Twenty-three miles outside the crumbling national capital. Everything seems to be lost. The seat of government was forced to flee the city. snow. Endless. Heavy for three days now. December 25, 1777. The winter of doom had only just begun. The guards stood on their hats, only to put something under their bare feet. Twelve thousand soldiers, the last hope of the Continental Rough Army is still in the field. More than three thousand are considered unfit for service due to illness.
Holiday dinner? Everything can be found locally. Maybe some lamb. Some nuts, probably. Not close enough for everyone. Shelter? For the most part, wooden structures were hastily built and the remains of what used to be tents. This… will be for all intents and purposes… the national capital for approximately the next six months. A few relentlessly persistent soldiers, barely able to do the job on their own during a day’s march through Philadelphia. Thank God this enemy did not like to fight in the cold.
It was Christmas day. That night, his colleagues found him in his tent. It was as cold as the night air and the earth lay upon it. His name was Jethro, a freed African American who attended Connecticut and died alone from malnutrition and exposure in this semi-forested area of Pennsylvania. He was the first of many terrible non-combat deaths that winter. We don’t know his last name or even if we have a name. We only know that his colleagues called him Jethro, and he made his mark fighting for and defending a free home and the ideals we all believe in, but which may have seemed so far-fetched to him.
The army that left Valley Forge in the spring of 1778 was not the savage crew that took refuge in the wilderness that miserable December. They were so trained that newcomer Friedrich Wilhelm von Steuben, who presented himself to George Washington as something more than he really was, taught the army everything from discipline to the tactics of small units of the day. He was the first true training teacher in the history of the US Army. The Continental Army became a confident and capable fighting force that would spend years in the field and with the help of French soldiers and sailors, gain independence from the global superpower of the time.
As we head into the holidays in 2021, let’s be grateful to those who forced themselves to endure long ago, when everyone seemed hopeless. Let’s say a little prayer on Saturday morning as we enjoy the company of our loved ones or at least talk to them. Let us say that little prayer for the repose of the soul of Jethro, an American soldier, who died alone in a cold field in Pennsylvania, and for the many who followed him forever that winter. to Jethro. Always honest.
Friday may be a market holiday, but on Wednesday it became clear that trading volumes are really starting to dwindle. Wednesday was actually the second day of a broad rally in the stock market that saw the NASDAQ Composite and S&P 500 recover both the 50-day simple moving averages and the 21-day moving average. Failure to participate forces us to delay the assertion that “everything is fine”. However, seasonal forces are on the “buy” side at this point. This does not mean that the “Santa Claus Rally” is a certainty. Nothing is certain. However, the last week of the calendar year over the past fifteen years has produced 10 winners and five losers with an average return (S&P 500) of 0.88%.
On Wednesday, all 11 selected SPDR ETFs in the S&P sector closed in the green, led by Consumer Discretionary Authorities (XLY) which was in turn led by Tesla-led (TSLA). The tech (XLK) and healthcare (XLV) sectors also posted gains of over 1% as neither cyclical, nor defensive, nor growth-type stocks really distinguished themselves during the session. The US Treasury yield curve, buy/sell (CBOE) VIX and (CBOE) ratios all appear to have flattened. The winners beat the losers on Wednesday by nearly three to one on the New York Stock Exchange and by nearly five to three on the Nasdaq. The advanced volume made up 75.1% of the NYSE Composite and 65.3% of the Nasdaq Composite. Total trading volume, as noted above, was light, down 19.5% from Tuesday’s total for names listed on the New York Stock Exchange, and down 11.2% from Tuesday for names listed on the Nasdaq market website.
Jingle jingle. This is the season… for the federal government to pile tons of macroeconomic data down your throat in just a few hours. Can you handle data on jobless claims, personal income, personal spending, consumer inflation, durable goods orders, new home sales, and consumer sentiment all in about 90 minutes? Can you algae? Yes, they can, so you should be able to, too.
While all of the above data points are important in the grand scheme of things, Core PCE on a yearly basis is what the financial markets will realize. Wall Street is looking at 4.5% for the month of November, up from 4.1% in October. For comparison purposes, the core CPI for November was 4.9%. The CPI is produced by the Bureau of Labor Statistics, while the PCI print provided by the Bureau of Labor Statistics is what the Fed refers to when they “mention” inflation…perhaps because it’s been consistently running cooler than the CPI for years many.
