The Morning Call
9/27/19
Off to pledge class
reunion. No Closing Bell.
The
Market
Technical
The Averages (26891,
2927) were off slightly yesterday on lower volume (pretty soon there won’t be
any) and poor breadth. The VIX was up
5/8% but remains below both MA’s---a plus for stocks. My directional assumptions remain that short
term the 9/4 gap up opens need to be filled but longer term the momentum is to
the upside.
The
long bond bounced (+5/8%) after Wednesday’s drubbing. GLD didn’t---down four cents. And the dollar continued its winning way (up ¼%). Long term, these charts remain solid; though
trading in the last week has been confusing.
Here is an easily understood
explanation of the repo market and one that is more sanguine than some of the
other links that I have included.
***overnight, dollar
shortage eases.
China’s looming
dollar debt problem.
Fed policy and
gold.
Thursday in the
charts.
Fundamental
Headlines
Yesterday’s data
releases were generally upbeat: August pending home sales, the September
Kansas City Fed manufacturing index and the August trade deficit were better
than anticipated; final Q2 GDP growth was in line; while weekly jobless claims
and the Q2 PCE price indicator had unfavorable comparisons.
Again,
nothing from overseas except this from Ed Yardini.
About the only headline
(as opposed to real news) was more happy talk on US/China trade. This time for the Chinese foreign minister.
Bottom
line: it looks like this week’s economic stats will again be positive. The US is going to need it, given the data releases
from the rest of the world. Still it
reinforces my conviction that the US will not experience a recession; but if it
does, it will likely be a mild one. That
said, equity valuations are extreme for even this upbeat scenario. Of course, that doesn’t matter; nor apparently
the low probability of a successful conclusion to the US/China trade standoff;
nor the dems seemingly driving to the hoop to impeach Trump for whatever reason
they can fabricate. All that matters is
an easy Fed. But when that story ends,
there will only be one out the door first; everyone will feel the pain. It makes sense to me to reduce that potential
pain by having some cash as a margin of safety.
Peak buybacks?
Prepare now for
the end of the bull market.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
August
pending home sales were up 1.6% versus forecasts of +0.9%.
The
September Kansas City Fed manufacturing index came in at 11 versus estimates of
-3.9.
August
durable goods orders rose 0.2% versus consensus of -0.1%; ex transportation
they were +0.5% versus +0.2%; ex defense, they were -0.6% versus +0.1%.
August
personal income was up 0.4%, in line; personal spending was up 0.1% versus up
0.3%.
International
August
YoY Chinese industrial profits fell 1.7% versus projections of -2.0%.
September
EU consumer confidence was 19.5 versus an anticipated 20.0; business confidence
was -.22 versus +.11; economic confidence was 101.7 versus 103.0; industrial sentiment
was -8.8 versus -6.0; services sentiment was 9.5 versus 9.3.
Other
How
accurate is Chinese data? I have raised
the question numerous times. This is the
first attempt that I have seen to quantify the answer.
An
example of why public employee pension plans are bankrupting municipalities.
What
I am reading today
If the world is ending in
twelve years, why go to college?
Especially
if this is what is being taught.
Whistleblower
complaint made public. Here is the full
text.
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for Survival’s website (http://investingforsurvival.com/home)
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