The Morning Call
2/13/20
The
Market
Technical
The Averages (29551,
3378) resumed their advance yesterday.
The Dow S&P ended above its former all-time high (29373); if it
remains there through the close today, it will re-establish a very short term
uptrend. That will put it back in sync
with the S&P which is already returned to a very short term uptrend. In addition, the VIX finally gave up the
ghost, closing below both DMA (if it remains below its 100 DMA through the
close on Friday, it will revert to resistance; if it remains below its 200 DMA
through the close next Monday, it will revert to resistance).
Barring a retreat
today, the indices will be back firmly in uptrends, being above both DMAs and
in uptrends across all time frames. That
puts the next resistance levels considerably higher (32301, 3583).
The NASDAQ performance
and the ‘complexity factor’.
GLD and TLT were
down again and have now marked a lower high and a higher low. Meaning that they are in uptrends which may be
challenged in the near future. UUP was strong,
finishing right on the upper boundary of its short term downtrend. Meaning that it is challenging a trend. Their pin action continues to say ‘safety
trade’ to me though the message is weakening.
Wednesday in the
charts.
Fundamental
Headlines
Yesterday’s
numbers were not that great. The January
budget deficit was much larger than expected; and while weekly mortgage
applications rose, the more important purchase applications fell.
It’s the
spending, stupid.
Trump’s
budget is an economic fantasy.
How
plausible in Trump’s budget forecast.
***overnight,
China comes clean on coronavirus data. Ooops.
On the other hand,
it is causing
economic logjams worldwide. Bear in mind
that none of this has shown up in the data yet.
True, I don’t believe that the ultimate impact of this epidemic will
cause sustainable economic damage. But
right now, nobody knows.
Powell
delivered his second day of Humphrey Hawkins testimony, this time to the senate. Part of his message was that the Fed needs QE
going forward and that higher interest rates aren’t really acceptable. Think about that and what it means for
monetary policy and future inflation.
Speaking
of inflation, in yesterday’s Morning Call, I linked to a must read article on
the risk of stagflation. Here is another
link that goes at the problem from a different direction, to wit, the Fed’s use
of the PCE as its inflation measure, its lack of precision and how this could
result in ineffective monetary policy.
Deciphering the NotQE gibberish.
Bottom line. between the Fed and the Bank of China, speculators
have plenty of firepower to keep the stock market advancing. Doesn’t matter that fiscal policy has been
and apparently will continue to be an obstacle to secular economic growth. Doesn’t matter that all that monetary
liquidity (in addition to propelling security prices higher) is driving up your
and my cost of living; and more of the same will likely result in more of the same.
This move higher
notwithstanding, I like the cash and gold that my portfolios own.
News on Stocks in Our Portfolios
T. Rowe
Price (NASDAQ:TROW) declares
$0.90/share quarterly dividend, 18.4% increase from prior dividend of
$0.76.
Economics
This Week’s Data
US
The
January budget deficit came in at $33 billion versus estimates of -$11.5
billion.
January CPI was reported at
+0.1% versus projections of +0.2%; core CPI was +0.2%, in line.
Weekly
jobless claims rose 2,000 versus consensus of up 7,000.
International
January
Japanese PPI rose 0.2% versus forecasts of 0.0%.
January
German CPI declined 0.6%, in line.
Other
Update
on subprime auto loans and delinquencies.
What
I am reading today
Giant
skeleton washes ashore in Scotland.
A
photographer goes behind the scene at the Westminster Dog Show.
Mysterious
deep space radio signals repeat at regular intervals.
Five mistakes that can
wreck your retirement.
Quote of the day.
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for Survival’s website (http://investingforsurvival.com/home)
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