The Morning Call--Signs of a rich market

 

The Morning Call

 

8/24/21

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/short-squeeze-surge-sends-stocks-record-high-soft-data-slumps-14-month-lows

 

            Brace yourself.

            https://www.zerohedge.com/markets/nomura-warns-stocks-face-extreme-de-risking-flow-overhang-after-last-few-days

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications were up 1.6% while purchase applications were up 3.0%.

 

                          July new home sales rose 1.0% versus estimates of down 2.7%.

                          https://www.advisorperspectives.com/dshort/updates/2021/08/24/new-home-sales-down-6-6-in-june

 

July durable goods orders declined 0.1% versus expectations of -0.3%; ex transportation, they rose 0.7% versus +0.5%.

                                   https://www.zerohedge.com/markets/us-durable-goods-orders-drop-july-unadjusted-motor-vehicles-orders-tumble

 

The August Richmond Fed manufacturing index came in at 9 versus forecasts of 25.

                          https://www.advisorperspectives.com/dshort/updates/2021/08/24/richmond-fed-manufacturing-activity-improved-in-august-despite-decline-in-index

 

                        International

 

June Japanese leading economic indicators were reported at 104.1 versus 102.6 in May.

 

The August German business climate index was 99.4 versus consensus of 100.4.

 

                        Other

 

                          Money, money everywhere except in the loan market.

                          https://mrzepczynski.blogspot.com/2021/08/money-money-everywhere-but-in-loan.html

 

            The Fed

 

              The case for no tapering.

              https://www.zerohedge.com/markets/central-banks-cannot-really-taper-slowdown

 

            Fiscal Policy

 

              The Treasury may have more impact than the Fed on money supply near term.

              https://www.zerohedge.com/markets/forget-fed-and-jackson-hole-treasury-about-unleash-500-billion-quantitative-tightening

 

              House agrees on $4.1 trillion in spending.

              https://www.zerohedge.com/political/pelosi-and-moderate-dems-strike-deal-over-41-trillion-economic-plan

 

            Inflation

 

              New data suggests easing in inflationary pressures.

              http://www.capitalspectator.com/new-data-continue-to-suggest-us-inflation-trend-is-peaking/

 

              But shortages could make matters worse.

              https://www.zerohedge.com/economics/shortages-are-going-get-worse-later-year-global-supply-chains-increasingly-falter

 

              Should house prices be in the CPI?

              https://www.pragcap.com/should-house-prices-be-in-the-cpi/

 

            The coronavirus

 

              The delta variant infections appear to have peaked.

              https://www.zerohedge.com/covid-19/it-finally-peaked-delta-delta-turns-negative

 

            Afghanistan

 

              The military’s systematic looting of the Treasury.

              https://www.nakedcapitalism.com/2021/08/notes-on-the-loss-of-afghanistan.html

 

     Bottom line.

 

            Signs of a rich market.

            https://www.zerohedge.com/markets/pet-rocks-other-signs-rich-market

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

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The Morning Call---Ignoring risk

 

The Morning Call

 

8/24/21

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/crypto-gold-oil-stocks-soar-dismal-data-dollar-dumps

 

            What’s next?

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

 

            When the ducks are quacking, feed them.

            https://www.gmo.com/americas/research-library/bubble-signs-stock-issuance/

 

            New highs on negative breadth.

            https://sentimentrader.com/blog/approaching-new-highs-on-negative-breadth/

 

            The uptrend is so extended, breaking it is not an option.

            https://www.zerohedge.com/markets/failure-not-option

 

            What do the credit markets know that the stock market is ignoring?

            https://www.zerohedge.com/markets/what-do-credit-markets-know-stocks-are-choosing-ignore

 

            Most money market rates slide below Fed reverse repo floor.

            https://www.zerohedge.com/markets/most-money-market-instruments-slide-below-feds-reverse-repo-floor-collateral-shortage-gets

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

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

 

                          July existing home sales were up 2.0% versus estimates of a slight decline.

                          https://www.calculatedriskblog.com/2021/08/comments-on-july-existing-home-sales.html

 

The August flash manufacturing PMI was 61.2 versus 62.5; the services PMI was 55.2 versus 59.5; the composite PMI was 55.4 versus 58.3.

 

                        International

 

                          Q2 German GDP grew 1.6% versus expectations of +1.5%.

 

                        Other

 

                          Global economic data disappointing experts.

