ValueSide

What we're discussing here are the economic ramifications of all this. And the fact, that these ramifications are likely to be felt beginning this week.

And the first that we'll really see about it, will be in further diminished goods and services. The noted Supply Chain, for instance, will likely become much worse. As delivery of items you want, may be delayed either from the current supply issues or now from these new non-compliant workers, no longer on their jobs.  

In a world in which businesses are desperately understaffed, having even more workers left at home, will dramatically slow the economy.

The first thing to know about today is that last night many of the Street's basic assumptions were laid to rest. The idea we have a fairly good economy was destroyed by a preliminary GDP report which said we're only growing at 2%. less than 1/3rd the level of the last 2 GDP reports. Well, at least the Street knew they could rely on the big five, to continue chugging along, supporting a positive growth scenario for the market. Then came the dismal Apple earnings, and the even more dismal Amazon earnings. Bringing their sense of invincibility back down to earth.  

It was one of those days, with lots of churns, but no real directions. As market averages flat, but behind all of that was a lot of angst and a few choice words among analysts. The first thing to know about today is that last night many of the Street's basic assumptions were laid to rest. The idea we have a fairly good economy was destroyed by a preliminary GDP report which said we're only growing at 2%. less than 1/3rd the level of the last 2 GDP reports.

Well. As Wall Street breaks for Lunch, there are two stocks that are conspicuous for their decline. The same two were higher all day yesterday when markets were also mixed. Today Amazon and Apple are both down nearly 3% at times, reflecting their not-so-great earnings. It's become a truism on Wall Street: rally on the rumor, sell on the news.

There are many who will miss the historic impact of yesterday. In the history of modern finance, this was as large a disconnect between reality and the market's behavior as we'll ever see. In the span of a day, we went from the euphoria of all-time record highs in the NASDAQ and S&P 500, to some of the most crushing economic news ever. When first the Nation's Gross Domestic Product was reported to be far below the growth level that the Street assumed. And this was followed later in the afternoon, by two huge misses by two of the market's leaders: Amazon and Apple.

On to Apple: Apple comes through with very good results, again I read the Press Release, with revenue up by 29%. But quarterly earnings per share show only $1.24 per share which is 6 cents below the quarter before. So I'm not sure what's going on here either. But these results appear to be somewhat mixed. We'll take our time to look both these over tonight, and report back in the morning.    

On to Apple: Apple comes through with very good results, again I read the Press Release, with revenue up by 29%. But quarterly earnings per share show only $1.24 per share which is 6 cents below the quarter before. So I'm not sure what's going on here either. But these results appear to be somewhat mixed. We'll take our time to look both these over tonight, and report back in the morning.

And for traders up and down the street they would rather focus on the good news from these two market titans, than the dismal news coming from the GDP report. But buried within the pages of the current report is something that everyone needs to make a note of: Consumer Spending.

This morning we'll receive our first look at the Third Quarter's Gross Domestic Product. The ultimate MACRO Number, the sum total of the economy's goods and services. It's also the final checksum, making sure that what we've seen so far in the economy really adds up. Now a checksum is a block of data, used to make sure that your big database does not have any errors.

I see the market operating as one of those old Zane Grey Novels. A series of episodes unfolding before us. Each with one theme and one characteristic. Last year was the episode of  LockDown, with that terrible crash in March of 2020. This was followed by what's been up to now, the Episode of the Recovery, which again got fully underway in March of this year.

But you can already sense that most of the Street are looking ahead to 8:30 tomorrow morning, when the latest numbers on the nation's overall economy, the Gross National Product will be announced. And frankly, it's a real puzzle, and that's reflected in the current estimate, which ranges from essentially zero to almost a 4% growth.

Well, It's on days like today that you realize just how concentrated our financial markets have become. Three stocks are up right now Microsoft, Alphabet Google, both of which had earnings last night, and Tesla which reported their results a week ago. This morning all three are up by better than 4%, and on the basis of those performances, NASDAQ has traded higher all day.

I think that these 10 days we're in now are critical in that they could set the stage for yet another new Episode in the market. The reason for this is that this is when we will get the largest collection of corporate and economic reports of the quarter. It will be the time when portfolio managers and brokers, establish the strategies that will carry them through to the end of the year.

Alphabet and Microsoft are following the old Wall Street Tradition of announcing earnings outside of market hours. This is done so that the results do not disrupt the market action of the stock.

Alphabet and Microsoft are following the old Wall Street Tradition of announcing earnings outside of market hours. This is done so that the results do not disrupt the market action of the stock.      

