The Morning Call
3/5/20
The
Market
Technical
The Averages (27090, 3130) staged another moon shot
yesterday---maintaining its best imitation of the Six Flag’s Texas
Tornado. The principal technical
headlines were (1) the S&P rose back
above its 200 DMA voiding Tuesday’s break and (2) the pin action did a lot to
alleviate the Market’s oversold condition.
What happens to
the S&P after a Fed emergency rate cut?
TLT, GLD and UUP
traded directionless, fractionally. So, nothing
changed technically including my confusion over their dramatically mixed
performance.
Wednesday in the
charts.
Fundamental
Headlines
Yesterday’s stats
were weighed to the positive. Weekly
mortgage applications rose but purchase applications fell; both the February
Markit services and composite PMI’s were in line; and the February ISM nonmanufacturing
index as well as the February ADP private payroll reports were better than
anticipated.
Overseas,
they were negative and dominated by the latest services and composite PMI’s. The February Japanese, Chinese Caixin, German,
UK and EU services and composite PMI’s were all below estimates except tor the
EU composite PMI which was in line. January
German retail sales were better than expected while January EU retail sales
were in line
The coronavirus:
Latest out of US.
***overnight
update.
If you are in the coronavirus doomsday crowd,
this article is for you.
The health crisis versus policy makers.
Thoughts on the impact
of the coronavirus from Ray Dalio.
The Fed:
The Fed released
its latest Beige Book report. However,
this anecdotal economic survey is based on numbers collected before February 24th;
so, it is of little use anticipating the impact of the coronavirus. Nonetheless, I include it for your reading
pleasure.
Turmoil continues
in repo market.
Is the Fed a pawn of the stock market?
The Fed is complicit
in creating fragilities.
Are negative US rates in our future?
Bottom line: the
questions I have are, was the Market’s Trident III shot (1) a sign the Bernie
is no longer in the picture or (2) having muscled the Fed on the unscheduled 50
basis point cut on Tuesday, it now thinks that the Fed will give even more at
its March FOMC meeting?
Unfortunately, my
answers don’t make any sense in the context of an 1100 Dow point rise. (1) [a]
Bernie will bury Biden in any debate and [b] the whole Hunter Biden/Ukraine
story is yet to be told, (2) what possible difference will another 50 or 100
basis point decline in interest rates have on a company’s decision to close an
office/factory or a consumer’s decision to go to the movies or eat out for
health reasons. I stand confused at the
end of the day.
What do you buy in
a recession?
News on Stocks in Our Portfolios
Revenue of $899M (-0.6% Y/Y) misses by $54.42M.
Revenue of $662M (-5.9% Y/Y) misses by $34.41M.
General Dynamics (NYSE:GD) declares $1.10/share quarterly dividend, 7.8%
increase from prior dividend of
$1.02.
Economics
This Week’s Data
US
The
February Markit services PMI came in at 49.4, in line; the composite PMI was
49.6, also in line.
The
February ISM nonmanufacturing index was reported at 57.3 versus estimates of
54.9.
International
Other
Estimating
the economic impact from a disaster shock.
OPEC
agrees to 1.5 million b/d cut in
production.
February
Chinese auto sales down 80% YoY.
What
I am reading today
The get rich portfolio.
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for Survival’s website (http://investingforsurvival.com/home)
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