The Morning Call---Oooops

 

The Morning Call

 

 

9/13/22

 

The Market

         

    Technical

 

            Monday in the charts

            https://www.zerohedge.com/markets/stock-squeeze-continues-bonds-dollar-dump-ahead-cpi

 

Note: the S&P pushed through the upper boundary of the very short term downtrend off its mid-August high and closed above its 100 DMA for the second day (if it remains there through the close today [I mistakenly said Wednesday in yesterday’s Morning Call], it will revert to support). However, it still faces multiple challenges to the upside: (1) the 200 DMA, (2) the upper boundary of its short term downtrend and (3) it has now made two gap up opens in a row.

 

            Don’t get greedy.

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

 

            How stocks behave post mid-term elections.

            https://investorplace.com/hypergrowthinvesting/2022/09/why-this-selloff-is-perfect-for-a-stock-breakout/?utm_source=rcm&utm_medium=editorial

 

            Keep your eye on gold.

            https://allstarcharts.com/dont-lose-sight-of-gold/

 

            A perfect storm is about to hammer the dollar.

            https://www.zerohedge.com/markets/bear-traps-our-highest-conviction-trade-selling-dollar

 

            Will the dollar weaken?

            https://www.bloomberg.com/news/articles/2022-09-11/zoltan-pozsar-sees-a-new-dollar-regime-his-longtime-collaborator-disagrees?sref=loFkkPMQ

           

            If not, will it crash the global economy?

            https://www.pragcap.com/will-the-surging-dollar-crash-the-global-economy/

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

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

 

The August small business optimism index was 91.8 versus forecasts of 91.1.

 

August CPI was +0.1% versus expectations of -0.1%; core CPI was +0.6% versus +0.3%.

                          https://www.zerohedge.com/economics/us-consumer-prices-blow-away-expectations-rise-27th-straight-month

 

                        International

 

                          The July UK unemployment rate was 3.6% versus predictions of 3.8%.

 

                          August Japanese PPI was +0.2% versus estimates of +0.4%.

 

                          August German CPI was +0.3%, in line.

 

September EU economic sentiment was -60.7 versus consensus of -58.3; September German economics sentiment was -61.9 versus -60.0.

                        

                        Other

 

                          Weekly indicators of economic activity.

                          https://econbrowser.com/archives/2022/09/weekly-indicators-of-economic-activity-through-september-3rd

 

                          Update on four high frequency economic indicators.

                          https://www.calculatedriskblog.com/2022/09/four-high-frequency-indicators-for_12.html

 

                          Mortgage equity withdrawals still high in August.

                          https://www.calculatedriskblog.com/2022/09/mortgage-equity-withdrawal-still-strong.html

 

            The Fed

 

More funny government accounting: the Fed’s coming operating losses and the federal budget deficit.

              https://www.aier.org/article/federal-reserve-operating-losses-and-the-federal-budget-deficit/

 

                  QT puts the bond market on shakier ground.

              https://www.nytimes.com/2022/09/11/business/fed-treasury-market.html

 

                  And potentially negatively impacts liquidity.

              https://www.zerohedge.com/markets/liquidity-fated-scupper-smooth-running-feds-qt

 

                Inflation

 

              Inflation shows signs of easing in August.

              https://www.wsj.com/articles/inflation-showed-signs-of-easing-in-several-industries-in-august-11662888602?mod=hp_lead_pos1

 

                  NY Fed inflation expectations survey plunge to two year low.

              https://www.zerohedge.com/markets/deflation-deck-ny-fed-inflation-expectations-plunge-2-year-low-dragged-tumbling-gas-prices

 

    Bottom line

 

            Update on valuation.

            https://www.advisorperspectives.com/dshort/updates/2022/09/12/the-q-ratio-and-market-valuation-august-update

                https://www.advisorperspectives.com/dshort/updates/2022/09/09/market-cap-to-gdp-august-buffett-valuation-indicator

                https://www.advisorperspectives.com/dshort/updates/2022/09/07/regression-to-trend-132-above-trend-in-august

 

                More earnings declines are likely in the offing.

            https://www.advisorperspectives.com/commentaries/2022/09/12/earnings-decline-likely-more-to-go-before-we-are-done

 

                As analysts shave their estimates.

            https://www.yardeniquicktakes.com/s-p-500-analysts-shaving-profit-margins/

 

    News on Stocks in Our Portfolios

 

Oracle press release (NYSE:ORCL): Q1 Non-GAAP EPS of $1.03 misses by $0.04.

