The Morning Call
8/28/20
The
Market
Technical
The Averages (28492, 3484) continued to climb and for the
first time in a number of days, on higher volume. But there remain a number of negatives (1) on
Monday, both of the indices made a gap up open, joining those two gap up opens made
three weeks ago, (2) the VIX continues to reflect investor concern [it was
actually up yesterday on a stock price up day for the second day in a row] (3) the
indices’ breadth remains in overbought territory while the rest of the Market
weakens. So, there are good reasons to expect a selloff. Nonetheless, I am sticking with my assumption
that the Market’s bias remains to the upside long term.
Gold retreated below
the uptrend off its June low---the first negative indicator in a long time. TLT was hammered (down 1 ¾%), again, on
increased volume. The bad news is that
it remains below its 100 DMA (now resistance) and has now made a lower
high. The good news is that on Tuesday, it
created a huge gap down open that needs to be filled. The dollar rallied but not enough break even
the very shortest term downtrend. The
cumulative pin action is pointing to an improving economy/higher rates.
Divergences
everywhere.
Thursday in the
charts.
https://www.zerohedge.com/markets/powell-pelosi-pentagon-pummel-stocks-bonds-bullion
Fundamental
Headlines
The
Economy
US
July pending home sales rose 5.9% versus
forecasts of +3.0%.
https://www.advisorperspectives.com/dshort/updates/2020/08/27/pending-home-sales-rise-5-9-in-july
July personal
income was up 0.4% versus estimates of up0.2%; personal spending was up 1.9%
versus 1.5%.
The July trade
balance was -$79.3 billion versus expectations of -$73 billion.
July wholesale
inventories declined 0.1% versus projections of -0.6%.
The August Kansas
City Fed manufacturing index came in at 23 versus consensus of 2.
International
August Japanese
CPI was up 0.3% versus predictions of up 0.6%, core CPI was up 0.3%, in line.
August EU consumer
confidence came in at -14.7, in line; economic sentiment was 87.7 versus 85.0;
industrial sentiment was -12.7 versus -14.4; services sentiment was -17.2
versus -24.4.
September German
consumer confidence declined 1.8% versus estimates of +1.2%.
Other
America’s coming double dip (must read from Stephen
Roach).
https://www.zerohedge.com/markets/americas-coming-double-dip
Hotel occupancy down 30% YoY.
https://www.calculatedriskblog.com/2020/08/hotels-occupancy-rate-declined-303-year.html
Quality adjusted price inflation in much
higher than measured.
The
coronavirus
The latest fatalities stats.
http://econbrowser.com/archives/2020/08/cdc-covid-19-fatality-count-and-excess-deaths
Most Americans are misinformed on the
coronavirus.
The Gallup Pool shows public school enrollment
will decline by 76%-83%.
https://nalert.blogspot.com/2020/08/the-gallup-poll-finds-that-public.html
I am not sure that
the government/single payer approach is the right one for solving the health
insurance problem; but the pandemic spotlights a huge problem that has to be
addressed.
The
Fed
Summation of Powell’s Jackson Hole address (must
read).
https://www.zerohedge.com/markets/after-inflation-targeting-heres-what-fed-will-do-next
Just how easy has Fed monetary policy been
this year?
https://www.themoneyillusion.com/the-fed-hasnt-done-much-monetary-stimulus-this-year/
Bottom
line. Fed policies are part of the problem.
https://www.zerohedge.com/markets/one-bank-finally-tells-truth-fed-policies-have-become-part-problem
A bear market still lurks.
Ultra rich stockpile cash.
Lessons from long term Market returns.
https://novelinvestor.com/peter-bernstein-lessons-from-long-run-market-returns/
News on Stocks in Our Portfolios
What
I am reading today
Claiming social security
during the pandemic.
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for Survival’s website (http://investingforsurvival.com/home)
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