The Morning Call
10/8/20
The
Market
Technical
At the moment, the
chart of the dollar may be the best directional indicator for the rest of the markets. Having reset its short term trend from down
to a trading range, UUP is holding a developing trend of higher lows. If that presages a stronger dollar (economy) that
would be a plus for stocks but a negative for bonds and gold. On the other hand, if it fails to hold that
very short term uptrend, it may be anticipating a move to safety. Stay tuned.
Fundamental
Headlines
The
Economy
US
Weekly jobless claims were up 840,000 versus
expectations of up 820,000.
International
The August German
trade balance was +E15.7 billion versus estimates of +E18.2 billion.
Other
Vehicle sales per capita as of 9/20.
Framing lumber prices up 65% YoY.
https://www.calculatedriskblog.com/2020/10/update-framing-lumber-prices-up-65-year.html
Q3 GDP growth will
likely show robust improvement; but Q4 remains a big question mark.
http://www.capitalspectator.com/us-q3-gdp-expected-to-rise-sharply-as-q4-outlook-dims/
UK threatens to walk away from Brexit talks.
https://www.zerohedge.com/geopolitical/uk-threatens-walk-away-brexit-talks-if-no-deal-end-next-week
Panic in the leveraged loan market.
The
Fed
The FOMC released
the minutes from its last meeting; the most important takeaways being that (1)
the QEInfinity/Forever policy through 2023 is not set in stone and (2) it was
expecting more fiscal policy stimulus than has occurred to date. Suggesting that QEForever could be upscaled if
fiscal policy fails to deliver. Here are
the minutes.
Another $3.5 trillion?
https://www.zerohedge.com/markets/top-fed-economist-says-another-35-trillion-qe-needed
Fiscal
Policy
Pelosi signals that she would support standalone
airline rescue bill.
The
coronavirus
End this recession now.
https://www.aier.org/article/end-this-recession-now/
How about listening to these scientists?
https://www.powerlineblog.com/archives/2020/10/declare-this.php
7,000 scientists and doctors call for the end
of the lockdown (must read).
Bottom line. I
am amazed at how tone death our political class is. Having made what I believe will be recorded
as the greatest f**kup in economic history, these guys are debating over angels
on a pin head.
Meanwhile, personal income fell 2.7% in
August. Last week 840,000 workers filed
for unemployment bringing total unemployment to around 12 million. Small businesses are failing a rate higher
than during the financial crisis.
Wolf Richter points out that one of the major results
of the PPP program was that it allowed many very small business owners to simply
shutter their enterprises, giving them enough to settle with the landlords and
other creditors rather than file bankruptcy.
In a recent article he points out:
‘From
March through mid-July, over 420,00 small businesses – or 7.1% of all small
businesses – permanently and quietly closed their doors, more than typically in
an entire year, according to a study by Brookings, released in September.
The
analysis found that “many small businesses are financially fragile and not
equipped to weather a prolonged period of substantially reduced revenues”:
47% rely on
personal funds of the owner to fill a two-month revenue drop.
88% rely on the personal credit score of the owner (such as working capital
funded by personal credit cards).
Only 44% have had a bank loan over the past five years.
Small
businesses account for about 99% of all businesses in the US and about 47% of
jobs in businesses. If these 420,000 businesses are representative of national
employment, “this means we have lost at least 4 million jobs that will only
return with the creation of new businesses,” the report said.’
Cut the showboat crap and fix what you broke.
Valuation update.
https://www.advisorperspectives.com/dshort/updates/2020/10/07/is-the-market-still-overvalued
News on Stocks in Our Portfolios
Exxon. Buy now
Altria
is controversial but resilient
McDonald's (NYSE:MCD) declares
$1.29/share quarterly dividend, 3% increase from prior dividend of $1.25.
CVS Health (NYSE:CVS) declares
$0.50/share quarterly dividend, in line with previous.
What
I am reading today
Finally, someone gets it.
https://trendingpolitics.com/nba-walks-back-wokeism-as-finals-ratings-continue-on-downward-spiral/
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