The Morning Call--No bubble is ever the same

The Morning Call

 

8/18/20

 

The Market

         

    Technical

 

The Averages  (27044, 3381) turned in another mixed day (Dow down, S&P up), continuing the consolidation process begun last week and working through (but not resolving) the negative factors that I have been listing over the last two weeks: (1) both of the indices made two gap up opens two weeks ago that need to be filled, (2) the VIX continues to reflect investor concern and (3) breadth remains in overbought territory.  So, some more consolidation seems probable.  Nonetheless, I am sticking with my assumption that the Market’s bias remains to the upside long term.

                        https://www.zerohedge.com/markets/chart-day-bearish-setup-doubles-down

 

Gold spiked over 2%. Likely reflecting the news of Buffett’s new position in Barrick Gold.  Still it did not close last Monday’s huge gap down open.  TLT was up fractionally but remained below its 100 DMA for a third day, reverting to resistance.  While its long term chart is strong, this pin action is the first sign of technical weakness and could potentially be signaling a trend change (i.e. rising rates/inflation).   But it is too soon to make that call.  The dollar was down again, enough so to fill last week’s big gap up open.   So far, there is no reason to question this downtrend.

            https://www.zerohedge.com/economics/china-was-biggest-dumper-us-treasuries-june-foreign-central-banks-resumed-selling

 

                        Corporate bond issuance soars to new highs.

            https://www.zerohedge.com/markets/massively-compromised-corporate-debt-issuance-soars-record-highs

 

            Monday in the charts.

            https://www.zerohedge.com/markets/buffetts-barrick-bid-pumps-precious-metals-dollar-dumps        

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Month to date retail chain store sales grew faster than in the prior week.

 

July housing starts spiked 22.6% versus estimates of +5.0%; building permits were up 18.8% versus +5.4%.

                          https://www.zerohedge.com/economics/us-housing-starts-permits-explode-higher-july-multi-family-starts-soar

 

                        International

 

                        Other

 

                          Europe’s fading rebound.

 https://www.bloomberg.com/news/articles/2020-08-17/europe-s-fading-rebound-turns-recovery-from-v-shape-to-bird-wing?srnd=economics-vp&sref=loFkkPMQ

 

                          FHA mortgage delinquency rate soars to all-time high.

                          https://www.zerohedge.com/markets/fha-mortgage-delinquencies-soar-record-60-q2-hit-all-time-high-157

 

            The coronavirus

 

              ***overnight update.

              https://www.zerohedge.com/geopolitical/german-covid-19-cases-continue-surge-pandemic-now-no-3-cause-death-us-live-updates

 

              Minnesota governor reverses himself on use of hydroxychloroquine.

              https://www.zerohedge.com/political/maines-democrat-governor-quietly-reverses-course-hydroxychloroquine

 

            Bottom line.  No bubble is ever the same.

            https://www.advisorperspectives.com/commentaries/2020/08/17/why-soros-just-called-the-market-a-bubble

 

    News on Stocks in Our Portfolios

 

Genuine Parts (NYSE:GPC) declares $0.79/share quarterly dividend, in line with previous.

 

Home Depot (NYSE:HD): Q2 GAAP EPS of $4.02 beats by $0.34.

Revenue of $38.05B (+23.4% Y/Y) beats by $3.41B.

 

Home Depot (NYSE:HD) declares $1.50/share quarterly dividend, in line with previous.

 

What I am reading today

 

            What America can learn from the decline of Rome (must read):

            https://www.vox.com/2019/1/1/18139787/rome-decline-america-edward-watts-mortal-republic

 

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