The Morning Call
6/24/20
The
Market
Technical
The Averages (26156, 3131) had another good day. But they remain out of sync on their 200 DMA’s
(intraday, the Dow challenged its 200 DMA but fell back) and, at least to date,
have been unable to mount a challenge on those ‘island tops’---the longer this
goes on, the more likely the next move is to the downside.
Though short term the
technical picture is getting a bit shaky, for the moment, I am sticking with my
assumption that the Market’s bias is to the upside---at least until/unless the
Averages revert their DMA’s to resistance.
Gold made another
strong move higher on volume, making another new seven year high. The long bond was down. It just can’t break out of its month long
soft spell. The dollar was down again,
confirming a new lower high and completely voiding that positive seven day run
to the upside.
Tuesday in the
charts.
Fundamental
Headlines
The
economy
Data was yesterday’s
main headline. In the US, month to date
retail chain store sales, May new home sales, the June flash manufacturing,
services and composite PMI’s plus the June Richmond Fed manufacturing index were
all better than anticipated.
Overseas, June
EU consumer confidence, June German, EU and UK flash manufacturing, services
and composite PMI’s were above forecasts while the June Japanese flash
manufacturing, services and composite PMI’s were below.
***overnight, the
US draws up plans for $31 billion in tariffs on EU products.
The
coronavirus
***overnight
update.
Sweden thankfully
tries something different.
Updated analysis
of Arizona’s experience.
A new study on
the coronavirus.
And another.
China
China is stuck in a vicious cycle (must read).
China and India
agree to a disengagement along contested border.
Bottom line. Japan notwithstanding, the data continue to
point to the global economy recovering from recessionary lows. That trend is apt to continue, barring an overwhelmingly
adverse second wave of the virus. Couple
that with a historically expansive monetary policy and the Market will continue
to have a good deal of air beneath its wings.
Nonetheless, risks
exist. Not the least of which are
extraordinarily generous valuations. Another
is investor skittishness (not surprising in a richly valued Market)---which we
witnessed overnight on Monday when Peter Navarro made a negative comment about
the US/China trade deal and the futures plunged.
But as I said
yesterday, I have no idea when, as or if these factors will lead to mean
reversion.
How to explain the
Market’s wild mood swings.
The diversification
benefit of bonds in a sharp drawdown are less than you might expect.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
May
new home sales rose 16.6% versus estimates of +2.9%.
The
June flash manufacturing PMI was 49.6 versus consensus of 48.0; the services
PIM was 46.7 versus 46.5; the composite PMI was 46.8 versus 44.0.
The
June Richmond Fed manufacturing index came in at 0.0 versus forecasts of -14.0.
International
Other
Weekly
bankruptcy filings soar.
Including
those of hospitals.
What
I am reading today
In search of King David’s
lost empire. This article is long but if
you are interested in biblical history, it is a must read.
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for Survival’s website (http://investingforsurvival.com/home)
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