The Morning Call---Are the secular trends changing?

 

The Morning Call

 

5/22/24

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/stocks-flat-fearless-vol-sellers-continue-push-ahead-nvdafomc-mins

 

            No time to be bearish.

            https://allstarcharts.com/permabears-hate-nashville/

 

            The Market performance following periods of extreme volatility.

            https://www.bespokepremium.com/interactive/posts/think-big-blog/extreme-nasdaq-extremes

 

            The Market performance in an election year.

            https://ofdollarsanddata.com/how-does-the-stock-market-perform-in-an-election-year/

 

            Margin debt down 1.1% in April.

            https://www.advisorperspectives.com/dshort/updates/2024/05/21/margin-debt-down-april-2024

 

            The dollar rally falters.

            https://www.ft.com/content/27a1864b-53e8-4c8c-afdc-b7763ed42363

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications were up 1.9% while purchase applications were down 1.0%.

 

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

 

                        International

 

March Japanese machine orders were up 2.9% versus estimates of -2.2%; the April trade balance was -Y462.4 billion versus -Y339.5 billion.

 

April UK CPI was +0.3% versus predictions of +0.2%; core CPI was +0.9% versus +0.7%.

 

                        Other

 

                          YoY LA port traffic up in April.

                          https://www.calculatedriskblog.com/2024/05/la-port-traffic-increased-year-over.html

 

            Fiscal Policy

 

              Addressing the debt bomb.

              https://fee.org/articles/is-it-time-to-hold-a-convention-of-the-states-to-address-the-debt-bomb/

 

              Global bankers suddenly worried about US national debt.

              https://www.zerohedge.com/economics/global-bankers-are-suddenly-worried-about-soaring-us-national-debt

 

            Recession

 

              Picking a peak in economic activity.

              https://www.capitalspectator.com/is-the-yield-curve-still-relevant-an-economist-clarifies/

 

              A detailed look at household credit.

              https://assets.realclear.com/files/2024/05/2428_ny_fed_-_hh_debt_q1_2024.pdf

 

            Geopolitics

 

              The wrath of Khan.

              https://www.zerohedge.com/geopolitical/wrath-khan-or-why-some-point-lack-global-rule-law-will-matter-mightily

 

     Bottom line.

 

            Are the secular trends changing? (must read)

            https://alhambrapartners.com/2024/05/19/weekly-market-pulse-ch-ch-changes/?src=news

 

            What an aging population means for investing.

            https://www.bloomberg.com/news/articles/2024-05-21/what-a-world-growing-older-fast-means-for-investing?srnd=homepage-americas&sref=loFkkPMQ

 

            Expected future S&P earnings.

            https://politicalcalculations.blogspot.com/2024/05/spring-2024-snapshot-of-expected-future.html

 

            Benchmarking your portfolio may have more risk than you think.

            Benchmarking Your Portfolio May Have More Risk Than You Think - RIA (realinvestmentadvice.com)

 

    News on Stocks in Our Portfolios

 

Williams-Sonoma press release (NYSE:WSM): Q1 GAAP EPS of $4.07 beats by $1.37.

Revenue of $1.66B (-5.7% Y/Y) beats by $10M.

 

What I am reading today

 

           

 

 

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The Morning Call--The inflation debate

 

The Morning Call

 

5/21/24

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/markets/crypto-soars-ether-etf-hope-downbeat-dimon-sends-gold-record-er-highs

 

            The most new highs in years.

            https://allstarcharts.com/most-new-highs-in-years-2/

 

            Bears turning bulls.

            https://www.zerohedge.com/the-market-ear/bears-turning-bulls

 

            Gold hits new high.

            https://www.bloomberg.com/opinion/articles/2024-05-20/cooling-apartment-rents-won-t-last-long?srnd=homepage-americas&sref=loFkkPMQ

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                        International

 

The March EU trade balance was E24.1 billion versus forecasts of E19.9 billion; March YoY construction output rose 0.1% versus -1.8%.

 

April German PPI was up 0.2%, in line.

 

The May UK industrial trends orders index was -33 versus projections of -20.

 

                        Other

 

            Fiscal Policy

 

              Deficient reporting.

              https://cafehayek.com/2024/05/deficient-reporting.html

 

            Inflation

 

This from my favorite optimist. His outlook is for slower growth and lower inflation---the latter being the opposite of my forecast. Of course, he is a professional economist. So act accordingly. That said, until I see some sanity in our fiscal/monetary policies and weaker employment, I am sticking with my story.

https://scottgrannis.blogspot.com/2024/05/charts-with-message.html

 

              More on the inflation debate.

              https://www.advisorperspectives.com/commentaries/2024/05/20/inflation-conversation-john-mauldin

 

I linked to an article two weeks ago that argued that apartment rents were on their way higher and that would have an impact on the owner’s equivalent rent portion of CPI. The import being that inflation was unlikely to decline as much as many think (see above). Here is more on that point.

              https://www.bloomberg.com/opinion/articles/2024-05-20/cooling-apartment-rents-won-t-last-long?srnd=homepage-americas&sref=loFkkPMQ

 

            Recession

 

              US GDP is recovering faster than other advanced economies.

              https://econbrowser.com/archives/2024/05/fed-board-why-is-the-u-s-gdp-recovering-faster-than-other-advanced-economies

 

              Borrowing conditions for corporations are improving.

              https://www.ft.com/content/97044e7e-ccf7-4b87-95f6-8aeee7ea0e80

 

            China

 

              Trade war. What is it good for?

              https://www.politico.com/news/magazine/2024/05/18/biden-trump-trade-00158499

 

     Bottom line

 

            How long can good times keep rolling?

            https://www.ft.com/content/b6bb50b9-4f4e-4acb-ad5f-90d5ac3beaa5

 

            Investment advice from Bill Miller.

            https://www.investmenttalk.co/p/a-masterclass-with-bill-miller

 

    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.

