Thursday, April 23, 2020

The Morning Call--Higher high or lower low


The Morning Call

4/23/20

The Market
         
    Technical

The Averages  (23475, 2799) bounced hard yesterday, though on low volume.  Still the S&P ended below the lower boundary of its very short term uptrend for a second day, voiding that trend.  The very short term technical question at the moment is, will the indices recoup last Friday’s highs and regain their upward momentum or will they fall short and make a low lower than Tuesday’s. 

GLD had a strong upward move yesterday;  the dollar continued its breakout to the upside from a pennant formation; while the long bond slipped slightly, its upward momentum remains intact.  Safety trades.

            Wednesday in the charts.

    Fundamental

       Headlines

            Wednesday was another slow day for data.  What we got was mixed.  The February housing price index rose more than anticipated; weekly mortgage applications declined while purchase applications rose.

            Overseas, March UK PPI and core CPI were lower than expected, CPI was in line while core PPI was hotter than forecasts.

            The coronavirus

            Mnuchin says that we will all be back to work by September 1st.

            The latest US stats on the coronavirus.

                An equally important set of stats.

            A silver lining for the homeless.

            The Fed

            This is an interesting article.  There is logic in the author’s argument (QE is not responsible for higher stock prices).  The problem is, events of the last decade say that he is wrong.
           
            And so does this guy.

            ECB follows Fed’s lead in accepting junk bonds as collateral.
                    
            Oil

            The worst is yet to come for oil.

Pricing oil in Cushing.

Kyle Bass on Saudi oil imports.

Why 2/3rds of the oil and gas companies may not be around in a year.

Bottom line:  as you know, I have a list of stocks that have suffered severe whackage since the February high and bought positions in some of them late in the March decline.  I am not inclined to resume any buying until stocks make a solid test of the March low.  (must read)

The only thing working now.

An important investing lesson.

    News on Stocks in Our Portfolios
 
Sherwin Williams (NYSE:SHW) declares $1.34/share quarterly dividend, in line with previous.

W.W. Grainger (NYSE:GWW): Q1 Non-GAAP EPS of $4.24 misses by $0.23; GAAP EPS of $3.19 misses by $1.25.
Revenue of $3B (+7.1% Y/Y) beats by $130M.

Economics

   This Week’s Data

      US

            The February housing price index rose 0.7% versus expectations of up 0.4%.

            Weekly jobless claims rose 4,427,000 versus projections of 4,200,000.

     International
               
                Hello, coronavirus.

                The April Japanese flash manufacturing PMI was 37.8 versus estimates of 42; the services PMI was 22.8 versus 31; the composite PMI was 27.8 versus 35.0.  The February leading economic indicators were 91.7 versus 92.1.

                The April German flash manufacturing PMI was 34.4 versus forecasts of 39; the services PMI was 15.9 versus 28.5; the composite PMI was 17.1 versus 31.0.

                The April EU flash manufacturing PMI was 33.6 versus consensus of 39.2; the services PMI was 11.7 versus 23.8; the composite PMI was 13.5 versus 25.7.

                The April UK flash manufacturing PMI was 32.9 versus expectations of 42; the services PMI was 12.3 versus 29; the composite PMI was 12.9 versus 31.4.  The Q2 business optimism index was -87 versus -60.

    Other

            The good news is that the banks are more soundly capitalized than in 2008.

What I am reading today

           

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