The Morning Call
6/16/20
The
Market
Technical
The Averages (25763, 3066) staged a monster rally,
recovering from a huge down opening to close in the green. The good news is that both remain above their
100 and 200 DMA’s. The bad news is that
they both have voided their very short term uptrends and created ‘island tops’.
My assumption
remains that the Market’s bias is to the upside, though that is clearly in
question. The issue is, where will the
indices find support? If they can hold
at the level of their DMA’s (which they are doing at the moment), then that
assumption will remain operative. A
break below those levels would point to a retest of the March 23rd
lows.
Who is driving the
stock market?
Gold declined, continuing
to struggle to reestablish upside momentum.
The long bond was up. It too
continues to battle (and having more success) to regain upside momentum. The dollar resumed its move to the downside,
keeping its chart the ugliest of the lot.
Monday in the
charts.
Fundamental
Headlines
One datapoint
was released in the US yesterday. The June NY Fed manufacturing index came in well
above expectations.
***overnight,
reports are out saying Trump is considering a $1 trillion infrastructure bill.
Overseas,
China disappointed as May fixed asset investments, industrial production and retail
sales were below estimates; the EU followed suit with an April trade balance that
was considerably less than anticipated.
The
Fed
The big headline
of the day was the Fed reiterating that it will start buying a broad portfolio
of corporate bonds. It apparently was
just what equity investors wanted to hear as it sparked a major recovery from deeply
negative to a positive close on the day.
Also, Powell
begins his regular Humphrey Hawkins testimony before congress today. What are the odds that he will say something
dovish?
The pandemic
moonshot.
The
coronavirus
The modelers thought
of everything except reality.
The masks masquerade.
Bottom line. it is
boring for me (and I am sure you) to keeping repeating the mantra that all that
matters to the Market is QEInfinity. But
it keeps getting shoved in our collective faces---yesterday’s pin action being
a prime example. The likely severe economic
dislocations resulting from the coronavirus lockdown, the heightened risk of a
resumption of a trade war with China, the massive social unrest and their impact
on corporate profitability are apparently being regarded as irrelevant. As long as that is the case, Market’s bias is
to the upside.
The great divide
between the economy and the Market.
Cooperman:
this will end in tears.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
May
retail sales rose 17.7% versus expectations of +8.0%; ex autos, they were up
12.4% versus up 5.5%.
International
April
UK unemployment was 3.9% versus estimates of 4.7%.
May
German CPI was -0.1%, in line.
June
EU economic sentiment came in at 58.6 versus consensus of 48.0; German economic
sentiment was 63.4 versus 60.0.
Other
Federal tax
receipts show record plunge in May.
US restaurant
traffic suddenly craters.
TSA throughput
is surging.
LA area port
traffic down sharply in May.
The systematic
risk in leveraged loans.
What
I am reading today
The problem with hedging
inflation in retirement.
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