The Morning Call
4/1/20
The
Market
Technical
The Averages (21917, 2584) took a rest yesterday, ending in
short term downtrends whose boundaries are ~17198/2220 on the downside and ~22790/2703
on the upside.
Quarter end
pension rebalancing is over.
Is this a new bull
market---technicians respond?
On a long term
basis, I still think the evidence points to more downside: (1) stocks condition
has largely been worked off, (2) the VIX is not reflecting a reduction in risk
adverseness among investors, (3) both indices experienced gap up opens last
Tuesday [which need to be filled] and (4) some of the most powerful rallies
occur during bear markets. There is
almost no visible support until ~ 15399/1810.
TLT, GLD and UUP had
another quiet day on low volume with no change to their technical picture---a
positive sign that some kind of normalcy is returning.
Tuesday in the
charts.
Fundamental
Headlines
Yesterday’s
economic numbers were positive; and surprisingly, they were March stats. The March Chicago PMI and March consumer confidence
were ahead of expectations while the
January Case Shiller home price index and month to date retail chain store
sales were disappointing.
Overseas,
the data was very upbeat. February
Japanese retail sales, industrial production, construction orders, housing
starts as well as the March Chinese manufacturing and nonmanufacturing PMI’s, March German unemployment and Q4 UK business
investment and trade deficit were better than anticipated. February Japanese unemployment, the March EU
CPI and Q4 UK GDP were in line.
The
coronavirus
***overnight
update.
New coronavirus
test a game changer?
Brazil and the
coronavirus.
There are multiple
strains of the coronavirus.
Ten things to
think about.
Here
is one more thing.
The
Fed
Why
QEV won’t stop corporate defaults.
The
bottom line: the news flow appears to be
improving. While we haven’t seen peak
infections/deaths in the US, the coronavirus numbers overseas as well as Washington
State, California and, perhaps, even New York are indicating some flattening in
the curve. Plus, American corporations
are driving for the hoop in producing virus fighting supplies and developing tests
and promising vaccines.
The
economic data is also getting better in areas of the world hit earlier than the
US.
I
am not suggesting that the worst is over in gross terms; but there are enough numbers
that analysts can get their pencils working and quantification efforts began in
earnest.
So,
on my lists of worries, corporate insolvency continues to be at the top. 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.
The
latest from Morgan Stanley.
The latest from Jeff
Gundlach.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
The
March Chicago PMI came in at 47.8 versus estimates of 40.0.
March
consumer confidence was reported at 120 versus expectations of 110.
Weekly
mortgage applications rose 15.3% while purchase applications were down 10.8%.
The
March ADP private payroll report showed job losses of 27,000 versus an
anticipated decline of 150,000.
International
The
March Japanese final manufacturing PMI was 44.2 versus forecasts of 44.8.
Q1
Japanese large manufactures index was -8 versus consensus of -10; small
manufacturers index was -15 versus -17; the nonmanufacturers index was 8 versus
6; large manufacturers cap ex was +1.8% versus -1.1%.
The
March Chinese Caixin final manufacturing PMI was 50.1 versus projections of
45.5.
February
German retail sales were up 1.2% versus estimates of +0.1%.
The
March German final manufacturing PMI came in at 45.4 versus expectations of
45.5; EU manufacturing PMI was 44.5 versus 44.7; UK manufacturing PMI was 47.8
versus 47.0.
February
EU unemployment was 7.3% versus forecasts of 7.4%.
Other
NY
Fed launches new real time index to monitor the economy.
What
I am reading today
Bizarre archeological
finds that still baffle scientists.
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