The Morning Call
4/10/19
The
Market
Technical
The Averages
(DJIA 26150, S&P 2878) had their first down day in eight days. However, they both remain in solid uptrends,
even their very short term uptrends. So,
I continue to believe that they will advance toward their all- time highs
(26951/2942). There are still negatives
that may inhibit momentum---the pin action in the dollar and bonds as well as last
Monday’s gap up open (that will likely be closed).
Volume was down;
and, somewhat surprisingly, breadth was mixed---a positive signal.
The VIX rose 8 %,
finishing back above the double bottom and the upper boundary of its very short
term downtrend; if it remains there through the close today, that trend will be
negated.
The long bond was
up 3/8%, maintaining a strong chart---in a very short term uptrend and above
MA’s. However, it has yet to close that
gap open of three Friday’s ago. More downside would not be surprising.
This is a great
article on the wisdom of the bond market and its current message to central bankers
(must read):
The dollar advanced
slightly. However, intraday, it closed
last Wednesday’s gap up open, freeing it from the gravitational pull of that
gap---in other words, unfettered from a further move up.
GLD was up
another ½ %. It is in an uptrend and
needs to close last Thursday gap down open, though it continues to develop a
head and shoulders pattern.
Bottom line: aside
from being somewhat overbought (though clearly yesterday’s pin action helped
alleviate that problem), there is nothing standing between the Averages at
current prices and their all-time highs.
However, there is enough negatives coming from other indicators (mixed
signals from the dollar, the long bond and gold plus Monday’s gap up open) to
create some doubt about the strength of any upward momentum.
Tuesday
in the charts.
Fundamental
Headlines
Yesterday’s
stats were weighed to the positive: month to date retail chain store sales and
the March small business optimism index were upbeat while the February job openings
were disappointing.
No
data from overseas, though following the WTO ruling on Airbus subsidies, the
US/EU trade dispute picked up steam.
EU/China agree to unite
against Trump---read this and tell me who is the chief beneficiary.
In addition, a
number of entities are shifting their global growth forecasts downward.
Including
the IMF.
Counterpoint
from our ever present optimist: Ten charts that suggest that there is nothing
to worry about.
As
I noted yesterday, the news flow is about to pick up meaningfully today: the EU
holds its emergency Brexit summit, the ECB meets and the Fed releases the latest
FOMC minutes. Plus, first quarter earnings
season begins in earnest of Friday with many of the big banks reporting.
***overnight,
ECB leaves rates unchanged and will continue reinvesting the proceeds from
maturing bonds on its balance sheet.
Bottom
line: the universe knows that the first quarter earnings growth is going to show
a sharp slowdown. The questions are (1)
will reports be better or worse than anticipated, (2) how optimistic/pessimistic
will forward guidance be and (3) will either make a difference, if central bank’s
remain very accommodative.
Futures
point to a deceleration in dividend growth.
The
diminishing role of dividends in total return.
News on Stocks in Our Portfolios
Procter & Gamble (NYSE:PG) declares $0.7459/share quarterly dividend, 4% increase from
prior dividend of $0.7172.
Economics
This Week’s Data
US
Month to date
retail chain store sales grew slightly faster than in the prior week.
The February (Jolts)
job openings showed an increase of 7.08 million versus forecasts of 7.5
million.
Weekly mortgage
applications fell 5.6% but purchase applications advanced 1.0%.
March inflation
was up 0.4% versus projections of up 0.3%; core inflation was +0.1% versus
+0.2%.
International
February
Japanese machinery orders rose 1.8% versus expectations of up 2.5%; March PPI
was +0.3% versus +0.2%.
February
UK GDP climbed 0.2% versus estimates of 0.0%; construction spending was up 3.3%
versus 2.4% and industrial production was +0.9% versus +0.2%.
Other
Violence
in Libya could put more upward pressure on oil prices.
Lumber
framing prices down 30% YoY.
What
I am reading today
The
US is not ‘full’.
Manage
yourself, leave your stocks alone.
Quote of the day.
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