The Morning Call--Nvidia does the trick

 

The Morning Call

 

2/23/24

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/everything-awesome

 

Note: Nvidia did the trick. The S&P exploded higher yesterday, regaining the lower boundary of its very short term uptrend and pushing through the upper boundary of its short term uptrend. If it remains above it through the close on Monday, the challenge will be successful. The good news is that there is no visible resistance between it and the upper boundary of its intermediate term uptrend (~6700). The bad news is that it created a huge gap up open, which needs to be filled.

 

            All-time highs are historically bullish.

            https://ritholtz.com/2024/02/all-time-highs-are-historically-bullish/

 

            Positioning is worrying but no one cares.

            https://www.zerohedge.com/markets/positioning-worrying-and-nobody-seems-care

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          January existing home sales were up 3.1% versus estimates of +3.0%.

                          https://www.advisorperspectives.com/dshort/updates/2024/02/22/existing-home-sales-reach-five-month-high

 

The February flash manufacturing PMI was 51.5 versus projections of 50.5; the flash services PMI was 51.3 versus 52.0; the flash composite PMI was 51.4 versus 51.9.

 

                        International

 

Final Q4 German GDP growth was -0.3%, in line; the February business climate index was 85.5, in line; the February current conditions index was 86.9 versus 86.7.

 

                        Other

 

            The Fed

 

              Are rate hikes really unthinkable?

              https://www.themoneyillusion.com/are-rate-increases-unthinkable/

 

            Fiscal policy

 

              A profit seeking government.

              https://arnoldkling.substack.com/p/a-profit-seeking-government

 

              CBO revises costs on new energy policy. Guess which way.

              https://www.zerohedge.com/markets/cbo-revised-cost-bidens-energy-policies-466-billion

 

     Bottom line.

 

            How valuable is the advice from CNBC?

            https://slate.com/business/2024/02/cnbc-investing-advice-bad-making-money.html

 

    News on Stocks in Our Portfolios

 

EOG Resources press release (NYSE:EOG): Q4 Non-GAAP EPS of $3.07 misses by $0.04.

Revenue of $6.36B (-5.4% Y/Y) beats by $360M.

 

EOG Resources (NYSE:EOG) declares $0.91/share quarterly dividend, in line with previous.

 

What I am reading today

 

            The first sack of Rome.

            The first sack of Rome wasn't when you think it was (nationalgeographic.com)

 

                        Quote of the day.

            https://cafehayek.com/2024/02/quotation-of-the-day-4552.html

 

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The Morning Call--FOMC minutes' narrative more hawkish than expected

 

The Morning Call

 

2/22/24

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/bonds-stocks-dumped-ahead-jensens-big-night

 

Note: while the S&P finished up on the day, it was not enough to regain the lower boundary of its very short term uptrend, thus voiding it. However, futures are up this morning on the Nivida earnings news. If that pushes the index back above the very short term uptrend boundary, I will reinstate that trend. But the S&P must still deal with the upper boundary of its short term uptrend.

 

            Sentiment remains positive.

            https://www.bespokepremium.com/interactive/posts/think-big-blog/sturdy-sentiment

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly initial jobless claims totaled 201,000 versus predictions of 218,000.

 

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

 

The January Chicago national activity index came in at -0.3 versus consensus of -0.19.

 

                        International

 

                          January EU CPI was -0.4%, in line.

 

The February German flash manufacturing PMI was 42.3 versus expectations of 46.1; the February flash services PMI was 48.2 versus 48.0; the February flash composite PMI was 46.1 versus 47.5; the February EU flash manufacturing PMI was 46.1 versus 47.0; the February flash services PMI was 50.0 versus 48.5; the February flash composite PMI was 48.9 versus 48.5; the February UK flash manufacturing PMI was 47.1 versus 47.5; the February flash services PMI was 54.3 versus 54.1; the February flash composite PMI was 53.3 versus 52.9.

 

 

 

 

 

                        Other

 

                        January architecture billings were sluggish.

                        https://www.calculatedriskblog.com/2024/02/aia-architecture-billings-index-reports.html

 

            The Fed

 

The Fed released the minutes from the last FOMC meeting. They more hawkish than was generally expected. But I thought that the Market took it reasonably well.

              https://www.zerohedge.com/markets/fomc-minutes-7

 

              The Market continues to price in a path to rate cuts in 2024.

              https://www.capitalspectator.com/markets-continue-to-price-in-path-for-rate-cuts-in-2024/

 

            Inflation

 

              It has been thirty years since food ate up this much of your income.

              https://www.wsj.com/economy/consumers/its-been-30-years-since-food-ate-up-this-much-of-your-income-2e3dd3ed?mod=economy_lead_story

 

            Government Shutdown

 

              The deadline looms.

              https://www.zerohedge.com/political/close-deal-or-its-about-blow-speaker-johnson-enters-mccarthy-territory-march-deadline

