The Morning Call---Money, money everywhere but nothing for me or thee

The Morning Call

5/19/20

The Market

         

    Technical

The Averages  (24597, 2953) did a moonshot yesterday, pushing above their 4/17-4/21 trading ranges and voiding their topping formations (head and shoulders for the Dow, double top for the S&P).  Plus, the S&P made a new high (the Dow didn’t).  The only bad news is that both index made big gap up opens---which as you know, I believe have to be closed.

GLD, TLT and UUP were all off.  If they continue to do so, then that would put their investors back in line with the positive perspective of equity investors.  Follow through.

            The bond bull market is alive and well and is not going anywhere.

            https://www.advisorperspectives.com/commentaries/2020/05/18/why-siegel-is-wrong-about-end-of-bond-bull-market-1

            Monday in the charts.

            https://www.zerohedge.com/markets/markets-go-manic-thanks-money-printing-moderna-merkel

    Fundamental

       Headlines

            Only one datapoint released yesterday. The May housing market (builder confidence) index was better than expected.

            Latest nowcast from Atlanta Fed.

            https://ritholtz.com/2020/05/gdp-42-8-percent/

            Interview with Reinhart and Rogoff.

            https://www.bloomberg.com/news/features/2020-05-18/harvard-s-financial-crisis-experts-this-time-really-is-different?sref=loFkkPMQ

            Interview with Mohamed El Erian.

            https://www.zerohedge.com/economics/biggest-shock-weve-had-generations-el-erian-says-buckle-bumpy-ride

            Overseas, the Q1 Japanese (preliminary) GDP growth rate, capital expenditures and  private consumption were above (less bad than) expectations.

            https://www.nytimes.com/2020/05/17/business/japan-recession-coronavirus.html

            The coronavirus

            Not a natural disaster but a manmade one.

            https://www.spectator.co.uk/article/this-is-not-a-natural-disaster-but-a-manmade-one?fbclid=IwAR0ZVkvmENJUKjoEouGsZtl5g6kSwV_ljTYpvtITNK9zhxpkjM9JjQzrBeE

            China

           

            China warns US over Huawei restrictions.

            https://apnews.com/51bbf084069b430310aa7b03b18490ea

            The Fed

            Sunday night, Powell promised the moon.

            https://www.zerohedge.com/markets/powell-makes-history-triggers-record-buying-panic-us-stocks

            Today, he will repeat it in testimony before the senate (his prepared remarks were released early).

            https://www.zerohedge.com/markets/highlights-powells-prepared-remarks-senate-banking-committee

            The EU followed suit.

            https://www.zerohedge.com/markets/euro-spikes-merkelmacron-eu-bailout-fund-headlines

            Bottom line: as long as the global central banks are willing to pump unlimited liquidity into the financial markets, investors appear ready to buy, buy, buy irrespective of valuations.  Until that changes, lay back and enjoy it.

            Another example of the misallocation of assets,

            https://blogs.cfainstitute.org/investor/2020/05/13/modern-private-equity-and-the-end-of-creative-destruction/

    News on Stocks in Our Portfolios

 

Hormel Foods (NYSE:HRL) declares $0.2325/share quarterly dividend, in line with previous.

Home Depot (NYSE:HD): Q1 GAAP EPS of $2.08 misses by $0.18.

Revenue of $28.26B (+7.1% Y/Y) beats by $690M.

Home Depot (NYSE:HD) declares $1.50/share quarterly dividend, in line with previous.

Economics

   This Week’s Data

      US

            The May housing market (builder confidence) index was reported at 37 versus consensus of 35.

            https://www.calculatedriskblog.com/2020/05/nahb-builder-confidence-increased-to-37.html

                April housing starts fell 30.2% versus expectations of down 27.4%; building permits declined 20.8% versus -26.3%.

     International

            March Japanese industrial production dropped 3.7%, in line.

            March UK unemployment came in at 3.9% versus estimates of 4.4%; average earnings were up 2.4% versus up 2.6%.

            March EU construction output decreased 15.4% versus forecasts of down 17.0%. May economic sentiment was reported at 46 versus 39.

            May German economic sentiment was 51 versus projections of 32.

    Other

What I am reading today

            How should the government fund R&D?

            https://www.aei.org/economics/what-can-advocates-of-federal-rd-support-learn-from-world-war-ii-my-long-read-qa-with-tony-mills/

                        And you thought that the UN was irrelevant?

            https://www.zerohedge.com/political/united-nations-claims-its-politically-incorrect-say-husband-or-wife

                

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