The Morning Call
6/7/16
The
Market
Technical
The indices
(DJIA 17920, S&P 2109) recovered the losses from last week yesterday.
Volume fell; breadth was stronger. The
VIX rose, somewhat surprising for an up Market day, bouncing off the lower
boundary of its short term trading range which it has rebounded off of four
times.
The Dow closed
[a] above its rising 100 day moving average, now support, [b] above its 200 day
moving average, now support, [c] within a short term trading range {17498-18726},
[c] in an intermediate term trading range {15842-18295} and [d] in a long term
uptrend {5541-19413}.
The S&P
finished [a] above its rising 100 day moving average, now support, [b] above
its 200 day moving average, now support, [c] within a short term trading range {2037-2110},
[d] in an intermediate term trading range {1867-2134} and [e] in a long term
uptrend {830-2218}.
The long
Treasury gave back some of its advance on Friday, but still remained above the
former upper boundary of a very short term downtrend, above its 100 day moving average
and well within a short term uptrend.
GLD continued
its upward move, ending well above its 100 day moving average and the lower
boundary of its short term trading range.
Bottom
line: the bulls continued their upward
pressure. That said, the S&P challenged
the upper boundary of its short term trading range and failed; in addition, the
VIX was up on a pretty strong up Market day.
Both suggest a possible loss of momentum. However, investors’ unbridled enthusiasm for
both good and bad economic news keeps me thinking that a challenge to the upper
boundaries of the Averages intermediate term trading ranges remains a strong likelihood.
Melt
up? (short):
Fundamental
Headlines
No
US economic data was released yesterday and the only foreign stat was a poor April
German industrial orders number.
***overnight,
EU first quarter GDP was slightly better than expected; April German industrial
output was much better than anticipated.
The
news of the day once again came from the Fed.
Actually prior to Monday, two Fed chiefs spoke reiterated that a June
hike was on the table. But the coup de
grace came from Yellen in which she again tried to have both ways: on the one
hand, the economy really is awesome, on the other hand, the Fed just doesn’t know
when to rate rates---which as always is data dependent. Odds of either a June or July rate increase
declined.
After
all that rhetoric from all those Fed members about hiking rates, Yellen now
wants to reintroduce uncertainty. Haven’t
these people been talking to each other?
What in the name of heaven are they thinking about, when they know that
everyone in the globe is hanging on their every syllable? Either Yellen was throwing virtually the
entire FOMC under the bus or she is trying to keep us all in suspense before a
June rate hike. I just don’t know how
this can end well.
Her comments:
Central banks in
fantasy land (medium):
Bottom
line: in addition to a multitude of other sins (which I will save you time by
not reiterating), the Fed has made itself indispensable to the Market. Nobody cares anymore what the numbers here or
abroad are, or what the result of the current political clown show is, or
whether there is a Brexit or not. They
only care about what the Fed’s reaction will be, that is, whether or not interest
rates will remain low so they can continue to chase yield and gamble on the
carry trade. My opinion, one day this
link is going to be broken whether by accident or by another stupid move by the
Fed. I also believe that cash will be
handy when that occurs.
My thought for
the day is that following the passage of Glass-Steagall our financial system
operated in relative safety. Since its
repeal fifteen years ago, we have experienced the biggest financial crisis since
1929. Today, irresponsible Fed policy
has encouraged, on an unprecedented scale, the assumption of risk in order to
chase yield. Yes, recent regulatory
actions have forced banks to increase capital.
However, we have no idea how to measure the magnitude of the counterparty
risks in their derivative portfolios, especially as it relates to the international
banks which have not been subjected to the kind of reforms placed on US banks. As long as banks are able to operate beyond their
original charters, the temptation to speculate with basically free money
remains and will ultimately lead to another crisis (to wit, student and subprime auto
loans. See below)
Investing for Survival
How
much retirement spending can you afford?
News on Stocks in Our Portfolios
Economics
This Week’s Data
First
quarter US productivity fell 0.6%, in line; unit labor costs rose 4.5% versus
expectations of +4.1%.
Other
Why
so many Americans are voting against the status quo (short):
More
on subprime auto loans (medium):
More
manufactured data from China (short):
Politics
Domestic
DHS is catching
and releasing busloads of illegal immigrants (medium):
International
Obama refuses to discuss nuclear
options with Russia (medium):
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
No comments:
Post a Comment