For me, the most surprising report of the day so far has been the Conference Board's survey of Consumer Confidence. Frankly, I was looking for a much lower report here, and instead, the report came in 4 points higher than last month. This runs counter what we've seen over the last 3 or 4 months. During that time both the Conference Board's own report and the Michigan Survey of Consumer Sentiment have been ticking down. Leading me to believe that the consumer was starting to lose heart. And that's perfectly understandable when you think about it. Record inflation, combined with record shortages is enough for anyone to lose spirit.

Opinions on Wall Street are a dime a dozen. Turn on any of the financial channels and you can hear a different opinion 24/7. But hard data, now that's a different matter. By law and regulation, much of this kind of data is carefully regulated and must adhere to strict timing. And that's most especially the case with corporate earnings.  

For Facebook a very solid report with Operating Income up a very impressive 30%. But to give you some idea of what the new Biden Corporate taxes will mean if passed, Facebook just set aside another 800 million dollars for coming higher taxes. Bringing their projected tax liability up to $1.3 billion dollars. A 300% plus jump for taxes.  

For Facebook a very solid report with Operating Income up a very impressive 30%. But to give you some idea of what the new Biden Corporate taxes will mean if passed, Facebook just set aside another 800 million dollars for coming higher taxes. Bringing their projected tax liability up to $1.3 billion dollars. A 300% plus jump for taxes.

These next ten days are likely to be decisive, setting both the tone and direction for the next phase in the market. During this week and a half, we're going to get the big Macro numbers that tell us how the economy overall is doing, as well as a detailed look at the market leaders, and finally, a new monetary policy all set to emerge.

This week China goes for yet another record: Number One in Corporate Malfeasance. This is a record long held by the Americans. When 13 years ago Lehman Brothers, the large New York-Based financial firm, threatened the US Economy. As it was Lehman was the direct cause of America's steepest recession in the 21st century.

China is a land of Superlatives. A country that likes really strives to be number one. Of course, you know that China has the largest population in the world, at an estimated 1.4 billion souls. Did you know that China by some measures has the largest economy in the world? Exceeding the USA? Or that it now has the largest Navy in the World. That China is the largest Bitcoin miner in the world?  

China's candidate for number 1 in corporate malfeasance is, as you know the Evergrande Group, headquartered in Guangzhou .

This week China goes for yet another record: Number One in Corporate Malfeasance. This is a record long held by the Americans. When 13 years ago Lehman Brothers, the large New York-based financial firm, threatened the US Economy. As it was Lehman was the direct cause of America's steepest recession in the 21st century.  

Yesterday. Donald Trump, yes THAT Donald Trump former President of the United States officially launched his “special purpose acquisition company,” SPAC for short. The purpose of which is to start a new series of social media platforms, designed, quite frankly, to compete with some of the existing platforms which threw him off. Platforms like Twitter and Facebook and Google. Google isn't strictly speaking a social media company, but they've had their own agenda.

More of that in a minute. Right now we want to discuss how this new stock, Digital World Acquisitions, symbol DWAC, has performed in two days of trading. And this is the part that is utterly amazing. This is the part you want to write home about. This is the part that we will remember for a long time.

Yesterday. Donald Trump, yes THAT Donald Trump former President of the United States officially launched his “special purpose acquisition company,” SPAC for short. The purpose of which is to start a new series of social media platforms, designed, quite frankly, to compete with some of the existing platforms which threw him off. Platforms like Twitter and Facebook and Google. Google isn't strictly speaking a social media company, but they've had their own agenda.

And finally on an upbeat note. Donald Trump launched his new social media company, Digital World Acquisitions company. And it's one of the hottest new issues I ever recall. After just two days of the most frantic trading ever, Trump's new company is worth an unbelievable $3 billion dollars. Putting it in the top one-third of all publicly traded companies, before they even open their doors.

Yesterday DWAC, Digital World Acquisitions began trading at roughly $10 per share. But it shot through that level in a heartbeat. And before you could say, Donald John Trump, it doubled in price. Then doubled again, and finally finished the day up by a factor of fivefold.

Yesterday. Donald Trump, yes THAT Donald Trump former President of the United States officially launched his “special purpose acquisition company,” SPAC for short. The purpose of which is to start a new series of social media platforms, designed, quite frankly, to compete with some of the existing platforms which threw him off. Platforms like Twitter and Facebook and Google. Google isn't strictly speaking a social media company, but they've had their own agenda.

