The Morning Call--The global economy is not out of the woods yet

 

The Morning Call

 

1/5/24

 

The Market

         

    Technical

 

Thursday in the charts.

https://www.zerohedge.com/markets/goldilocks-gored-growth-gains-bitcoin-bounces-rate-cut-hopes-hammered

 

            What will it take to get bearish?

            https://allstarcharts.com/what-will-it-take-to-get-bearish/

 

            Any clues for the rest of the year in the first week’s performance?

            https://www.zerohedge.com/markets/magnificent-sevens-january-start-gives-clues-markets-year

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

                       

The final December services PMI was 50.9 versus consensus of 51.0; the final composite PMI was 51.4 versus 51.3.

                        https://www.advisorperspectives.com/dshort/updates/2024/01/04/s-p-global-services-pmi-expansion-picks-up-in-december

 

December nonfarm payrolls rose by 216,000 jobs versus projections of 170,000.

                          https://www.zerohedge.com/markets/jobs-shocker-december-payrolls-unexpectedly-surge-unemployment-rate-slides-wages-jump

 

                        International

 

                          November German retail sales fell 2.5% versus forecasts of -0.1%.

 

The final December Japanese services PMI was 51.5 versus estimates of 52.0; the final December composite PMI was 50.0 versus 50.4; December consumer confidence was 37.2 versus 36.0.

 

The December EU construction PMI was 43.6 versus expectations of 44.0; the December German construction PMI was 37.0 versus 38.0; the December UK construction PMI was 46.8 versus 46.0.

 

The December EU flash CPI was up 2.9% versus consensus of up 3.0%; the core CPI was 3.4%, in line; the PPI was -0.3% versus -0.1%.

https://www.zerohedge.com/markets/ecb-rate-cut-odds-tumble-eu-inflation-re-accelerates-december

 

                        Other

 

The Fed

 

  How the markets are now pricing the odds of a rate cut.

  https://www.capitalspectator.com/markets-and-fed-minutes-see-path-for-rate-cuts-in-2024/

 

            Fiscal Policy

 

              The rule of the unelected.

              https://www.forbes.com/sites/waynecrews/2024/01/03/rule-of-the-unelected-revisiting-the-unconstitutionality-index/?sh=192712545760

 

                        Recession

 

              The global economy is not out of the woods yet.

  https://www.project-syndicate.org/commentary/global-economic-outlook-for-2024-growing-uncertainty-by-kenneth-rogoff-2024-01?utm_source=project-syndicate.org&utm_medium=email&utm_campaign=authnote&

 

    Auto sales bounced back in 2023.

   https://www.wsj.com/business/autos/u-s-auto-sales-bounced-back-in-2023-ecd389dd?mod=business_lead_pos4

 

     The latest Q4 nowcast.

   https://www.atlantafed.org/cqer/research/gdpnow

 

                        Geopolitics

 

              You may not care about war but………

              https://www.econlib.org/you-may-not-care-about-war/

 

                        2024

 

              What happens after a good year in the stock market?

              https://awealthofcommonsense.com/2024/01/what-comes-after-a-good-year-in-the-stock-market/

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

 

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The Morning Call---Ignore the FOMC minutes

 

The Morning Call

 

1/4/24

 

The Market

         

    Technical

 

Wednesday in the charts.

https://www.zerohedge.com/markets/global-bonds-stocks-suffer-biggest-rout-start-year-1999

 

Risk-on mood fades.

https://www.zerohedge.com/markets/equities-eye-january-pause-risk-mood-fades

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly initial jobless claims totaled 202,000 versus projections of 216,000.

                          https://www.zerohedge.com/personal-finance/initial-jobless-claims-end-2023-year-lows

 

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

 

The November job openings (JOLTS) totaled 8.79 million versus forecasts of 8.85 million.

https://www.advisorperspectives.com/dshort/updates/2024/01/03/job-openings-jolts-november-2023

 

The December ISM manufacturing index came in at 47.4 versus predictions of 47.1.

                          https://www.advisorperspectives.com/dshort/updates/2024/01/03/ism-manufacturing-index-contracts-14th-straight-month

 

The December ADP private payroll reported showed an increase of 164,000 jobs versus expectations of 115,000.

 

                        International

                       

  The final December Japanese manufacturing PMI was 47.9 versus estimates    of 47.7; the final December Chinese Caixin services PMI was 52.9 versus 51.6; the composite PMI was 52.6 versus 51.6; the final December German services PMI was 49.3 versus 48.4; composite PMI was 47.4 versus 46.7; the final December EU services PMI was 48.8 versus 48.1; the final composite PMI was 47.6 versus 47.0; the final December UK services PMI was 53.4 versus 52.7; the final composite PMI was 52.1 versus 51.7.

