The Morning Call
2/21/18
We leave for the beach tomorrow
morning. Be back on March 3rd.
The
Market
Technical
The indices
(DJIA 24964, S&P 2716) fell yesterday and appeared to have set a lower high
(though follow through on the downside is needed to confirm that). Volume rose slightly but remains at a
relatively low level; breadth was mixed.
Despite a bad day, the Averages still finished above both moving
averages and within uptrends across all major timeframes. The technical assumption is that long term
stocks are going higher; though the Averages need to overcome their former
highs before we have an all clear signal.
The VIX jumped
6%, continuing its bounce off a support level and remaining at an elevated
level, suggesting that there is no end to the recent volatility.
The long
Treasury declined, ending below both moving averages, in very short term and
short term downtrends and very near the lower boundary of its long term
uptrend, a breach of which would clearly intensify investors’ concern about
rising interest rates/inflation
The dollar was
up, continuing its bounce off of a support level. Nonetheless, it ended below both moving
averages and in an intermediate term downtrend. This remains an ugly chart.
GLD was off hard
(1 ¼ %), though it is still above its 100 and 200 day moving averages and in a
short term uptrend. Still it couldn’t
make it above its prior high; and that is not a good sign.
Bottom line: stock
prices were off yesterday on little news (poor WMT earnings, a big Treasury
auction). So the pin action may be
nothing more than a respite from last week’s big move up. The technicals of the
equity market point higher.
Still the long
Treasury continues to point to higher interest rates/inflation; and for the
first time in a couple of weeks both the dollar (up) and gold (down) traded in
sympathy.
Yesterday
in charts (short):
Fundamental
Headlines
As
I noted above, it was a slow news day.
No economic data. Little out of
DC, save for a tweet storm from Trump.
So
no change in my bottom line: the economy seems to be slipping back toward the
below average growth/stagnation; fiscal policy is too expansive; monetary
policy has been too expansive and too late for a quiet transition to normal;
Trump is alarming me with his aggressive trade policy; and stocks are
overvalued even if the tax bill produces better results than I expect.
News on Stocks in Our Portfolios
Revenue of $4.21B (+11.4%
Y/Y) beats by $160M.
Economics
This Week’s Data
US
Weekly
mortgage applications fell 6.6% while purchase applications were down 6.0%.
International
The
February flash manufacturing, services and composite PMI were all below
expectations.
Other
Chemical
activity barometer increased in February (short):
An
argument against rising inflation (short):
Deficits
(short):
The
Fed’s ‘data dependency’ is imaginary (medium and a great read):
Net
charge-offs at small commercial banks are rising (medium):
China
moves to cut its debt load (medium):
China’s
trade policy reaching into South America (medium):
What
I am reading today
Seeing
your own blind spots (medium):
An interesting dialogue
on Russiagate (medium):
Quote of the day (short):
Wednesday morning humor (short):
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