Friday, July 31, 2020

The Morning Call--It is only a question of when.

The Morning Call




The Market




The Averages  (26313, 3246) yo yoed back down yesterday but the friction between them remains.  While they are not out of sync with respect to a major trend, (1) the S&P is above its June high, the Dow is not, (2) the Dow unsuccessfully challenged its 200 DMA [now support] intraday, the S&P is not even close and (3) while both are making higher lows, the S&P is making higher highs; the Dow is not.  Further, the VIX unsuccessfully challenged its 200 DMA (now resistance) intraday. In short, the Market continues to back and fill.  I am sticking with my assumption that the Market’s bias is to the upside.



Gold was off after nine straight up days but remains a short hair away from the upper boundary of its long term uptrend (185.85).  The long bond rebounded, maintaining its strong upward trend.  The dollar was down, finishing below the lower boundary of its short term downtrend.


            Thursday in the charts.







              The Economy




                          June personal income fell 1.1% versus estimates of -0.5%; personal                                    rose 5.6% versus up 5.5%; the PCE price index was up 0.2%, in line.




June Japanese unemployment was 2.8% versus expectations of 3.1%;   industrial production rose 2.7% versus +1.2%; YoY housing starts fell 12.8% versus -13.7%; YoY construction orders declined 13.4% versus -10.0%; July consumer confidence came in at 29.5 versus 26.0.


The July Chinese manufacturing PMI was reported at 51.1 versus forecasts of 50.7; the nonmanufacturing index was 54.2 versus 54.1.


June German retail sales dropped 1.6% versus consensus of -3.3%.


Q2 EU GDP growth came in down 12.1% versus projections of down 12.0%; July CPI was -0.3% versus -0.5%.





                          July hotel occupancy declines 38%.



While I don’t agree with much of what this author says, he does make two points worth considering (1) the need to at least review the rationale for the difference in taxation between tangible and intangible assets and (2) however, we got there, the income/wealth distribution in the US is out of whack and needs to be corrected.



                          The lasting damage of the pandemic.



                          Will the demand side shock keep inflation in check?



            The coronavirus


              Misinformation on hydroxychloroquine.



              The vaccine swindle.



              Domestic violence almost doubled during lockdown.



            The Fed


              The road to inflation.



              The enabling Fed.





              China matters more than ever.



            Bottom line.  It is only a question of when.



    News on Stocks in Our Portfolios


Genuine Parts (NYSE:GPC): Q2 Non-GAAP EPS of $1.32 beats by $0.40; GAAP EPS of -$2.52 misses by $3.48.

Revenue of $3.82B (-14.3% Y/Y) misses by $510M.


Mastercard (NYSE:MA): Q2 Non-GAAP EPS of $1.36 beats by $0.18; GAAP EPS of $1.41 beats by $0.25.

Revenue of $3.3B (-19.5% Y/Y) beats by $40M.


Apple (NASDAQ:AAPL): Q3 GAAP EPS of $2.58 beats by $0.51.

Revenue of $59.69B (+10.9% Y/Y) beats by $7.13B.


Apple's (NASDAQ:AAPL) board of directors approves a 4-for-1 stock split, effective August 31. Shares are up 4.4% AH, pushing the stock above $400 for the first time.


V.F. Corp (NYSE:VFC): Q1 Non-GAAP EPS of -$0.57 beats by $0.11; GAAP EPS of -$0.71 misses by $0.07.

Revenue of $1.08B (-47.3% Y/Y) beats by $104.51M.


V.F. Corp (NYSE:VFC) declares $0.48/share quarterly dividend, in line with previous.


What I am reading today


            Four crucial expenses to consider in retirement.



            Six steps to the best BBQ ribs.



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