 

  December German CPI was up 0.1%, in line.

 

                        Other

 

The Fed

 

Minutes from last FOMC meeting pushed back on the ‘Fed pivot.’  The more hawkish tone of the minutes support the notion that the Fed intended to remain ‘higher for longer.’   But then, as I have speculated, Powell suddenly changed the narrative pointing towards easier monetary policy, most likely because the Administration put pressure on him to take a more dovish stance which it hoped would be a plus for reelection. Powell then caved (pivoted)---and that scenario is not likely to change. In other words, it is still an election year and politicians will still be politicians; so I expect a continuation of the easy money rhetoric. Bottom line: the Fed minutes are just an inconvenience in timing not a switch back to a tighter monetary policy.

  https://www.zerohedge.com/markets/fomc-12

 

Inflation

 

  Will the good news on inflation last?

  https://www.nytimes.com/2024/01/03/business/economy/inflation-prices.html

 

Recession

 

  Pat attention to growth not inflation.

  https://www.themoneyillusion.com/with-ngdp-everything-becomes-much-clearer/

 

2024

 

  Three more predictions for 2024.

  https://investorplace.com/hypergrowthinvesting/2024/01/my-final-big-3-stock-market-predictions-for-2024/

 

     Bottom line

 

            Lessons form 2023.

            https://disciplinefunds.com/2023/12/31/3-lessons-from-2023/

 

            December dividends by the numbers.

            https://politicalcalculations.blogspot.com/2024/01/dividends-by-numbers-in-december-2023.htmlv

 

            Profit growth to accelerate in 2024.

            https://finance.yahoo.com/news/us-profit-growth-accelerate-2024-162943630.html

 

Contrarian investing.

https://ritholtz.com/2024/01/at-the-money-contrarian-investing/#more-327911

 

            The latest from Jeff Gundlach.

            https://www.zerohedge.com/political/jeff-gundlach-warns-tucker-carlson-large-multi-generational-reset

 

            Have the Markets gotten ahead of themselves?

            https://www.zerohedge.com/markets/treasuries-send-out-early-message-caution-2024-trades

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            Quote of the day

            https://cafehayek.com/2024/01/quotation-of-the-day-4501.html

 

 

 

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The Morning Call---Living with higher interest rates

The Morning Call

 

1/3/24

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/2024-starts-bitcoin-breakout-crude-collapse-mega-cap-meltdown

 

            The big long.

            https://www.zerohedge.com/the-market-ear/big-long

 

            Paying up for downside protection.

            https://www.zerohedge.com/the-market-ear/hunting-skew

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

  Weekly mortgage applications fell 10.7% while purchase   applications were down 7.6%.

 

                          November construction spending rose 0.4% versus expectations of +0.6%.

                          https://www.calculatedriskblog.com/2024/01/construction-spending-increased-04-in.html

 

                          The December manufacturing PMI was 47.9 versus consensus of 48.2.

                           https://www.advisorperspectives.com/dshort/updates/2024/01/02/s-p-global-us-manufacturing-pmitm-sharper-decline-in-december

 

                         International                  

 

                          The December German unemployment rate was 5.9%, in line.

 

                        Other

 

The Fed

 

  Reverse repos plummet.

  https://www.zerohedge.com/markets/reverse-repo-plummets-314-billion-first-massive-liquidity-injection-2024

 

Fiscal Policy

 

  Congrats to the thieves and cheaters in our ruling class.

  https://nalert.blogspot.com/2024/01/congrats-to-this-very-bipartisan-group.html

 

  The national debt hits $34 trillion.

  https://www.zerohedge.com/markets/us-debt-hits-record-34001-trillion

 

Recession

 

  The economic graph of 2023.

  https://bonddad.blogspot.com/2023/12/the-economic-graph-of-year-for-2023.html

 

  Living with higher interest rates.

  https://www.reuters.com/markets/investors-2024-is-year-transition-new-economic-order-2024-01-02/

 

Government Shutdown

 

  Here we go again.

  https://thehill.com/homenews/senate/4372512-government-funding-fight-scenarios/

 

China

 

  Xi admits Chinese economy is struggling.

  https://www.cnn.com/2024/01/01/economy/xi-jinping-new-year-address-economy-intl-hnk/index.html

 

The Dollar

 

              The dollar remains the world’s dominant reserve currency.

              https://www.nakedcapitalism.com/2024/01/status-of-us-dollar-as-global-reserve-currency-and-usd-exchange-rates-long-slow-uneven-decline-continues.html

                 

 

 

                        Outlook for 2024

 

              A useless (hopeless) exercise.

              https://www.bloomberg.com/graphics/2024-investment-outlooks/?srnd=premium&embedded-checkout=true&sref=loFkkPMQ

                                      

              Supply chain problems still exist.

              https://www.wsj.com/articles/new-disruptions-geopolitics-hang-over-2024-supply-chains-6fca8f1e?mod=business_lead_pos2

 

 

               Three predictions for 2024.

              https://allstarcharts.com/my-3-predictions-for-2024/

               

              Resolutions for 2024.