Revenue of $11.45B (+17.7% Y/Y) in-line.

 

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

 

What I am reading today

 

            How migrants make the economy they move to a lot like the economy they left.

https://marginalrevolution.com/marginalrevolution/2022/09/the-culture-transplant-how-migrants-make-the-economies-they-move-to-a-lot-like-the-ones-they-left.html

 

                        US economic freedom index sinks to Carter era level.

            https://www.aier.org/article/u-s-economic-freedom-index-collapses-to-carter-administration-levels/

 

            Another good life lesson from Traderfeed.

            http://traderfeed.blogspot.com/

 

 

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

 

 

 

Monday Morning Chartology

 

The Morning Call

 

9/12/22

 

 

The Market

         

    Technical

 

            There is a lot to digest in this chart.

 

(1) after the 100 DMA reverted to resistance in the prior week, the S&P turned right around and pushed back through it to the upside; if it remains there through the close on Wednesday, it will revert back to support,

 

(2) the S&P is challenging the very short term downtrend off the August 16 high. If it is successful, then it must still negotiate  the initial 23.6% Fibonacci retracement level (~4200) and the upper boundary of its short term downtrend (~4275) before making any assumption about the current downtrend being over. If it retreats from this level, then we are once again looking at the lower boundary of the S&P’s intermediate term uptrend/initial 38.2% Fibonacci retracement level for support (~3817).

 

(3) finally, note that there was a gap up open of Friday which will need to be closed.

 

We will learn a lot about direction today and tomorrow.

 

The easy part of the bounce is over.

https://www.zerohedge.com/the-market-ear/c7aduasdiw

 

 

 

                       

 

             For all appearances, the long bond has successfully challenged the lower boundary of its intermediate term trading range, resetting it to a downtrend. My only hesitation in making that call is that big gap down open two Thursdays ago  together with the fundamental facts that the economy is noticeably weakening while the Fed assures us that there is more tightening to come (meaning even more weakness). So, I am postponing that call until the end of this week.

 

 

            Gold remains in that eighteen month trading range, bouncing off the lower boundary of that range for the third time. There has been a lot of chatter in the media about bonds bottoming and the dollar topping which could explain why GLD is holding in there. However, until we see some concrete signs of either, I can’t come up with a good reason to assume higher gold prices.

 

 

 

 

 

            While the dollar had a rough couple of days at weekend, I don’t see any reason to jump on the dollar is topping bandwagon. We need a lot more deterioration in this chart before that makes any sense---technically speaking. Plus, there is the gap down open on Friday that needs to be filled.

 

            What is behind the dollar’s weakness?

            https://www.zerohedge.com/markets/whats-behind-big-dollar-drop-morning-goldman-explains

 

 

 

 

 

 

            Friday in the charts.

            https://www.zerohedge.com/markets/stocks-soar-biggest-squeeze-5-months-hawknado-deepens-yield-curve-inversion

 

            Is this a new bull market?

            https://allstarcharts.com/is-this-a-new-bull-market/

 

            More support for the bulls.

            https://theirrelevantinvestor.com/2022/09/09/the-bullish-case/

 

    Fundamental

 

       Headlines

 

              The Economy

                         

                        Review last week

 

The US data last week were very negative (no primary indicators). Ditto the international stats. The principal headline of the week was a doubling down on the inflation fighting narrative by the Fed (Powell) and the ECB. I noted last week that a hawkish policy by the central banks was probably not good for the Markets; but they rallied on this news---apparently it was already priced in. That said,  I remain skeptical of central bankers resolve to fight inflation to the death.

 

So, my issues remain the same:

 

1.      how deeply embedded is inflation in our economy?

 

2.      given the answer to one., how firm will the Fed remain in its policy decisions to bring the inflation rate back to acceptable levels?

 

As I noted previously, there are enough signs that inflation has peaked to consider it a real possibility. However, as I have also noted, that really doesn’t address the answer to how deeply embedded it is. The issue is not peak inflation, the issue is what has to occur to return to a ~2% regime.

 

In other words, what is the answer to #2 above---which as I noted above remains open to question, the latest actions by the central banks notwithstanding. Given that lack of consistency and fortitude, it is too big a leap of faith for me to assume that Powell et al have found religion and will hold firm in the face of a faltering economy and plunging asset prices.

