The Morning Call
8/10/18
The
Market
Technical
The Averages
(DJIA 25509, S&P 2853) traded down on flat volume. Breadth was mixed. They remain strong technically. In addition
the Dow’s 100 DMA remains right on its 200 DMA but has ceased declining---at
least for the moment. However, the VIX finished
back above the lower boundary of its short term trading range, negating Tuesday’s
break.
The major
technical story continues to be the pin action of TLT (increase in interest
rates). Yesterday, it was up noticeably
on volume (likely responding to weaker than expected July PPI and June
wholesale sales), ending back above (1) its 100 DMA, one day after the DMA
reverted to resistance---calling that change in trend into question and (2) the
lower boundary of its long term uptrend, negating last Wednesday’s break.
The dollar rose, remaining in
a strong technical position and appears to be confirming a move to higher
rates. GLD was down but is in a solid
downtrend which also points towards higher rates.
Bottom
line: the Averages remain quite strong
technically speaking. The assumption remains that they are going to challenge
their all-time highs with the S&P only points away.
TLT’s
bounced in a big way, leaving it within a long term uptrend (declining
rates). GLD and possibly UUP investors
seem to disagree.
Yesterday
in the charts.
Fundamental
Headlines
Three
economic stats released yesterday: weekly jobless claims fell; July PPI was
lower than estimates month over month, though the year over year number was up;
and June wholesale inventories rose but sales declined. I know that we haven’t got much a read on the
economy is this week’s data, but a tamer than expected PPI and falling
wholesale sales are hardly signs of an accelerating economy.
Just
when I thought that we would get through a whole week without the ruling class
coming up with another idea to screw with the electorate, VP Pence announces
that the administration wants to spend another $8 billion on a ‘space force’. Now, I don’t have an objection to giving a
more targeted attention to the military aspects of space. But the US is already doing it---in the Air
Force. If the AF is not doing a good
job, fire somebody; but why build an entire new bureaucracy for the taxpayers
to support? Furthermore, if Trump wants
to spend more money on space defense, then take some of the funds allocated in
the current monstrously large defense budget. To be sure, $8 billion dollars
spent over five years is a wart of goat’s ass relative to present budget
deficit/national debt. But why add to it; and why give the rest of
the ruling class a reason to assume that there is plenty of money to spend on their
own pet projects?
In
the last year, I have been linking to articles addressing the problem of the
growing dollar shortage within the international financial system. Venezuela and Argentina were easy enough to
write off given their recent history.
However, the problem now appears to be coming to a NATO ally---Turkey.
***overnight,
lira plunges (medium):
Bottom
line: the larger the budget deficit becomes, the more difficult it is for the
economy to grow, the higher stock prices go, the more overvalued they
become. Cash is an important asset to
own in this environment.
This
from Lord Rothschild (medium):
More
on stock buybacks (medium):
More
on valuations (medium):
News on Stocks in Our Portfolios
Accenture
(NYSE:ACN) buys hardware engineering firm Mindtribe
and intends to acquire embedded software company Pillar Technology for
undisclosed terms.
The acquisitions will help
expand Accenture Industry X.0, which helps companies from software to
industrial to utilities shift to digital products and services.
San Francisco-based
Mindtribe has 40 employees and creates connected hardware integrated with
digital services for faster and shorter development cycles.
Pillar Technology has 320
employees across offices in Iowa, Michigan, and Palo Alto, California. The company
specializes in rapid/agile development of embedded software used in smart
products like autonomous vehicles.
C.H. Robinson Worldwide (NASDAQ:CHRW) declares $0.46/share quarterly dividend, in line with
previous.
Economics
This Week’s Data
US
June
wholesale inventories rose 0.1% versus expectations of 0.0%; however, wholesale
sales fell 0.1%.
July
CPI rose 0.2%, in line; ex food and energy, it was up 0.2%, also in line.
International
Other
More
on the China tariffs (medium):
Counterpoint
(medium):
Quote
of the day (medium):
What
I am reading today
North
American megadroughts (medium):
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