The Morning Call
2/19/20
The
Market
Technical
The Averages
(29232, 3370) were down yesterday---the Dow enough to close back below its
former high (29337). For the moment, I
am going to continue to posit that it remains in a very short term uptrend;
though, it is a weakly held assumption.
Contributing to that notion is the VIX closing back above both DMA’s
(now support), voiding last week’s move below those levels and suggesting that
investors continue to be more risk averse than is apparent in the indices’ pin
action.
GLD, TLT and UUP maintained their strong move as
safety trades. UUP ended above the upper
boundary of its short term downtrend for a third day, resetting its short term
trend to a trading range. And GLD made a
new higher high on volume.
There remains an apparent
dichotomy between the economic expectations of equity investors and those in
GLD, TLT, and UUP. Somebody is going to
be wrong.
Tuesday
in the charts.
Fundamental
Headlines
One datapoint
yesterday. The February NY Fed manufacturing
index was better than anticipated.
Latest Q1
nowcasts.
Overseas,
the stats were generally disappointing. Q4 Japanese GDP growth, capital
expenditures and private consumption along with December industrial production,
February EU and German economic sentiment and December UK average earnings were
below estimates; while the December UK unemployment rate was in line and its Q4
productivity was above forecast.
The other headline
of the day was Apple’s lowering forward guidance due to the impact of the
coronavirus on its China operations.
But
doesn’t that mean more QE?
Bottom
line: as you know, I believe that the coronavirus will have a short shelf
life---which in an investment sense means that its economic impact will
dissipate as 2020 progresses. Of course,
there is as yet no evidence that this will be the case. So, it makes sense to me not to be making big
bets at this point in time on the ultimate effect.
While
GLD, TLT and UUP investors appear to agree, the stock boys continue to buy,
leaving equity prices for large segments of the Market at or near record
highs. If you haven’t used this
opportunity to build some cash reserves, I would begin doing so.
The
latest Fund Manager Survey.
When government
deficits meet NotQE.
Doom and gloom
from Nouriel Roubini.
The silly season.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
The
February housing index came in at 74 versus estimates of 75.
Weekly mortgage
applications dropped 6.4% while purchase applications were down 3.4%
January housing
starts declined 3.6% versus projections of -12.3%; building permits rose 9.2%
versus flat.
January
PPI was +0.5% versus forecasts of +0.1%, core PPI was also +0.5% versus +0.1%.
International
The
January Japanese trade deficit was Y1312 billion versus consensus of -Y1694
billion; December machine tool orders were off 12.5% versus -9,0%.
The
January UK CPI came in at -0.3% versus expectations of -0.4%; core CPI was
-0.6%, in line.
December
EU YoY construction output fell 3.7% versus forecasts of +1.4%.
Other
Is
the monetarist fantasy over?
Siphoning
off World Bank largess.
What
I am reading today
This
is a pretty interesting background article on the locust plague in the Horn of Africa. I pose the question, if this plague is the
result of climate change what caused the plague Moses imposed on Egypt. Before you say God, think about the
implications.
What economists think of
our health care system.
Improving from the ground
up.
The
US, Russia, Europe and nuclear war.
The
perils of ‘survivorship bias’.
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