The Morning Call
8/31/20
The
Market
Technical
The S&P had
quite a week, starting with a gap up open on Monday, resetting its short and
intermediate term trends from trading ranges to uptrends and having its 100 DMA
crossing above its 200 DMA. All this
clearly supports my assumption that the Market’s bias is to the upside. That said, there are some negatives that
point to some sort of short term correction: (1) the S&P now has three gap
up opens below it that need to be filled, (2) the VIX continues to reflect
investor concern and (3) the index’s breadth remains in overbought territory
while the rest of the Market weakens.
https://www.zerohedge.com/markets/tale-two-bull-markets
The long bond had
as bad a week as the S&P had good. It
has fallen out of the uptrend off its March/June low’s, established a very
short term downtrend having made two lower highs and remained below its 100 DMA
(now resistance). That said, short term
it has that huge gap down open overhead that needs to be filled; and long term,
it remains in uptrends across all time-frames.
The only way that I can reconcile declining bond prices with rising gold prices and a falling dollar
is significantly higher inflation.
As you can see,
GLD has been trading in an increasingly narrowing wedge formation. In fact, on Friday, it closed right on the
upper boundary of that formation. The
new Fed monetary policy and a weakening dollar suggest a break to the upside.
Did I just say, ‘a
weakening dollar’?
Technically, the
VIX’s chart should look roughly like an upside down S&P/Dow chart. But as I have been pointing out for the last
two weeks, it hasn’t. That suggests that
there are enough investors that are growing increasingly uncertain/risk averse.
https://www.zerohedge.com/markets/whats-behind-last-weeks-meltup-vix-citadel-explains
Friday in the charts.
https://www.zerohedge.com/markets/powell-promises-push-sp-best-august-1986-dollar-bonds-puked
Fundamental
Headlines
The
Economy
Last Week in Review
The data (and
primary indicators) last week was (very) upbeat again, keeping alive the prospects
of a ‘V’ recovery, or at least something close.
I am not there yet; but the recent improvement in the numbers cannot be
ignored. In further good news, the
international stats were also positive, which has not been the case for several
weeks. Still, I will take good news
where I can get it. Let’s hope it
continues as it would be a plus for us.
Intermediate
term, the economic growth will be influenced by how quickly virus treatments
and a vaccine are discovered as well as the permanent impact this
disease/government reaction will have on the spending and work habits of the
nation.
Whatever the
shape of the recovery, I am not altering my belief that long term the economy
will grow at a historically subpar secular rate due to the twin burdens of
egregiously irresponsible fiscal and monetary policies---which, by the way, are
becoming even more egregiously irresponsible as a result of measures being
taken by the government and the Fed in dealing with the current crisis.
US
International
July YoY Japanese housing
starts fell 11.4% versus estimates of -12.5%; YoY construction orders were down
22.9% versus -7.0%.
August Japanese
consumer confidence came in at 29.3 versus expectations of 29.0.
The August Chinese
manufacturing PMI was reported at 51.0 versus consensus of 51.2.
Other
A quarter of all personal income in the US
comes from the government.
https://www.zerohedge.com/markets/quarter-all-personal-income-us-comes-government
Subprime mortgages fall massively delinquent.
Former Fed official warns of double dip.
https://www.zerohedge.com/economics/former-fed-official-warns-double-dip
The fiscal cliff is coming right up.
https://www.zerohedge.com/personal-finance/devastating-consumer-financial-cliff-coming-right
The
Fed.
The social and economic side effects of negative
interest rates.
https://www.zerohedge.com/markets/social-and-economic-side-effects-negative-interest-rates
The
coronavirus
The first US reinfection case.
News on Stocks in Our Portfolios
What
I am reading today
Quote of the day.
How to survive
when you are the target of an angry mob.
https://www.zerohedge.com/political/how-survive-when-youre-target-angry-mob
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