The Morning Call
4/30/20
The
Market
Technical
The Averages (24633, 2938) had a great day as both of the
indices finished above their 4/17 highs.
If they remain there through the close today, they will re-establish
very short term uptrends. If they do,
then next resistance exists at their 100/200 DMA’s (26200/26400; 3010/3020).
Update on margin
debt.
GLD rallied while
TLT and UUP sold off, indicative of a concern about inflation.
Wednesday in the
charts.
Fundamental
Headlines
The
trend in bad economic data continues.
Yesterday, March pending home sales, weekly mortgage applications and the
initial Q1 GDP growth estimate were less that anticipated. One bright spot, weekly purchase applications
rose.
The economy may
have bottomed.
Or
not.
Overseas,
March EU consumer credit growth, April business confidence, economic, services and industrial sentiment were below
estimates while consumer confidence was in line.
There were two
major headlines yesterday:
(1)
Gilead Sciences released a study showing that trials
on one of its drugs showed positive recovery results from coronavirus patients. Clearly, advances in either treatments of or
vaccines for the virus is a plus for the health of Americans and their economy.
(2)
the FOMC wrapped up its latest meeting. The formal statement following that meeting
read pretty much as expected, i.e. the Fed will do whatever it takes to support
the economy [cough, cough, the Market].
Meaning that the Fed ‘put’ is alive and well and living on the floor of
the NY Stock Exchange.
The Fed/Powell spend a lot of time congratulating itself on saving the
world. I would have preferred that it
tell us how they are going to get out of the business of throwing money at the
economy/Market every time it catches cold and how they are going to reduce
their engorged balance sheet---but that is just me. Here is a synopsis and the full text.
Here is
a gem from the Powell presser: Don’t
worry about debt (easy for you to say,
you have a government job, pension and healthcare).
***Today’s main
headline will likely be the results of an ECB meeting in which it left rates unchanged, QEV intact and
added another liquidity program.
Laguard’s press
conference: More of the same is just the ticket.
The
coronavirus
***overnight
update.
No Payroll Protection
Plan check can correct what destroyed my business.
The psychological
toll of the lockdown.
Counterpoint.
Where is Plan B?
Update on US
coronavirus stats.
Bottom line: ‘the
stats are horrible and will remain so for the near future. We expected that. To be sure, steps are already being taken to bring
the country out of lockdown. But
the questions are how fast will the numbers recover, by how much and what is
that worth? Much about the speed and
magnitude of recovery isn’t knowable right now unless the assumption is that
conditions return to the way they were pre-coronavirus within a reasonable
timeframe. And that may happen; but I don’t
think it is prudent to be paying current valuations based on that assumption.
That said, the Fed is pushing money into the financial system
(and
promised yesterday to continue to do so as long as there is a question about
economic growth) and investors are using that liquidity to buy
stocks (the Fed ‘put’) just as they have for the last decade. As long as that remains the modus operandi, stock
prices will have an upward bias.’
Waiting for a dip.
The mean reversion
of small gap value.
News on Stocks in Our Portfolios
Revenue of $4B (+2.8% Y/Y) beats by $20M.
Economics
This Week’s Data
US
March
pending home sales declined 20.8% versus estimates of -10.0%.
March
personal income was -2.0% versus projections of -1.5%; personal spending as -7.5%
versus -5.0%; PCE price index was -0.3% versus -0.7%; core PCE price index was
-0.1%, in line.
Weekly
jobless claims rose 3,839,000 versus an anticipated increase of 3,500,000.
International
March
Japanese retail sales fell 4.5% versus expectations of -3.7%; industrial
production was -3.7% versus -5.2%; housing starts YoY were -7.6% versus -16.0%;
construction orders YoY were -14.3% versus -16.7%; April consumer confidence
was 211.6 versus 22.3.
The
April Chinese manufacturing PMI was 50.8 versus forecasts of 51.0; the Caixin
(small business) manufacturing PMI was 49.4 versus 50.3; the nonmanufacturing
PMI was 53.2 versus 45.1.
March
German retail sales declined 3.6% versus consensus of -7.3%.
The
Q1 EU GDP growth was -3.8% versus projections of -3.5%; CPI was +0.3% versus
0.0%; unemployment was 7.4% versus 7.7%
Other
Empty
promises of fiscal restraint.
Update
on oil.
What
I am reading today
What causes social
inequality?
NASA plans to slam a
spacecraft into an asteroid.
People hoarding Pepcid
AC as possible coronavirus treatment.
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