Friday, April 3, 2020

The Morning Call---A new higher low?


The Morning Call

4/3/20

The Market
         
    Technical

Yesterday, the Averages  (21434, 2526) see sawed through the trading session, torn between the conflicting headlines of a horrendous weekly jobless claims number and positive developments in the oil market---the latter carrying the day.  They remained within short term downtrends whose boundaries are ~17119/2184 on the downside and ~22381/2642 on the upside. 

The question is, can the indices follow through to the upside, creating a higher low. As you know, I don’t believe a Market bottom has been made---that thesis is about to be tested.   

TLT, GLD and UUP were up nicely again, an indication that investors, yesterday’s equity pin action notwithstanding, are still gravitating to them as safety trades.
           
Thursday in the charts.

            What do Market recoveries look like?

    Fundamental

       Headlines

            Yesterday was not a good day for economic stats.  February factory orders,  March vehicle sales and weekly jobless claims were disappointing while the February trade deficit was slightly better than anticipated.

            CBO reveals apocalyptic forecast.

            Overseas, there only a single datapoint.  February EU PPI was much lower than expected.

            The coronavirus
           
            ***overnight update.

            More data on coronavirus.
           
            And more.

            This is not good---chaos at the SBA.

                Oil

***overnight update.

A busy day in oil land---starting with Trump saying he expects production cuts.

            The impact on prices.

            Trump invites oil chiefs to White House.

                Bottom line:  corporate insolvency continues to be at the top of my list of worries.  To be sure, the Fed has made it clear that it is prepared to throw unlimited amounts of money at anything that resembles a credit problem.  That will almost certainly mitigate some potential disasters.  But that said, the Fed has shown itself to be clueless about the how it created the misallocation of assets.  So, the question is how clueless will it be managing the unwinding of this problem?  That is the biggest risk facing the economy and Market now, in my opinion.  In other words, solving the coronavirus problem may not remove the risk of further downside in the Market---‘may not’ being the operative words.

If the coronavirus hadn’t caused the crash, something else would have (must read).

            S&P 1600?

                Markets now a tipping point.


            Update on valuations.

            March dividends by the numbers.

    News on Stocks in Our Portfolios
 
           

Economics

   This Week’s Data

      US

            February factory orders were unchanged from January versus estimates of +0.2%; ex transportation, they were down 0.9% versus +0.3%.

            March vehicle sales decline to 11.4 million SAAR.

            March nonfarm payrolls declined 701,000 versus consensus of down 100,000; the unemployment rate was 4.4% versus 3.8%.

     International

            February EU retail sales rose 0.9% versus forecasts of +0.1%; the March services PMI was 26.4 versus 28.4; the composite PMI was 29.7 versus 31.4.

            The March Japanese and Chinese services and composite PMI’s were above expectations while the German and UK services and composite PMI’s were below.

    Other

            Hotel occupancy rates plunging.

            The problem with the regulatory state.

           

What I am reading today

            Live for today; plan of tomorrow.

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