The Morning Call
1/2/19
The
Market
Technical
After
a huge down draft, the S&P managed a strong rally last week. However, it remains below both moving
averages and in a short-term downtrend. Nevertheless,
on Monday, it closed just slightly above the upper boundary of its very short-term
downtrend. If closes there today, that
trend will be negated and we can start thinking about the worst being
over.
The
long bond remains technically strong (lower interest rates) on decent
volume. Nothing suggests that is going
to change.
Leverage
loan prices falling.
Eurodollar yield curve inverting.
While the dollar remains above its
100 and 200 DMA and in a strong short term uptrend, it does look like it is struggling
to make a new high. The best assumption right
now is that UUP is in an uptrend but needs to consolidate more before moving
higher.
Gold’s chart continues to do
better. That fits with lower stock
prices and higher bond prices. It does not
square with a strong dollar.
Despite the dramatic Market recovery last
week (mini Santa Claus rally?), the VIX is still in a solid uptrend, suggesting
that there could be more downside in stock prices.
Fundamental
Headlines
Week
of 12/24:
The
economic stats for the week were overwhelmingly negative with no primary
indicators released. However, several
datapoints, the most important being November new home sales, were not reported
due to the government shutdown. So, I am
tentatively scoring that week a negative, subject to the reading on new home
sales (primary indicator). Overseas, the
numbers were lousy. So, nothing here to
alter my forecast.
Trump
did shut the government down. There is
little macroeconomic consequence short term save whatever psychological impact
it might have on the Market.
The
really big headline was the volatility in the Market which I covered above.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
The
December Dallas Fed manufacturing index came in at 7.3 versus November’s
reading of 8.4.
International
The
December Chinese manufacturing PMI fell into contraction territory, coming in
at 49.4 versus November’s reading of 50.0.
The
December Chinese Caixin (small business) manufacturing PMI came in at 49.7
versus November’s 50.2.
The
December Taiwan manufacturing PMI was 47.7 versus 48.4 in November.
The
December EU manufacturing PMI came in at 51.4, in line.
Other
The
Fed put---or not.
Doug Kass’s opinion.
The latest in US/China
trade talks.
The latest from Goldman
Sachs.
Italian bank put
under EU control.
What
I am reading today
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