           

     Bottom line

 

            Knowns, known unknowns and unknown unknowns.

            https://alhambrapartners.com/2024/02/20/weekly-market-pulse-questions/?src=news

 

            Cliff Arness’ top ten peeves.

            https://www.aqr.com/Insights/Research/Journal-Article/My-Top-10-Peeves

 

            Getting the big things right.

            https://theirrelevantinvestor.com/2024/02/17/get-the-big-things-right/

 

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            Higher education crapification.

            https://www.nakedcapitalism.com/2024/02/michael-hudson-higher-education-crapification-the-new-school-case-study.html

 

                        The coming flip from El Nino to La Nina.

            https://www.zerohedge.com/weather/coming-collapse-el-nino-and-flip-la-nina

 

            Which lifestyle changes can help you live longer?

            https://www.zerohedge.com/medical/which-lifestyle-changes-can-make-you-live-longer

 

 

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The Morning Call---S&P breaks very short term uptrend

 

The Morning Call

 

2/21/24

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/bonds-bullion-bid-stocks-skid-ahead-nvdas-big-da

 

Note: the S&P challenged the lower boundary of its very short term uptrend yesterday. If it remains there through the close today, it will negate that trend. If so, then we need to look for the next support levels; which are as follows: the 50 DMA (~4826), the 100 DMA (~4598), the 200 DMA (~4489), the lower boundary of its short term uptrend (~4321), the lower boundary of its intermediate term uptrend (~4261). Be careful.

 

            Equal weighted indices back to 2021 highs, but………

            https://allstarcharts.com/equally-weighted-indexes-back-to-2021-highs/

 

            Margin debt up in January.

            https://www.advisorperspectives.com/dshort/updates/2024/02/20/margin-debt-up-0-2-in-january

 

            Don’t fear all-time highs; understand them.

            Don't Fear All-Time Highs, Understand Them - RIA (realinvestmentadvice.com)

 

            Everyone is in the pool.

            https://www.zerohedge.com/markets/everyones-pool-goldmans-flows-guru-sees-positioning-warning-signs-ahead-nvda-earnings

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications fell 10.6% while purchase applications were down 10.0%.

 

The January leading economic indicators were down 0.4% versus estimates of -0.3%.

                          https://www.advisorperspectives.com/dshort/updates/2024/02/20/leading-economic-index-conference-board-no-longer-forecasting-recession

 

                        International

 

The January Japanese trade balance was -Y1758.3 billion versus predictions of -Y1925.9 billion.

 

                        Other

 

            The Fed

 

              Markets starting to speculate that next Fed move is up not down.

  https://www.bloomberg.com/news/articles/2024-02-20/markets-start-to-speculate-if-the-next-fed-move-is-up-not-down?srnd=premium&embedded-checkout=true&sref=loFkkPMQ

 

              The Fed has a big problem.

              https://www.zerohedge.com/personal-finance/feds-big-problem-there-are-two-economies-only-one-interest-rate

 

            Recession

 

              Recession defined and predicted (?).

              https://econbrowser.com/archives/2024/02/recessions-defined-and-maybe-predicted

 

              Credit cards starting to show strain.

              https://www.advisorperspectives.com/commentaries/2024/02/20/credit-cards-showing-strains-northerntrust

 

              Estimating recession risk using data from the states.

              https://www.capitalspectator.com/estimating-us-recession-risk-using-economic-data-for-states/

 

    Bottom line

 

            The most crowded trade on earth.

            https://www.downtownjoshbrown.com/p/crowded-trade-earth

 

            Low volatility and equity performance.

            https://blogs.cfainstitute.org/investor/2024/02/16/the-low-volatility-factor-and-occams-razor/?s_cid=eml_Enterprising

 

            Where does the trading edge come from?

            https://traderfeed.blogspot.com/2024/02/where-does-trading-edge-come-from.html

 

    News on Stocks in Our Portfolios

 

Expeditors press release (NYSE:EXPD): Q4 GAAP EPS of $1.09 misses by $0.13.

Revenue of $2.3B (-33.1% Y/Y) misses by $10M.

 

 

What I am reading today

 

            You don’t need more how-to advice.

            https://tim.blog/2024/02/09/harajuku-moment/

 

 

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Tuesday Morning Chartology

 

The Morning Call

 

2/20/24

 

The Market

         

    Technical

 

What a week. Plenty of disappointing news. But the S&P took Tuesday’s gut punch in stride, closed that gap down open it created, bounced off the lower boundary of its very short term uptrend, finished in the narrowing range between that very short term lower boundary and the upper boundary of its short term uptrend and hung tough through what many experts thought would be a very volatile (to the downside) option expiration.

