The Morning Call
5/28/20
The
Market
Technical
The Averages (25548, 3036) did another moonshot yesterday,
continuing to clarify the technical picture.
Both of the indices are now in very short term uptrends. The Dow finished above its 100 DMA (joining
the S&P; now resistance, if it remains there through the close on Friday,
it will revert to support). The S&P
ended above its 100 DMA for a second day (now resistance; if it remains there
through the close today, it will revert to support) and its 200 DMA (now
resistance; if it remains there through the close Monday, it will revert to
support. Finally, the VIX made a new
closing low, putting it back in sync with equities. The one negative is those huge 5/18 gap opens
that remain unfilled and will continue to act as a magnet that needs to be
closed.
My assumption
continues to be that equity prices’ bias is to the upside, though they are
overcoming two restraining factors---the resistance presented by both indices’
100 and 200 DMA’s and the pin action in the VIX.
GLD was up, TLT
down and UUP unchanged. All their charts
remain strong, suggesting that their investors remain risk averse.
Wednesday in the
charts.
Fundamental
Headlines
The
economy
It was a slow day
for data. Weekly mortgage and
purchase applications rose and month to date retail chain store sales fell less
than in the prior week.
The
Fed released its latest Beige Book, which told us what we already knew---the
economy was sh*tty for the six weeks leading up to May 18th.
Overseas, April
Chinese YoY industrial profits fell less than estimates.
The
coronavirus
Update on US
coronavirus data.
CDC slashes
coronavirus fatality rate.
Fewer things will
change than we might expect (must read).
On the other hand,
‘creative destruction’ could save the economy.
The
Fed
Monetary expansion
Argentina style.
Fiscal/monetary
stimulus does not work.
China
Pompeo says Hong
Kong no longer autonomous from China.
China sanctions
headed for Trump’s desk.
Geopolitical
support for China falls.
***overnight
update.
Fiscal
Policy
Japan approves $1
trillion stimulus.
Bottom line: the
explosive growth in M2 discussed above plus the expansive fiscal policies
announced by the EU Tuesday (see Tuesday’s Morning Call), Japan yesterday (see
above) and McConnell comments (yesterday) that a third stimulus bill will likely
be enacted means that the financial markets will continue to be flooded by
excess liquidity. That likely means that
equities will continue to advance until acted upon by some outside force
(China?). Lie back and enjoy it.
Let’s not forget
the Fed.
The value of the
Fed ‘put’.
Q1 S&P 500
profits post record decline.
Hindsight bias.
News on Stocks in Our Portfolios
Bank of Nova Scotia (NYSE:BNS): Q2 Non-GAAP EPS of
C$1.04 beats by C$0.09; GAAP EPS of C$1.00 beats
by C$0.14.
Revenue of C$7.96B (+2.1% Y/Y) beats by C$90M.
Economics
This Week’s Data
US
Weekly
jobless claims were up 2,123,000 versus expectations of up 2,100,000.
The
second estimate of Q1 GDP growth was -5.0% versus forecasts of -4.8%; the price
index was up 1.6% versus 1.4%.
April durable goods
orders fell 17.2% versus consensus of down 19.0%, ex transportation, they were
off 7.4% versus -14.0%.
International
May
EU business confidence came in at -2.43 versus estimates of -3.0; consumer confidence
was -18.0 versus -18.8; economic sentiment was 67.5 versus 70.3; industrial
sentiment was -27.5 versus -27.0; services sentiment was -43.6 versus -28.6.
May
German inflation was -0.1%, in line.
Other
What
I am reading today
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
No comments:
Post a Comment