Wednesday, July 29, 2020

The Morning Call--What a weak dollar means

The Morning Call


The Market

The Averages  (26379, 3218) were off yesterday and ended somewhat out of tune with each other.  While they are not out of sync with respect to a major trend, but (1) the S&P is above its June high, the Dow is not, (2) the Dow is near challenging its 200 DMA [now support], the S&P is not and (3) while both are making higher lows, the S&P is making higher highs; the Dow is not.  All this as (1) breadth remains strong; though it has been treading water and (2) the VIX is caught between its 200 DMA and its June low.  In short, a Market that seems to be backing and filling.  However, I am sticking with my assumption that the Market’s bias is to the upside.

            Update on margin debt.

            Subdued VIX making markets uneasy.

Gold (183.75) was up another 7/8% on big volume, making another new nine year high and drawing ever closer to the upper boundary of its long term uptrend (185.85).  The long bond resumed its upward trend.  The dollar was up slightly, but remained near the lower boundary of its short term downtrend, doing little to close Monday’s gap down open.

            Has gold reached its peak?

            What gold bugs are missing.

            Tuesday in the charts.



              The Economy


Month to date retail chain store sales declined at a faster pace than in the prior week.

The May Case Shiller home price index rose 0.4% versus forecasts of +0.8%.

 The June trade balance was -$70.46 billion versus projections of -$72.0    billion.

 June wholesale inventories fell 2.0% versus estimates of +0.5%.

                          July consumer confidence came in at 92.6 versus consensus of 94.5.

The July Richmond Fed manufacturing index was reported at 10 versus expectations of 5.


June UK consumer credit declined L-0.086 billion versus predictions of L-2.0 billion.


            The coronavirus

              ***overnight update.

              Ten coronavirus charts.

              Flaring virus threatens global economic recovery.

              Eviction wave is imminent unless moratorium is extended.


              US and China raise military stakes in South China Sea,

            Fiscal Policy

              Update on stimulus bill negotiations.

Bottom line.  QEInfinityForever affects more than the price of the dollar and coffee beans.

              What a weak dollar means to stock market leadership.

              What a weak dollar means for economic growth.

    News on Stocks in Our Portfolios
Cummins (NYSE:CMI): Q2 GAAP EPS of $1.86 beats by $0.88.
Revenue of $3.85B (-38.1% Y/Y) beats by $170M.

C.H. Robinson Worldwide (NASDAQ:CHRW): Q2 GAAP EPS of $1.06 beats by $0.47.
Revenue of $3.63B (-7.2% Y/Y) beats by $170M.

General Dynamics (NYSE:GD): Q2 GAAP EPS of $2.18 in-line.
Revenue of $9.26B (-3.1% Y/Y) beats by $230M.

Automatic Data Processing (NASDAQ:ADP): Q4 Non-GAAP EPS of $1.14 beats by $0.18; GAAP EPS of $0.96 beats by $0.01.
Revenue of $3.38B (-3.4% Y/Y) beats by $60M.

T. Rowe Price (NASDAQ:TROW): Q2 Non-GAAP EPS of $2.29 beats by $0.26; GAAP EPS of $2.55 beats by $0.29.
Revenue of $1.42B (+1.4% Y/Y) beats by $10M.

What I am reading today


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