              January Stats & New Year Investing Resolutions For 2024 - RIA (realinvestmentadvice.com)

 

 

    Bottom line

 

            Update on valuations.

            https://www.advisorperspectives.com/dshort/updates/2024/01/02/market-valuation-is-the-market-still-overvalued

           

    News on Stocks in Our Portfolios

 

 

What I am reading today

 

            Wednesday morning humor.

            https://babylonbee.com/news/the-biden-administrations-top-10-accomplishments-of-2023

 

            The last exercise column you ever need to read.

            https://slate.com/technology/2023/12/last-exercise-column-you-ever-need.html

 

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

 

 

 

Tuesday Morning Chartology

The Morning Call

 

1/2/24

 

The Market

         

    Technical

 

Over the prior two weeks, the S&P continued its relentless upward momentum---until the last moment. As you can see, it made it to the final trading day of the year, almost made it to its all-time high then fell out of the moonshot that started in late October. That is not to suggest that the rally is over; but the S&P may need a rest following such a powerful move.

 

Seasonality would indicate further upside; but the resistance posed by the all-time high and those multiple gap up opens down below say otherwise. My focus is on how the S&P handles the all-time high.

 

            No caution signs.

            https://www.zerohedge.com/the-market-ear/dangerously-bullish-no-caution-signs

           

 

 

 

Like the S&P, the long bond maintained its push to the upside. Unlike S&P, it isn’t showing any signs of rolling over. All three DMAs are now support; and there is no visible resistance except at higher levels. It is too soon to make the call; but a faltering S&P and a rising long bond points to recession.

 

 

 

GLD continues to be unable to push through its all-time high. Until it does so, I see no reason to be invested here.

 

 

 

 

 

Dollar investors clearly didn’t like the ‘Fed pivot.’  While the long term uptrend remains in place, the dollar’s short term technical picture has been wrecked. To be sure, a gap down open of the order of magnitude shown on the chart begs to be closed. But that will likely take a long time. Expect a lot of directionless trading over the short to intermediate term.

 

 

 

            2023 in the charts.

            https://www.zerohedge.com/markets/powells-pivot-adds-20-trillion-global-debtequity-markets-2023-fiat-alternatives-fly

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Week of 12/18 Review

 

Stats were upbeat both is the US and abroad. The US primary indicators were mixed to slightly positive: five plus, one neutral, four minus. The most important aspect of these numbers being a steady decline in inflation---which will likely continue, at least for the short term.

 

On the other hand, the more negative growth indicators leaves me still uncertain as to whether the coming landing is soft, hard or we have no landing at all. As you know, there is a growing consensus for the soft scenario.

 

Week of 12/25 Review

 

It was a quiet week on the stat front. What there was, was mixed. So nothing to alter my outlook.

 

 

(1)   I think that the inflation risks are behind us, at least for the short term. However, longer term, I believe that the most important economic factor is the potential [inflationary] impact of a grossly irresponsible fiscal policy which if left unresolved will ultimately push interest rates and inflation to higher levels, risking a tighter monetary policy and impeding the economy’s ability to grow.

 

(2)   The question of recession [what kind of landing] remains open, in my opinion. There simply isn’t enough consistently upbeat data to warrant the assumption of a soft [no] landing. Not that that won’t occur; it is just not yet in the numbers. But I will take it a step further. I still think that there is a decent chance of a recession---or something worse than current Market expectations. Why? Recessions historically begin after the yield curve uninverts. Right now it remains inverted. Pay attention to the normalization of the curve.

 

                        US

 

 

 

                        International

 

The December German manufacturing PMI came in at 43.3 versus estimates of 43.1; the December EU manufacturing PMI was 44.4 versus 44.2; the December UK manufacturing PMI was 46.2 versus 46.4.

 

                        Other

 

            The Fed

 

              Monetary policy at year end.

              https://scottgrannis.blogspot.com/2023/12/monetary-policy-and-economic-overview.html

 

            Geopolitics

 

              The war is over.

              https://www.zerohedge.com/geopolitical/no-stomach-us-keep-funding-ukraine-war-over-ex-pentagon-official

 

            Risks in 2024

 

              From BofA.

              https://www.zerohedge.com/markets/biggest-downside-risks-2024

 

 

    News on Stocks in Our Portfolios

 

Johnson & Johnson (NYSE:JNJ) declares $1.19/share quarterly dividend, in line with previous.

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.