The Morning Call---Horrible breadth suggests that the Marker is oversold.

 

The Morning Call

 

5/4/22

 

 

The Market

         

    Technical

 

            Tuesday in the charts

            https://www.zerohedge.com/markets/bonds-stocks-bid-ahead-fed-natgas-soars-2008-highs

 

Note: the S&P closed below the lower boundary of its short term trading range (and the 23.6% Fibonacci retracement level) for the third day. That signals a reset to a short term downtrend---which I am doing. However, the weakness of the follow through from the first day of the challenge suggests that this could be a false flag. And as you can read below, breadth is so oversold that a bounce seems likely. The point being: do not be surprised if this break is quickly negated.

 

            Horrible breadth suggests that the Market is oversold.

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

 

            Another excellent piece from the Northman Trader (must read).

            https://www.zerohedge.com/markets/unthinkable-0

 

            Counterpoint---sort of.

            https://www.zerohedge.com/personal-finance/passive-behemoths-have-yet-awaken

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications increased 2.5% while purchase applications were up 4.1%.

 

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

 

The March job openings report (JOLTS) showed total openings of 11.5 million versus predictions of 11.0 million.

 

March factory orders rose 2.2% versus estimates of +1.1%; ex transportation, they were up 2.5% versus +0.9%.

 

The April ADP private payrolls report pointed out job increases of 247,000 versus expectations of 395,000.

                            https://www.zerohedge.com/markets/adp-signals-weakest-job-gains-april-covid-lockdowns

 

                        International

 

The March German trade balance was +E9.7 billion versus forecasts of +E9.5 billion; the final April services PMI was 57.6 versus 57.5.

 

March EU retail sales fell 0.4% versus consensus of -0.1%; the April final services PMI was 57.7, in line.

 

                        Other

 

                          The ‘strong’ dollar is a relative thing.

                          https://www.realclearmarkets.com/articles/2022/05/03/the_dollar_is_mighty_in_the_way_that_kim_jong_un_is_tall_829849.html

 

                          Median household income in March.

                          https://politicalcalculations.blogspot.com/2022/05/median-household-income-in-march-2022.html#.YnFfjOjMKUk

 

                          Update on some business cycle indicators.

                          https://econbrowser.com/archives/2022/05/monthly-gdp-and-other-business-cycle-indicators

 

                          The era of ‘cheap and plenty’ may be over.

                          https://www.nytimes.com/2022/05/03/business/economy/pandemic-supply-chains-inflation.html

 

            The Fed

 

              The Bank of England is expected to raise rates to 13 year high this week.

              https://www.bloomberg.com/news/articles/2022-05-03/bank-of-england-poised-to-boost-interest-rates-to-13-year-high?srnd=economics-vp&sref=loFkkPMQ

 

            Inflation

 

              The hot housing market makes the Fed’s job tougher,

              https://www.bloomberg.com/news/articles/2022-05-03/housing-market-prices-rise-worsen-inflation-dilemma?srnd=premium&sref=loFkkPMQ

 

                          Speaking of which, housing prices were up 20% YoY in March.

              https://www.calculatedriskblog.com/2022/05/corelogic-house-prices-up-record-209.html

 

              And rents were not any better.

              https://www.calculatedriskblog.com/2022/05/rent-increases-up-sharply-year-over.html

 

            Geopolitics

 

An interesting background discussion about the Ukraine/Russia conflict. It is a bit too conspiratorial for me but a lot of the points mesh with what we already know.

https://www.nakedcapitalism.com/2022/05/michael-hudson-talks-with-katie-halper-and-aaron-mate-about-the-broader-ramifications-of-the-us-nato-conflict-with-russia.html

 

    Bottom line

 

This does not comport with the Earnings Tracker evidence that I linked to yesterday. Let’s see who is right.

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

 

            Thoughts on the Market; the scale versus the casino.

            https://alephblog.com/2022/04/28/the-scale-versus-the-casino/

 

            The familiarity bias.

            https://www.evidenceinvestor.com/beware-the-lure-of-the-familiar/

 

            The inevitable end of bad advice.

            https://www.zerohedge.com/markets/dont-be-bearish-inevitable-end-bad-advice

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            Optimism about the threat of nuclear war.

            https://marginalrevolution.com/marginalrevolution/2022/05/optimism-about-the-threat-of-nuclear-war.html

 

                        Big government cheese.

            https://www.adamsmith.org/blog/the-big-government-cheese

 

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The Morning Call--The national debt is only getting worse

 

The Morning Call

 

5/3/22

 

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/may-day-mayhem-equity-flash-crashes-bond-blowouts-commodity-chaos

 

            Update on margin debt.

            https://www.zerohedge.com/the-market-ear/cotatdq0b5

 

            Ray Dalio updates his bubble indicators.

            https://www.zerohedge.com/markets/were-out-bubble-extremes-bridgewaters-dalio-warns-overvalued-us-stock-market-still-not-safe

 

            Gold at critical support level.

            https://www.zerohedge.com/the-market-ear/cnofq1whfj

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          March construction spending was up 0.1% versus projections of +0.7%.

