The Morning Call
11/14/19
The
Market
Technical
The Averages (27783,
3095) moved higher yesterday. Volume was
up and breadth was stronger---pushing it further into overbought territory. The
VIX was up 2 ½ %---but continues to support the breadth overbought
reading.
My assumption
remains that momentum is to the upside; but there are still some short term
negatives: (1) October 11th
gap up opens need to be closed and (2) the VIX and breadth suggest equities are
overbought.
The bond market
was up another 5/8%, continuing its bounce off the lower boundary of its very
short term uptrend. It is too soon to
assume that worst is over, but clearly a strong bounce off of a definable
support level is a good sign.
The dollar was
down a penny and remains strong.
Gold advanced another
3/8 %, but momentum remains to the downside with little support visible before
it hits its 200 DMA (six points lower).
Wednesday in the
charts.
Fundamental
Headlines
Yesterday’s
dataflow was mixed. Weekly mortgage and
purchase applications were strong, October CPI ran a little hotter than
expected (but that should make the Fed happy) while core CPI was in line and
the October budget deficit came in above expectations.
Overseas, the
stats were again upbeat. October Japanese and UK PPI and CPI were below
estimates while October German CPI was in line. September EU industrial
production was well above forecasts.
In
other news:
Powell gave his
presentation to the Congressional Joint Economic Committee. In it, he repeated the narrative from the
last FOMC meeting---no more rate cuts in sight, but no increases either even if
the economy starts running hot and most importantly, NotQE is a live and well. If you want to read his full prepared
statement, here it is:
Fed losing control
of rates again; but this time to the downside.
Sub zero interest
rates pose a problem for the insurance industry.
Also, as I noted
in yesterday’s Morning Call, Trump started the day off with a bang, threatening
more tariffs.
Which was followed
by reports that the Chinese are resisting the size of proposed ag purchases as
well as provisions against technology transfers and enforcement.
And then this bit
of news. German businesses are moving out
of China because of problems with its industrial policies. Would they be doing this without the US
having led the way? Who knows. Will it put increasing pressure on China to
mend its ways? Who knows, But it will impede the progress of China’s
economic development. (see economic data
below)
Bottom line: if
you had any doubts about whose was calling the tune in the Market, it was
likely eliminated yesterday, as the trade rhetoric heated up but Powell
promised more NotQE.
But
that just means that valuations are getting more outrageous. Caveat emptor.
The
bull market in bearish predictions.
News on Stocks in Our Portfolios
The program fully
replaces the 2015 authorization to repurchase up to 25M shares of common stock,
which had 433M shares outstanding.
Economics
This Week’s Data
US
The
October budget deficit came in at $134 billion versus forecasts of $133
billion.
October PPI rose 0.4% versus
expectations of +0.3%; core PPI was +0.3% versus +0.2%.
Weekly
jobless claims rose 14,000 versus consensus of +4,000.
International
Preliminary
Q3 Japanese GDP growth was reported at +0.1% versus estimates of +0.2%.
The
second estimate of Q3 EU GDP growth was +0.2%, in line; employment change was
+0.1% versus +0.2%.
The flash Q3
German GDP growth rate was +0.1% versus projections of -0.1%.
October
Chinese fixed asset investments rose 5.2% versus consensus of +5.4%; industrial
production was +4.7% versus +5.4% retail sales were +7.2% versus +7.9%.
October
UK retail sales fell 0.3% versus expectations of +0.2%.
Other
Update
on household debt and credit.
The
most fiscally conservative party—notable by their absence is any mention of
Kennedy/Johnson administrations.
What
I am reading today
Death and taxes.
WWII
US sub found 75 years after being sunk.
Navy UFO sighting.
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
No comments:
Post a Comment