The Morning Call
3/31/20
The
Market
Technical
The Averages (22327, 2626) rallied yesterday, but still
finished in short term downtrends whose boundaries are ~17304/2231 on the
downside and ~22917/2717 on the upside.
Very short term,
the huge buyside orders in the quarter end institutional rebalancing process continue
to influence trading.
Quarter end
rebalancing.
On a slightly
longer term basis, I still think the evidence points to more downside: (1)
stocks condition has largely been worked off, (2) the VIX is not reflecting a
reduction in risk adverseness among investors, (3) both indices experienced gap
up opens last Tuesday [which need to be filled] and (4) some of the most
powerful rallies occur during bear markets.
There is almost no visible support until ~ 15399/1810.
And. The unprecedented drop in autocorrelation.
A short history of
dead cat bounces.
TLT, GLD and UUP had
a quiet day on low volume with no change to their technical picture.
Monday in the
charts.
https://www.zerohedge.com/markets/stocks-bonds-bid-month-end-despite-americans-massive-scramble-cash
Fundamental
Headlines
Yesterday was another
day of mixed US data. February
pending home sales were better than anticipated while the March Dallas Fed
manufacturing index was awful.
Overseas,
the numbers were better than expected. March
EU economic sentiment, industrial
sentiment and services sentiment were above estimates while March EU consumer
confidence and March German CPI were in line and EU business confidence came in
below forecasts.
Coronavirus
headlines:
***overnight
update.
We need more
testing.
Grounds for
optimism.
Keeping perspective
on scientific claims.
Sweden’s
approach---do nothing.
The
Fed and the damage it has done:
Jim Grant warns
Fed actions are a clear and present danger (must read):
Multi trillion
dollar helicopter credit drop.
Bottom line: the
above interview with Jim Grant captures all my worries about what is in my
opinion the biggest problem facing the Market.
There are insolvencies ahead that the Market likely hasn’t discounted.
Projected S&P
quarterly dividends.
Where ‘I bought it
for the dividend’ went wrong.
Unknown unknowns.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
February
pending home sales rose 2.4% versus expectations of -1.0%.
The
March Dallas Fed manufacturing index came in at -70 versus estimates of -6.
Month to date
retail chain store sales grew at a slower rate than in the prior week.
The
January Case Shiller home price index was flat versus projections of up 0.2%.
International
February
Japanese unemployment was 2.4%, in line; retail sales were +0.6% versus -0.9%;
industrial production was up 0.4% versus up 0.1%; construction orders were up
0.7% versus -12.0%; housing starts were -12.3% versus -14.7%
The
March Chinese manufacturing PMI came in at 52 versus expectations of 45; the
nonmanufacturing PMI was 52.3 versus 40.4.
The
March German unemployment rates was 5.0% versus estimates of 5.1%.
March
EU CPI was +0.5%, in line.
Q4
UK GDP was flat, in line; business investment was -0.5% versus -1.0%; the trade
deficit was L5.6 billion versus L7.0 billion.
Other
Oil
man’s plea to Trump.
What
I am reading today
An American approach to
the coronavirus crisis.
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
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