This entire debacle, which is labeled the Supply Chain Issue grows worse each and every day. This is simply the worst Transportation issue of my lifetime. And at my age, that's saying a lot. I believe that this inability to transport the goods and raw materials needed for commerce will single-handedly push us into a recession. A recession that we can ill afford. Coming just as we try to manage our way out of last year's economic lock-down.  

It had been rumored for months. Yesterday was the day that Real Estate Mogul, Reality TV Host, and the 45th President Of The United States became Donald Trump, Social Media Entrepreneur.

In finance, he's the bond market. There's a reason, after all, that the late Louis Rukeyser called them the bond ghouls. They're the ones who always have a dour outlook, and measure markets with basis points. There's one other bad thing I can say about the bond market, most unfortunately they're often right.  

Now while the Treasury does auction bonds very often, some weeks even every day. They don't auction every maturity every day. In fact, it's a very complex process they use to model out just what maturity bonds they want to offer at any given time. Managing the weighted average maturity of the US Treasuries Bond Portfolio has to be one of the most formidable tasks I can imagine.

Well, it's been a day of second thoughts. We began the day digesting last's Nights Report by Tesla of their latest quarterly results. Markets were somewhat hesitant last evening, but as markets opened this morning traders decide that Tesla's beat on both top line and bottom line revenue was good enough to drive the stock higher. Right now Tesla stock is up over 3 1/2% and a real bright spot in what has been a rather dull session.

He's the guy who comes to the company party, sits in the corner sipping his Dubonnet, adding up the bar tab. In finance, he's the bond market. There's a reason, after all, that the late Louis Rukeyser called them the bond ghouls.

Yesterday we pointed out that the Atlanta Branch of the Federal Reserve Bank, in their GDP Now Model is now calling for Economic Growth this quarter of just one-half of one percent. Essentially zero growth.  

Yesterday we pointed out that the Atlanta Branch of the Federal Reserve Bank, in their GDP Now Model is now calling for Economic Growth this quarter of just one-half of one percent. Essentially zero growth.

It's a Day when records seem to be breaking left and right. But it is Bitcoin that shines the brightest. The worlds leading Crypto Currency has leaped above its old high setback in April. In fact, earlier Bitcoin briefly traded above $67,000 dollars, at one point this morning.  

Yesterday we pointed out that the Atlanta Branch of the Federal Reserve Bank, in their GDP Now Model is now calling for Economic Growth this quarter of just one-half of one percent. Essentially zero growth.

We call this the “Supply Chain” Issue. It's the inability of US consumers to secure the goods and products that they wish to purchase. I recently tried to order a piece of furniture. I was told it would be available in about 7 months. But when pressed the store wasn't really sure that it would really be available then. They just hoped it would. And I'm not alone in this. Thousands of American's are finding the same. Items that we want to purchase just aren't available.

Right about now, it's become apparent to nearly everyone, that something is terribly wrong. That we are in the very precarious position of having many of the goods we need on a daily basis, a thousand miles away across the Pacific Ocean. That we've been played. That a very carefully orchestrated, long-term plan, undercut our market prices and moved our Manufacturing to China, and other Asian nations.

But like so many issues in this country right now, Supply Chain does little to help us understand just what the real problem is. It obscures, rather than enlightens. It hides the real parties who are at fault. Implying that somehow an amorphous transportation problem is at work. When the reality of where we are is much more sinister...

We are living in a growing economic crisis. A Crisis that will shortly see, if you haven't already, an emptying of store shelves, a tightening of vital supplies. We call this the “Supply Chain” Issue. It's the inability of US consumers to secure the goods and products that they wish to purchase.

The CARB has prohibited any truck operating at the ports, the technical name for these kinds of trucks is Drayage Trucks, The CARB has required any of the older Drayage Trucks to meet impossibly high emissions standards. Absolutely eliminating any truck which is over 10 years old, and I'm told essentially eliminating any truck over 3 to 5 years old. So if you want to work as a Drayage Truck, the trucks which actually drive off those big cargo containers, then you must have a brand new truck, or you're not allowed.

Are we seeing unfold here something entirely unpredictable? Is the recovery unwinding? It sure looks so at the moment. All this was reflected in today's trading, Where The Dow never could get into positive territory. Although both the NASDAQ and S&P 500 did finish higher.

It was two shocks in a row, as first China and then the US reported dramatically lowered industrial production. Industrial production which, if it continues for another quarter will signal that the world's two largest economies have entered into at least an industrial recession.

But today's report on the Chinese Economy shows that China's economy grew at less than 5% for the past 12 months. But it's worse than that, much worse.