The Morning Call
9/17/20
The
Market
Technical
The Averages (28032, 3385) experienced a roller coaster
day but closed mixed (Dow up slightly; S&P down 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. So, more downside would not be
surprising. 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 now crossing 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 (see below).
Gold reversed again;
this time back up, 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.
Like GLD, it is in a consolidating pattern marked by lower highs and
higher lows. The dollar was up, but still failed 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.
Wednesday in the charts.
https://www.zerohedge.com/markets/stocks-pumpndump-fed-financial-stability-fears
Fundamental
Headlines
The
Economy
US
Weekly jobless claims rose 860,000 versus
consensus of up 850,000.
August housing
starts fell 5.1% versus forecasts of -5.0%; building permits declined 0.9% versus +2.5%.
https://www.calculatedriskblog.com/2020/09/housing-starts-decreased-to-1416.html
The September housing market index came in at
78 versus estimates of 77.
The September
Philadelphia Fed manufacturing index was reported at 15, in line.
International
Final August EU CPI was -0.4%, in line.
Other
Update on business
cycle indicators.
http://econbrowser.com/archives/2020/09/business-cycle-indicators-september-15th
Brexit:
snake eyes.
https://www.nakedcapitalism.com/2020/09/brexit-snake-eyes.html
Europe’s economic recovery is imperiled.
https://www.nytimes.com/2020/09/16/business/europe-economy.html
OECD’s latest global 2020 GDP forecast not as
negative as prior estimate.
The
Fed
Of course, the big
news event of the day was the wrap of the FOMC September meeting, its official
statement and the follow up press conference with Powell. As expected, the Fed left rates unchanged and
promised to continue its $120 billion/month purchases of US Treasuries and
mortgage backed securities (QEInfinity/Forever) as far out as 2023. In short,
it will continue its disastrous policy of enabling the mispricing and
misallocation of assets---which, as you know, I believe will not end well
especially for Market participants.
Powell did, however,
note that fiscal stimulus was needed to keep the economic growth from
faltering. And, as we all know, fiscal
stimulus is now hostage to politics. What he failed to note is that the US is
already up to its eyeballs in debt and that more debt will further inhibit the
long term secular growth rate of the US.
Not to be repetitious,
but, in my opinion, the US needs to take a page from the Swedish playbook and reopen
the economy modeling that country’s policy.
Here is the
official statement.
http://www.crossingwallstreet.com/archives/2020/09/the-feds-policy-statement-6.html
Here is its growth, employment, inflation, etc.
projections.
https://www.calculatedriskblog.com/2020/09/fomc-projections-and-press-conference.html
Steve Forbes on the Fed’s new inflation targeting
policy.
Which is meaningless since inflation has
averaged 2% for the last 18 years.
http://scottgrannis.blogspot.com/2020/09/consumer-inflation-has-averaged-2-for.html
The
Bank of England also met and, like the Fed, left interest rates unchanged and
reiterated the promise of more QEInfinity/Forever. In a surprise move, it also noted that negative
interest rates were being considered as a potential policy tool.
The
coronavirus
Overnight update.
The latest US coronavirus stats.
Never let a crisis go to waste.
Stocks in Our Portfolios
Oracle
on track for higher growth.
While
ATT is not quite at my Buy level, this author thinks that it is a buy.
What
I am reading today
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