The Morning Call
4/28/20
The
Market
Technical
The Averages (24133, 2878) started the week on their front
foot---good enough to push the S&P above the 4/17 high, re-establishing a very
short term uptrend. The Dow fell short
of its 4/17 high which leaves the indices out of sync. That leaves direction in question, though
breadth and the VIX, GLD, TLT and UUP are pointing to higher prices. The next visible resistance levels are the
100/200 DMA’s (26200/26400; 3010/3020).
Hedge fund
redemptions are nearly as bad as in 2009/2009.
TLT, GLD and UUP sold
off. They all remained in uptrends but
yesterday’s pin action showed a retreat from a safety trade.
Monday in the
charts.
Fundamental
Headlines
Two datapoints
yesterday. In the US, the April Dallas
Fed manufacturing index was awful, just not as much as had been expected. Overseas, March YTD Chinese industrial
profits were also down but not as bad as anticipated.
***overnight
update on coronavirus.
The
economy
$6 trillion slump
could be optimistic.
White House adviser
says Q2 GDP will be the worst since the Depression.
Not so, says Mnuchin.
The US will never return to free market
capitalism.
The food chain is breaking down.
Oil
Oil tumbles again.
More.
Bottom line. the stats are horrible. We expected that. But the questions are how fast will they recover,
by how much and what is that worth? Much
about the speed and magnitude of recovery isn’t knowable right now unless the
assumption is that conditions return to the way they were pre-coronavirus
within a reasonable timeframe. And that
may happen; but I don’t think it is prudent to be paying current valuations
based on that assumption.
That
said, the Fed is pushing money into the financial system and investors are
using that liquidity to buy stocks (the Fed ‘put’) just as they have for the
last decade. As long as that remains the
modus operandi, stock prices will have an upward bias.
Q2 dividend cuts
accelerate.
The latest from
Jeff Gundlach.
Subscriber Alert
Estee Lauder (EL)
suspended its dividend. Accordingly, the
Dividend Growth Portfolio will Sell its position at the open.
News on Stocks in Our Portfolios
Canadian National Railway (NYSE:CNI): Q1 Non-GAAP EPS of
C$1.22 beats by C$0.11; GAAP EPS of C$1.42 beats
by C$0.34.
Revenue of C$3.55B (+0.3% Y/Y) beats by C$80M.
T. Rowe Price (NASDAQ:TROW): Q1 Non-GAAP EPS of
$1.87 beats by $0.05; GAAP EPS of $1.41 misses
by $0.39.
Revenue of $1.46B (+9.8% Y/Y) beats by $30M.
Revenue of $5.01B (-16.5% Y/Y) beats by $140M.
United Parcel Service (NYSE:UPS): Q1 Non-GAAP EPS of
$1.15 misses by $0.08; GAAP EPS of $1.11 misses
by $0.13.
Revenue of $18.04B (+5.1% Y/Y) beats by $870M.
Economics
This Week’s Data
US
The
April Dallas Fed manufacturing index came in at -73.7 versus estimates of
-88.0.
Month
to date retail chain store sales fell versus the prior week.
The
February Case Shiller home price index rose 0.5% versus forecasts of +0.2%.
The
March trade deficit was $64.2 billion versus expectations of $63.8 billion.
March
wholesale inventories fell 0.1% versus consensus of +0.1%.
International
March
Japanese unemployment was 2.5%, in line.
Other
TSA
checkpoint travel numbers.
Freight
trucking demand collapsing.
What
I am reading today
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