Tuesday, June 16, 2020

The Morning Call--Money, money, money, money

The Morning Call


The Market

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.


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


   This Week’s Data


            May retail sales rose 17.7% versus expectations of +8.0%; ex autos, they were up 12.4% versus up 5.5%.


            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.


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.

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