Investing for Survival

The June Japanese services PMI was 49.4 versus projections of 49.8; the composite PMI was 49.7 versus 50.0; the June Chinese Caixin services PMI was 51.2 versus 53.4; the composite PMI was 52.8 versus 53.6; the June German services PMI was 53.1 versus 53.5; the composite PMI was 50.4 versus 50.6; the June EU services PMI was 52.8 versus 52.6; the composite PMI was 50.9 versus 50.8; the June UK services PMI was 52.1 versus 51.2; the composite PMI was 52.3 versus 51.7.

Other

May median household income.

https://politicalcalculations.blogspot.com/2024/07/median-household-income-in-may-2024.html

Business cycle indicators as of July 1^st.

https://econbrowser.com/archives/2024/07/52725

Inflation

A closer look at yesterday’s EU inflation data.

https://www.cnbc.com/2024/07/02/euro-zone-inflation-june-2024.html

US home prices continue to rise but at a slower pace.

https://www.calculatedriskblog.com/2024/07/corelogic-us-home-prices-increased-49.html

Recession

Labor market showing signs of losing steam.

https://finance.yahoo.com/news/us-labor-market-shows-signs-100000508.html

The global PMI indicates growth continues to expand but input cost inflation is accelerating.

https://www.pmi.spglobal.com/Public/Home/PressRelease/b8ebd597eb8d475ab7ec04250bb31e1e

Bottom line.

Lack of diversification has been the winning strategy. How long can that last?

https://alhambrapartners.com/weekly-market-pulse-the-sp-500-rules-everything-around-me/?src=news

Tuesday, July 2, 2024

The Morning Call---The mess our rulng class has created

The Morning Call

7/2/24

The Market

Technical

Monday in the charts.

https://www.zerohedge.com/markets/treasuries-trounced-trump-triumph-looms-crude-crypto-soar

The S&P is looking more vulnerable.

https://www.apolloacademy.com/sp-500-looking-more-vulnerable/

A spike in volatility is inevitable once correlations align.

https://www.zerohedge.com/markets/spike-volatility-inevitable-once-correlations-align-and-few-are-prepared-it

Fundamental

Headlines

The Economy

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

May construction spending fell 0.1% versus consensus of +0.1%.

https://www.calculatedriskblog.com/2024/07/construction-spending-decreased-01-in.html

The June manufacturing PMI was 51.6 versus predictions of 51.7.

https://www.advisorperspectives.com/dshort/updates/2024/07/01/sp-global-manufacturing-pmi-june-2024

The June ISM manufacturing index was 49.3 versus estimates of 50.0.

https://www.advisorperspectives.com/dshort/updates/2024/07/01/ism-manufacturing-index-contracts-june-2024

International

The May EU unemployment rate was 6.4%, in line; the June flash CPI was +0.2%, also in line.

Other

Monetary Policy

Central bank credibility and institutional resilience.

https://econbrowser.com/archives/2024/06/guest-contribution-central-bank-credibility-and-institutional-resilience

Why the Fed must change the way it targets inflation.

https://www.ft.com/content/c9cba47f-5902-4c2e-93de-b1bd113a91db

Fiscal Policy

The mess our ruling class has created.

https://nypost.com/2024/06/29/business/wall-street-is-going-toward-a-straight-free-fall-no-one-knows-whats-going-to-happen-with-the-market/

The BIS warns of rising government debt but then (as usual) says everything will be OK.

https://www.wsj.com/economy/global/rising-government-debt-threatens-financial-stability-inflation-bis-says-e0efaf53?mod=economy_lead_pos1

The Supreme Court

More on the ‘Chevron’ deference decision.

https://www.manhattancontrarian.com/blog/2024-6-28-the-end-of-chevron-deference

Bottom line

Small caps on the launching pad.

https://investorplace.com/hypergrowthinvesting/2024/06/falling-inflation-rising-political-tensions-priming-small-caps-to-soar/

Update on valuations.

https://www.advisorperspectives.com/dshort/updates/2024/07/01/p-e10-and-market-valuation-june-2024

https://www.advisorperspectives.com/dshort/updates/2024/07/01/q-ratio-and-market-valuation-june-2024

https://www.advisorperspectives.com/dshort/updates/2024/07/01/regression-to-trend-s-p-composite-163-above-trend-in-june

What is next for bitcoin?

https://finance.yahoo.com/news/bitcoin-investors-begin-ponder-next-143000692.html

We remain in the midst of a bond bear market.

https://x.com/bespokeinvest/status/1807825378842480882

News on Stocks in Our Portfolios

What I am reading today

The Swedish secret to a perfectly balanced vacation.

https://www.washingtonpost.com/travel/tips/lagom-travel-balance-rest-adventure/

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

Monday, July 1, 2024

Monday Morning Chartology

The Morning Call

7/1/24

The Market

Technical

The S&P was down for the week, capped by a high volume selloff on Friday. I am not sure that there is much significance to this, given that (1) it remains above all DMA’s and in uptrends across all time frames and (2) there is little visible resistance save the upper boundaries of its intermediate term uptrend (~6800) and long term uptrend (~7100). The only negative is that the three weeks old gap up open still needs to be filled. But even when that occurs there will be almost no technical damage done to this chart. All that said, there is mounting concern among technicians about the lack of volatility and breadth; and I am developing a case of altitude sickness.

