The Morning Call
7/21/20
The
Market
Technical
The Averages (26680, 3251) advanced yesterday. The S&P pushed above its June high, voiding
that double top that was forming and leaving it open to a challenge of its February
all time high (3393). However, the Dow was
still been able to fill its ‘island top’ on a closing basis much less pierce
its June high. Until it does so, it could
act as a drag on the S&P. On the
other hand, the VIX finished below its 200 DMA for a second day; a successful
challenge would open the way to filling the February gap up open---support for
the S&P. I am sticking with my
assumption that the Market’s bias is to the upside.
Gold was up, making
a new nine year high. The long bond was also
up, keeping its upward momentum going.
The dollar declined, ending below the lower boundary of its short term
trading range (if it remains there through the close on Wednesday, it will
reset to a downtrend). All this suggests
a weak economy.
Monday in the
charts.
Fundamental
Headlines
The
Economy
US
The June Chicago
national activity index came in at 4.11 versus expectations of 3.2.
Month to date
retail chain store sales grew more slowly than in the prior week.
International
June Japanese CPI was 0.1%, in line.
Other
What
happens if the government ceases to pay the $600/week unemployment benefit?
Update on six high
frequency indicators of the economy.
Never has so much
been given to so many in so short a time.
Commercial
mortgage delinquencies near record levels.
The coming rent-pocalypse
and its impact on inflation.
The coronavirus
The race for a vaccine.
Fiscal Policy
GOP draft of new
stimulus bill.
EU nears agreement
on stimulus package.
The Fed
Trump nominee for
Fed Board up for senate vote this week.
Bottom
line. the news from AstraZeneca (see above) is a clear
plus for the economy and Americans’ health; the big question is, will a vaccine
come soon enough to save the millions of businesses (and their employees) that are
on the edge of bankruptcy if they are not already there. So too the EU and US preparations to throw
more money at their respective economies are a positive, at least in the short
term. But all those funds (1) have to be
financed, which just means more QEInfinity/Forever and (2) have to be serviced
[interest cost], adding to the debt/GDP ratio that is already at a level to act
as a governor on economic growth.
Investors
are impervious to the need to pay the piper.
Irrational
exuberance.
Is value investing
really dead?
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