The Morning Call
4/16/20
The
Market
Technical
The Averages (23504, 2783) gave back Tuesday’s advance
yesterday, though as I noted in the Morning Call, breadth has been strong and
they were nearing overbought territory.
So, a rest is not surprising. On
a positive note, the VIX held fairly well on a big down day, ending in a very short
term downtrend. Further, both indices
remained above the lower boundaries of their very short term uptrends---though
the Dow just barely.
Short
term optimism has spiked.
And.
TLT was up big,
leaving its technical picture unchanged (positive). UUP also rose though it
remained near both DMA’s as well as the lower boundary of its short term
uptrend. GLD sold off; some profit
taking is not surprising given its recent powerful run. Still, it finished above the upper boundaries
of its very short term and short term uptrends.
Wednesday in the
charts.
Fundamental
Headlines
Yesterday’s data
releases were abysmal. March industrial
production (primary indicator) and retail sales (primary indicator) were well
below estimates. Backing up this poor
showing was weekly purchase applications, February business inventories/sales,
the April housing market index and the April NY Fed manufacturing index.
Update on big four
economic indicators.
IMF predicts
biggest downturn since great depression.
The Fed released its
latest Beige Book report which made for pretty depressing reading---the main
theme being that economic activity contracted across all industries in every
region of the country. A more detailed
summary and the full text are below.
Nothing from
overseas.
The
coronavirus
***overnight update.
Update on coronavirus
stats.
Tucker Carlson on
the shutdown.
The small business
bailout fund ran out of money Wednesday evening.
Bottom line: now
that the economic data is turning really bad, investors are in a position of
either worrying about the fallout from the government shutdown or embracing the
Fed’s aggressive stimulus policy. If
history repeats itself, the latter will win out. That said, I have maintained for years that
the mispricing and misallocation of assets will end at some point. Though again, if history repeats itself, it remains
a low probability bet. So, for the
moment, I think that the bias of the Market is to the upside; although in the
absence of a coronavirus cure or vaccine, the almost assured poor economic
numbers will likely make any progress erratic.
I have no intent of chasing stock prices in that environment.
News on Stocks in Our Portfolios
Revenue of $3.71B (+10.7% Y/Y) beats by $50M.
Economics
This Week’s Data
US
February
business inventories fell 0.4%, in line; sales declined more.
March
industrial production dropped 5.4% versus estimates of -4.0%; capacity
utilization was 72.7% versus 73.8%.
The
April housing market index came in at 30 versus expectations 55.
March
housing starts fell 22.3% versus consensus of -19.6%; building permits
decreased 6.8% versus -10.9%.
Weekly
jobless claims were up 5,245,000 versus projections of up 5,105,000.
The
April Philadelphia Fed manufacturing index came in at -56.6 versus forecasts of
-30.
International
February
EU industrial production rose 0.1% versus estimates of -0.2%.
March German CPI
was up 0.1%, in line; PPI fell 0.4% versus -1.2%.
Other
Problems
in China’s belt and road projects.
OPEC’s production
cuts not enough to offset decline in demand.
What is we hadn’t
bailed out Chrysler in 1980?
Banks have a huge
problem.
What
I am reading today
Fixing college
corruption.
The more you walk, the less likely
you are to die.
Life
wasn’t easy in ancient Mesopotamia.
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
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