The Morning Call
6/23/20
The
Market
Technical
The Averages (26024, 3117) recovered from Friday’s quad
witch sell off. While breadth showed
only weak improvement, the VIX was down almost 10%---meaning the level of
investor uncertainty continues to decline.
Unfortunately, the indices remain out of sync on their 200 DMA’s 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.
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, re-establish upside momentum by making a new seven year
high. The long bond was also up but only
fractionally. It will take more to consider
that it has broken out of its month long soft spell. The dollar was down almost five percent, breaking
a seven trading day uptrend and remaining in an ugly technical position.
Monday in the
charts.
Fundamental
Headlines
The
economy
Yesterday’s
stats were mixed. The May Chicago Fed national activity index came in well
above forecasts while May existing home sales (primary indicator) were very
disappointing.
A deeper dive into
the current state of the US economy.
Are tariff
policies about to change?
Is inflation
finally coming?
How rare is a
double dip recession?
Overseas,
June EU consumer confidence was slightly below estimates.
The
Fed
Powell’s potent
put.
Here comes yield
curve control. What does that mean?
China
China still not
buying US soybeans.
Bottom line. everyone appears on board with the proposition
that the key determinant of stock prices now is Fed policy. Even the bears
acknowledge that valuations will continue to rise as a result of the flood of
liquidity being pumped into the financial markets by the global central banks---that
is, until something breaks. But they can’t
really pinpoint what triggers it or when that will occur. Their best argument (which I use all the
time) is that if something can’t go on forever, it won’t.
Which
is not really helpful to investors who have to worry about how their assets are
deployed. My solution, which some may consider cowardly,
is to (1) stick to my [sell] price discipline, (2) don’t be concerned if you
own a heavy position in cash and (3) own a little gold---I added modestly to my
holding yesterday.
Retail
investors flood the Market.
The
Market in a sweet spot.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
Month
to date retail chain store sales fell less than in the prior week.
May
existing home sales declined 9.7% versus forecasts of down 3.0%.
International
June
EU consumer confidence came in at -14.7 versus estimates of -15.0.
The
June Japanese flash manufacturing PMI was reported at 37.8 versus consensus of
47.5; the services PMI was 42.3 versus 40.6; the composite PMI was 37.9 versus
42.4.
The
June German flash manufacturing PMI was reported at 44.6 versus expectations of
41.5; the services PMI was 45.8 versus 42.2; the composite PMI was 45.8 versus
44.2.
The
June EU flash manufacturing PMI was reported at 46.9 versus projections of 44.5;
the services PMI was 47.3 versus 41.0; the composite PMI was 47.5 versus 42.4.
The
June UK flash manufacturing PMI was reported at 50.1 versus forecasts of 45.0;
the services PMI was 47.0 versus 40.0; the composite PMI was 47.6 versus 41.0.
Surging
PMI’s bolster recovery narrative.
Other
Home mortgage
delinquencies reach highest level since 2011.
What
I am reading today
What happens when
everyone kneels?
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