The Morning Call--Grexit talks go poof

The Morning Call

2/17/15

The Market

           

    Technical

        Tuesday Morning Chartology

          

            The S&P closed above its mid-December high and its 50 day moving average.  It is now right on the upper boundary of its long term uptrend.  Look at the last two times it did this (early December and mid-December).  It snugged up against the boundary, followed it up for a couple of days, and then fell off.  That is not atypical when a chart is technically overextended.   Of course, it can also experience a blow off top much as the indices did in 2000 and 2007---giving investors one last euphoric high before burying them.   I wouldn’t touch this market with a ten foot pole.

            February option expiration week performance (short):

            http://jeffhirsch.tumblr.com/post/110925000628/february-expiration-week-up-7-of-last-9

            It was rough out there in bond land last week.  As you can see, TLT remains in uptrends across all timeframes.  But technical damage is starting to occur: (1) breaking below 50 day moving average and (2) nearing the lower boundary of its short term uptrend.  Our ETF Portfolio has a full weighting in bonds and will start to lighten up if that lower boundary is successfully challenged (reduce to an 85% position).

            GLD’s chart isn’t exactly awe inspiring either.  To be fair, it is holding its short term uptrend and finished right on its 50 day moving average.  So we have something for which to be thankful.  Our Portfolios still retain a small position.

            The VIX got hammered last week which confirms the script of higher stock prices.  As you can see, it negated that developing pennant formation.

    Fundamental

 

            Greek/EU talks terminated on Monday (medium):

            http://www.nakedcapitalism.com/2015/02/eurogroup-talks-terminated-greece-wont-take-orders-bailout.html

            And were told that they have until Friday to request an extension of the current bailout or it will expire.  Here are the choices and consequences, the Greeks now face (medium):

            http://www.zerohedge.com/news/2015-02-17/how-trade-grexit-scenarios-and-what-worst-case-looks

            Redline version of the draft the Greeks’ rejected (medium):

            http://www.zerohedge.com/news/2015-02-16/redlined-comparison-eurogroup-draft-varoufakis-was-willing-sign-and-draft-he-rejecte

The latest news out of Ukraine (medium):

            http://www.nakedcapitalism.com/2015/02/eurogroup-talks-terminated-greece-wont-take-orders-bailout.html

The latest from David Stockman (medium):

            http://www.zerohedge.com/news/2015-02-15/david-stockman-global-economy-has-entered-crack-phase

                Goldman’s take on fourth quarter earnings (medium):

            http://www.zerohedge.com/news/2015-02-15/four-key-themes-q4-earnings-dollar-headwinds-management-over-confidence

                And the latest data on earnings guidance (short):

            http://www.bespokeinvest.com/thinkbig/2015/2/13/guidance-spread-still-negative.html

                ***overnight, fourth quarter Japanese business spending (+0.1%), private consumption (+0.3%) and GDP (+2.2%) all missed estimates on the downside; as did UK CPI.

      Investing for Survival

            Eleven ideas on better investing (medium):

            http://alphabaskets.com/11-investing-and-personal-finance-hacks/

    News on Stocks in Our Portfolios

Medtronic beats by $0.04, beats on revenue

·         Medtronic (NYSE:MDT): FQ3 EPS of $1.01 beats by $0.04.

·         Revenue of $4.32B (+3.8% Y/Y) beats by $70M.

Economics

   This Week’s Data

            The February NY Fed manufacturing index was reported at 7.78 versus expectations of 9.5.

   Other

            John Mauldin looks at the inescapable math of pensions (as usual long; but if you are covered by a defined benefit plan, you have to read this):

            http://www.advisorperspectives.com/commentaries/20150215-mauldin-economics-mamas-don-t-let-your-babies-grow-up-to-be-pension-fund-managers

            The economics of a janitor becoming a multimillionaire (medium):

            http://www.philosophicaleconomics.com/2015/02/janitor/

            US GDP looking weaker (short):

            http://blog.yardeni.com/2015/02/us-gdp-looking-weaker-excerpt.html

Politics

  Domestic

Quote of the day (short):

http://cafehayek.com/2015/02/quotation-of-the-day-1265.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CafeHayek+%28Cafe+Hayek%29

  International War Against Radical Islam