The Morning Call
5/8/20
The
Market
Technical
The Averages (23875, 2881) made another strong opening, fading
into the close but this time finishing up on the day. The S&P managed to close
back above its 4/17 high although the Dow failed to do so---leaving the indices
out of sync. This pin action doesn’t
change my thought that they remain in ‘a standoff level between the bulls and
bears. I wait the outcome.’
GLD and the long
bond rose markedly on decent volume and the dollar fell. In other words, these indicators reversed Wednesday’
pin action decidedly. That puts them back
in line with a disappointing economic outlook which is at odds with the stock
Market. So, price action across all
Markets remains a bit confusing.
Thursday in the
charts.
Fundamental
Headlines
Yesterday, March
consumer credit and weekly jobless claims continued the trend of really poor
numbers; although preliminary Q1 nonfarm productivity fell less than expected.
This expert says
recession will be over by the end of 2020.
On the other hand,
the service sector is crashing and that is not a good omen.
Overseas, March
German industrial production, the April Chinese Caixin services and composite PMI’s
and the April EU construction PMI were below expectations while the April Chinese
trade balance was much stronger than anticipated
The
coronavirus
More
coronavirus data.
The lockdown could
cause more deaths than the virus.
https://www.zerohedge.com/markets/professor-economic-impact-lockdown-will-cause-more-deaths-covid-19
Trump picks the worst
possible time to attack China.
***overnight, US/Chinese
trade negotiators talk by phone, agree to continue implementing Phase 1 of the
trade deal.
Government orders alone
didn’t shutdown the economy. They
probably won’t reopen it.
The Fed
The main headline yesterday was the pin action in
the bond market where futures are starting to price in negative rates by the
end of the year.
The decline of real interest rates.
Yesterday futures were
pricing in negative short term rates.
Eurodollar futures
were also pricing negative rates.
Paul Tudor Jones
buys Bitcoin as hedge against central bank money printing.
Bottom line: if I judge the price action in the Markets
based on economic factors, I would totally confused because the price action in
gold, the dollar and the long bond are pointing to a weak economy (which includes
lower corporate profits and an elevated risk of major bankruptcies) while the
equity Market is tip toeing through the tulips.
The conundrum is resolved by QEInfinity.
Act accordingly.
One chart says it
all.
https://www.zerohedge.com/markets/albert-edwards-one-chart-proving-just-how-insane-market-has-become
News on Stocks in Our Portfolios
C.H. Robinson Worldwide (NASDAQ:CHRW) declares $0.51/share quarterly dividend, in line with previous.
Economics
This Week’s Data
US
March
consumer credit fell $12.1 billion versus estimates of a $15 billion increase.
April nonfarm
payrolls declined by 20,500,000 jobs versus expectations of a 22,000,000
decrease.
High stock prices
and high unemployment---not a good look.
International
March
Japanese household spending dropped 4.0%, in line; cash earnings rose 0.1%
versus +0.3%; the April services PMI was 21.5 versus 22.8; the composite PMI
was 25.8 versus 27.8.
The
March German trade balance was +E17.4 billion versus consensus of +E17.0
billion.
Other
March
median household income.
Update
on hotel occupancy rates.
US
to remove Patriot missile protection from Saudi Arabia.
What
I am reading today
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