The Morning Call
12/3/19
The
Market
Technical
The Averages (27783,
3113) had their worse day in two months, falling below the lower boundaries of
their very short term uptrends (if they remain there through the close today,
those trends will be negated). Breadth
deteriorated and volume rose---but not that much. I have noted numerous times that the indices
were deep in overbought territory; so, a pullback is not unexpected. And don’t forget those October 11th
gap up opens that need to be filled. On
the other hand, we are in a seasonally positive time of the year, so it is
certainly possible that the overbought
condition could last through year end.
The bond market made
a big gap down open, finishing the day off 1 ½ % on big volume and below its
100 DMA---if it remains there through the close on Wednesday, it will revert to
resistance.
The dollar was down
½%, ending below the lower boundary of its short term uptrend; if it remains
there through the close on Wednesday, it will reset to a short term trading
range.
Gold was down seven
cents. While it remained in very short
term and short term uptrends and above its 200 DMA, it is continues to trade
below its 100 DMA and yesterday made another lower high.
Given the lousy
trade headlines and poor economic numbers, I thought that either TLT and GLD
would have been up and UUP down on a weak economic scenario or that they would
all have been up on a safety trade. So, I
consider their pin action muddled and anticipate some clarity on their investors’
thinking today or later in the week.
For the bulls.
Monday in the
charts.
Fundamental
Headlines
Yesterday’s
economic data did not make for great reading.
While the November final manufacturing PMI was better than
estimates, the November ISM manufacturing index and October construction
spending were below expectations.
Overseas, it was
a different story. Q3 Japanese capital
spending, its November final manufacturing PMI as well as the final manufacturing
PMI’s for China (Caixin), Germany, the EU and the UK were above forecasts.
On
the trade front, Commerce Department secretary Ross threatened a tariff
increase if there is no deal by December
15th.
China fires back.
It is also upset
with Trump for signing the bill supporting Hong Kong.
***overnight, Trump says that a trade deal might
not occur until after 2020 elections.
Late in the day,
Trump opened up another front in the trade war, slapping tariffs on France in
reaction to that country’s new tax on digital revenues (think FANG stocks).
Global trade takes
a beating.
Trump’s ‘bad cop’.
Bottom line: poor economic
and trade news imply a potential negative effect on corporate earnings---and
yesterday’s pin action pointed to investor concern. The question is, will the Fed’s NotQE assuage
worries and keep any dip a minor one?
Imagining
the worst.
Valuation update.
More on the ill
effects of excess liquidity.
Subscriber Alert
Tiffany (TIF) has
accepted a takeover bid for the company.
Its stock reacted accordingly.
Since I do not follow the fundamentals of the acquiring company, the
Dividend Growth Portfolio will Sell its position at the open.
News on Stocks in Our Portfolios
Revenue
of $672.7M (-4.1% Y/Y) misses by $26.64M.
Economics
This Week’s Data
US
The November
final manufacturing PMI was 52.6 versus estimates of 52.2.
The
November ISM manufacturing index was 48.1 versus expectations of 49.2.
October
construction spending fell 0.8% versus consensus of +0.4%.
International
October EU PPI
came in at +0.1% versus forecasts of 0.0%.
The November UK
construction PMI was 45.3 versus projections of 44.5.
Other
The
solution for too much debt. More debt.
Framing
lumber prices up YoY.
Another
take on the liquidity problems in the repo market.
Student
loan debt continues to climb.
Christine
Laguard makes her maiden speech---links QE to climate control. Yeah, that’s a winner.
The
great American divide.
What
I am reading today
The five universal laws
of human stupidity.
Quote of the day.
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for Survival’s website (http://investingforsurvival.com/home)
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