Tuesday, May 5, 2020

The Morning Call---A standoff?

The Morning Call


The Market
The Averages  (23749, 2842) opened down in early trading but rallied into their close.  That leaves them in that 4/17-4/20 trading range.  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 a good day, bouncing off its 100/200 DMA and following through on a higher low.  TLT and GLD charts continue strong.  All this points to the need for safety.
                        Monday in the charts.



            Yesterday didn’t see many data releases,  In the US, March factory orders fell more than anticipated; though; ex transportation, they were down less.  Overseas, the April EU manufacturing PMI was slightly better than expected.

            An enormous output gap is forming.

            The fallacy of using debt to solve a debt problem.

            The coronavirus

            ***overnight update.

                        More stats.
             Incompetent experts.
            Destroying markets and ignoring human rights.

            China warns of armed conflict over coronavirus backlash

            German high court throws monkey wrench into ECB QE.

Bottom line: we remain in a period in which the economic stats are going to be poor, (the extent of which we have no clue) while simultaneously the global central banks are pouring liquidity into the financial system.  This is a template that investors have grown used to over the last decade; and their reaction has remained fairly consistent---buy the dips irrespective of valuations.  Until that changes, stocks will retain their upward bias.
            Update on valuations.


                        The future is more variable than the present.
     Subscriber Alert

            In my quarterly fundamental review of Ralph Lauren (RL), it failed to meet the minimum financial quality criteria for inclusion in the Dividend Growth Universe.  Accordingly, at the Market open, the Dividend Growth Portfolio will Sell its position in RL.

    News on Stocks in Our Portfolios


   This Week’s Data


            March factory orders fell 10.3% versus forecasts of -9.7%; ex transportation, they were down 3.7% versus down 7.2%.

            The March trade balance was -$44.4 billion versus expectations of -$44.0 billion.

            Month to date retail chain store sales declined more rapidly than in the prior week.


            March EU PPI was -1.5% versus consensus of -1.3%.

            The April UK services PMI came in at 13.4 versus estimates of 12.3; the composite PMI was 13.8 versus 12.9.


            April YoY heavy truck sales down 54%.

            Framing lumber futures prices unchanged.

            April vehicle sales lowest in 50 years.

What I am reading today

            Setting priorities.

                        How will the crisis impact housing prices?

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