The Morning Call
3/20/20
The
Market
Technical
The Averages (20087, 2409) rallied modestly yesterday---very
modestly given that (1) there was a short squeeze and (2) the indices were
oversold. Both charts remain
technically broken with the nearest support ~ 15399/1810.
Today
is a quad witching. This expert expects
volatility.
TLT, GLD and UUP continued
their volatility. TLT moved up smartly
and remains technically strong. GLD maintained
Wednesday’s downside reversal, finishing below its 100 DMA (now resistance) and
its 200 DMA (if it remains there through the close on Monday, it will revert to
resistance). The UUP spiked yet again, closing
back above its 100 and 200 DMA’s and the upper boundary of its short term trading
range---if it remains there through the close today, it will reset to an uptrend.
The muni market is getting
massacred.
The question remains,
are TLT, GLD and UUP reflecting a Market rattling credit/liquidity event?
The dollar shortage continues.
The agony of margin calls.
How selloffs have ultimately played out.
https://www.zerohedge.com/markets/how-react-people-losing-their-heads-good-decisions-uncertain-times
Thursday in the
charts.
https://www.zerohedge.com/markets/median-us-stock-now-down-50-its-highs-world-loses-25-trillion-mont
Fundamental
Headlines
The coronavirus
economic fallout is starting to appear in US numbers. While the February leading economic indicators
rose, weekly jobless claims, the March Philadelphia Fed manufacturing index and
the Q4 trade deficit were disappointing.
Overseas,
the data was mixed. January EU YoY construction output was above expectations, February
Japanese CPI YoY was in line and the March German preliminary business climate
index came in below estimates.
Two headlines out
of the White House yesterday.
(1)
White House working with drug companies on new
virus therapies.
The
bear case on the coronavirus.
A concerned note from the in-house optimist.
Don’t conflate this political crack up with
recession.
Sending a $1,000
check to every person won’t solve the crisis.
The argument for doing nothing.
(2)
Trump says he may intervene in the Saudi/Russia oil price
war.
Oil
surges 24%.
Plus, the Bank of
England joined the crowd, lowering rates and hiking QE.
Bottom line: hopefully, we have seen the bottom in oil
prices. If so, we can scratch it off our
list of uncertainties. Unfortunately, ‘hopefully’
is the operative word. So, this problem
is apt to continue to be with us for a while.
So
far there is no indication of peak infections/deaths from the coronavirus. On the other hand, our ruling class is working
overtime generating ideas/programs to not only address curbing the spread of
the virus but also the economic fallout.
Those efforts will almost surely generate positive results (though the
question is, will they be worth it?). So,
while there may be no light at the end of the tunnel at this moment, I believe
that it is coming---and with it the ability to quantify the economic damage.
Also,
there has been no negative event in the credit market despite some pretty loud signaling
from the TLT, GLD and UUP markets and desperation moves by the central
banks. Maybe the financial system gets
held together by chewing gum and baling wire.
But I continue to worry about a major bankruptcy (ies) triggering a chain
reaction in the corporate debt market.
Estimating future
stock returns.
P/E’s at the
bottom.
Should I buy
stocks now?
Goldman expects more
downside.
For the bears
News on Stocks in Our Portfolios
Revenue of $1.36B (+3.0% Y/Y) in-line.
Economics
This Week’s Data
US
The
February leading economic indicators rose 0.1%, in line.
International
The
January EU trade surplus was E8.7 billion versus estimates of E20.5 billion.
February
German PPI came in at -0.4% versus forecasts of -0.1%.
Other
The
decline in restaurant traffic.
What
does invoking the Defense Production Act mean?
What
I am reading today
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