The Morning Call
5/14/20
The
Market
Technical
The Averages (23247, 2820) had another ugly day. Both of the indices finished below their 4/17
highs but also well above the 4/21 lows.
The good news is that as long as they remain within those 4/17-4/21
trading ranges, I have to assume that momentum continues to the upside. The bad news is that (1) the Dow is forming a
head and shoulders formation and the S&P appears to be making a double top
and (2) the VIX broke above the upper boundary of its very short term downtrend
off its 3/23 high [the Market low]. So,
it is important that the Averages hold above their 4/21 trading lows.
GLD, TLT and UUP
rose on strength. As I continue to note,
they shouldn’t be trading in unison to the upside unless investors are
nervous---and it is not yet clear that the current two day sell off is anything
other than consolidation from an overbought condition.
Wednesday in the
charts.
Fundamental
Headlines
Yesterday’s data
releases were mixed. Weekly mortgage and
purchase applications rose while April PPI continues to point toward deflation.
The real economy
Overseas,
the March UK trade balance was lower than anticipated but March industrial
output, manufacturing production, March GDP, Q1 GDP and business investment were
less bad than expected as was March EU industrial production.
The
coronavirus
***overnight
update.
Update on US
coronavirus stats.
Sweden’s
coronavirus strategy---successful or not?
Here is a
refutation of the above article. I note
that it hardly dispenses with the ‘herd immunity’ argument. It may be right to question it; but the
author doesn’t know any more than those that promote the notion. Also note that one of the main rebuttal
experts is a CNN contributor which is not exactly an unbiased source. In the end, nobody knows what strategy will
ultimately prove the most efficacious. The
good news is that enough countries/states are pursuing enough different
strategies that we will have a better sense of how to handle this pandemic a
year from now.
Why the various
narratives are so confusing.
One
final article that accurately reflects my opinion.
https://www.zerohedge.com/political/prager-worldwide-lockdown-may-be-greatest-policy-mistake-history
The Fed
Fed chair Powell gave an
online speech yesterday, in which he (1) painted a dismal economic picture, (2)
said that the Fed had done a lot to offset the problems caused by the economic
shutdown, (3) had the tools to do still more if necessary, but (4) there are
measures that the Fed can’t/won’t undertake [like negative interest rates
{cough, cough, I pinky swear}]; so, congress and the white house need to do
more. The text of his speech:
The
Zimbabwification of Wall Street.
The Fed’s ongoing
destruction of the bottom 90%.
The current need to
pay for expansive fiscal policy will generate huge Treasury offerings which
will require the Fed to institute another round of QE.
Bottom line. Investor giants Buffett, Druckenmiller and
Tepper all agree that equities are overvalued.
But it does not
matter as long as investors believe that Fed supplied liquidity will assure
higher security prices. ‘As long as’
being the operative words.
The latest from
David Tepper.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
Weekly jobless
claims rose by 2,981,000 versus consensus of up 2,500,000.
International
April
German CPI rose 0.4% versus estimates of +0.3%.
April
Japanese machine tool orders fell 48.3% versus forecasts of -48.0%.
Other
What
I am reading today
Why some rules don’t
work.
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for Survival’s website (http://investingforsurvival.com/home)
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