The Morning Call
5/5/20
The
Market
Technical
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.
Fundamental
Headlines
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.
And.
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
Economics
This Week’s Data
US
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.
International
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.
Other
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?
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