                          https://www.ft.com/content/f8eaf88b-53f8-4b7f-a110-dcc5ad767c8c

 

            The Fed

 

              What if QE is starting to fail?

              https://www.advisorperspectives.com/commentaries/2021/08/23/did-the-feds-monetary-policy-experiment-just-fail

 

            Fiscal Policy

 

The tradeoffs in running the economy too hot (though that may not be a problem now).

https://www.nytimes.com/2021/08/23/upshot/biden-economy-analysis-inflation.html

 

              These are your tax dollars.

              https://www.zerohedge.com/geopolitical/quantifying-staggering-costs-us-military-equipment-left-behind-afghanistan

 

            Inflation

 

              The shipping crisis is getting worse.

              https://www.cnn.com/2021/08/23/business/global-supply-chains-christmas-shipping/index.html

 

     Bottom line

 

            Ignoring risk.

            https://www.zerohedge.com/markets/fastest-bull-market-history-sp-500-doubles

 

            The latest from Morgan Stanley.

            https://www.zerohedge.com/markets/morgan-stanley-us-consumer-headed-double-dip-recession

 

            Buy businesses not stocks.

            https://www.advisorperspectives.com/commentaries/2021/08/20/buy-businesses-not-stocks

 

            Touching the sky.

            https://alephblog.com/2021/08/17/touching-the-sky/

 

    News on Stocks in Our Portfolios

 

Bank of Nova Scotia (NYSE:BNS): FQ3 Non-GAAP EPS of C$2.01 beats by C$0.11; GAAP EPS of C$1.99.

Revenue of C$7.76B (+0.4% Y/Y) misses by C$10M.

 

What I am reading today

 

            How Marx was wrong.

            https://www.adamsmith.org/blog/madsens-intelligence-squared-speech-on-karl-marx-april-2013

 

                Why wouldn’t bitcoin go to $100,000?

            https://thereformedbroker.com/2021/08/23/ask-yourself-this-why-wouldnt-is-go-to-100000/

 

            A video tour of Mars.

            http://econbrowser.com/archives/2021/08/video-tour-of-mars

           

            The majesty of simplicity.

            https://www.whitecoatinvestor.com/the-majesty-of-simplicity/

 

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

 

8/23/21

 

The Market

 

    Technical

 

Last week the S&P once again successfully challenged the newly reset the lower boundary of its short term uptrend to a trading range.  As I have described ad nauseum for the last month, the cause of these multiple challenges/resets is the slowing of the upward momentum of the S&P index.  ‘That is not necessarily a bad thing.  Most likely, it just means that the buyers are getting exhausted and some consolidation is order.’  I see little reason why this pattern won’t persist. That notwithstanding, my current short term pin action premise remains unchanged: ‘I can’t see an end to this uptrend as long as the money keeps flowing with abundance and in the absence of any major negative exogenous event.’ 

 

Record equity issuance surpasses dot com era.

https://www.zerohedge.com/markets/warning-signs-flash-record-stock-issuance-surpasses-dotcom

 

 

 

 

The long bond continued the bounced started the prior week.  In the process, it closed that huge gap down open from two weeks ago---meaning that it now can decline further without the overhead magnetic pull of that gap open.  That said, the upward bias resulting from the support of both DMA and the uptrends across most timeframes argue for a further advance. Watch the boundary of that very short term trading range for directional information.

 

 

 

Trading in GLD was relatively quiet following the prior week’s extraordinarily volatile performance.   It left that huge gap down open unfilled.  So, there will remain some upward bias until it is filled.  ‘Longer term, we know GLD is in uptrends across all timeframes; but it is also below both DMA’s (now resistance).  So, again I am going to pass on making a directional call.’

 

 

 

 

The dollar resumed its upward march off the late May/early June lows.  It appears to be confirming the lower interest rate/inflation scenario, meaning that bond/dollar investors are increasing unconcerned about stagflation.

 

 

Friday in the charts.

https://www.zerohedge.com/markets/crypto-rips-dollar-dips-stocks-hit-record-highs-americans-confidence-collapses

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Review of Last Week 

 

The data releases last week were almost nonexistent.  What there was, was evenly divided, including the primary indicators (1 negative, 1 neutral and 1 positive).  So, there was not a lot of informational value in the stats.  That leaves the trend in economic activity slowing from the post Covid bounce back.

 

The other piece of mentionable economic news was the release of the minutes from the last FOMC meeting.  They indicated that the Fed is ready to proceed with tapering this year.  Two points: (1) this tapering will be the lowering of the rate of QE; in other words, the Fed will still be pumping money into the system, just in lesser quantities, and (2) an increase in interest rates remains in the distant future.  The Fed views them as heavily dependent on the unemployment rate, which nowhere its target.

https://www.realclearmarkets.com/articles/2021/08/20/the_next_taper_is_a_big_deal_for_very_different_reason_790825.html

 

Overseas, the numbers remained negative.  So, no help there.   

 

Bottom line. ‘As you know my opinion is that following an initial snapback (which may already be over), the US economy will likely return to its former subpar secular growth rate, stymied by an irresponsible mix of  fiscal/monetary policies.’

