The Morning Call
4/15/20
The
Market
Technical
The Averages (23949, 2846) bounced back yesterday, even in
the face of disappointing bank earnings
reports. Other positive signs include
(1) volume was up and breadth strong, (2) the VIX is finally sinking toward a level
reflecting declining investor uncertainty, (3) both indices remained above the
lower boundaries of their very short term uptrends. The next visible resistance levels are the
100 and 200 DMA’s (DJIA 26649/3051/3014).
TLT traded lower;
but its technical picture was unchanged. Ditto for UUP although it is nearing both DMA’s
as well as the lower boundary of its short term uptrend. On the
other hand, GLD once again soared (on volume), finishing above the upper
boundaries of its very short term and short term uptrends for a third day---a signal
that it has successfully challenged those boundaries which, in turn suggests
that inflation is working its way into investors’ forecasts.
Tuesday in the
charts.
Fundamental
Headlines
Yesterday’s
stats were mixed. Month to date retail
chain store sales were terrible while March import and exports prices fell
though not as much as expected.
JP
Morgan sees no recovery until 2023.
Overseas,
the March Chinese trade balance was better than anticipated.
The
coronavirus
***overnight
update.
***overnight, White
House leaks draft plan to re-open economy.
More coronavirus
data.
The Council to Re-open
the Economy.
State
Department warned of potential SARS-like pandemic.
Paying the price
of extreme isolation.
Will central
planning become part of the post-coronavirus landscape?
Bottom line: lousy earnings. Not to worry; the Fed is flooding the Markets
with liquidity. With the exception of
couple of months in early 2020, that has proven a plus for securities prices
for the last ten years. So, aren’t the
odds in favor of it being a positive this time around? Probably.
Warning: based on
the likely destruction of corporate earnings, stocks are more overvalued than
they were at the February high.
Head NY Fed
trader: Our purchases have been unprecedented.
https://www.zerohedge.com/markets/ny-fed-head-trader-scale-our-asset-purchases-has-been-unparalleled
The latest from Howard
Marks.
The potential
reward doesn’t justify the risk.
This crisis will
only make wealth inequality worse.
BofA’s latest fund
manager survey.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
Month
to date retail chain store sales plunged from last week’s number.
Weekly
mortgage applications rose 7.3% but purchase applications decreased 1.8%.
March
retail sales fell 8.7% versus estimates of -8.0%; ex autos, they were -4.5%
versus -4.0%.
The
April NY Fed manufacturing index came in at -78.2 versus forecasts of -35.
International
Other
This
is an interesting article on the mounting level of debt and where the problems
will develop.
The
cut in oil production may not be enough.
What
I am reading today
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