 

That stocks handled this scenario as well as it did speak to the continuing underlying strength in the Market. That said, it remains within that narrowing uptrending wedge; and thus, there is still the possibility of breaking below the lower boundary of its very short term uptrend and continuing lower. I don’t think that will occur; but I wouldn’t bet money on it. Indeed, as always, my strategy is to await follow through. I continue to hold the IWN trading position.

Bull Trend Remains Despite Inflation Scare - RIA (realinvestmentadvice.com)

 

            Where are the new lows?

            https://allstarcharts.com/where-are-the-new-lows/

 

            One day option traders suddenly became bearish.

            https://www.zerohedge.com/markets/super-micro-meltdown-3rd-leg-market-melt-stool-breaks

 

            Call options frenzy.

            https://www.zerohedge.com/the-market-ear/if-only-there-were-signs-call-options-frenzy

 

 

 

The long bond was down again last week. It suggests bond investors are discounting a tighter for longer Fed. Whether or not that is the same Goldilocks scenario that the stock boys seem to be betting on is open to question. What isn’t is that TLT made a new lower low, so the trend is down (higher rates).

 

 

 

GLD, like TLT, made a lower low last week. You would expect that if rates were rising. It couldn’t hold its 50 DMA and tested (unsuccessfully) its 100 DMA. Longer term, breaking through the all-time high is now yesterday’s story. I still see no incentive to dabble.

       

 

 

 

 

 

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. And that has been what has been happening since its low in late December. Last week, it easily pushed through its 50 DMA. So, the short term trend is up---generally not a plus for stocks.

 

 

 

 

            Friday in the charts.

            https://www.zerohedge.com/markets/bitcoin-blasts-euphoric-stocks-do-something-hasnt-happened-52-years

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Week in review

 

The stats in the US were terrible as were the primary indicators (no positive or neutral and five negative). Making matters worse, those primary indicators showed growth slowing and inflation rising. To be sure the CPI number was something of an anomaly; but PPI wasn’t. And unfortunately PPI tends to foreshadow CPI. Meaning expect a poor future CPI that isn’t an anomaly. Clearly, this is an abrupt and disappointing break to the nascent trend of upbeat readings. Doesn’t mean that it is over; but this is certainly no positive.

 

Two issues:

 

First, at least for me, is that inflation may not be behind us as I had thought which means the Fed (if you believe its current narrative) could stay tighter for even longer keeping the risk of recession omnipresent for much longer.

 

On the other hand, if you are a cynic like me, you can’t help but think that the Fed will ease (for political reasons) whether it has conquered inflation or not.

 

Second, I (and most of the rest of the universe) believed that we were getting clarity on the question of recession/landing, i.e., that the economy would avoid a hard landing. Last week’s stats certainly raises doubts.

 

Bottom line:

 

(1)   Unfortunately, the inflation risk may not be behind us as per my current forecast. I am not altering it yet but clearly it is now in question. And any further data suggesting that it is not will likely prompt a change. That, in turn, would amplify the impact of a grossly irresponsible fiscal policy which if left unresolved will ultimately push interest rates and inflation to even higher levels, risking a tighter monetary policy and impeding the economy’s ability to grow.

                              

(2)   Just as unfortunate, the question of recession [what kind of landing] which appeared to be gaining clarity, also suffered a setback. Of course, my forecast had been for some type of growth problem which I was considering changing. Last week’s stats increases my hesitation to do so.

 

      A more sanguine take on last week’s retail sales number.

            https://wolfstreet.com/2024/02/15/it-sucks-being-a-retailer-in-january-and-february-but-do-retail-sales-show-consumers-cut-back/

 

     Another positive take on the data.

         https://www.wsj.com/economy/americas-economy-slowedit-probably-wont-stumble-e9661630?mod=economy_lead_story

 

And still no overall sign of recession.

https://www.capitalspectator.com/moderate-slowdown-expected-for-us-q1-gdp-growth/

                                               

                        US

 

 

                        International

 

December YoY EU construction output was up 1.9% versus consensus of -2.3%.            

 

                        Other

 

            Recession

 

              Another crack in the commercial real estate market.

              https://www.zerohedge.com/markets/cracks-another-corner-cre-market

 

     Bottom line.

 

            A macro guide to the Mag 7.

            https://www.zerohedge.com/markets/most-concentrated-market-history-macro-guide-magnificent-7-13-charts

 

    News on Stocks in Our Portfolios

 

Home Depot press release (NYSE:HD): Q4 GAAP EPS of $2.82 beats by $0.04.

Revenue of $34.79B (-2.9% Y/Y) beats by $120M.

 

Home Depot (NYSE:HD) declares $2.25/share quarterly dividend, 7.7% increase from prior dividend of $2.09.

 

FedEx (NYSE:FDX) declared $1.26/share quarterly dividend, in line with previous.

 

 

What I am reading today

 

            A must read article on Hayek and his critique of big government.

            https://lawliberty.org/still-trudging-towards-serfdom/

 

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