The Morning Call
6/11/20
The
Market
Technical
The Averages (26909, 3190) had a see saw day, finishing down.
However, both of the indices remain in
very short term uptrends; the DJIA finished above its 200 DMA for a fourth day,
reverting to support; and neither have not even began to fill their 6/5 gap up
open. My assumption remains that the
Market’s bias is to the upside, though the pin action of the indices as well as
a couple of internal indicators suggest that the retail driven moonshot may be
coming to an end. Meanwhile, (1) the two
huge gap opens (5/18, 6/5) remain unfilled, (2) the indices remain solidly in
overbought territory and (3) the VIX continues to reflect growing investor
uncertainty.
Gold had another
good day and is a short hair away from reestablishing its upside momentum. Ditto with the long bond---price up though it
still has work to do to regain upside momentum.
The dollar was down again, ending right on the lower boundary of its short
term trading range; its chart getting uglier by the day.
Wednesday in the
charts.
Fundamental
Headlines
Yesterday’s
stats were encouraging. Weekly mortgage and
purchase applications, the March budget deficit and May CPI were upbeat (though
some would argue about the inflation number).
Overseas, April Japanese machinery
orders were disappointing while the May Japanese and Chinese CPI’s were
positive (again the disagreement on inflation)
The
coronavirus
***overnight
update.
Update on US stats.
China
China buying its
soybeans from South America.
The Fed
The FOMC
completed its latest meeting and the results were pretty much as expected:
The formal
statement:
(1) the economy
is in rough shape; a ‘V’ shaped recovery is unlikely---which was not well
received by investors,
For the ‘V’
shape recovery doubters; another blistering assessment of the Fed by Jeffrey
Snider (must read).
The economic
projections.
Which reflect
considerable uncertainty.
(2) rates remain
the same and will so for the foreseeable future,
(3) it will
continue to support the economy[cough, cough, the Market] with all the available
tools at its disposal for as long as necessary.
Powell says that
the Fed will never hold back support for the economy even if asset prices are
too high
How much more
hand holding from the Fed does the Market really need?
The
Fed’s monetary animal house.
Bottom line. the
Fed remains the lead story for the Market.
Powell gave no hint that the Fed would consider shrinking much less
eliminating QEInfinity. As you know,
there will ultimately be a significant economic price to be paid for the Fed’s
decade long grossly irresponsible monetary policy; and indeed, the country may currently
be experiencing a painful social cost for the wealth inequality created by its
policy. Whether this could ignite the correction
process in the misallocation and mispricing of assets I think is open to
question. That said, until it does, the most
important factor in security pricing will be QEInfinity.
Rationalizing
high valuations won’t improve investment returns.
We
have reached the silly phase of the bull market.
Worries about a
retail investor-led speculative rally.
An interesting
history of rubbish rallies.
Counterpoint.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
Weekly
jobless claims rose by 1,542,000 versus consensus of 1,550,000.
The
May budget deficit was $399 billion versus forecasts of $625 billion.
May
PPI rose 0.4% versus estimates of +0.1%; core PPI fell 0.1%, in line.
International
Other
What
I am reading today
What
happens when a society loses confidence?
https://www.aei.org/economics/what-happens-when-a-society-loses-confidence-in-itself-and-the-future/
Congress should reassert
its ‘power of the purse’.
Savings, investing and
storage.
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