The Morning Call
7/17/20
The
Market
Technical
After touching key
resistance levels on Wednesday, the Averages
(26734, 3215) fell back yesterday; though only slightly. And given their
proximity to overbought territory, it is not surprising. The Dow finished above its 200 DMA for a third
day (now resistance; if it remains there through the close today, it will
revert to support). A successful challenge
would clearly be a positive development.
On the other hand, while it filled its ‘island top’ gap intraday
Wednesday, it fell back at the close with no follow through yesterday.
Further the
S&P looks like it could be forming a double top; not good. Still, there are
more pluses than negatives in the indices technical picture. So, I am sticking with my assumption that the
Market’s bias is to the upside---at least until/unless the Averages revert
their DMA’s to resistance.
Gold was down,
giving the first sign of momentum lost; the long bond was up (no momentum lost
there). The dollar was up, bouncing off
the lower boundary of its short term trading range. This makes the fourth time that boundary has
held. So, clearly there is good support
at this level.
Thursday in the
charts.
Fundamental
Headlines
The
economy
Yesterday was
really upbeat in US data land. June
industrial production (primary indicator), capacity utilization and retail sales
(primary indicator) along with the July Philadelphia Fed manufacturing index and
the July
housing index were quite positive. While
weekly jobless claims were disappointing and May business inventories were in line.
Beware the coronavirus
economy aftermath.
Business cycle indicators
as of 7/15.
Expect more
bankruptcies in the second half.
Overseas,
May UK unemployment and average earnings as well as June Chinese
YoY industrial production, YoY fixed asset investment
and Q2 GDP were better than anticipated.
On the other hand, June Chinese YoY retail sales were really poor while June
unemployment was in line.
The
coronavirus
Estimates of world
GDP lost to the coronavirus.
The media campaign
against Sweden.
The
Fed
Powell, Mnuchin
and investors---friends forever.
Investing in central
bank sedated markets.
China
As usual, the
Chinese were lying.
The
bottom line. yesterday’s
numbers give the impression of a ‘V’
shaped recovery; but to date, while the stats have been indicated an upturn is
in progress, they hardly portray a sharp one.
Still, good data is good data;
so, I am thankful for what we got. That said,
to have ‘V’ there has to be a continual strong advance in the stats; and we don’t
have that---at least, not yet.
What
we do have is a Fed (global central banks) that have and will likely continue to
flood the markets with liquidity. So
far, that has had a marginal impact on the economy but has propelled asset
prices into the stratosphere. The big
question is what happens when the onslaught of bankruptcies starts impacting
the Fed’s balance sheet (see above) which contains low grade debt?
Fundamentals do
not really matter much (must read).
News on Stocks in Our Portfolios
Revenue of $3.65B (+3.7% Y/Y) beats by $100M.
Economics
This Week’s Data
US
May
business inventories fell 2.3%, in line.
June
housing starts rose 17.3% versus consensus of up 15.6%; building permits were
up 2% versus 6%.
The
July housing index came in at 72 versus estimates of 60.
International
May
YoY EU construction output fell 11.9% versus expectations of -23.0%; June CPI
came in at 0.3%, in line.
Other
What
I am reading today
Astronomers
make new discovery in deep space.
Cash remains king.
Adam
Smith’s anniversary.
The
transgender threat to girls.
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