The Morning Call
4/29/20
The
Market
Technical
The Averages (24101, 2863) retreated modestly yesterday---but
enough for the S&P to fall back
below its 4/17 high. With the Dow having
been unable to successfully challenge its own 4/17 high, that keeps directional
momentum in question. Levels to watch
are the 4/17 highs on the upside and 4/14;4/21 lows on the downside.
It is the machines
that are buying.
TLT rose yesterday,
though GLD and UUP sold off. The net
result is an uncertain investor take on the need for safety.
Tuesday in the charts.
Fundamental
Headlines
Yesterday’s data
releases were negative. Month to date
retail chain store sales, the March trade deficit, March wholesale
inventories, April consumer confidence and the April Richmond Fed manufacturing
index were less than anticipated. The
only positive number was February’s Case Shiller home price index.
Nouriel Roubini is
concerned about the long term.
Overseas,
only one stat. March Japanese unemployment
was in line.
European banks
brace for default tsunami.
The
coronavirus
Alarmist policies
are the enemy of employment.
80% of the
population have little to nothing to fear.
Has the recovery started
already?
The Fed
The FOMC warps up
its scheduled meeting today which will be followed by the usual policy statement release and the
periodic news conference. The net result
will likely be the reiteration of its current ‘whatever it takes’ policy.
What
it might do.
It
peeps out of its foxhole.
The third major
wealth transfer in twenty years.
Oil
The steep selloff
in oil continues.
Bottom line. ‘the stats are horrible and will remain so for
the near future. We expected that. But the questions are how fast will they 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 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.’
When Warren was a quant.
Dividend
massacre.
News on Stocks in Our Portfolios
Revenue of $3.81B (+1.6% Y/Y) beats by $250M.
Automatic Data Processing (NASDAQ:ADP): Q3 Non-GAAP EPS of
$1.92 beats by $0.03; GAAP EPS of $1.90 beats
by $0.02.
Revenue of $4.04B (+5.5% Y/Y) beats by $10M.
Sherwin Williams (NYSE:SHW): Q1 Non-GAAP EPS of
$4.08 beats by $0.19; GAAP EPS of $3.46 misses
by $0.21.
Revenue of $4.15B (+2.7% Y/Y) beats by $40M.
Revenue of $8.75B (-5.5% Y/Y) misses by $500M.
Economics
This Week’s Data
US
April
consumer confidence came in at 86.9 versus forecasts of 87.9.
The
April Richmond Fed manufacturing index was reported at -53 versus estimates of
-42.
Weekly mortgage
applications declined 3.35 while purchase applications rose 11.6%.
The initial Q1 GDP growth
estimate came in at -4.8% versus expectations of -4.0%; the price index was
+1.4% versus +1.2%.
International
March
EU YOY consumer credit growth was +3.4% versus consensus of +3.6%; corporate credit
rose 5.4% versus +2.2%.
April
EU consumer confidence came in at -22.7, in line; business confidence was -1.81
versus -1.24; economic sentiment was
67.0 versus 74.7; services sentiment was -35.0 versus -27.0; industrial sentiment
was -30.4 versus -25.7.
April
German CPI was up 0.3% versus projections of flat.
Other
The
end of the US China relationship?
The
downside to banning Chinese science students from US universities.
What
I am reading today
What being a Conservative
means.
Mortgage chaos when it is time to
repay.
Pentagon
releases UFO video footage.
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for Survival’s website (http://investingforsurvival.com/home)
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