                        https://www.advisorperspectives.com/commentaries/2021/08/13/was-that-the-peak-of-economic-growth-earnings

                           

 

                                US

 

           The July Chicago Fed national activity index came in at .53 versus -.01 in June.   

 

                        International

 

The August German manufacturing PMI was reported at 62.7 versus estimates of 65.0; the services PMI was 61.5 versus 61.8; the composite PMI was 60.6 versus 62.2.

 

The August EU manufacturing PMI was reported at 61.5 versus forecasts of 62.0; the services PMI was 59.7 versus 59.8; the composite PMI was 59.5 versus 59.7.

 

The August UK manufacturing PMI was reported at 60.1 versus consensus of 59.5; the services PMI was 55.5 versus 59.0; the composite PMI was 53.3 versus 58.4.

 

                        Other

 

            The Fed

 

              After yields turn negative, what happens next?

              https://www.zerohedge.com/markets/david-stockman-return-negative-yields-and-what-comes-next

 

            The coronavirus

 

              The more masks fail, the more we need them,

              https://www.zerohedge.com/covid-19/more-masks-fail-more-we-need-them

 

            Afghanistan

 

              What a clusterf**k.

              https://www.zerohedge.com/geopolitical/did-pentagon-generals-want-disastrous-war

 

                          

 

          Bottom line

 

              Three indicators to watch for signs that the Market is topping.

              https://www.advisorperspectives.com/commentaries/2021/08/20/when-is-the-next-bear-market-3-things-will-tell-you

 

              Where is the outlook the most m miserable?

              https://www.zerohedge.com/markets/where-outlook-most-miserable

 

         News on Stocks in Our Portfolios

           

 

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.

 

 

 

 

 

The Morning Call--Biden's Plan is inflatioinary

 

The Morning Call

 

8/17/21

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/traders-buy-end-empires-dip-stocks-bonds-bullion-bid

 

            Macro rolling over but everybody’s long.

            https://www.zerohedge.com/the-market-ear/cwev2exmj

 

            China dumped US Treasuries for fourth month in a row.

            https://www.zerohedge.com/markets/china-dumped-us-treasuries-4th-straight-month-most-2016

           

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

July retail sales fell 1.1% versus forecasts of -0.3%; ex autos, they were  down 0.4% versus +0.1%.

 

                        International

 

Q2 UK productivity declined 0.5% versus +0.4% in Q1; June unemployment was 4.7% versus consensus of 4.8%; average earnings were +8.8% versus +8.6%.

 

Q2 EU GDP grew 2.0%, in line.

 

                        Other

 

            The Fed

 

              More on declining liquidity.

             https://alephblog.com/2021/08/13/is-liquidity-evaporating-what-a-gas-man/

 

              The surging wealth gap and the slowing economy.

              https://www.advisorperspectives.com/commentaries/2021/08/16/the-data-shows-the-fed-is-behind-the-surging-wealth-gap

 

            Fiscal Policy

 

              Biden’s plan is inflationary.

              http://scottgrannis.blogspot.com/2021/08/biden-is-making-wrong-call.html

 

              Part 2:

              https://www.zerohedge.com/political/dont-fall-joe-bidens-big-lie-inflation

 

              But there is hope.

              https://www.zerohedge.com/political/moderate-dems-tell-pelosi-pound-sand-threaten-hold-35t-budget-plan-hostage-unless

 

            The coronavirus

 

              Companies are hoarding cash amid fears of delta variant.

              https://www.wsj.com/articles/companies-are-hoarding-record-cash-amid-delta-fears-11629106380

 

            Afghanistan

 

              The government lied to the American people from the beginning.

              https://www.zerohedge.com/geopolitical/us-government-lied-two-decades-about-afghanistan

 

     Bottom line

 

            Why investors can’t ignore bitcoin.

            https://blog.evergreengavekal.com/why-investors-cannot-ignore-bitcoin-any-more/

 

            The dollar must go crypto.

            https://www.bloomberg.com/opinion/articles/2021-08-15/niall-ferguson-nixon-the-gold-standard-and-a-bitcoin-bonanza?srnd=opinion&sref=loFkkPMQ

 

            Diversification is the protection against ignorance.

            https://mrzepczynski.blogspot.com/2021/08/diversification-as-ignorance-protection.html

 

    News on Stocks in Our Portfolios

 

Genuine Parts (NYSE:GPC) declares $0.815/share quarterly dividend, in line with previous.

 

Home Depot (NYSE:HD): Q2 GAAP EPS of $4.53 beats by $0.11.

Revenue of $41.12B (+8.1% Y/Y) beats by $380M.

 

What I am reading today

 

            Quote of the day.

            https://cafehayek.com/2021/08/quotation-of-the-day-3619.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CafeHayek+%28Cafe+Hayek%29

 

 

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