                          https://www.calculatedriskblog.com/2022/05/construction-spending-increased-01-in.html

 

The April ISM manufacturing index came in at 55.4 versus estimates of 57.6.

https://www.advisorperspectives.com/dshort/updates/2022/05/02/april-ism-manufacturing-index-demand-up-supply-chain-issues-remain

 

The final April manufacturing PMI was 59.2 versus consensus of 59.7.

                          https://www.advisorperspectives.com/dshort/updates/2022/05/02/april-markit-manufacturing-activity-strengthens

 

                        International

 

                          The March German unemployment rate was 5.0%, in line.

 

The March EU unemployment rate was 6.8% versus expectations of 6.7%; March PPI was 5.3% versus 5.0%.

 

                        Other

 

            The Fed

 

              QT is coming.

              https://www.bloomberg.com/news/articles/2022-05-01/global-economy-faces-410b-financial-shock-as-central-banks-pull-back?srnd=premium&sref=loFkkPMQ

 

                          And this won’t help.

              https://www.bloomberg.com/news/articles/2022-05-01/biggest-treasury-buyer-outside-u-s-quietly-offloads-billions?srnd=premium&sref=loFkkPMQ

 

              Australia’s central bank shocks with larger than expected rate hike.

              https://www.zerohedge.com/markets/australia-shocks-bigger-expected-rate-hike-lowe-admits-embarrassment-being-so-wrong

 

            Fiscal Policy

 

              The national debt is only getting worse.

              https://reason.com/2022/04/29/dont-wait-the-national-debt-is-only-getting-worse/

 

            Recession

 

              David Stockman on the latest personal income data.

              https://brownstone.org/articles/real-personal-income-down-20-from-one-year-ago/

 

              Too soon to call a recession.

              https://econbrowser.com/archives/2022/04/why-did-u-s-real-gdp-fall

 

              The odds of a recession.

              https://econbrowser.com/archives/2022/05/term-spread-models-and-recession-probabilities-for-april-2023

 

              Private debt risks are rising.

             https://www.project-syndicate.org/commentary/pandemic-debt-moratorium-and-ukraine-war-boost-debt-distress-by-carmen-m-reinhart-and-leora-klapper-2022-05

 

            Geopolitics

 

              The plan to seize oligarchs’ assets sets an appalling precedent.

              https://thehill.com/opinion/judiciary/3472889-the-plan-to-seize-russian-oligarchs-assets-sets-an-appalling-precedent/

 

     Bottom line

 

            No gain from diversification.

            http://mrzepczynski.blogspot.com/2022/05/trend-models-tell-same-story-no-gain.html

 

            Morgan Stanley sees the S&P at 3400.

            https://www.zerohedge.com/markets/escalated-quickly-mike-wilson-takes-victory-lap-markets-crash-sees-sp-tumbling-3400

 

            The latest stats from Earnings Tracker on Q1 earnings season.

            https://www.zerohedge.com/markets/end-euphoria-earnings-season-turns-dire-corporate-sentiment-plummets

 

    News on Stocks in Our Portfolios

 

Illinois Tool Works press release (NYSE:ITW): Q1 GAAP EPS of $2.11 beats by $0.04.

Revenue of $3.9B (+11.4% Y/Y) beats by $140M.

 

Cummins press release (NYSE:CMI): Q1 Non-GAAP EPS of $4.04 beats by $0.49.

Revenue of $6.4B (+5.1% Y/Y) beats by $340M.

 

What I am reading today

 

            When draft pundits are right and NFL teams as wrong.

            https://www.nytimes.com/2022/04/28/upshot/nfl-draft-surprise-picks.html

 

                        The burden of regulation.

            https://www.adamsmith.org/blog/just-what-should-the-critical-minerals-strategy-be-less-perhaps

 

            Quote of the day.

            https://cafehayek.com/2022/05/quotation-of-the-day-3881.html?utm_source=feedburner&utm_medium=email

 

 

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Monday Morning Chartology

 

The Morning Call

 

5/2/22

 

 

The Market

         

    Technical

           

            Can you say ‘volatility,’ boys and girls? Three big intraday reversals, followed by a huge up day, followed by an even bigger down day. In the process, the S&P tested the lower boundary of its short term trading range and the 23.6% Fibonacci level for a fifth time, bounced, then crashed through both. If it remains there through the close on Tuesday, the short term trend will reset to down. Worse, the only visible support is the 38.2% Fibonacci retracement level---which, as you can see, sits at 3817. But it is too soon to get beared up, right now. Let’s where the S&P closes on Tuesday.

 

This time wasn’t different.

https://novelinvestor.com/this-time-wasnt-different/

 

 

 

 

 

The long Treasury backed and filled last week---which is better than continuing to drop. So, it still remains to be seen if this is just a temporary ceasefire or a true attempt to mark a bottom. Unfortunately, as I noted previously: ‘given the hefty distance between TLT’s current price and the lower boundaries of both its newly reset intermediate term trading range and its long term uptrend, prices could go a good deal lower without totally breaking down.’