President Biden, on Wednesday… extended the hold on student loans another 90 days as the Omicron variant of the SARS-CoV-2 coronavirus spreads rapidly across the country. This extension will push the expected appeal of individuals serving those loans through May 1. Meanwhile, a total of 41 million borrowers save a total of $5 billion a month, keeping an unknown number of those borrowers from defaulting.
Thank you no thank you
On Wednesday, the U.S. Food and Drug Administration (FDA) issued an emergency use authorization (EUA) for Pfizer’s oral antiviral therapy Paxlovid (PFE) that showed an 89% efficacy rate in reducing hospitalization risks compared to a placebo for adults. Those suffering from Covid-19. Permission was expected.
Markets had expected Merck’s antiviral molnupiravir to get an EUA this week, but so far this has been a “no-go”. Instead, after Phase 3 trials showed that the treatment reduced the risk of hospitalization by nearly 30% for patients with Covid, France became the first country to publicly cancel an order for the drug, based on the results of that study. In contrast, the United Kingdom placed an order on Wednesday for an additional 1.75 million courses, bringing the total demand for that country to 2.23 million courses.
According to Cloudflare (NET), TikTok app owned by Chinese company ByteDance was the most visited website in the world in 2021, ditching Alphabet (GOOGL) Google, which took second place this year. The Meta Platform (FB) will close the year in third place. Just FYI, I still have never used TikTok. I think I’m out of reach.
Perhaps the most exciting thing was the news, or rather a report in the website “Mashed” indicating that the Taco Bell fast-food chain of Yum! Brands (YUM) might take a page out of the McDonald’s (MCD) McRib playbook, thinking about bringing the fan-favorite “Mexican pizza” item back to the menu, perhaps for a limited time. Taco Bell has not confirmed this possibility. On that note, I enjoy at least one Macaribe each year and eagerly await the return of the Mexican pizza.
Has anyone else watched this epic 200-day battle of SMA for CRM giant Salesforce? This is something you must see. From 10,000 feet, readers will see the support that appeared at the nearly perfect 61.8% Fibonacci retracement level of the March to November rally. Note that the quick bounce came from a failed cup with a handle pattern that left a gap between $277 and $283.
Now, readers will see the RSI trying to recover from technically oversold territory, the full stochastic still screaming “oversold,” and the daily MACD that looks like Tokyo the day after their little visit to King Kong and Godzilla. Let’s take a closer look.
Just look at that fight in the 200 day streak. For new kids, the 200-day streak is where risk managers force portfolio managers to act. Do you find support? They add exposure. Lose that streak, and they’ll reduce exposure to a heartbeat and blame each other on the road. Note that the 200-day line was already support in early December and has been resistance for the past 4 sessions. However, the stock never lost contact with that line.
I bet Salesforce in “after hours” trading and added to my existing long positions. I canceled my previous target price which was closer to $400 than $300. Now, I’m just looking to fill that gap. I’ll cut the bait as soon as I see this line and notice other portfolio managers running for the hills. Fortunately, I am my own risk manager.
economics (all times eastern)
08:30 – Initial Jobless Claims (weekly): Expect 203 thousand, another 206 thousand.
08:30 – Continuing Claims (weekly): last 1.854 m.
08:30 – Personal Income (November): Expect 0.5% m/m, another 0.5% m/m.
08:30 – Consumer Spending (November): We expect 0.6% m/mAnd Another 1.3% m/m.
08:30 – PCE Price Index (November): We expect 5.6% annually, another 5.0% annually.
08:30 – Core PCE Price Index (November): We expect 4.5% YoY, another 4.1% YoY.
08:30 – Durable Goods Orders (November): Expect 1.5% m/m, the latter -0.5% m/m.
08:30 – previous transfer (November): We expect 0.6% m/mAnd Another 0.5% m/m.
08:30 – Previous Defense (November): We expect 1.2% m/m, another 0.8% m/m.
08:30 – Core Capital Goods (November): Expect 0.5% m/mAnd Another 0.6% m/m.
10:00 – New Home Sales (November): We expect 770 thousand, the last 745 thousand walked.
10:00 – Consumer sentiment U of M (December – Fahrenheit): flashed 70.4.
10:30 – Natural Gas Inventories (Weekly): Another -88B cf.
13:00 – Baker Hughes rig count (weekly): last 475.
Fed (all times eastern)
No scheduled public appearances.
Today’s Top Earnings (EPS consensus forecast)
Before Opening (SAFM) (6.19)
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