A Tale of Two Tapes: Macro and Market

Yesterday’s PPI and Philly Fed disappointed, but in different ways. [The Rude Awakening] February 17, 2023 [WEBSITE]( | [UNSUBSCRIBE]( [Ed. note: Important housekeeping note: As you may have noticed, your emails are now coming from a new email address: rude@mb.paradigmpressgroup.com. Ensure delivery of every email in your subscription by following [these simple whitelisting instructions.]( A Tale of Two Tapes: Macro and Market - Yesterday’s Producer Price Index (PPI) surprised to the upside. - The Philly Fed was decimated. - The underlying macro still doesn’t look good at all. [[Trade Alert] This Explosive Sector Is Primed To Deliver Huge Gains… Fast!]( [Click here to learn more]( Have a few hundred dollars and the desire to make huge gains? If so, [this explosive stock market sector]( needs your attention right away. I’m talking about biotech. And as one headline from late July reads, “investors back [biotech]… as sector booms.” Point being, there’s a lot of money up for grabs right now. Best of all, we’ve identified what could be the No. 1 biotech stock pick in the world. It could deliver substantial gains over the coming weeks to those who act fast. And you can still buy shares for less than $3. [Just click here now for the urgent details.]( [Click Here To Learn More]( [Sean Ring] SEAN RING Happy Friday from yet another unseasonably warm day in Asti! Today, temperatures are expected to reach 17C (63F). I think I’ll head outside later for a mid-winter al fresco Aperol Spritz. I read some sad news earlier that Tim McCarver died, aged 81. If you’re not a baseball fan, McCarver was the ubiquitous color commentator for many a baseball broadcast over the last forty years. He did much of the commentary for the 1986 Mets World Series-winning team and seemed to always be on my television while I was growing up. McCarver wasn’t to everyone’s taste. But to me, his death means one more piece of Americana slipped away. Rest in peace. One quick note: as Monday is President’s Day, I won’t be writing a Rude. So, enjoy your day off, and I’ll see you again on Tuesday. In today’s Rude, let’s catch up on the macro and why this stock market rally is fragile. Note: All charts below are courtesy of Dr. Lev Borodovsky’s [The Daily Shot]( unless otherwise indicated. The PPI First, here’s a quick refresher on the Producer Price Index (PPI). From the Bureau of Labor Statistics: The Producer Price Index (PPI) program measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services. How does the PPI differ from the CPI (Consumer Price Index)? The PPI is from the suppliers’ point of view for the first commercial transaction. The CPI measures the prices consumers encounter on their - the last - transaction for a good or service. So, you can infer that the PPI front runs the CPI regarding inflation. As you look at the chart below, you can see that the PPI has “decreased” year-on-year to 6.0%. [sjn] Credit: [The Wall Street Journal]( But that really means that producers are paying 6% more this year than they were last year. Does that sound like the inflation problem has been solved? And since the big pop in inflation came in 2022, we should look at the month-on-month numbers anyway. What do they tell us? The surveyors underestimated the month-on-month increase (0.7% actual versus 0.4% survey). Also, this month’s increase was much higher than last month’s. In fact, producer prices fell in January. So, this inflation nightmare is nowhere near over. [SJN] This isn’t bullish for stocks. The Philly Fed Speaking of abysmal, how about that Philly Fed print? Quickly, the Philly Fed is a leading economic indicator that gives us an idea of what direction the region, and by extension, the country, is going. The Philly Fed, technically called The Manufacturing Business Outlook Survey, is a monthly survey of manufacturers in the Third Federal Reserve District. The Third Federal Reserve District covers the state of Delaware, nine counties in southern New Jersey, and 48 counties in the eastern two-thirds of Pennsylvania. [SJN] Credit: [Investopedia]( Participants indicate the direction of change in overall business activity and the various activity measures at their plants: employment, working hours, new and unfilled orders, shipments, inventories, delivery times, prices paid, and prices received. The survey has been conducted each month since May 1968. Remember that only about 11% of the US economy is manufacturing. That’s why the market doesn’t tank when news this bad comes out about manufacturing. First, notice that February’s number was -24.3 against a projected -7.5, which is worse than last month’s number. The trend has been down since 2022. [SJN] It’s a horrendous print. Inventories are now up, as well. That means manufacturers can’t offload the stuff they’ve made so far. This has been the story since the end of 2022. [SJN] There was no good news in that report. Lastly, let’s look at the Fed's pish-talking presidents. [URGENT! The Truth About Biden’s Role In the Nord Stream Attack]( President Biden has denied all involvement in the Nord Stream pipeline attack… But in [this SHOCKING presentation]( one man reveals evidence that Biden not only ordered the attack… But that it will devastating consequences for every American citizen… Including crippling fuel shortages… widespread “Biden blackouts”… and energy bills rocketing to $1000! [Click here to learn the TRUTH, and how to protect yourself from the fallout](. [Click Here To Learn More]( Fed Presidents and Stocks I’m really of two minds when it comes