A sneak peek into second half seasonality for stocks.

https://www.lpl.com/research/blog/sneak-peek-into-second-half-seasonality-for-stocks.html

Not so calm beneath the surface (must read).

https://www.nytimes.com/2024/06/28/business/stocks-dispersion-trade.html

The last legs of a melt up.

https://www.zerohedge.com/markets/market-last-legs-melt-goldman-flows-guru-warns-bulls-start-trimming-exposure-after-4th

Hedging is cheap.

https://www.zerohedge.com/the-market-ear/rejection-and-cheap-hedging

Technicals are set to worsen from here.

https://www.zerohedge.com/markets/goldman-trader-technicals-are-set-worsen-here

Hedge funds are selling/shorting are the highest rate in two years.

https://www.zerohedge.com/markets/hedge-funds-are-selling-and-shorting-stocks-fastest-pace-two-years

The long bond had a rough week topped off by a horrible Friday, closing below both its 100 and 200 DMAs though neither have reset to resistance. Of short term importance, that huge gap up open from three weeks ago has been closed. Plus, the seeming consensus that inflation/the economy is slowing suggest that this sell off is short term in nature. On the other hand, it remains within downtrends across all timeframes. For moment, color me confused.

GLD had another volatile week. The good news is that it didn’t make a new lower low. The bad news is it continues to develop a well-defined head and shoulders pattern. The outstanding question remains will it bust through the next visible support level (the horizontal red line). I retain my GDX position but as I noted last week, will sell it if that red line is breached.

The dollar continued its upward march. It is above all DMAs; that is good. However, it is approaching the upper boundary of its short term downtrend (brown line). A break above that boundary would not be a good sign for stocks.

Friday in the charts.

https://www.zerohedge.com/markets/stocks-surge-best-election-year-h1-1976-rate-cut-hopes-macro-data-collapse

Fundamental

Headlines

The Economy

Week in review

Last week’s stats were a little sparse. The indicators were balanced including the primaries (one plus, one minus). Overseas, the data had a modest negative bias. This is certainly a change from the hugely negative reads of the prior two weeks. So, I retain with doubtful conviction my forecast though, for the moment, it remains unchanged:

(1) the economy muddles through and (2) inflation has likely seen its lows. But clearly my confidence in that outcome is weakened.

While not quite enough to warrant altering my forecast, another couple of weeks of discouraging numbers will. In short, (1) my original recession call may turn out to be correct and (2) while I continue to believe that profligate fiscal policy and an accommodative Fed will ultimately lead to higher inflation, a recession could work against that scenario in the near term. And I would add that if (1) recession is the ultimate scenario and (2) the Fed maintains its tight money policy, then conditions could develop even worse.

International

The June Japanese consumer confidence index was 36.4 versus forecasts of 36.5.

The June German manufacturing PMI was 43.5 versus projections of 43.4; the June EU manufacturing PMI was 45.8 versus 45.6; the June UK manufacturing PMI was 50.9 versus 51.4.

June German preliminary CPI was +0.1% versus estimates of +0.2%.

Other

Monetary Policy

Monetary policy is returning to normal (from my favorite optimist. While he recognizes the problem posed by irresponsible fiscal policy, he fails to mention that historically, the Fed monetizes deficits which, in turn, aggravates inflation).

https://scottgrannis.blogspot.com/2024/06/monetary-conditions-are-returning-to.html

Fiscal Policy

The case for adult management of our economy (the tone of this piece is a bit too strident for me; but it makes the point.)

https://www.realclearmarkets.com/articles/2024/06/28/a_case_for_much_more_worry_about_the_national_debt_1040452.html

Recession

Update on big four recession indicators.

https://www.advisorperspectives.com/dshort/updates/2024/06/28/the-big-four-recession-indicators

The latest Q2 nowcast.

https://www.calculatedriskblog.com/2024/06/q2-gdp-tracking-17-to-22.html

Household net worth near record highs.

https://www.apolloacademy.com/household-net-worth-is-almost-eight-times-higher-than-disposable-income/

Moody’s predicts that 24% of office tower space will be empty by 2026.

https://www.zerohedge.com/markets/moodys-predicts-office-towers-will-be-vacant-2026

Tariffs

Tariffs undermine tax cuts.

https://www.cato.org/blog/trumps-tariffs-undermine-tax-cuts

War in the Middle East

War cycle turns up.

https://www.zerohedge.com/geopolitical/war-cycle-turns-economic-cycle-plunges-charles-nenner-warns-very-hard-times-are-coming

The Supreme Court

Curbing the power of federal agencies.

https://www.zerohedge.com/political/scotus-overturns-chevron-deference-massive-blow-administrative-state

Giving the streets back.

https://www.zerohedge.com/economics/major-blow-democrats-supreme-court-enacts-crackdown-homeless

Bottom line.

The confidence dichotomy.

The Confidence Dichotomy - RIA (realinvestmentadvice.com)

When credit loses its power to stimulate growth (must read).

https://www.advisorperspectives.com/commentaries/2024/06/28/redux-credit-supernova

The election and the Fed loom as risks to stocks in the second half.

https://www.reuters.com/markets/election-fed-risks-loom-us-stocks-after-strong-first-half-2024-2024-06-28/

Q1 breakdown of corporate profits.

https://wolfstreet.com/2024/06/27/corporate-profits-by-major-industry-q1-update-greedflation-hits-ceiling-in-some-industries-but-still-thrives-in-others/

News on Stocks in Our Portfolios

What I am reading today

The secret to sanity and success.

https://ryanholiday.net/this-is-the-secret-to-sanity-and-success/

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

Wednesday, July 3, 2024

The Morning Call---The labor market showing signs of losing steam

Tuesday, July 2, 2024

The Morning Call---The mess our rulng class has created

Monday, July 1, 2024

Monday Morning Chartology

About Me

My Blog List