 

 

 

Monday Morning Chartology

 

The Morning Call

 

5/20//24

 

The Market

         

    Technical

 

The S&P had another good week, pushing above the upper boundary of its short term uptrend as well as its former all-time high. The only visible resistance now is the upper boundaries of its intermediate term uptrend (~6800) and long term uptrend (~7100). I am not suggesting those as reasonable near term targets; just pointing out the potential upside. Undoubtedly, there will be much back and forth before either of those levels are reached. Still, there is nothing else to shoot for.

 

Money market assets rise to highest level in a month.

https://www.bloomberg.com/news/articles/2024-05-16/us-money-market-assets-rise-to-highest-level-in-a-month?srnd=homepage-americas&sref=loFkkPMQ

 

            Retail has engaged.

            https://www.zerohedge.com/markets/forget-fomo-fomu-back-goldman-flows-guru-says-retail-has-engaged

 

            Smells like a summer rally.

            https://www.zerohedge.com/the-market-ear/smells-summer-rally

 

            The big VIX short.

            https://www.zerohedge.com/the-market-ear/3-extreme-volatility-charts-we-are-watching-big-vix-short

 

 

 

 

With the investor world amped up by the promise of lower rates, it is not surprising the long bond had a positive week. The good news is that it successfully challenged its very short term uptrend, resetting it to support. The bad news is that it remains (1) below its 100 and 200 DMAs, (2) in downtrends across all timeframes and (3) its advance stopped dead in its tracks where the upper boundary of a very short term downtrend [in this case, the red line] and the 200 DMA converge. Getting through that dual resistance level should take some time and effort. If it is successful, then it is probably safe to assume that price [rates] are headed up [down]. That needs to happen before a bet on bonds makes sense.

 

Bonds trigger a tactical buy.

https://allstarcharts.com/bonds-trigger-a-tactical-buy/

 

 

 

 

GLD finished above its former closing high, reestablishing a very short term uptrend and opening the way for higher prices. Like the S&P, there is little visible resistance save for the upper boundary of its long term uptrend which is so far away as to be unthinkable except in the very, very long term. That said, the question now is where will gold find resistance? Given my concern about the current irresponsible fiscal and monetary policies, my vote is clearly higher. I added to my GDX (gold miners ETF) trading position on Friday.

 

Is gold’s run done?

https://investorplace.com/smartmoney/2024/05/gold-is-2024-leader-but-is-run-done/

 

Probably not.

https://www.zerohedge.com/markets/momentum-its-favor-gold-has-potential-head-higher

 

 

 

The dollar was down on the week (at last getting in step with the long bond and gold). It successfully challenged its 200 DMA (now resistance) but held firmly at the lower boundary of its very short term uptrend and 50 DMA. Let’s see if it holds.

 

 

            Friday in the charts.

            https://www.zerohedge.com/markets/dismal-data-sparks-dollar-dump-everything-else-rips-week

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Week in review

 

Last week’s stats were negative as were the primary indicators (two plus, three minus). The center of attention was the inflation data which was mixed (PPI negative, CPI positive); but consensus was that the PPI wasn’t as bad as CPI was good. So, everyone got jiggy.

 

Not me. I continue to believe that inflation is as good as its going to get absent a more fiscally responsible congress and less compliant Fed. Clearly, I don’t believe the ‘higher for longer’ storyline the Fed is trying to sell.

 

Fears of recession took a back seat despite the dataflow---which doesn’t concern me since I don’t think that a recession is in the cards, at least in the short term. And in the absence of a negative turn in the employment stats, I am sticking with the ‘muddle through’ scenario.

 

Bottom line:

 

(1)   as long as the government pursues its current spend, spend policy, I don’t see us making any further progress in lowering the inflation rate. Indeed, I don’t think that the Fed has any choice but to continue monetizing the government IOUs.

 

Congress’s bipartisan spending addiction.

https://thehill.com/opinion/4663193-mulvaney-congress-must-break-its-bipartisan-addiction-to-spending/

 

 

(2)   the economy seems to be returning to its pre-covid sluggish growth path---the result primarily of the ‘crowding out’ effects of irresponsible government spending/financing.

                                

                                  

                                 Barry Ritholtz argues that all is well.

                         https://ritholtz.com/2024/05/what-stagflation/

                  

                        US

 

                         

                        International

 

           

                        Other

 

            Recession

 

              Recession Alert weekly leading economic index.

              https://www.advisorperspectives.com/dshort/updates/2024/05/17/recession-weekly-leading-economic-index

 

     Bottom line.

 

            Bad news is good news.

            Bad News Is Good News As Markets Set Record Highs - RIA (realinvestmentadvice.com)

 

    News on Stocks in Our Portfolios

 

What I am reading today

 

            Monday morning humor---your tax dollars at work.

            https://www.zerohedge.com/political/waffle-house-chaos-ensues-fiery-house-catfight

 

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