Wednesday, September 16, 2020

The Morning Call---Everything is priced in


The Morning Call




The Market




The Averages  (27995, 3401) basically marched in place yesterday (Dow down slightly; S&P up fractionally).  Short term, they (1) remain in a trend of lower highs within a trading range, (2) must still fill two gap up opens lower down and (3) have to overcome September’s negative seasonal predisposition.  But lots of support exists at their 100 DMA’s (26208/3159), their 200 DMA’s (26208/3097) and the lower boundary of their short term trading ranges (18213/2991).


Longer term their charts are positive.  Indeed, the Dow’s 100 DMA is about to cross above its 200 DMA.  My current operating assumption remains that the Market’s bias is to the upside long term---until QEInfinity/Forever either comes to an end or investors conclude that it has been, is and will be an economic disaster. 



            Long tech becomes the most crowded trade of all time.



            The liquidity boom fueled record stimulus has ended.



Gold reversed again to the downside, continuing its recent see saw trading pattern between a series of lower highs and the July/August minor support level.  In other words, consolidating.  TLT was down one cent; it too seems to be consolidating. The dollar was up, failing to break the current short term trend of lower highs. 


In short, all these indices are in some sort of consolidation phase---which is not surprising given the economic and political cross currents investors are now facing.


            Tuesday in the charts.







              The Economy



Weekly mortgage applications fell 2.5% while purchase applications were down 0.5%.


Month to date retail chain store sales declined more rapidly than in the prior week.


August industrial production was up 0.4% versus consensus of +1.0%; capacity utilization was 71.4 in line.



August retail sales were up 0.6% versus estimates of +1.0%; ex autos, they were up 0.7% versus +0.9%.





The July EU trade balance was E27.9 billion versus forecasts of E25.1 billion.


The August Japanese trade balance was Y248.3 billion versus projections of -Y37.5 billion.


The August UK CPI was -0.4% versus expectations of-0.6%; core CPI was -0.6% versus -0.9%; PPI was -0.4% versus -0.3%; core PPI was +0.1%, in line.




                          Growth but no ‘V’ shaped recovery.



                          Europe’s zombie firms.



            The Fed


              The Fed and future inflation.



              So far, the Treasury market has yawned at the Fed’s new inflation policy.



 The money printing end game.




            Fiscal Policy


              Government spending and inflation.



 Stimulus compromise bill goes down to defeat.



              Biden’s budget plan.



            The coronavirus


              Overnight update.



              Global GDP loss from coronavirus tops $11 trillion.



Bottom line.  Everything is priced in.



  Growth versus value---take a blind taste test (must read).


              Institutional investors are tracking what the amateurs are doing.



                          The nine best income producing assets to grow your portfolio.



    News on Stocks in Our Portfolios


Microsoft (NASDAQ:MSFT) declares %0.56/share quarterly dividend, 9.8% increase from prior dividend of $0.51.



What I am reading today




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