Buffett indicator.

            https://www.advisorperspectives.com/dshort/updates/2021/12/09/market-cap-to-gdp-november-buffett-valuation-indicator

 

            BofA issues warning.

            https://www.nytimes.com/2021/12/09/business/dealbook/stock-markets-warnings.html

 

    News on Stocks in Our Portfolios

 

Hormel Foods (NYSE:HRL): Q4 GAAP EPS of $0.51 beats by $0.01.

Revenue of $3.45B (+42.6% Y/Y) beats by $230M.

 

Oracle (NYSE:ORCL): Q2 Non-GAAP EPS of $1.21 beats by $0.10; GAAP EPS of -$0.46 misses by $1.31.

Revenue of $10.4B (+6.1% Y/Y) beats by $190M.

 

Oracle (NYSE:ORCL) declares $0.32/share quarterly dividend, in line with previous.

 

Medtronic (NYSE:MDT) declares $0.63/share quarterly dividend, in line with previous.

 

 

What I am reading today

 

            Ignoring the bit about Australia, I thought this an interesting piece on the chemistry of reducing pollution from diesel engines.

            https://doomberg.substack.com/p/how-to-brick-an-entire-economy

 

            What is wrong with bitcoin?

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

 

 

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