The Morning Call
2/11/20
The
Market
Technical
The Averages
(29276, 3352) rallied yesterday. The
S&P ended above its all-time high (if it remains there through the close
today, it will re-establish a very short term uptrend); however, the Dow (29373) fell short. That leaves the indices out of sync---not
that unusual when they are in trading ranges.
At the moment, my assumption is that the indices are in a very short
term trading range defined by their all-time highs on the upside (29373, 3337) and
the mid-December gap up opens (28394/3215) on the downside.
When everyone agrees,
something else happens.
GLD, TLT and UUP continued
to move higher, their charts strengthening.
This pin action says ‘safety trade’ to me. Though clearly, that puts those investors at
odds with the stock boys. Further, the
VIX continues to trade like investors are more risk averse than suggested by
the indices price action.
Monday in the
charts.
Six commodity
charts to watch.
Fundamental
Headlines
No US stats
yesterday. Overseas, the numbers were
mixed. The
December Japanese trade surplus was larger than expected; while January Chinese
CPI was almost double estimates.
Other
headlines:
(1)
the coronavirus continues to impact local economies;
though we still don’t know what its ultimate macroeconomic effect will be. Watch global logistics shares as virus supply
chain signal.
https://www.zerohedge.com/geopolitical/saxo-watch-global-logistics-shares-virus-supply-chain-signals
(2)
as I noted in yesterday’s Morning Call, Trump
released his FY 2021 budget. Of course,
most executive budgets are just giant wet dreams; so, there is little to be
gleaned from this document about what the final budget will look like. As you might expect, what bothers me about
this budget is that it pays weak lip service to reducing the deficit/debt at a
time that the economy is about as good as it is going to get.
More detail on Trump’s FY2021 budget.
Bottom line. the deficit and national debt have reached a
magnitude that many experts (with whom I agree) believe will inhibit future
economic growth. And nothing is
changing. So, the coronavirus aside,
investor expectations for some kind longer term economic lift off seem ill
founded.
That said, all that
matters is the money.
***overnight, the
liquidity problem in the repo market is back.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
The
January small business optimism index was reported at 104.3 versus forecasts of
103.4.
International
The
preliminary Q4 UK trade balance was +L7.715 billion versus estimates of -L2.6
billion; GDP growth was 0%, in line; business investment was -1.0% versus -0.6%.
December
UK industrial production was up 0.1% versus expectations of +0.3%;
manufacturing production was +0.3% versus +0.5%; GDP growth was +0.3% versus
+0.2%.
Other
Iron
and steel primary production employment.
Living
standards have never been better.
What
I am reading today
History is interesting
because nothing is inevitable.
Sinn Fein win upsets Irish
politics.
Ten things that I wish that I had
been told when I was 20.
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