 

So, despite the Market’s perky response to the hawkish central bank patience is the better part of valor.

.                        

                        US

 

 

                        International

 

July UK GDP growth was +0.2% versus consensus of +0.4%; July industrial production fell 0.3% versus +0.4%; the July trade balance was L-7.7 billion versus L-11.7 billion.

 

August Japanese YoY machine tool production rose 10.7% versus estimates of +7.0%.

 

                        Other

 

                         Household net worth experiences big drop in Q2.

                          https://www.zerohedge.com/markets/us-household-net-worth-crashed-most-ever-q2

 

                          The credit cycle is weakening.

                          https://www.zerohedge.com/markets/credit-cycle-deteriorating-quickly

            The Fed

 

              Will QT have any effect on interest rates or the economy?

              https://www.realclearmarkets.com/articles/2022/09/09/the_infatuation_with_fanciful_stories_of_fascinating_bank_reserves_852624.html

 

            Recession

 

              Recession signals abound.

              https://www.zerohedge.com/personal-finance/recession-signals-abound-fed-hikes-rates

 

 

      Bottom line.

 

            Update on the Buffett indicator

            https://www.advisorperspectives.com/dshort/updates/2022/09/09/market-cap-to-gdp-august-buffett-valuation-indicator

 

For the bulls.

https://www.advisorperspectives.com/commentaries/2022/09/08/what-if-the-bear-market-isnt-over

 

    News on Stocks in Our Portfolios

 

AbbVie (NYSE:ABBV) declares $1.41/share quarterly dividend, in line with previous.

 

What I am reading today

 

           

 

 

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The Morning Call---A short term bounce or change in trend?

 

The Morning Call

 

9/9/22

 

 

The Market

         

    Technical

 

            Thursday in the charts

            https://www.zerohedge.com/markets/negative-delta-squeeze-sustains-stocks-hawknado-hammers-rates-higher

 

            Update on the bull bear ratio

            https://www.yardeniquicktakes.com/bull-bear-ratio-drops-back-to-1-0/

 

            More reasons for a short term bounce.

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

           

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

July consumer credit grew by $23.8 billion versus predictions of +$33 billion.

                          https://www.zerohedge.com/markets/consumer-credit-unexpectedly-slows-new-auto-loans-stumble-soaring-rates

 

                        International

 

August Chinese CPI was -0.1% versus forecasts of +0.2%; August YoY PPI was +2.3% versus +3.1%.

 

                        Other

           

                          The latest FDIC reports shows banking system remains sound.

                          https://www.calculatedriskblog.com/2022/09/fdic-problem-banks-unchanged.html

 

            Fiscal Policy

 

              Cancelling student debt is wrong policy.

              https://townhall.com/columnists/calebthompson/2022/08/26/you-dont-need-a-college-degree-to-know-canceling-student-debt-is-wrong-n2612258

 

              Waiting for Net Zero.

              https://www.adamsmith.org/blog/just-wait-until-those-future-net-zero-pledges-come-in

           

            The Fed

 

              The fakery of fighting inflation.

              https://betonit.substack.com/p/fighting-inflation

           

              Goldman lifts forecast for Fed rate hikes.

              https://www.bloomberg.com/news/articles/2022-09-08/goldman-lifts-forecasts-for-fed-hikes-in-september-and-november?sref=loFkkPMQ

           

Inflation

 

              Wholesale used vehicle prices fell substantially in August.

              https://www.calculatedriskblog.com/2022/09/wholesale-used-vehicle-prices-decline.html

               

            Geopolitics

 

              The optimistic take on Europe’s energy problem.

              https://www.nytimes.com/2022/09/07/world/europe/eu-russia-putin-gas.html

 

              JP Morgan expects another one million b/d cut from OPEC+.

              https://www.zerohedge.com/markets/jpmorgan-expects-opec-cut-another-1-million-bd-output-biden-mulls-more-spr-releases

 

    News on Stocks in Our Portfolios

 

 

What I am reading today

 

           

                        We waste too much time forecasting.

            https://www.collaborativefund.com/blog/good-enough/

           

Greenpeace co-founder says climate change is based on a false narrative (must read).

            https://www.zerohedge.com/markets/greenpeace-co-founder-patrick-moore-says-climate-change-based-false-narratives

 

              

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