The Morning Call
5/3/19
I am out of town this
weekend. No Closing Bell. See you on Monday
The
Market
Technical
The Averages (26307,
2917) had another down day. Volume was
low (that’s good) but breadth weak (that’s bad). The S&P ended below the lower boundary of
its very short term uptrend for a second day, voiding that trend; the Dow has
already done so.
The VIX was down
2 ½ % on this down day. That is unusual,
especially when it is already at levels reflecting investor complacency. It suggests to me that, barring some
unexpectedly bad news, any consolidation is apt to be tame and limited in
downside---even though I don’t think a more pronounced decline would be a big
deal.
Still, at current
price levels, the degree of complacency is palpable and, historically, has been
a signal that stock prices will have a struggle moving appreciably higher. In
addition, (1) the April 1st gap up open still needs to be closed and
(2) having failed on their first attempt to successfully challenge their
all-time high, the Averages need some rest to bring in new buyers.
The long bond dropped
½ %, moving back toward a fourth challenge of the lower boundary of its very
short term uptrend---perhaps in a delayed response to the more hawkish Fed
statement.
The dollar was up again. Its chart remaining quite positive; though
there is still a gap up open below that needs to be filled.
GLD
was banged another 3/8%. Its chart remains
broken. Its 100 DMA and the upper
boundary of its very short term downtrend represent overhead resistance.
Bottom line: the
indices did some more consolidating yesterday.
More would not be surprising; but the behavior of the VIX doesn’t
support that notion. However, a further
decline doesn’t mean a reversal in trend, just more consolidation.
A higher dollar,
lower bond and gold prices suggest higher interest rates.
Thursday
in the charts.
Update
on oil prices.
Fundamental
Headlines
Yesterday’s
numbers were really good: Q1 nonfarm productivity and March factory orders (both
primary indicators) were strong while weekly jobless claims were higher than
expected.
Overseas,
the data was also positive: March German
retail sales fell but April UK construction spending and the April EU manufacturing
PMI were better than anticipated.
While
it was only one day of stats, they played into the more hawkish Fed narrative (stronger
economy = tighter Fed) and finally offered some support to the +3.2% Q1 GDP
number. However, this week to date has shown
no clear trend with total as well as primary indicators mixed. In short, I still need more data before
upgrading my economic growth forecast.
More
on Fed policy (or the lack thereof).
***overnight,
update on US/China trade talks.
Bottom line: equities
are overvalued. But that is not going to
change as long as the Fed remains accommodative. Which it likely will because to date, it has
proven beyond a reasonable doubt that the Market sentiment, not unemployment
and not inflation is the metric by which it judges its success.
I will continue
to Sell Half of my position in any stock that trades into its Sell Half Range.
Update
on valuations.
April
dividends by the numbers.
The
problem with stock buybacks.
News on Stocks in Our Portfolios
Revenue of $4.06B (+9.7%
Y/Y) beats by $140M.
EOG Resources (NYSE:EOG) declares $0.2875/share quarterly dividend, 30.7% increase from
prior dividend of $0.22.
Economics
This Week’s Data
US
March
factory orders rose 1.9% versus estimates of up 1.5%; ex transportation, they were
up 0.8% versus +0.2%.
March
wholesale inventories were unchanged versus forecasts of a 0.3% increase.
The
March trade deficit was $71.4 billion versus an anticipated $73.0 billion.
April
nonfarm payrolls grew by 263,000 versus consensus of +185,000; the unemployment
rate came in at 3.6% versus 3.8%.
International
The
April UK services PMI was 50.4 versus expectations of 50.5.
The
April EU flash core CPI rose 1.2% versus projections on 1.0%; PPI fell 0.1%
versus 0.0%.
Other
April
US vehicle sales decline.
QE
was a failure.
Luxury
home sales decline.
What
I am reading today
Viagra
linked to reduced heart attack risk.
Afghanistan---shades
of Vietnam.
CBO
issues report on ‘medicare for all’.
Useful
and overlooked skills.
Four
overlooked investment skills.
Media and a coup.
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for Survival’s website (http://investingforsurvival.com/home)
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