 

 

 

Gold gapped down on Monday’s open, then tried to stabilize the rest of the week. ---suggesting that gold investors are still more worried about higher interest rates than higher inflation. On the plus side, that gap down open needs to be filled. On the negative side, GLD can drop a long way before it challenges either of its DMAs or the lower boundaries of its multiple uptrends.

 

 

            Friday’s pin action notwithstanding, nothing has changed. The dollar’s chart continues to be the healthiest of the lot. My assumption remains that irrespective of what happens, investors continue to believe that the dollar is a safe place to be.

 

  Why the dollar keeps rising (must read).

  https://www.realclearmarkets.com/articles/2022/04/29/weird_doesnt_even_begin_to_describe_the_present_829716.html

 

 

 

 

 

 

            Friday in the charts.

            https://www.zerohedge.com/markets/nasdaq-collapses-worst-month-lehman-market-starts-pricing-75bps-hike-june

 

                Outflows from everything.

            https://www.zerohedge.com/the-market-ear/cm2vyeqmjc

 

                How bad was it?

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

 

                Goldman thinks that the worst is over.

            https://www.zerohedge.com/markets/buyback-blackout-period-over-and-10-more-reasons-goldman-calls-end-market-carnage

 

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Review of last Week

 

Last week the economic data were very negative although the primary indicators were balanced (two positive, one neutral, two negative). Overseas stats were mixed.

 

The one mentionable number was first quarter GDP which came in well below estimates and is clearly inconsistent with my ‘no recession’ forecast. If we begin to get a more negative flow to the data, then I will have to change the outlook. On the other hand, were that to occur, history suggests that the Fed will crawfish on its current tightening rhetoric and decline to follow through with strong action (remember, it hasn’t done diddily to date).

https://apnews.com/article/us-economy-shrinks-in-Q1-7eb454a7874abeba545f8796edb38edb

 

For the moment, I am leaving my current forecast intact but with lesser conviction:  the economy is struggling to grow (but no recession), hampered by irresponsible monetary and fiscal policies, getting no support from the global economy and threatened by (1) inflationary forces and (2) continued supply chain disruptions because of the conflict in Ukraine.

 

                        US

 

 

                        International

 

March German retail sales fell 0.1% versus estimates of +3.0%; the April manufacturing PMI was 54.6 versus 54.1.

 

The April EU manufacturing PMI was 55.5 versus expectations of 55.2; April economic sentiment was 105 versus 108; April industrial sentiment was 7.9 versus 9.5; April services sentiment was 13.5 versus 14.2; April consumer confidence was -22 versus -16.9.

 

 

                        Other

 

                          Europe’s economy slows to a crawl.

                          https://www.nytimes.com/2022/04/29/business/europe-economy-gdp.html

 

            Geopolitics

 

              More history on Ukraine/Russia.

              https://www.zerohedge.com/geopolitical/1991-when-america-tried-keep-ukraine-ussr

 

            The coronavirus

 

              The next ten battles (must read).

              https://brownstone.org/articles/the-next-ten-battles/

 

     Bottom line

 

            Buying stocks is easy; selling is the hard part.

            https://www.zerohedge.com/markets/buying-stocks-easy-selling-hard-part-7-rules-manage-risk

 

            The latest from John Hussman.

            https://www.advisorperspectives.com/commentaries/2022/04/29/repricing-a-market-priced-for-zero

 

            Bitcoin and the economy.

            https://thereformedbroker.com/2022/04/28/incoherence/

 

            Putin’s booby trapped bonds.

            https://www.ft.com/content/a0b41150-78aa-490d-a3eb-4e8bd7bcf155

           

    News on Stocks in Our Portfolios

 

AbbVie press release (NYSE:ABBV): Q1 Non-GAAP EPS of $3.16 beats by $0.02.

 Revenue of $13.54B (+4.1% Y/Y) misses by $70M.

 

Genuine Parts (NYSE:GPC) declares $0.895/share quarterly dividend, in line with previous.

Apple press release (NASDAQ:AAPL): Q2 GAAP EPS of $1.52 beats by $0.09.

Revenue of $97.3B (+8.6% Y/Y) beats by $3.31B.

 

Apple (NASDAQ:AAPL) declares $0.23/share quarterly dividend, 4.5% increase from prior dividend of $0.22.

 

Paychex (PAYX) declares $0.79/share quarterly dividend, 19.7% increase from prior dividend of $0.66.

 

           Exxon triples its stock buyback program.

           https://www.zerohedge.com/markets/exxon-triples-buyback-30-billion-energy-giant-prints-billions-free-cash-flow

          

What I am reading today

 

            Does swearing make us stronger?

            https://bigthink.com/neuropsych/why-does-swearing-make-us-stronger/

 

 

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