to these people. On the one hand, the market can use all the information it can get. On the other hand, I wish these people would just shut up. At 08:45 yesterday morning, Cleveland Fed President Loretta Mester said the following: [SJN] Not much happened in the markets at the time, to be fair. But once St. Louis’s Jimmy Bullard opened his gob in the early afternoon… [SJN] …the market didn’t like it one bit. Only 5 of the 12 Federal Reserve Presidents are on the FOMC at any time. And neither of these two is on the FOMC this year. That is, they don’t have a vote on rates. So why are they speaking about it? Everyone’s allowed an opinion. I’m merely questioning the intelligence and smartness of having two distinguished figures speak aloud about their opinions. Look at what Bullard’s remarks did: [SJN] Credit: [The Daily Chart Report]( Here’s a snippet of what he said: From Nikileaks at [The Journal]( St. Louis Fed President James Bullard also said Thursday he would have favored a half-point rate increase at the last meeting and that he would support moving as quickly as possible to raise rates to just below 5.5%. “I don’t see much merit in delaying our approach to that level,” he told reporters after speaking to business leaders in Jackson, Tenn. “My overall judgment is it will be a long battle against inflation.” Thanks to those words, the market tanked by over 1%. Not great. Wrap Up Between inflation, manufacturing, and loose-lipped Fed governors, it’s a wonder the SPX has stayed as elevated as it has. But the key thing to remember is that the dire underlying macro stats belie the rosy market picture. And that’s why I think you’re wise to ride this wave up, but you must be cautious of any signs of a market downturn. In the meantime, have a wonderful long weekend! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening PS: in case you didn’t know, I now write Thursday’s Morning Reckoning every week. Here is yesterday’s edition. Enjoy! In Case You Missed It… My Message To Chelsea Handler, With Hearts and Flowers [Sean Ring] SEAN RING Good morning Reader, I left America in October 1999, never to return. Well, that wasn’t the plan at the time, but that’s what happened. The plan was to sprinkle my resumé with international experience so I could get into a Top 25 business school. You see, I partied at Villanova more than I studied. And a 3.1 GPA – my freshman year was a complete write-off – wasn’t good enough to get into a top business school. So when I was offered a chance to move to London, I jumped at it. If there was one place I knew US b-schools loved, it was the UK. I expected to be back in the US by 2001, seated in one of the finest schools in the world. Instead, over two decades later, I’m seated in my home office in Italy. You know what they say about the best laid plans. While I’ve been away from America, all sorts of weird things happened. The Angels, Red Sox, White Sox, Phillies, Cubs(!) and the Giants each won at least one World Series title. What? They were all perennial losers when I was growing up. The Golden State Warriors went to five straight NBA finals, winning three of them. And they just won another title this past season. In my youth people knew who Chris Mullin was, but not where Golden State actually played. And of course, in the NFL, the team gleefully known as “The Pisspots” in my youth were a juggernaut dynasty with a quarterback who won more Super Bowls than Joe Montana. We never went to war when I was young, except that exercise in the Middle East known as the Gulf War. Now we’re at war all day, every day. People now cut off their body parts, claiming they were born the wrong sex. And people like Chelsea Handler got famous. Who Are Ya? Who Are Ya? That’s the chant English football fans sing when a substitute of no repute is sent on. Without Googling who she is, this is everything I know about Handler. She’s a blonde comedian who’s friends with Jennifer Aniston. She once had to remind ex-boyfriend 50 Cent that he was black so he wouldn’t vote for Trump. Handler is also thrilled she had an abortion at 16 so she was able to live the life she has. That’s it. That’s all I know. To be clear, that’s no reflection on her professional capabilities. It’s just a stroke of luck that I haven’t lived within earshot of vapid American entertainment for over two decades. Now before I get into what Handler posted that aroused such opprobrium from the Right Twitterati, let me be clear on a few things. A Really Sticky Subject Though I was born Catholic, I never attended church regularly. But for reasons I don’t understand, I’m not a fan of abortion. Never was. But this really isn’t about abortion, per se. It’s about much larger, intertwining geopolitical considerations, which I’ll get into later. With that said, the intense fury about abortion, or even anti-natalism, that involuntarily rises in those who can’t, for whatever reason, have children is one I totally sympathize with. And to be completely transparent, Pam and I tried for years to conceive. About five years into our marriage, Pam finally got pregnant. Micah was born in 2017. To this day, I marvel at that stretch of my life and how it changed every part of my life going forward. You see, I thought much more like Handler. Though we weren’t rich, Pam and I lived in a penthouse apartment with a view of the sea in Singapore. The digs got smaller in Hong Kong, but we still lived that young, married couple life most people envy. When I traveled around the world doing my corporate training, I’d take Pam with me. Just through my teaching gigs, we’ve been to Japan, Taiwan, Hanoi, Melbourne, India, Abu Dhabi, Dubai, London, and Paris. I got so used to it, I wanted it to last forever. But Pam wanted kids. Well, until we had Micah. Then suddenly, one child sufficed. [[SCIENTISTS SPEECHLESS] Patent No. 11,219,620 B2: The End Of Arthritis?]