The Morning Call
3/6/20
The
Market
Technical
The Averages (26121, 3023) continued their extremely
volatile pin action---now putting the Six Flag’s Texas Tornado to shame. Yesterday’s technical highlight was the S&P
finishing back below its 200 DMA (now support; if it remains there through the
close on next Tuesday, it will revert to resistance). It is beginning to look like the S&P 200
DMA has become the battle line in this Market; that is, if the S&P keeps
bouncing off it, the worse may be over; if it successfully challenges this
level, then 25047/2855 looks like the next stop.
TLT and GLD aggressively
resumed their push to new highs while UUP was ripped again. So, nothing changed technically including my confusion
over their dramatically mixed performance
(***see below).
Thursday in the
charts.
Fundamental
Headlines
The dataflow yesterday
was mixed. Q4 nonfarm productivity was below
projections but so was unit labor costs; January factory orders fell more than anticipated
but ex transportation they fell less; weekly
jobless claims declined less than expected.
JP Morgan’s Global
Composite Output Index declined sharply in February.
Forward looking
components of economic activity.
Overseas,
the February German construction PMI was better than expected.
Are the Chinese
faking the numbers (again)?
https://www.zerohedge.com/economics/lights-are-no-ones-working-how-china-faking-coronavirus-recovery
The
coronavirus.
The coronavirus
has created both demand and supply shocks.
***overnight
update.
The
Fed.
The Fed in a
corner.
Are negative rates now guaranteed?
This helps explain
what is going on in the various markets.
US banks are selling dollars (dollar down) to buy yen to invest in long
bonds (bonds up) and not stocks (stocks down).
Bottom line: the two
most important factors for the Market, in my opinion, is (1) when it believes
that the globe in witnessing peak coronavirus infections/deaths. Once that occurs, uncertainty starts to
dissipate and estimates can began on the economic impact of the virus, and (2) when
it loses faith in the Fed ‘put’. Tuesday’s
pin action suggested that the process may have begun. Time will tell. Irrespective of that, the Fed is nearly out
of bullets. What happens when it is all
out and the economy really needs easier monetary policy?
The latest from
Jeff Gundlach.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
Q4
nonfarm productivity was up 1.2% versus expectations of +1.4%; unit labor costs
rose 0.9% versus +1.4%.
January
factory orders fell 0.5% versus forecasts of -0.1%; ex transportation they were
-0.1% versus -0.2%.
Weekly
jobless claims declined 3,000 versus consensus of down 4,000.
February
nonfarm payrolls grew by 273,000 versus an anticipated increase of 175,000.
International
The
February German construction PMI was reported at 55.8 versus estimates of 54.2.
January
Japanese household spending YoY was down 3.9% versus projections of -4.0%; cash
earnings were up 1.5% versus 1.3%.
January leading economic indicators were 90.3 versus 91.9.
Other
What
I am reading today
Massive white dwarf star
poses mystery.
How books improve our mental health.
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