Wednesday, May 6, 2020

The Morning Call--New strain of coronavirus

The Morning Call


The Market

The Averages  (23883, 2868) made a strong showing most of the day but faded a bit into the close, ending below their 4/17 high and leaving them in that 4/17-4/20 trading range.  This reinforces my comment yesterday: ‘That the indices couldn’t hold above their 4/17 highs but also couldn’t develop follow through on last Thursday/Friday’s selloff suggests that they have found a standoff level between the bulls and bears.  I wait the outcome.’

The dollar had another good day on big volume. TLT and GLD charts continue strong.  All this points to the need for safety.

                        Tuesday in the charts.


Yesterday’s US data was mixed.  The March trade balance, the April services PMI and month to date retail chain store sales were disappointing while the April composite PMI and the April ISM nonmanufacturing index were better than anticipated.

            Overseas, the March EU PPI was lower than expected while the April UK services and composite PMI’s were above estimates.

            The coronavirus

            ***overnight, a new strain of coronavirus discovered (must read).

            The re-opening of Florida.

The advantage of diverse systems in dealing with a crisis.
            Here is the negative case for re-opening.  Note there is almost no data and almost no mention of the economic/health consequences of not re-opening.

            What’s good for thee but not for me.

            The Fed

            There was one minor headline during the day.  Fed vice chair Clarida made comments that about the economy that were more negative than the current generally accepted forecast.

            Another irresponsible Fed policy.

            When the Fed finally loses control.

            Bottom line: the liquidity driven Market has returned equities to rich valuation levels.  I will use this opportunity to Sell Half of any holding that trades into its Sell Half Range.

            April dividends by the numbers.

            Too connected to fail (must read).

            Warren Buffett’s peek into the financial abyss.

     Subscriber Alert

            EQM Midstream Pts. (EQM) reduced its dividend.  Hence the High Yield Portfolio will Sell its position at the Market open.

    News on Stocks in Our Portfolios
Emerson Electric (NYSE:EMR) declares $0.50/share quarterly dividend, in line with previous.

FactSet Research Systems (NYSE:FDS) declares $0.77/share quarterly dividend, 6.9% increase from prior dividend of $0.72.


   This Week’s Data


            The April services PMI came in at 26.7 versus estimates of 27.0; the composite PMI was 27.0 versus 24.4.

            The April ISM nonmanufacturing index was reported at 41.8 versus projections of 36.8.

                Weekly mortgage applications were up 0.1% while purchase applications were up 5.8%.

            The April ADP private payroll report showed job losses of 20,236,000 versus expectations of 20,000,000.

March German factory orders declined 15.6% versus estimates of -10.0%; the April services PMI came in at 16.2 versus 15.9; the composite PMI was 17.2 versus 17.1.

March EU retail sales were off 11.2% versus consensus of -10.5%; its April services PMI was 12 versus 11.7; the composite PMI was 13.6 versus 13.5.

The April UK construction PMI was 8.2 versus forecasts of 22.2.


            The case for negative interest rates.

The German high court just upended the ECB’s QE.

What I am reading today

            Wednesday morning humor.

            Eat steak and be happy.  Eat brussels sprouts and be depressed.

            The problem with personalizing the outcome of decisions.

            Quote of the day.

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