( This tiny stock’s new patent could give new hope to millions… and make early investors rich. [Click here to learn more]( And it all kicks off with an announcement that I expect any day now… when this $87 million company will announce what could be the potential end of arthritis. [>> Click Here Now.]( click here now to see how to survive America’s deadly inflation crisis. [Click Here To Learn More]( What Did Handler Post? But back to Handler… She posted a video for a skit she did on The Daily Show. [tweet] Credit and watch it here: [@chelseahandler]( Did I think it was the funniest thing ever? No. But to be fair, I lived in England for too long to think American comedians are funny anymore. Was it the most offensive thing ever? Of course not. But by the Right’s reaction, you’d think she was shilling for Stalin. All she did was write the perfect ad for not having children (if you’ve got the money to party like she does). And that’s why most people have a hard time taking the Right seriously. Because the Right overreacts to even the most innocuous stuff. Take Matt Walsh, Ben Shapiro’s right-hand man, who tweeted, “Chelsea Handler wants you to know that she's really happy being a childless 47 year old. Like seriously happy. She's so happy, you guys. Okay? Nobody says she's sad. She's not. Definitely not.” I, Hypocrite tweeted, “Weapons grade copium.” Gad Saad tweeted, “Being a parent can be difficult and painful but I would not trade being a father to my children for anything. My daughter just gave me a box of chocolate and flowers for Valentine’s. I’m the richest man for it. [Also retweeted]” Even Princeton-educated all-around good guy and Superman Dean Cain tweeted, “I never know more happiness and fulfillment than being a father to my son. (and your shooting form is for shit)” It wasn’t until I ran into this tweet, that I guffawed loudly: [tweet] Credit: [@VDAREJamesK]( Finally, someone got the joke! The Best Part About The Left Is They Don’t Reproduce But the worst part of the above observation is that the political spectrum itself, in virtually all the Northern Hemisphere, let alone the West, has shifted left. And that means no one is having enough kids. But The Left cooks up population issues all day long. And you can’t get more left than communism. So let me show you the most egregious example of communist idiocy: China’s One Child Policy. My goodness, The Cultural Revolution only killed up to twenty million people. But the One Child Policy? That’s next level stuff. The One Child Policy was introduced in 1979 to slow China’s rapid population growth and was formally phased out in 2015. During its implementation, the policy was enforced differently in different parts of China. There were cases of forced sterilization, forced abortions, and infanticide. In 2013, China's National Health and Family Planning Commission reported that since the introduction of the one-child policy, it had prevented approximately 400 million births. All those souls… It’s a mind-blowing number. And it’s easy to see why the Right gets so bent-out-of-shape about these things. What’s the result? China is no longer the most populous country on Earth – that’s India – and its population pyramid looks like this: [chart] Credit: [( Too many old people and not enough young people. And too many men and not enough women. While people like Peter Zeihan have been predicting China’s imminent collapse for years now, I think it’s a slow burn. But one thing we can agree on is that the One Child Policy was a disaster for China. Let’s contrast that with India, the new most populous nation on the planet: [chart] Credit: [( Now that’s more like it! Lots of young people. Few old people to support. Old Indians know when to exit stage left gracefully. It’s great for the social welfare system. From Macro to Micro I think eugenics are plain awful. However, if someone says they’re unfit for parenthood, believe them. If someone says, “You guys fill your house, but I’m not into it,” then fine. It worked for Helen Mirren. And Candace Bushnell. If women follow Handler’s example only to be disappointed later, that’s their fault. Not Handler’s. Or yours. Remember, [I don’t believe society is savable](. But people are. Especially you and your children. I’m positively thrilled Micah won’t have to deal with Handler’s would-be progeny. I wish all leftists thought like her. Ninety percent of the world’s problems would disappear immediately. So let’s get selfish. Encourage those who want children to have them as soon as possible. (Boy, I wish I was ten years younger.) And let’s quietly tolerate those who don’t. They’re probably leftists anyway… who would give birth to more leftists. As for the gift of parenthood… I remember not so long ago when Micah, after a long day of playing, was exhausted and laying in my arms on the couch. As he was about to fall asleep, he looked up at me and said, “Daddy, I love you… with hearts and flowers.” And off to Dreamland he went. Thank goodness someone else had a plan for me. If you have any feedback or topics you want covered, be sure to click [here](mailto:feedback@dailyreckoning.com) and drop me a line. Till next time! All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. 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