The Morning Call
4/14/20
The
Market
Technical
The Averages (23390, 2761) sold off yesterday but closed
well off their lows. The good Market news
is that (1) new higher lows have still
been set, leaving the possibility that a bottom has been made, (2) both of the
indices have reset their short term trends to trading ranges [18210-29540,
2188-3398] and (3) both remained above the lower boundaries of their very short
term uptrends. The next visible resistance
levels are the 100 and 200 DMA’s.
Counterpoint.
Have we put in a
bottom?
TLT and UUP traded lower; but their technical pictures
were unchanged. On the other hand, GLD once
again soared (on volume), finishing above the upper boundaries of its very
short term and short term uptrends.
Clearly, it needs to successfully challenge those boundaries for this
move to have any technical significance; and, as you recall, it has tried three
times to do so and failed. Still, if
this challenge is successful, it suggests that investors have added a new
element to the Fed ‘put’---inflation.
Central
banks continue to add to their gold reserves.
Monday
in the charts.
Fundamental
Headlines
No data releases
yesterday either here or aboard.
Update on ECRI
weekly leading index.
The crisis is over
but at a terrible cost.
How big the deficit?
The
coronavirus
Five lessons from
WWII.
Three
waves of the 1918-20 flu epidemic.
Study
reveals biggest coronavirus factor leading to hospitalization
Morgan
Stanley on the likely course of the coronavirus.
Governors planning to reopen their economies.
The economy is now
a sausage factory.
The
Fed
Guess who the Fed
is helping.
As
you might guess, I disagree with some of this narrative (i.e. the Fed is
somehow not responsible for the mispricing of risk); but I include it to present
the counterpoint.
Bottom line: money
solves a lot of problems, especially when there is a lot of it. And it appears that the Fed is determined to ensure
that there is a lot of it and that nothing will stand in its way to keep it
that way. In short, the Fed ‘put’ is
alive and well. If investors embrace it
as enthusiastically as they have previously, the bias in stock prices is
up. However, as I have noted previously,
I am not chasing stock prices to the upside.
Today starts first quarter earnings season
which means we will begin to see the impact of the coronavirus/government reaction
on corporate earnings. No one is
expecting anything positive. Indeed, the
debate is just how bad profits will be. I
think most of Wall Street has already written off 2020 earnings and is now focused
on the length and magnitude of an earnings recovery. In short, unless figures released are an
unmitigated disaster, I don’t see stocks selling off. Forward guidance will be much more important along
with the rapidity with which the Fed juices the money supply.
News on Stocks in Our Portfolios
Johnson & Johnson: Q1 Non-GAAP EPS of $2.30 beats by $0.30; GAAP EPS
of $2.17 beats by $0.74.
Revenue of $20.69B (+3.3% Y/Y) beats by $1.21B.
Economics
This Week’s Data
US
March
import prices fell 2.3% versus expectations of -3.2%; export prices declined
1.6% versus -1.9%.
International
The
March Chinese trade balance was +$19.9 billion versus estimates of +$18.55
billion.
Other
What
I am reading today
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
No comments:
Post a Comment